Financial Market &Equity Analysis

1.1 INTRODUCTION
The economic development of any country depends upon the existence of a
well organized financial system. It is the financial system which supplies the
necessary financial inputs for the production of goods and services which in turn
promote the well being and standard of living of the people of country. Thus, the
'financial is a broader term which brings under its fold the financial markets and
the financial institution which support the system. The assets traded in the financial
system are money and monetary asset. The responsibility of the financial system is
to mobiles the savings in the form of money and monetary asset and invests them
to productive ventures. An efficient functioning of the financial system facilitates
the free flow of funds to more productive activities and thus promotes investment.
Thus, the financial system provides the intermediation between savers and
promotes faster economic development.
Generally speaking, there is no specific place or location to indicate a
financial market. Whenever a financial transaction takes place, it is deemed to have
taken place in the financial market. Hence financial markets are pervasive in nature
since financial transactions themselves very pervasive throughout the economic
system. For instance issue of equity shares, granting of loan by term lending
institutions, deposit of money into bank, purchase of debenture, sale of shares and
so on.
However, financial markets can be reoffered to as those centers and
arrangements which facilitate buying and selling of financial assets, claims and
services. Sometimes, we do find the existence of a specific place or location for a
financial market as in the case of stock exchanges.

It is through the financial markets and institutions that the financial system
of an economy works. Financial Markets refer to the institutional arrangements for
dealing in financial assets and credit instruments of different types such as
currency, cheques, bank deposits, bills, bonds, etc. Or simply it can be said that
Financial Markets are credit markets catering to the various credit needs of the
individuals, firms and institutions. Credit is supplied both on short as well as long
term basis.

1.2 FUNCTIONS OF FINANCIAL MARKET:

To facilitate creation and allocation of liquidity.
To serve as intermediaries for mobilization of savings
To assist the process of balanced economic growth.
To provide Financial convenience; and
To cater to the various credit needs of various business houses.
The whole financial market is divided on the basis of credit requirements for
short term and long term purposes.
1. Money Market (for short term purposes 1 year or less):
Money Market is simply an arrangement that brings about a direct or
indirect contact between the lender and the borrower. Negotiations between these
parties may be carried through telephone, telegraph or mails.
Functions of money market:
To provide a parking place to employ short term surplus funds.
To provide room to overcome short term deficits to enable the central bank
to influence and regulate liquidity in the economy through its intervention in
the market.

 To provide a reasonable access to users of short term funds to meet their

requirements quickly, adequately and at reasonable cost.
It provides short term funds to the various borrower viz. businessmen,
industrialist, traders etc.
Providing funds to government funds.
2. Capital Market (for long term purpose, more than 1 year):
It refers to the institutional arrangement for facilitating the borrowing and
lending of long term funds. In the widest sense, it consists of a series of channels
through which the savings of the community are made available for industrial,
commercial enterprises and public authorities. An efficient capital market is a
prerequisite of economic development. An organized and well developed capital
market operating in free market economy;
Ensures best possible coordination and balance between the flow of savings on
e one hand and the flow of investment leading to capital formation on the other.
Directs the flow of savings into most profitable channels and thereby ensures
optimum utilization of financial resources.
N:B: Thus the capital market strives for- the mobilization or concentration of
National Savings for economic development, and the mobilization and import of
foreign capital and investment to augment the deficit in the required financial
resources so as to maintain the expected rate of economic growth.
Functions of capital market: Mobilization of financial resources on a nation wide scale.
Securing the foreign capital and know-how to fill up the deficit in the
required resources for economic growth at a faster rate

 Effective allocation of the mobilized financial resources, by directing the

same to projects yielding highest yields or to the projects needed to promote
a balanced economic development.
Components of Capital Market:
The following are the three components of the capital market:
Primary Market
Secondary Market
Financial Institution
(a) New Issue Market or Primary Market:
A market for new issues of shares, debentures and bonds where investors
apply directly to the issuer for allotment and pay application money to the issuer's
account. The transactions in the primary market result in new capital formation.
Instruments of primary market:
Mutual funds
lPOs or initial public offers
Insurance-(life and non-life)
Government of India bonds
Tax savings Bonds
Postal Savings-(NSE, KVP).
Major Players in the Primary Market are as follows:
1. Issuers may be corporations, the government or mutual funds. They start
the whole process of raising funds. Funds are raised through public

issues, right Issues, or through private placements and preferential

allotments.
2. Instruments are the means through which issuers raise funds, such as
debentures, equity shares, warrants, etc.
3. Intermediaries are those who facilitate the flow of funds from a person
who has excess funds to the person who needs it. They help the issuer to
raise funds by issuing securities through selected instruments e.g. banks,
investment companies, insurance companies, development financial
institutions, NBFCs, mutual funds, pension funds etc
4. Investors invest their surplus money in securities issued by issuers. The
investor may be an individual, corporate, financial institutional investor,
etc.
There has been tremendous growth in the sphere of new issue activity in
India since 1990s. The establishment of Securities Exchange Board of India
(SEBI), passing of the depository's Act,1996, liberalization of industrial and new
capital issue policies, relaxation of norms relating to foreign investments and
incentives provided by the Government have helped in the growth of new issue
market.
(b)Secondary Market or Stock market
A stock market is a place where securities of various types are traded and
where one can sell and purchase securities easily. It is an organized market for
purchase and sale of listed industrial and financial securities. Securities traded in
the stock exchanges include shares, debentures, and debt instruments of public
limited companies. These securities are in fact are documented evidence of
ownership of claim upon the assets of the issuing company. The securities are also
not fixed in value that is determined at the time of their buying and selling. Hence
enormous capital is rose which is generally required to operate the industrial and

commercial enterprises of the country. It provides ready market and liquidity to the
various types of securities listed. It also ensures efficient allocation of available
capital resources to the users in the economy. It also acts as a barometer that easily
measure and detect the incipient systems of an economic boom or decline well in
advance before such an eventuality actually occurs.
Growth of stock exchanges is attributed to the increase in the number of
instruments offered, listed companies and tight credit policy of banks as a result of
which Indian corporate sectors has been relying upon capital markets for raising
funds for their needs.
Instruments of Secondary Market
Equity
Derivatives and
Commodities
Function of stock exchange:
It provides a ready market for trading in securities.
The investors can evaluate the worth holdings from the prices coated at
difference exchanges for those securities
It also plays an important role in mobilizing surplus funds of investors.
It ensures safety in dealing which brings confidence in the minds of all the
concerned parties and helps in increasing various dealings.
Duly listed securities can be purchased at stock exchanges.
Lastly, Stock exchanges also provide a platform to raise public debts
(c) Financial Institutions:
Financial Institutions provide means and mechanism of transferring
resources from those who have an excess of income over expenditure to those who

can make productive use of the same. The commercial banks and investment
institutions mobilize savings of the people and channelize them into productive
uses. Some of the financial institutions are - IFCI (Industrial Finance Corporation
of India), IDBI (Industrial Bank of India). They differ from non-financial
(industrial and commercial) business organization in respect of their wares i.e.
while the former deal in financial assets such as deposit loans, securities and so on,
the later deal in real assets such as machinery, equipments, stock of goods, real
estates and so on.
1.3 OBJECTIVE OF THE STUDY:
This project work is done with the following intentions:
To study the Indian financial system and financial market in particular.
To study the equity market in India
To study the procedural aspect, technical aspect and technological aspect
of equity market of India.
To proof the benefit of the long term holder of share in the equity market.
1.4 .REASERCH DESIGN & METHODOLOGY
Forecasting is the essence of equity analysis. So there is a need of sound
logic behind any forecast. Forecasts needn't be accurate to the actual performance.
But it shouldn't deviate h that it becomes a flaw. The analyst should try to put his
best efforts to forecast the company's performance and produce an unbiased
analysis report.
For this analysis, the forecast figures have been drawn on the basis of management
discussions and analysis and industry averages. Due to the boom in construction
sector, there is a rise in demand in cement sector. And to meet the rising demand
the management has well defined plans. This drives the growth of ACC.

I have used mainly secondary sources to collect data. Since ACC is a listed
company, data is freely available. The sources of data are mainly:
company's annual report,
management analysis and discussion papers,
chairman's message and
Company's website.
Along with that data has been collected from sources like
nseindia.com,
bseindia.com,
ICICI direct.com,
IDSL research papers and
Money control. com.
1.5. INDIAN SECURITY MARKET.........WHERE DOES IT
STAND?

The Indian securities market comprises of 22 stock exchanges; the five major
exchanges are located in Mumbai, New Delhi, Kolkata, Ahmadabad and Chennai.
The stock exchange, Mumbai which was set up in 1857 and is Asia's oldest stock
exchange, accounts for about of the total turnover of all stock exchanges in the
country 1996, the Exchange listed 6881 companies and had a total market
capitalization of almost Rs. 4,260 billion. India's markets are taking steps to
modernize.
a. The National stock exchange (NSE), based in Mumbai was set up in 1993 and
in November 1994 screen based trading was launched by the NSE, allowing
traders from some 21 cities in India access to the stocks of about 1,300 companies
through satellite links. The NSE plans to network to over 40 cities across the

countries. The electronic screen based system can help to integrate transactions; the
system can also help to improve the transparency of trading.
b. Under new requirements, which came into effect in 1995 companies with issues
capital between Rs 30 to 50 million can seek listings only on stock exchanges with
screen based trading.
c. Those with capital of less than Rs 30 million are still eligible to list on the over
the Counter exchange of India, a national automated stock market set up in 1992 to
give small and medium sized companies access to the capital markets.
d. In 1995, the Govt. also announced its intention to issue rules for the creation of
share depositories, which would help move India's stock
c. Exchanges towards paperless trading: Currently, the share settlement systemis slow, with shares trades typically taking 28 days to settle compared with five
days in most other major markets government approval of the depository bill 1996
provided the legal basis for determining shares- although investors have given the
option to hold the securities in paper form. The National Securities Depository Ltd.
w as the first depository registered in India and began operating in November
1996.
e. The minister of finance regulates India's stock exchange and the securities
exchange and exchange board of India (SEBI) governs the public issues of
securities. The Securities Law Amendment Act 1995 increased SEBI's power to
protect the interest of investors and to regulate and reform the capital market.
f. As part of the measures to liberalize investment, India's securities markets were
opened to foreign institutional investors (FIIs) in 1992 by the end of January 1996,
350 FIIs had invested more than Rs. 141. 3 billion in the securities market
previously restricted to offshore mutual funds FIls are now allowed to make
portfolio investments in Indian companies, including private banks. No restrictions

apply to the movement of funds in and out of the country, to the lock in period, or
to the total volume of investments.
g. Foreign brokerages also operate in the Indian stock markets on behalf of FIIs.
The 1996 97 budgets proposed raising the limit for an individual FII from 5% of
the stock of a listed company to 10%. It also proposed allowing them to invest in
unlisted companies. Together, FIIs may hold a total of only 24% of the companys
stock. Domestic companies may raise capital overseas by issuing global depository
receipts (GDRS) or foreign currency convertible bonds. By December 1995, Indian
Firms had raised us$5.18 billion through these instruments.
h. In June 1996, bank financial institutions and non banking finance companies
were permitted to access to GDR markets. In June 1996, banks financial
institutions and non- banking finance companies -ere permitted to access to GDR
markets.
Capital markets are increasingly the preferred routes for raising finances
India, through debt, equity shares, debentures and hybrids. Investors can freely
access the capital market and in most cases freely price the issue. Investors with
both small and large fund requirements can mobilize fund from the market. Private
placement with institutional investors is also possible. Indian companies also have
the option of raising fund from international capital markets. Short term finances
for the working capital requirements are available from commercial banks and
through instruments such as fixed deposits inter-corporate deposits andcommercial paper.

Financial intermediaries:The intermediaries consist of banking and non- banking financial

intermediaries. Financial market and intermediaries have a symbiotic relationship
with each other. Each is necessary to the other. Without intermediaries the
informational barriers to participants would prevent investors from reaping the

benefits of the markets themselves because of inherent limitations. Much of what

modern intermediaries do to interface between individuals and incoming financial
markets.
Among their many functions, they help in transferring of funds across times
across space, help in risk sharing, price discovery, pooling and asset division,
provide information and bring together buyers and suppliers in a common
platform. In short they help in relocating the sources of economic units with
surplus goods to economic units with need for them. These can be grouped as:
a. Banks:- It is an institution that deals in money and its substitutes and
provides other financial services. Banks are engaged in activities such as
acceptance of application money from investors, banking of instruments,
their realization, refund of application money and payment of interest
dividend etc. The banks can also act as brokers and paid brokerage in
respect to an application bearing those stamps on allotment. They are also
entitled to fees for the services done.
b. Stock exchanges:- As discussed earlier it is a place where securities of
various types are openly traded and where one can sell and purchase
securities easily.
c. Depositories:- The phenomenal growth of the both the primary and the
secondary equities and debentures market, and the entry of bulk traders
(domestic and FIIs) in it have revealed the gross inadequacies of the market
infrastructure to support the new volumes of securities trading in India. The
traditional manual method of trading now converted to a modern
infrastructure consisting of depositories, paperless trading and computer
recording of transaction. So the birth of an agency where the securities are
deposited for safe keeping and handling/dealing on behalf of owner of
deposits. Its business is divided into five groups; clearing services,

registration/transfer processing, safe keeping, Corporate Actions and

Benefits Collection, and MIS aimed at a few objectives.

Objectives of depository
Immobilization of securities.
Book entry accounting.
Confidentiality.
Detailed listing of the investors holding by securities type.
Distribution of dividends, interest and redemption moneys
Handling of all types of securities both equity and preference and also
debentures.
Delivery vs. payment.
Link to the depositories globally.
The depositories go a long way in narrowing the gap between Indian market
and the foreign markets. Communications between the depositories and its users
will be a critical factor in the success of the system. The recent trend according to
SEBI requirements is that most of the shares have to be transacted in electronic
form which requires that the physical shares needs to be dematerialized. This helps
in reducing settlement time getting away with physical delivery of shares hence the
fear of losing or spoilage of share certificate is extinct. Even the counterfeit shares
floating in the market is greatly reduced. Hence both the exchanges have worked
out to compulsory dematerialization of almost all the listed scrips.

Stages of Dematerialization:
The investors submit his/her securities with the depository participant
rockers, NBFCs, individuals, FIIS, banks, custodians) for dematerialization.
The Depository Participants sends to registrar for DE-MAT. Then the DP
informs the depository about the dematerialization. The registrar gives the receipt

or conformation of securities demated.The registrar informs the depository about

the dematerialization.
The depository issues the receipt or conformation to the DP. The DP then
gives as receipt to the investor for completion of demats and opens a sub account.

1.6

SECURITIES

AND

EXCHANGE

BOARD

OF

INDIA

(SEBI):
The securities and exchange board of India is an apex body formed by the
government to develop and regulate the stock market in India. Eventually, the
securities and exchange board of India was set up on Apri112, 1988.
It took almost 4 years for the govt. to bring about separate legislation in the
name of securities and exchange board of India Act, 1992 conferring statutory
powers. The act, barged to SEBI with comprehensive powers over practically all
aspects of capital market operations.
Functions of SEBI:
A. Regulatory Functions:
Regulation of stock exchanges and self regulatory organizations.
Registration & Regulation of stock brokers, sub-brokers, registrar to all issue
to merchant bankers, underwriters, portfolio managers & such other
intermediaries who are associated with securities market.
Registration and regulation of the working of collective investment schemes
including mutual funds.
Prohibition of fraudulent and unfair trade practices relating to securities
market.

 Prohibit insider trading in securities.

Regulating substantial acquisition of shares and take over of companies.
B. Development functions:
Promote investors education.
Training of intermediaries.
Conducting research & published information useful to all market
participants.
Promotion of fair practices. Code of conduct for self-regulatory
organizations.
Promoting self regulatory organizations

SEBI Guidelines for secondary market:

Stock Exchange:
A. Board of directors of stock exchange has to be reconstituted so as to include non
members' public representatives, government representative to the extent of 50% of
total no. of members.
B. Capital adequacy norms have been led down for members of various stock
exchanges depending upon their turnover of trade and other factors.
C. Working hours for all stock exchanges has been fixed to be from 12 noon to 3
p.m.
D. All the recognized stock exchanges will have to inform about the transaction
within 24 hour.
E. Guidelines has been issued for introducing a system of market making in less
liquid scripts in a phased manner in all stock exchanges.

Brokers :
A. Registration of brokers and sub-brokers is made compulsory.
B. In order to ensure that brokers are professionally qualified and financially
solvent, capital adequacy norms for registration of brokers has been evolved.

C. Compulsory audit of broker's book and filling of audit report with SEBI have
been made mandatory.
D. To bring about greater transparency and accountability in the broker-claint
relationship, SEBI has made it mandatory for brokers to disclose transantion price
and brokerage separately in the contract note issued to the claint.

E. No broker is allowed to underwrite more than 5% of the public issue.

During the last decade there has been a broadening and deepening of financial
markets. Several new instruments and products have been introduced. Existing
sectors have opened to new private players. This has given a strong impetus to the
development and modernization of the financial sector. New players have adopted
international best practices and modern technology to offer a more sophisticated
range of financial services to corporate and retail customers. This process has
clearly improved the range of financial services providers to Indian customers. The
entry of new players has led to even existing players upgrading their product
offerings and distribution channels. This continued to be witnessed in 2002-03
across key sectors like banking and insurance, where private players achieved
significant success.
The past decade was also an eventful one for the Indian Capital market. The
reforms particularly the establishment and empowerment of Securities and
Exchange Board of India (SEBI), market-determined prices and allocation of
resources, screen-based nation wide trading dematerialization and transfer of
securities, rolling settlement and derivatives trading have greatly both the
regulatory framework and efficiency of trading and settlement. On account of the
subdued global economic conditions and their impact on the Indian economy of the
draught conditions prevailing in the country, 2002-03 was a subdued year for the
equity market. Despite this, the National Stock Exchange (NSE) and the Bombay

Stock Exchange (BSE) rank 3rd and 6th respectively among all exchanges in the
world with respect to the number of transactions. The year also witnessed the grant
of approval for setting of a multi commodity exchange for trading of various
commodities. Exposure to global practices has made the Indian Customer more
discerning and demanding there has been a clear shift towards those entities that
are available to offer products and services in the most innovative and cost
efficient manner. The financial sector will need to adopt a customer- centric
business focus. It will also have to crate value for its share holders as well as its
customers, competing for the capital necessary to fund growth as well as for
customer market share. This indeed will be the challenge in the years to come.

1.7 LIMITATION IN STUDY

Inadequate information of previous years considered in the study.
Unavailability of information of the current recession period.
One company under the study.

1.8 CHAPTER PLANNING

CHAPTER -1

INTRODUCTION ABOUT FINANCIAL MARKET

CHAPTER -2

LITERATURE REVIEW

CHAPTER -3

EQUITY ANALYSIS OF ACC LIMITED- A CASE STUDY

CHAPTER -4

ANALYSIS AND INTERPRETATION

CHAPTER -5

CONCLUSION

Chapter-4
4.1 ANALYSIS AND INTERPRETATION
As the information provided in the financial statements is not an end in itself
as no meaningful conclusions can be drawn from these statements alone. Therefore
there is a need to diagnose the information contained in financial statements so as
to judge the profitability and financial soundness of the firm. Just like a doctor
examines his patient by recording his body temperature, blood pressure, etc. before
making his conclusion regarding the illness and before giving his treatment, a
financial analyst analyses the financial statements with various tools of analysis
before commenting upon the financial health or weaknesses of an enterprise. Here

we have used comparative statement and ratio analysis for analyzing these
statements.

Table-2, five years profit & loss statement of ACC

ltd.
(Rs in crore)
Particulars
Net sales
Material consumed
Manufacturing expenses
Personnel expenses
Selling expenses
Administrative expenses
Expenses capitalized
Cost of sales
Operating profit
Other recurring income
Adjusted PBDIT
Financial expenses
Depreciation
Other write offs
Adjusted PBT
Tax charges
Adjusted PAT

Dec,11
Dec,10
Dec,09
Dec,08
Dec,07
8,021.59
7,229.97 6,894.79 5,731.75 3,183.80
1,204.68
1,180.15 1,836.72 1,542.80 1,033.58
1,961.34
1,961.86
861.73
693.43
457.17
367.71
413.04
352.73
318.02
184.84
1,393.87
1,377.31 1,279.48 1,148.03
726.22
530.88
514.33
622.70
356.99
201.91
0.00
0.00
0.00
0.00
0.00
5,458.48
5,446.69 4,953.36 4,059.27 2,603.72
2,563.11
1,783.28 1,941.43 1,672.48
580.08
136.17
211.59
142.24
89.57
45.43
2,699.28
1,994.87 2,083.67 1,762.05
625.51
84.30
39.96
73.87
75.19
66.19
342.09
294.18
305.43
254.61
164.64
0.00
0.00
1.55
6.24
6.46
2,272.89
1,660.73 1,702.82 1,426.01
388.22
688.93
524.60
491.70
369.10
140.17
1,583.96
1,136.13 1,211.12 1,056.91
248.05

Non recurring items

Other non cash
adjustments
Reported net profit
Equity dividend
Preference dividend
Retained earnings

1.23

41.25

227.11

158.30

255.41

21.54

35.39

-0.16

14.55

46.93

1,606.73
431.76
0.00
3,579.50

1,212.79
375.33
0.00
2,838.54

1,438.59
375.02
0.00
2,248.25

1,231.84
280.92
0.00
1,376.41

544.18
147.61
0.00
682.76

The above five years comparative income statement reveals that there has
been an increase in net sales with an increasing trend. The increase in net sales is
10.95% in 2011 as compared to 2010 where as the cost of sales are increases only
0.216% in this said period, thereby resulting of increase in operating profit of
43.73%.
The operating expenses such personnel expenses, administrative expenses,
&selling expenses of the company are reduced by 0.53% in 2011 as compared to
2010. The Profit before Tax (PBT) of the firm is in increasing trend except in 2010
because of decrease in turnover percentage. The adjusted Profit after Tax (PAT) is
increase by 39.42% in 2010 as compared to rs.447.83crs. in2009.
The reported net profits are in increasing trend except the year 2009. The
increases in reported net profit more by rs.687.66crs. In2008 as compared to2007
and less in2009 i.e, rs.206.75crs. as compared to2008. The comparative income
statement also shows that the company gives equity dividend to his shareholder
regularly.

Table-3, Five year Balance sheets of ACC

ltd.
(Rs in crore)
Particulars
LIABILITIES
Share Capital
Reserves & Surplus
Net Worth
Secured loans
Unsecured loans
TOTAL LIABILITIES
ASSETS
Gross block
(-)Accumulated

Dec,11

Dec,10

Dec,09

Dec,08

Dec,07

188.02
5,828.20
6,016.22
550.00
16.92
6,583.14

187.88
4,739.85
4,927.73
450.00
32.03
5,409.76

187.93
3,964.78
4,152.71
266.03
40.38
4,459.12

187.76
2,955.16
3,142.92
720.96
50.20
3,914.08

185.54
1,951.21
2,136.75
950.12
121.30
3,208.17

6,826.27

5,835.67

5,464.07

4,816.25

4,628.64

2,667.98
depreciation
Net block 4,158.29
Capital work-in-progress
2,156.21
Investments
1,475.64
Inventories
778.98
Sundry debtor
203.70
Cash & Bank
746.38
Loans & Advances
714.55
Total current assets 2,443.61
Current liabilities
2,558.73
Provisions
1,091.88
Total current liabilities
3,650.61
Net current assets -1,207.00
Misc. expenses
0.00

2,365.97

2,149.35

1,893.76

1,722.29

3,469.70
1,602.86
679.08
793.27
310.17
984.24
779.76
2,867.44
2,245.39
963.93
3,209.32
-341.88
0.00

3,314.72
649.19
844.81
730.86
289.29
743.48
544.31
2,307.94
1,991.27
666.27
2,657.54
-349.60
0.00

2,922.49
558.42
543.09
624.13
213.96
620.17
569.21
2,027.47
1,596.50
541.83
2,138.33
-110.86
0.94

2,906.35
290.95
333.80
600.95
199.17
102.79
533.54
1,436.45
1,449.02
316.77
1,765.79
-329.34
6.41

5,409.76

4,459.12

3,914.08

3,208.17

TOTAL ASSETS

6,583.14

Figure -2 Five Years Total Balance Sheet (rupees in Crore)

The total five years comparative balance sheet scenario of the company
reveals that there has been an increase in fixed asset with an increasing trend. It is
more in 2011 by rs.688.59 crore as compared to rs.154.98crs. in2010. Similarly the
long-term loans towards outsiders are more In2007 i.e., rs.1071.42crs. and less in
2009 i.e,rs.306.41crs. and the Equity capital with reserve &surplus are increased
rapidly by rs.1088.49crs. in2011. This fact depicts that the policy of the company is
to purchase fixed asset from the long-term source of finance there by not affecting
the Working capital.
The net current assets (working capital) of the company are always shows
the negative balance which are more in 2011 i.e, Rs.1207.00crs. It means
degradation current financial position of the firm. These further shows that the
liquidity position of the firm are very poor. The reserve &surplus of the firm are
increases more in 2011s i.e, rs.1088.35crs. as compared to all the given years,
which shows that the company has utilize less reserve &surplus for the payment of
dividend to share holders either in cash or by the issue of bonus shares. It also
shows that the profitability positions of the firm are in increasing trend.
The overall financial position of the concern is satisfactory. Now in current
scenario investors are likely interested to invest in this particular company.
4.2- Analysis of long-term financial position or test of solvency (for current
year only).
1. Debt-Equity Ratio
Debt-equity ratio is also known as external-internal equity ratio is calculated
to measure the relative claims of outsiders and the owners against the firms assets.
This ratio indicates the relationship between the external equities or the outsiders
funds and the internal equities or the shareholders funds.

Debt-equity ratio = outsiders funds / shareholders funds

= 4,217.53/ 6,016.22 = 0.70:1
2. Funded Debt to Total Capitalization Ratio
The ratio establishes a link between the long term funds raised from
outsiders and total long term funds available in the business.
Funded Debt to Total Capitalization Ratio = Funded Debt/ Total Capitalization x 100
= 566.92/ 6,583.14 x 100 = 8.612%
3. Proprietory Ratio or Equity Ratio

A variant to the Debt Equity ratio is the Proprietory ratio which is also
known as Equity Ratio or Shareholders to Total Equities ratio or Net worth to
Total Assets Ratio. This ratio establishes the relationship between
shareholders fund to Total assets of the firm.
Proprietory Ratio or Equity Ratio = Share Holders Fund / Total Assets
= 6,016.22 / 10233.75 = 0.59: 1

1. Solvency Ratio or Ratio of Total Liabilities to Total Assets

This ratio is a small variant of Equity ratio and can be simply calculated as
100 Equity Ratio. This ratio indicates the relationship between the Total
Liabilities to Outsiders to Total Assets of a firm and can be calculated as follows:
Solvency Ratio = Total Liabilities to Outsiders / Total Assets
= 4,217.53 / 10233.75 = 0.41: 1
2. Fixed Assets to Net worth or Proprietors Fund Ratio
The ratio establishes the relationship between fixed assets and shareholders
fund. The ratio indicates the extents to which share holders fund are sunk into the
fixed assets.
Fixed Assets to Net worth or Proprietors Fund Ratio:
= Fixed Assets (After depreciation)/ Shareholders Fund
= 4,158.29 / 6,016.22 = 0.69:1

3.Fixed Assets to Total Long Term Fund or Fixed Asset Ratio

A variant to the ratio of fixed assets to net worth is the ratio of fixed assets to
total long term funds which is calculated as follows:
Fixed Assets to Total Long Term Fund or Fixed Asset Ratio:
= Fixed Assets (After depreciation) / Total Long term fund
= 4,158.29 / 566.92 = 7.33:1

4. Ratio of Current Assets to Proprietors Fund

The ratio is calculated by dividing the total of current assets by the amount
of shareholders fund. The ratio indicates the extent to which proprietors funds are
invested in current assets.
Ratio of Current Assets to Proprietors Fund:
=Current Assets / Shareholders fund
= 2,443.61 / 6,016.22 = 0.41:1

CHAPTER 5
CONCLUSION
5.1 Findings
The Indian economy had shown a fastest growing trend by an efficient and
most effective performance in manufacturing and services sectors. By studying
ACC Ltd. Financial profile and comparing with its techniques to sustain in the
present recession period market and attracting the consumers towards to its equity
in Indian market, it is revealed that the company has able to its objectives to a
certain extent. These achievements are due its care ness to the quality contribution
in the production of goods and providing services. Without latest IT infrastructure
it is not a fair view about a successful corporate. With this move, ACC has also
shown a better prepared to master future expansion of its core business. Forecast is

the essence of equity analysis. For this analysis, the forecast figures have been
drawn on the basis of past prospective trend and present market conditions. This
prediction has made because of the availability of inadequate information i.e.,
neither for the current recession period nor of sufficient information during the past
periods. Due to the boom in construction sector, there would be a greater demand
in the cement sectors, but the recession market has become an obstacle in this path.

5.2 Suggestions
Choice under uncertainty is to be influenced by very recent gains or losses.
Thus, the company should look upon the consumers choice in the existing
unfavorable situations. Over confidence, one exponent of egontric biases is
regarded as one of the most robust findings in the psychological of judgment and
can be defined as a system of the accuracy of ones decision and the precision of
ones knowledge. This view is given because even though the companys position
in present market is better to a certain extent than some others, yet it has to
concentrate on the consumers behavior. It should not forecast blindly about the
consumers option to the companys equity. Now it is customer market and
consumers have their own idea to judge the benefits that company can return them
if they choose that company as alternative. In the present day the people are most
needed of services due to various personal and impersonal reasons. Thus the
company in spite of giving more importance in the manufacturing aspect should
give the emphasis on the service sectors what it has been taken as a base to hold
the present equity holders and the prospective investors.

5.3 Conclusion
In the 70 years the company has been shown a pioneer in the manufacturing
of cement and concrete and a trendsetter in many areas of cement and technology
including improvements in raw materials utilization, process improvement, energy

conservation and development of high performance concretes. Since its inspection

in 1963, the company has been a important benchmark for the cement industry in
respect of its production, marketing and personal management process. Investors
believe in higher returns and better portfolio manager. Equity analysis serves the
purpose. However equity analysis reports maynt accurate. It is subject to market
risks. So investors need to independently evaluate the investment and strategies
and also take the advice of a financial adviser. You also get control over your
investment with online order confirmation and order status tracking. Capital
market is increasingly the preferred routes for raising finances in India, through
debt, equity shares, debentures and hybrids. Investors can freely access the capital
market and in most cases freely price the issue.

BIBLIOGRAPHY

www.bse.com
www.nse.com
acclimated.com
logoofacclimited.com
BOOKS

Finance Market 7 Service, Gorden & Natrajan

Portfolio Management, S. Kevin
Management Accounting, Sharma & Gupta

List of Table
1.Reported Net Profit
2.5 years profit & loss statement of ACC Ltd.
3.5 years balance sheet ACC ltd

List of Graph
1. Reported Net profit
2. 5 year total balance sheet