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“Analysis of Indian cement Industry &

Financial performance of ACC LTD”

BUILD WITH CONFIDENCE

Presented by:-
Neeraj Soni
Sem-III
MBA

ARNI University Kathgarh (Indora) H.P

 Contents:-
 Introduction To The Study
 Overview of Indian CEMENT Industry
 SWOT Analysis
 ACC –Brief History
 Map of ACC & 5 years performance highlights
 Plants & capacity
 Working Capital Management
 Research methodology
 Financial Analysis
 Analysis :-Findings & observations
 Limitations &
 Suggestions
 Objective of the study:-
 To determine the amount of working capital
requirement and to calculate various ratios
related to working capital.
 To analyze the Indian Cement Industry.
 To evaluate the financial performance of ACC
limited using financial tools.
 To study liquidity position of the company by
taking various measurements.
 To suggest the steps to be taken to increase the
efficiency in management of working capital.
 Overview of Indian CEMENT
Industry
 India is the world's second largest producer of cement
with total capacity of 219 million tones (MT) at the end of
FY 2009, according to the Cement Manufacture’s
Association.
 Dispatches during 2009-10 were 159.43 million tones (MT)
increasing by 12 per cent over 142.23 in 2008-09.
 Cement production during 2009-10 was 160.31 MT an
increase of 12.37 per cent over 142.65 MT in 2008-09.
 According to ACC -the government’s continued thrust on
infrastructure will help an annual growth of 9-10 per cent
in 2010,
 In the Union Budget 2010-11, US$ 37.4 billion has been
provided for infrastructure development.
Top ten companies :-
 ACC Limited
 Gujarat Ambuja Cements Ltd
 Ultratech
 Grasim
 India Cements
 JK Cement Ltd
 Jaypee Group
 Century Cement
 Madras Cement
 Birla Corp.
 SWOT ANALYSIS:-
Strengths:- Weaknesses:-
 Growth momentum Highly regionalized industry.
 Government initiative in the  High capital & investment cost
infrastructure The complex Excise Duty
 Huge potential for export. structure
 Capacity utilization: over 90% The recent ban on export of
cement clinker
Opportunities:- Threats:-
Substantially low per capita The recent moves by the Central
cement consumption (82 kg Government in making the import
against 250kgs) of the cement total duty free
Boom in Infrastructure sector  Recent changes in the Central
For current fiscal year ,the Excise Duty
demand-supply Gap is 40 mt. Increased railway freight, coal
prices
 ACC company Profile:-
 ACC (ACC Limited) is India's foremost manufacturer of
cement and concrete.
 ACC's operations are spread with 14 modern cement
factories, 19 Ready mix concrete plants, 19 sales
offices & a workforce of about 9000 persons .
 ACC’s brand name is synonymous with cement and
enjoys a high level of equity in the Indian market. It is
the only cement company that figures in the list of
Consumer Super Brands of India
 ACC has also extended its services overseas to the
Middle East, Africa, and South America
 ACC was formally established on August 1, 1936.
Sadly, F E Din Shaw, the man recognized as the
founder of ACC, died in January 1936. Just months
before his dream could be realized.
 The success came as the historic merger of ten
companies to form a cement giant. These companies
belonged to four prominent business groups – Tatas,
Khataus, Killick Nixon and F E Din Shaw groups.
 ACC, with an installed capacity of 22.63 MTPA (with 13
plants), enjoys an 11% market share in India, which
with its total installed capacity of 207 MTPA .
 A new association was formed between ACC and The
Holcim group of Switzerland in 2005
 Vision:-“To be one of the most respected companies in
India”.
 Mission includes “Leadership, Profitability ,Growth,
Quality , Equity , Pioneering & Responsibility”.
 Map of ACC & 5 years performance
highlights:-
Particulars 2005 2006 2007 2008 2009
Rs Crore

NET SALES 3,221 5,803 6,991 7,283 8,027

PBT 684 1,620 1,930 1,737 2,204

OPERATING PROFIT 616 1,717 1,993 1,899 2,643

PAT 544 1,232 1,439 1,213 1,607

CAPITAL EMPLOYED 3,502 4,234 4,791 5,746 6,932

BASIC EARNINGS 30.02 66.02 76.75 64.63 85.60

Per Share(Rs.)
 Working Capital Management :-
“Working capital means the part of the total assets of the business
that change from one form to another form in the ordinary course
of business operations.”
Two different concepts of working capital :-
a) Balance sheet or Traditional &
b) Operating cycle concept.
SIGNIFICANCE OF WORKING CAPITAL:-
 INCREASE DEBT CAPACITY
 INCREASE IN FIXED ASSETS
 INCREASE EFFECIENCY
 EASY LOAN FROM BANKS
 PAYMENT TO SUPPLIERS
 DIVIDEND DISTRIBUTION
 Research Methodology
Data Collection
 Primary data is unstructured interview with managers to get
information regarding all variables for working capital
management.
 Secondary data is collected from annual reports, relevant
records of ACC ltd, journals & articles.
Scope: -
The study has got a wide & fast scope. It tries to find
out the players in the industry & focuses on the
upcoming trends. It also tries to show the financial
performance of the major player of the industry (ACC).
Financial Analysis & findings , using different tools
as:-
 Common size statement ( Vertical Analysis)
 Trend Analysis (Horizontal)
 Ratio Analysis using:-
a) Liquidity Ratio
b) Solvency Ratio
c) Activity/mgmt efficiency Ratio
d) Profitability Ratio
Interpretation Of Common size statement

There is a significant increase in shareholder’s fund

& decrease in loan funds continuously over a
period of time.
There is also a significant increase in the amount
invested by the company for the purpose of future
growth.
There is a significant decrease in current asset over
a period of time.
Trend Analysis:-
 Interpretation of trend analysis :-

Over a period of years ,there is an increasing

trend in all the Balance sheet items other than
Investment & Current assets.
Interpretation of working capital:-
 WORKING CAPITAL RATIOS AND ITS INTERPRETATION:-
Liquidity Ratio Dec’0 Dec’06 Dec’07 Dec’08 Dec’09
5
Current Ratio 0.58 0.77 0.86 0.89 0.67
Quick Ratio 0.42 0.61 0.55 0.61 0.42
Solvency Ratio
Debt-Equity
Ratio 0.50 0.25 0.07 0.10 0.09
 Activity ratios:-
Dec’05 Dec’06 Dec’07 Dec’08 Dec’09
Inventory 5.37 9.33 24.85 27.51 25.22
Turnover Ratio
Debtor Turnover 16.34 27.75 27.40 24.12 31.22
Ratio
Investment 12.29 22.40 24.85 27.51 25.22
Turnover Ratio
Working 27.93 6.96 18.25 17.02 54.17
Turnover Ratio
 Profitability Ratio:-
Profitability Dec’05 Dec’06 Dec’07 Dec’08 Dec’09
Ratio
Gross profit 17.32 28.97 23.72 20.59 27.68
ratio
Net Profit Ratio 16.85 21.16 20.44 16.29 19.69

30

25

20

15 Gross profit ratio

Net profit ratio
10

0
2005 2006 2007 2008 2009
 Observations:-
 Position of the stock is increasing per year that is
good sign to sustain as the leader ahead.
 Lack of advertisement can be said as weak point of
the ACC.
 ACC’s investment policies are very much reliable.
 The additional capacity of cement production at New
Wadi plant will create new milestones for the ACC.
 Overall all ratios of the company are good and
company need to work with more efficiency.
 The company is more dependent on outsider’s fund.
 There is a significant amount of increase in Basic
earnings per share ,Capital employed ,PAT( profit
after tax) ,Operating Profit & Net Sales.
 Limitations:-
 The study has taken the data for a limited period
of 5years i.e., Dec.2005 to Dec.2009 performance
of the company.
 The data collected were mostly secondary in
nature.
 This study in conducted within a short period.
During the limited period, the study may not be
retailed, full fledged and utilization in all aspects.
 Financial accounting does not take into account
the price level changes.
 Suggestions:-
 It is suggested that the company has to increase its current
assets to meet its short-term obligations.
 Company has to improve debtors’ collection period
continuously so that effective receivable management will
possible.
 Reserves should be utilized for the growth of the company.
 While forecasting cash flow, the management should take into
account the impact of unforeseen events, market cycles and
actions by competitors.
 Low Investment in innovative R&D. Company should invest
more in R&D.
 Manufacturing concern require more investment in capital
goods
THANK YOU…