Introduction

Cement is an important input for the construction industry for building houses, commercial complexes, and for infrastructure development. Cement industry accounts for the second largest share (the largest being cigarettes) of the total excise collection by the Government. India is the second largest producer and consumer of cement in the world, after China. In 2 2! ", in India, the total capacity of large cement players (over # cement players) was at around $"% million tonnes. (&arge cement units accounted for over %# per cent of total cement capacity). 'he cement consumption was around $ ( million tonnes. )round %# per cent of the total cement production is consumed domestically and the balance is exported. 'he important end!use sectors for cement include the housing segment (accounts for around #2 per cent of total demand), infrastructure pro*ects and industrial pro*ects excluding roads(around $+,) repairs and maintenance segment(around $-,) and government demand(around $#,). )nd demand from roads (around $,). cement demand break up

18%

15% 1%

52% 14%

Cement is a .ey infrastructure industry. It has been decontrolled from price and distribution on $st /arch, $%-% and delicensed on 2#th 0uly, $%%$. 1owever, the performance of the industry and prices of cement are monitored regularly.

Cement sector has been a beneficiary of Government2s increased focus on infrastructure and housing. Cement has been witnessing a strong growth in the last two years, due to a combination of the 3ational 1ighway 4evelopment 5ro*ect (3145) and the housing boom (driven by a low interest rate regime). 'he Government2s infrastructure related initiatives (announced during the 2 2 $! 2 to "! + period) will continue to boost cement demand.6ver the next #!7 years, the

3145 and the new pro*ect (road component alone) are expected to account for +!# million tonnes of cement demand every year. 'his could result in double!digit growth in the cement sector over the next five years. Capacity and Production 'he cement industry comprises of $2# large cement plants with an installed capacity of $+-.2- million tonnes and more than " mini cement plants with an estimated capacity of $$.$ million tonnes per annum. 'he Cement Corporation of India, which is a Central 5ublic 8ector 9nderta.ing, has $ units. 'here are $ large cement plants owned by various 8tate Governments. 'he total installed capacity in the country as a whole is $#%."- million tonnes. 2 $! 2, registering a growth rate of -.-+,. production(ton) $$,( ,$ , $$,$",+ , $ ,2",7 , %,"",( , %,"%,% , -,$(,"%, % (,7+,7-,+( ,change #.$ -.%.7 ( .() $#. 7.% %.( 4ispatches(ton) $$,7(,+ , $$,$ ,( , $ ,2",- , %,"", , %,"-,+ , -,$+, 7,+" (,7+,27,#27 ,change #.$ -.# %.( ( .7) $#." 7.# %.7 )ctual cement production in 2 2! " was $$$."# million tonnes as against a production of $ 2."7 million tonnes in

year 2 "! + 2 2! " 2 $! 2 2 ! $ $%%%! $%%-!%% $%%(!%-

:eeping in view the trend of growth of the industry in previous years, a production target of $27 million tonnes has been fixed for the year 2 )pril!0une 2 "! +. 4uring the period ", a production (provisional) was "$." million tonnes. 'he industry

has achieved a growth rate of +.-7 per cent during this period.

Regionwise Cement Production - (ton)

Month Northern Region Eastern Region Southern Region Western Region Central Region

/ar! + 2",7#,"$ ;eb! + 22,2%,7% 0an! + 22,$$,-4ec< " 2 ,(7,"+

$(,($,#$7, ,"#

"#,(2,#+ 2%,-(,(# 2%,#(, + " ,22,(

$-,#$,22 $%,7(,2 2 ,7$,-+ 2$, ,#+

$(,2", $#,+$,(7 $+,-(,$+,-#,77

$#, #,-+ $",(2,+

Regionwise Cement ispatches - (ton)

Month Northern Region Eastern Region Southern Region Western Region Central Region

/ar! + 2",-", " ;eb! + 22,#+,($ 0an! + 2$,77,2$ 4ec< " 2$,"%,("

$-, $,7$ $7,$+,+# $#,2%,-# $",#(,$+

"#,%2,+7 2%,2#,2( " ,+-, 2%,2",2(

$-," ,-$ $%,-2,(( 2 ,$+,+# 2$,2#,"#

$7,%+,#+ $#,2 ,+# $+,+#,-7 $+, $,2+

Source:CMA =uoyed by a strong surge in demand, especially in the northern and western regions on the eve of the elections, the cement sector is finally set for big!tic.et growth, according to experts.

E!ports )part from meeting the entire domestic demand, the industry is also exporting cement and clin.er. 'he export of cement during 2 $! 2 and 2 "! + was #.$+ million " was tonnes and 7.%2 million tonnes respectively. >xport during )pril!/ay, 2

"

$."# million tonnes. /a*or exporters were Gu*arat )mbu*a Cements &td. and &?' &td.

Cement e!ports(mn tons) month )pr!/ar2 + )pril /ay 0une 0uly )ugust 8eptember 6ctober 3ovember 4ecember 0anuary ;ebruary /arch 'otal Source:CMA ." .2( .27 .2( .2# .2# .27 ."7 ." .2+ ." ." "."7 )pr!/ar2 " ." ."" .2+ .2 .2$ .2.27 .2$ ."7 ."( ."# ."7 ".+( ! ($-.2) -." "#. $%. ($ .() ! ($.+ ($7.() ("#.$) ($+.") ($7.() (".2) ,yoy

"echnological change Cement industry has made tremendous strides in technological up gradation and assimilation of latest technology. )t present ninety three per cent of the total capacity in the industry is based on modern and environment!friendly dry process technology and only seven per cent of the capacity is based on old wet and semi!sdry process technology.

'here is tremendous scope for waste heat recovery in cement plants and thereby reduction in emission level. 6ne pro*ect for co!generation of power utili@ing waste heat in an Indian cement plant is being implemented with 0apanese assistance under Green )id 5lan. 'he induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially. India is also producing different varieties of cement li.e 6rdinary 5ortland Cement (65C), 5ortland 5o@@olana Cement (55C), 5ortland =last ;urnace 8lag Cement (5=;8), 6il Aell Cement, Bapid 1ardening 5ortland Cement, 8ulphate Besisting 5ortland Cement, Ahite Cement etc. 5roduction of these varieties of cement conform to the =I8 8pecifications.

emand and supply scenario

4emand for cement is a derived demand as it is directly related to the demand for construction. 4emand for construction comprises of both 5ublic 8ector and 5rivate 8ector. Irrigation, 5ower, 4efense, Bailways, 5ublic Aor.s 4epartment etc are the ma*or sources in the 5ublic 8ector 4emand. Construction of residential houses, office buildings, hospitals, institutions and industry etc are the ma*or sources in the 5rivate 8ector 4emand. 3arrow supply!demand gap, and absence of fresh greenfield capacity, cement capacity utili@ation is expected to reach %#, in ;C #. )s far as supply is concerned, no ma*or capacity additions are coming up in the next two years.

cement demand
160 140 120 100 80 60 40 20 0
FY 19 99 FY 20 00 FY 20 01 FY 20 F Y 02 20 03 F FY 20 04 F FY 20 05 F FY 20 06 F

mn tonnes

Series1

source:fortune India july 15 2003

cement demand growth

20 15 10 % 5 0 -5 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Series1

source:fortune India july 15 2003

emand Supply (Mn "onnes) #$%& )ll!india capacity less Capacities with low operating rates 3et ;unctional Capacities )ll!india consumption )ll!india production 4omestic 8urplusD(4eficit) Cement Capacity 9tilisation )ll India consumption growth 8ource E C/), 9'I 8ec. estimates $"2. (.+ $2+.7 $ (." $$$.+ +.$ -%, -.(, #$%' $"#.7 (.+ $2-.2 $$".$$(.+ ".7 %2, #.#, #$%(P $+ .( (.+ $""." $22.7 $27.+ ".%#, -.2,

Monthly dispatches trend

Source: CMA

emand dri)ers )n increase in demand is expected and there may even be a shortage situation in the medium term. 3o new large capacity is expected to come up in the next " years. )ny new pro*ect planned now would have a gestation period of at least " years. 1ousing sector, which contributes ##, of cement demand is set to grow at # ,p.a for the next + years. 'his sector has witnessed unparalleled growth during the last few years due to declining interest cost, steady real estate prices and fiscal incentives provided for tax purpose. In future this sector is expected to contribute to ( , of total cement demand. 4emand growth led by the infrastructure spending will fuel demand by an additional $ mn tons in next + year. 'he Golden Fuadilateral will consume +mn tons and north, east , west, south (3>A8) corridor will consume around 7mn tons.

4emand estimation from infrastructure pro*ects Golden Guadrilateral 'otal road length(.m) Concrete per .m(mn tons) Cement per .m of roads(tons) 'otal cement reGuirement(mn tons) Source:industry Industrial demand contributes $+,for the cement demand. Aith li.ely G45 growth of 7!7.#,the industrial sector is set to grow at #!(,. 'his will augment demand for cement from industry side. #-+7 (# 272# + 3>A8 corridor (" (# 272# 7

'hus on account of these growth drivers, the demandDsupply is expected to grow at -,!%, over the medium to long term. )lso strong order boo. position will push up the demand for cement. 'he current order boo. position of the companies IHBC&, 3CC, 1CC is 2!" times in ;C +. IHBC&, 3CC, 1CC have shown a huge spurge in their order boo.s positions over the last year. 'he order boo. position of IHBC&, at the end of ;C + is expected to be $+.%bn and is expected to -

be close to Bs " bn by the end of ;C #. 'he order boo. of 1CC has increased from Bs."".# bn at the end of ;C " to "%.-bn on march "$ 2 +. similarly, 3CC has an order position of about Bs $#bn, against an expected turnover of about Bs 7bn in ;C +5. while the order boo. position of Gammom construction is +# crores. 'he companies are constantly pitching for contracts and are expecting more orders by the end of the year. 'he )pril!0une Guarter witnesses the strongest demand for cement, and the pace gathers further momentum from mid!/ay. Cement Consumption regionwise ;eb2 " 3orth 2.(2 Aest 2.# >ast $."# 8outh 2.+2 )ll India -.%% ;eb2 + ".$( 2.-2 $.# 2.#$ $ . $ ,yoy $7.+ $".2 $$.# ".$$.+

Source: CMA

8outh India is the largest cement!consuming region with 2(.+, share in consumption. 'he region also ran.s no.$ in terms of installed capacity. >astern region2s consumption share ahs grown from $", in ;C $ '6 $(.-, in ;C ". the region has been witnessing surge in consumption since last few years. Aestern region2s consumption grew by (,yoy basis in the first Guarter, however production grew by $",. 'he state ran.s 2nd in terms of installed capacity. 3orth region witnessed a 2, yoy growth in production while consumption grew by #, in the first Guarter. Consumption trend in the region has been steady over the years.

Price scenario

;ollowing the price increase, cement prices in )ndhra 5radesh have risen to Bs $+ !$+# per bag, it is higher at around Bs $7 in 'amil 3adu and :erala. In poc.ets of /ahrashtra, cement prices have increased to around Bs $+ !$+# per bag. Current national average prices are pegged at Bs $#2 per bag, which is higher by (!-, year!on!year. Cement prices have continued its up trend post the elections. 5rices in the southern part of the country have moved up by 7, and in the western part of the country by ", over the last one month. )nalysts are confident that the cement sector is poised to be the primary beneficiary of a sustained upturn in the Indian economy. Industry analysts expect cement to catch up with other commodity sectors such as steel, which have been witnessing sharper growth in volumes. 'he sector should grow by $2!$#, in )pril 2 +, against a modest #.#, growth in despatches for the whole of the last fiscal, they say. .

Ma*or cement companies

)CC )ndhra Cement =irla Corporation Cement Corporation Century 'extiles Chettinad Cement Grasim Cement Gu*arat )mbu*a Cement India Cement 0aypee Cement &td 0.:.Group &afarge India &td :esoram &?' /adras Cement /angalam Cement /ehta Group /ysore Cement 6rient Cement 8hree Cement 'amil 3adu Cement Iuari 4almia Cement Company 6C& India &td

$$

Major players and relative share

Company )CC Gu*arat )mbu*a Grasim Ind &?' India Cement Century 'extiles 0aypee =irla Corp &afarge /adras cement Iuari Chettinad cement 8aurashtra cement )ndhra cement 6C& 6thers 'otal

capacity $7.$ $2.# $+.$ $(. -.+.( +.7 +.#. #.# ".+ $.2.$ $.( ".% "+.$ $+ .

, share in total $$.# -.% $ .$ $2.$ 7." ".+ "." ".+ ".+ ".% 2.+ $." $.# $.2 2.2+.+ $ .

$2

+ocation o, ma*or players

C6/5)3C AI8> B>GI63)& /)B:>' 81)B>, ,, 1$;C "

Company 3ort h >ast Central Aest 8outh )ll India Cu mul ativ e $". 2".% "+.(

)CC Grasim &?'

$+.$#.( .(

$+.7 (.2 $".(

$7.$ %.7 2.7

$ .7 $+.$ 2#.2

$ .( -.+ $ .%

$". $ .% $ .-

$"

G)C& IC&

$-.% !!!

(..$

2.# !!!

$(." $.#

$.$ $%.

%. #.-

+".( +%.#

$+

-nalysis o, ma*or cement companies

ACC
Company Pro,ile 'he genesis of the company dates bac. to $%"7, when ten cement companies, belonging to four industrial houses ! 'ata, :hatau, 4inshaw and :illic. 3ixon were amalgamated to form one single entity ! )CC. 'he company is the second largest cement companies with $#mn ton cement capacity. )CC operates out of the most dispersed manufacturing bases and has the largest distribution networ. in India ! $" cement factories, $$ regional mar.eting offices, $7 area offices, % dealers and $7 warehouses. 'he 'atas, which had a long association with )CC, sold their $+.+ per cent sta.e to Gu*arat )mbu*a Cement &imited (G)C&) in $%%%!2 . Currently, G)C&Js subsidiary )mbu*a Cement India &imited is one of the largest shareholders in the company. 'he core mar.ets of the company are Aest =engal and =ihar in east, 'amil 3adu, :erala and :arnata.a in the south, /aharashtra in the west and 1imachal 5radesh, /adhya 5radesh and 9ttar 5aradesh in the north. 'he company mar.ets cement under the brand names ! )CC 8amrat, )CC 8uper and )CC 8ura.sha. It also mar.ets different types of cements ! 6rdinary 5ortland, ;ly ash cement, 8lag cement to cater to the diverse needs of the users. )CC is steadily divesting its non!core assets. 6f the total investments of Bs $.- bn, about # per cent is in the areas of tyres, float glass, casting, asbestos sheets etc, which are unrelated to its main businesses. 4uring the last one year, it sold its interests in the float glass business, and shut down the loss ma.ing synthetic ferric oxide plant. Production and dispatches 2 5roduction 4ispatches "! +(ton) $,#",%+,2" $,#",%+,2" 2 "! 2(ton) $,"-,-%,7 $,"-,-$,2( ,change $ .$ .%

)CC 5B649C'8 )CC manufactures the following types of cement, in addition to which, it provides =ul. Cement and Beady /ix Concrete. .rdinary Portland Cements )CC Cement (65C +" Grade)K $#

)CC 8)/B)' (#" Grade 65C)K Composite Cements )CC 89B):81) () Composite Cement)K )CC 895>B (8lag!based =lended Cement)K KNational /rands Special Cements 8ulphate Besisting 5ortland Cement (8B5C) 6il Aell Cement (6AC) &ow )l.ali Cement Cement 0usiness statistics

/alance Sheet -s on -ssets Gross =loc. 3et =loc. Capital AI5 Investments Inventory Beceivables 6ther Current )ssets /alance Sheet "otal +ia0ilities >Guity 8hare Capital Beserves 'otal 4ebt &1-Mar-%' Rs cr "(-2.$7 2"(#.2" %7.+7 "27.7( "(-. $ $-2."( #+".+" &2%3415 Rs cr $((.+ $$+ .+% $+$(.27 &1-Mar-%& Rs cr "72%.+ 2"7-.$-7.%2 $2(.(7 "+#."% $-2. % "7".+ &'5&45' Rs cr $($.$" -#". ( $+%7.2 $7

Creditors and )cceptances 6ther current liabDprov. /alance Sheet "otal

# 7.2" 77 .(% &2%3415

+ +.-% #+-.+# &'5&45'

Pro,it and loss account

Halue(Bs.crores)
Description ) )pr ! /ar L + %change )pr M/ar2 " ","(-.(% $#. !# $."2 .+" 2,-((.+ $+.$# $$$.$ "#.+% 2,%--.#$ $+.%+ !2,#-+.% $2.2" + ".7$ "2.2% !$ ".%$ !$ .#% 2%%.( +(.$# !$7+.#7 (.+( $"#.$+ %#.+( !$+.2% 2(#.2" . ! $2 .-# (2."$ !$7.%7 !#2.-" $ ".-% %2.(+ $($.$+ ".%( % #.7 2%.-+ $( ,%2%,%++. ".7(

Gross sales >xcise duty 3et 8ales 6ther Income 'otal Income >xpenditure 6perating 5rofit Interest Gross 5rofit 4epreciation 5rofit before 'ax 'ax 5rovision ?contigencies 5rofit after 'ax >xtraordinary items 3et 5rofit >Guity Capital Beserves 3os. of 8hares ! 3on 5romoters 5ercentage of 8hares ! 3on 5romoters

",---." !7 ".-" ",2-+.+( $# .#" ",+"#. !2,% $. #"".%2 !%2.%$ ++$. $ !$(7.-# 27+.$7 !#".72 !2." 2 -.2+ !-. 2 .2+ $((.%+ $,$(#.(% $((,$%#,#" . $ .

$ .

Ratios )s on 6perating 5rofit /argin 3et 5rofit /argin /arch "$,2 + $".(#, #.$+, /arch "$,2 " $$.%+, ". ( ,

$(

>58 'otal 4ebtD>Guity =oo. value per share -nnual result highlight

$$.7$. 7 (+

7. $.+7 7

3et sales increased by $+.$#, from Bs 2,-((.+$cr in /arch 2 " to Bs. ",2-+.+(cr in /arch 2 + 3et profit increased by %2.(+, from Bs. $ ".-%cr in /arch 2 " to Bs. 2 .2+ cr in /arch 2 + . 3et profit margin increased by 7(.+2, from ". (, in /arch 2 2 +. " to #.$+,in /arch

6perating profit margin increased by $#.$#, from $$.%+,in /arch 2 in /arch 2 +.

" to $".(#,

6ther income has also increased by 35.49, from Bs.$$$.$ cr in /arch 2 $# .#" cr in /arch 2 +

" to Bs.

8ale of cement including traded cement for the year 2 "! + increased by %, to $#.2# million tonnes as compared to $".%# million tonnes in the previous year. 'otal income for the year 2 "! + was higher at Bs."+"#. crore as compared to Bs.2%( .-$ crore registering an increase of $7, over the corresponding previous period. 1igher volumes, better realisation and improved operating efficiency resulted inhigher profit of "2, amounting to Bs.#"".%2 crore before interest, depreciation, exceptional items and tax for 2 "! + but including dividend income and gain on foreign exchange. 'he profit for the corresponding previous period was Bs.+ ".7$ crore including non!recurring income. Interest cost (net) was lower by $ .7, as compared to previous year due to improved financial and wor.ing capital management. 4epreciation was higher at Bs.$(7.-# crore as compared to Bs.$7+.#7 crore in the previous year mainly on account of commissioning of Captive 5ower 5lants at 'i.aria, /adu..arai ? augmentation of 'i.aria grinding capacity in F!+ of 2 2! " and other ongoing pro*ects. 'he profits after tax for the year 2 "! + increased by %", to Bs.2 .2+ crore as compared to Bs.$ ".-% crore for the previous year. 5roduction of Cement for the year was higher at $+.7# million tonnes as compared to $".+2 million tonnes in the previous year, registering an increase of %,. 8ale of cement during the year including subsidiaries and other traded cement aggregated to $#.2# million tonnes as compared to $".%# million tonnes in the previous year

$-

'he cement industry recorded growth rate of #.#, for 2 "! + compared to -.#, in the previous year. 1owever, the Company has posted a higher growth as compared to the industry despite poor availability of wagons and truc.s for transport of cement, clin.er and coal in the second half of the year. 'he general economic outloo. for the country is expected to be good in the current year. 'he cement industry is expected to see higher growth in the year due to increased emphasis on infrastructure development. Aith no new capacity addition in the pipeline, the demand ! supply gap should narrow down and result in stable and remunerative cement prices. 'he /anagement shall continue to pursue improvement in capacity utilisation, operating efficiencies and cost competitiveness.

$%

678-R-" -M/78- CEMEN"S +IMI"E (6-C+) Company Pro,ile Gu*arat )mbu*a Cements &td (G)C&) is IndiaJs third largest cement player in terms of capacity, with an installed capacity of $2.# million tonnes. It has recently been on an acGuisition spree, buying /odi Cements (now )mbu*a Cement >astern!)C>&), 4&; Cements ()mbu*a Cement Ba*asthan!)CB&) and ta.ing a strategic $+.7, sta.e in )CC. )CC sta.e and )C>& CementsJ unit have been vested with a separate company, )mbu*a Cements India ()CI&). )CB& unit is with G)C&. G)C& holds 7 , sta.e in )CI& while the balance + , is held by ;IIs. G)C& holds +2, in )CB& while )CI& holds $$.", in )CC and %", in )C>&. Currently, the total capacity of )mbu*a Group is -.#mtpa shared by G)C& (#.#mtpa), )CB& ($.#mpta) and )C>& ($.#mpta). G)C& has increased its captive power capacity. It pioneered the use of sea route for bul. transportation of cement. G)C& has improved its cash position by selling businesses li.e 1ometrust 1ousing ;inance and a 27, sta.e in GB91 ;inance, and by placement of + , of )CI& eGuity with ;IIs. Cement 0usiness statistics

Production and dispatches 2 5roduction 4ispatches /alance Sheet "! +(ton) $,22,( , $,27, , 2 "! 2(ton) $,$#,% , $,$#,% , ,change 7 7

-s on -ssets Gross =loc. 3et =loc. Capital AI5 Investments Inventory Beceivables 6ther Current )ssets /alance Sheet "otal +ia0ilities >Guity 8hare Capital Beserves 'otal 4ebt Creditors and )cceptances 6ther current liabDprov. /alance Sheet "otal Fuarter /arch
Description

&%-8un-%& Rs cr 2%#$.($%+ .7+ 77. 7 $ %(.#2 22+."$ +#.%+ ##(.-2 &2&3432 Rs cr $##." $+#$.#+ $(#$.2$"#.-% +"-.2&2&3432

&%-8un-%3 Rs cr 2-+%.-2 2 2."+ ++.7+ $$ $.$$ 2 -."( "%. $ ++-.-$ &9''4&% Rs cr $##.$7 $+#(.-( $(-".$# $$2.+""#.7" &9''4&%

$ 0an 2 + to ! "$ /ar 2 +)

7#2. 2 !%2.%2 ##%.$ ""."+ #%2.++ !"(7.-" 2$#.7$ !$-.%2 $%7.7% !+$.$7 $##.#" !$ ." $+#.2"

Halue(Bs. Crores) %change $ 0an 2 " to "$/ar 2 "

#+7.(# !(+.7+ +(2.$$ $ ."+ +-2.+# !""(.77 $++.(% !$%. + $2#.(# !+".$% -2.#7 !$#.( 77.-7
19.25 24.49 18.43 222.44

Gross 8ales >xcise 4uty 3et 8ales 6ther Income 'otal Income >xpenditure 6perating 5rofit Interest Gross 5rofit 4epreciation 5rofit before 'ax 'ax 5rofit after 'ax

22.$$.7 +-.%$ ! .7" #7.+$ !+.( --."!"+."% $$(.22

2$

3et 5rofit >Guity Capital >58

$+#.2" $77."# %.2$

77.-7 $##.2$ +."

$$(.22 (.$$$+.%

Ratio analysis )s on 6perating profit margin, 3et profit margin, >58 =oo. value per share "$!/ar! + "". 7 22.2(
%.2$ $ +. %

"$!/ar! " 27.+$2.22

+."

"2+.$

-nnual result highlight

3et sales increased by $-.+", from Bs +(2.$ cr in /arch 2 " to Bs. ##%.$ cr in /arch 2 + 3et profit increased by $$(. , from Bs. 77.-7cr in /arch 2 " to Bs. $+#.2" cr in /arch 2 + . 3et profit margin increased by -2.2+, from $2.22,in /arch 2 /arch 2 +. " to 22.2(,in

6perating profit margin increased by 2+.-+, from 27.+-,in /arch 2 in /arch 2 +.

" to "". 7,

6ther income has also increased by 222.44, from Bs. $ ."+ cr in /arch 2 ""."+ cr in /arch 2 +

" to Bs.

)mbu*a Cement dispatches registered a growth of $$, $".2+ million tonnes of cement during )pril!/arch +. Gu*arat )mbu*a Cements &td (G)C&) along with )mbu*a Cement >astern &td and )mbu*a Cement Ba*asthan &td ()mbu*a Group) has dispatched $".2+ million tonnes of cement during )pril!/arch + against $$.-- million tonnes in the corresponding year in the same period, registering a growth of $$.+,.

22

'his is a remar.able growth considering the fact that the growth of the cement industry during the same period is li.ely to be about #, as the total despatches are expected to be about $$( million tonnes for the fiscal year 2 "! +. Clin.er production by )mbu*a Group for the year was $$.+ million tonnes against $ .# million tonnes in the corresponding period, registering a growth of %,. 4ispatches for the month of /arch + were at $.2+ million tonnes as against $."$ million tonnes for the corresponding period last year. 'he 5roduction and 4ispatches of )mbu*a Group for the month of /ay 2 + are $.2" and $.2"mn tones respectively as against $.2$ and $.2"mn tones in 2 ". while production and dispatches for 0uly!/ay + are $2.2( and $2.27mn tones respectively as against $$.#% and $$.#%mn tones in 2 ".G)C& is proposing to expand its mar.eting base, setting up a bul. cement sea terminal at 'uticorin in 'amilnadu. 'he pro*ect has been stalled till further notice from the courts.

2"

6rasim
Company Pro,ile Grasim Industries &td (GI&), the flagship of the )ditya =irla group ()H =irla group), was set up in $%+(. 'he group is well diversified with ma*or interests in viscose staple fibre (H8;), cement. 6ther businesses of the group includes textiles and sponge iron. Grasim is the third largest producer of grey cement in India (installed capacity of $$."" million mtpa) and is also 8outh )siaJs largest producer of white cement (installed capacity of ."7 million mtpa). GrasimJs main interest is in &?'Js cement business as the later is the second largest cement producer (with a capacity of $7 mt) in the country after )CC. Grasim is poised to become the world<s seventh largest cement producer, and the largest in a single location

Plant

Location

Rajashree ement !al"he# an# $ot%i %rin#in% &nit 'i"ram ement (a)a# an# *hatin#a %rin#in% &nit +rasim ement Rai,&r -#it.a ement Sham/h&,&ra ement 0i1ision Re##i,ala.am So&th otal Shree 0i%1ija. Si""a2 +&jarat ement otal %incl subsidiary)

Capacity (in million tonnes) 4.00 4.20 2.06 1.50 1.16 !"#$" 1.08 !&#''

Capacities Division +re. 3ement +rasim 4n#&stries Shree 0i%1ija. ement 5otal 5otal 7hite 3ement Capacity 12.92 million 561.08 million 5614.00 million 564002000 56-

2+

Cement 0usiness statistics

Production and dispatches 2 5roduction 4ispatches "! +(ton) $, +," ,"+ $, +,#(,$2 "! 2(ton) 7-,2$,"+ +(,- ,#( ,change #2.% $$-.(

/alance Sheet -s on -ssets Gross =loc. 3et =loc. Capital AI5 Investments Inventory Beceivables 6ther Current )ssets /alance Sheet "otal +ia0ilities >Guity 8hare Capital Beserves 'otal 4ebt &1-Mar-%& Rs cr #+(%.-# "$(+.-%. 2 $"%-.$$ #"%.%# +2%.7# %7%. % ::%%4:3 Rs cr %$.7( 2-(%."( 2 + .$2 &1-Mar-%3 Rs cr #27-."( "$7 ."$ $ 2.% $+$#.27 #+-.-% +%(.-# ##7.#2 :39145& Rs cr %$.7( 27$#.2$ $%#%.#%

2#

Creditors and )cceptances 6ther current liabDprov. /alance Sheet "otal

##2.7% $ "7.(( ::%%4:3 $

7 %. " 7.2"

:39145&

5rior 5eriod )d*ustments 5rovision for 'ax )fter 'ax 5rofit >Guity Capital Beserves Pro,it and loss account
Description a) )pr ! /ar L +

. $2- . 2-2 .( %$7.% .

Halue(Bs.crores)
u )pr M/ar2 " %change

. 2+ . +.% %$7.% .

3et 8ales 6ther Income 'otal Income >xpenditure 6perating 5rofit Interest Gross 5rofit 4epreciation 5rofit before 'ax 'ax 5rofit after 'ax >xtraordinary items 3et 5rofit >Guity Capital Beserves >58 3os. of 8hares ! 3on 5romoters 5ercentage of 8hares ! 3on 5romoters

#,2"".2( $7 ."+ #,+$".7$ !",%"-." $,+(#."$ !$#".-$,"2$.+" !2(". 7 $, +-."( !2%-. (# ."( 2-.-% ((%.27 %$.7% ",#$".-" -+.%% ($,#7 ,-27. (-. 7

+,727.2% $$#.-+ +,(+2.$" !",7 .+7 $,$+$.7( !$7-.+ %(".27 !2#+.$+ ($%.$2 !$((. #+2.$2 !$(+.#+ "7(.#%$.7% 2,-(%."# + . % (2,%#+,++ . (%.#-

$".$2 "-.+2 $+.$7 %."2%.22 !% .-7 "#.(( (.++ +#.(% 7-."7 "-.+$ !$$7.## $$2. . 22. + $$2. !$.%$ !$.%$

(atios
-s on 6perating profit margin(,) 3et 5rofit /argin &1-Mar-%& 2-.2 , $+.-%, &1-Mar-%3 2+.7- , (.%+,

27

=oo. Halue (Bs.) >58

"%".2" -+.%%

"2+.$ + . %

-nnual result highlight

3et sales increased by $".$2, from Bs +727.2%cr in /arch 2 " to Bs. #2"".2(cr
in /arch 2 + 3et profit increased by $$2. , from Bs. ",7(.#-cr in /arch 2 /arch 2 + . 3et profit margin increased by -(.#", from (.%+,in /arch 2 /arch 2 +. " to Bs.(,(%.27cr in

" to $+.-%,in

6perating profit margin decreased by $+.27, from 2+.7-,in /arch 2 2-.2 , in /arch 2 +.

" to

6ther income has also increased by "-.+2, from Bs.$,$#.-+cr in /arch 2 $,7 ."+cr in /arch 2 +

" to Bs.

Grasim Industries has made a proposal to &?' for the vertical de!merger of its cement business into a separate company, and ma.ing an open offer for the buying control over the new company at Bs $" per share. Grasim has valued &?'Js cement business at Bs $" per share and the remaining businesses at Bs $72.# per share ! thus valuing &?' at Bs 2%2.# per share. #uture Plans Grasim is planning to pic. up /angalam Cement. 'he company already owns the :ota plant, the only cement!ma.ing unit of /angalam. 1owever, tal.s are in initial stages and the move is yet to be finalised. 'he company is li.ely to be sold or it may hive off *ust the :ota unit. 'he decision will be based on the price and Grasim is yet to give its Guotation.

2(

Madras cement
Company pro,ile /adras Cements (/C&), a flagship of the Bamco group, is a ma*or player in south India and is one of the most efficient manufacturers of cement. It is a ma*or player in the blended cement category and is very popular for its Bamco brands of cements li.e JBamco super steel cement< and JBamco super grade cement<. It also operates a ready mix concrete plant (B/C) near Chennai. =etween $%- and $%-#, it undertoo. a modernisation programme and replaced its four cement mills in B 3 3agar, 'amilnadu, with a single new combined cement mill which ensured substantial reduction in energy and operation costs. In $%-7, /C& implemented one more cement plant in 0ayanthipuram, )ndhra 5radesh.In $%% !%$, the company expanded the capacity of its factory by $ tpa at an estimated cost of Bs 2$.# cr. In $%%2!%", it diversified into power generation by setting up a +!/A windmill at /uppandal in :anya.umari, 'amilnadu, which was upgraded by adding eight wind turbines of 2# .A, thereby ta.ing the generation capacity to 7 /A. In $%%+!%#, ( additional wind mills were installed in 5oolavadi, '3. 'he company, for the first time in India, commissioned a surface mine to modernise the mine operations at Bamasamyra*a 3agar factory..4uring $%%%! , the company<s slag grinding pro*ect at 0ayanthipuram for manufacture of belnded cement was commissioned and also the capacity of the )lathiyur unit was expanded by .2 million '5). 'he company<s second unit at )lathiyur with a capacity of $# lac tonnes at an estimated cost of Bs " crore was commissioned upto the clin.erisation in 0an.< $. 'he cement mill was commissioned in /ay < $. 'his unit has many world class features. 'he .lin fitted with cross bar cooler is the first of its .ind outside 98. 'he vertical mill for cememnt grinding is the highest of its .ind in )sia.'he company too. over the assets of :arnata.a /inerals ? /anufacturing Co, a mini cememnt plant situated at /athod, 1osadurga 'alu., Chitradurga 4ist. 'he second .lin at B B 3agar was upgraded in /ay< $ with the installation of fixed inlet segment to the cooler, new calciner and modifying preheater cyclone, thereby increasing the capacity of the unit to $$ lac '5) of blended cement. Cement 0usiness statistics

2-

Production and dispatches 2 5roduction 4ispatches /alance Sheet -s on -ssets Gross =loc. 3et =loc. Capital AI5 Investments Inventory Beceivables 6ther Current )ssets /alance Sheet "otal +ia0ilities >Guity 8hare Capital Beserves 'otal 4ebt Creditors and )cceptances 6ther current liabDprov. /alance Sheet "otal &1-Mar-%& Rs cr $++#.#" %- .".7+ #7.(2 7%.%# #7.#$ $ -.#$ 135:41' Rs cr $2. ( 2#2.(# ( #. $(.+2--.-" 135:41' &1-Mar-%3 Rs cr $+ ".22 %%#.(2 $$.+ #7.7( 7#.%7 +-.($$+.-132&4'& Rs cr $2. ( 2# . " ("7. % 27.227-.%+ 132&4'& "! +(ton) "#,"#,"#,# , 2 2 "! 2(ton) "+,"", # "+,2+,$7 ,change ". ".(

2%

Pro,it and loss account

Description e )pr !/ar L +

Halue(Bs.crores) 7%+.7 #.2$ 7%%.-$ !#"2.-$ $7(. !+%.7 $$(.+ !7".2( #+.$" !2 .(" "".+ "".+ $2. 2- .#27%#,(-+. #-.
% change )pr !/ar L " 727.$+ $ .%" +.22 2".+7 7" ."7 $$. 2 !+(7.-# $$.(+ $#".#$ -.(% !77.$( !2#. + -(."+ "+.+2 !7+. $ !$.$7 2"."" $"2. 2 !$ ."( %%.% 158.82 $2.%7 $2.%7 $#(.(2 $2. . 2#(.+2 %. $ (. !(".-" 7%#,(-+. .

3et 8ales 6ther Income 'otal Income >xpenditure 6perating 5rofit Interest Gross 5rofit 4epreciation 5rofit before 'ax 'ax 5rofit after 'ax 3et 5rofit >Guity Capital Beserves >58 3os. of 8hares ! 3on 5romoters 5ercentage of 8hares ! 3on 5romoters

#(.7$

.7-

Ratios -s on 6perating profit margin(,) 3et 5rofit /argin >58 =oo. Halue (Bs.) "$!/ar! + 2+. +, +.-, 2" .2+ "$!/ar! " 2+.#$, 2. 7 , $ (. 2$%2.(

-nnual result highlight

3et sales increased by $ .%", from Bs 727.$+cr in /arch 2 " to Bs. 7%+.7 cr in
/arch 2 + 3et profit increased by $#(.(2, from Bs. $2.%7cr in /arch 2 /arch 2 + . " to Bs. "".+ cr in

"

3et profit margin increased by $"", from 2. 7 ,in /arch 2 2 +.

" to+.-,in /arch

6perating profit margin decreased by $.%$, from 2+.#$,in /arch 2 in /arch 2 +. 6ther income has also increased by 2".+7, from +.22cr in /arch 2 /arch 2 +

" to 2+. +,

" to #.2$cr in

India cements
Company pro,ile 'he India Cements &td was established in $%+7 and the first plant was setup at 8an.arnagar in 'amilnadu in $%+% . 8ince then it has grown in stature to seven plants spread over 'amilnadu and )ndhra 5radesh . 'he capacities as on /arch 2 2 have increased multifold to % million tons per annum. 5he Company is the largest producer of cement in 8outh India.Its plants are well spread with three in 'amilnadu and four in )ndhra 5radesh which cater to all ma*or mar.ets in 8outh India and /aharashtra.It is the mar.et leader with a mar.et share of 2-, in the 8outh. It aims to achieve a "#, mar.et share in the near future. 'he Company has access to huge limestone resources and plans to expand capacity by de! bottlenec.ing and optimisation of existing plants as well as by acGuisitions.'he Company has a strong distribution networ. with over $ , stoc.ists of whom 2#, are dedicated.'he has well established brands! 8an.ar 8uper 5ower, Coromandel 8uper 5ower and Baasi 8uper 5ower.Begional offices are in all southern states and /aharasthra officesDrepresentative in every district. Cement business statistics

Production and dispatches

"$

2 5roduction 4ispatches

"! +(ton) 7",7 ,$+ 72,22,%7

"! 2(ton) #-,"(,-( #(,%-, -

,change -.% (."

India Cements &imited products

6rdinary 5ortland Cement (65C!#", 65C!+", 65C!"") 5ortland 5o@@olana cement (55C) 8ulphate Besistance Cement (8BC) /alance Sheet

-s on -ssets Gross =loc. 3et =loc. Capital AI5 Investments Inventory Beceivables 6ther Current )ssets /alance Sheet "otal +ia0ilities >Guity 8hare Capital Beserves 'otal 4ebt Creditors and )cceptances 6ther current liabDprov. /alance Sheet "otal

&1-Mar-%& Rs cr $($+.#% $$"".(+ 2$ .-" "$.#2 $2-.(# $2+.7$ 7#.7 3:2(41' Rs cr $"-.#2"(.%# $- ".+2 22#.#" 2-%.7+ 3:2(41'

&1-Mar-%3 Rs cr $( $.-% $2 2.$2 22".+% "".2# $%+.2" 2"-.7" %--.7# 399%4'% Rs cr $"-.#+2+.% $-$-. % $(+.-" "2".%( 399%4'%

"2

Pro,it and loss account escription Gross 8ales >xcise duty 3et 8ales 6ther Income 'otal income >xpenditure 6perating 5rofit Interest 4epreciation 5rofit before 'ax 'ax 5roportionate profitD (loss)of subsidiary companies 3et 5rofit >Guity Capital Beserves >58 3os. of 8hares ! 3on 5romoters 5ercentage of 8hares ! 3on 5romoters )pril!mar2 + $+#2.77 2$7. $2"7.77 +.2$2+ .%+ $$2".$$ $$(.-" $7$.-# -$.-+ ($$".(") $7.."7 (%7.#() $"-.#% $(.(((.$-) (( +($$+ ##.2$

Halue (Bs.crores)

)pril!mar2 " $2 #.7" $(#."# $ " .2(.7( $ "(.%# %%$.++7.+( 2-#.+( -$.(7 (""+. 7) $$+. 7 ."$ (22(.-%) $"-.#% ##.2( ($7.7#) (7(-7$$+ ##. "

, Change 2 .+% 2".$2 . " !++.2 $%.## $".2$#".#7 !+"." .$ !7#.%7 !-#.2( $7.$" !#(.72 . !#7.-."+ ."2

Ratio analysis
-s on 6perating 5rofit /argin 3et 5rofit /argin >58 -nnual result highlight
3et sales increased by 2 . ", from Bs $ " .2- cr in /arch 2 " to Bs.$2"7.77 cr in /arch 2 + 3et profit increased by #(.72, from Bs. (22(.-%)cr in /arch 2 " to Bs. (%7.#()cr in /arch 2 + .

6ct!dec2 " -.$$, (7.7+), ((.$-)

6ct!dec2 2 ".-#, ($-.% ), ($7.7#)

""

3et profit margin increased by 7+.-7, from ($-.% ),in /arch 2 /arch 2 +.

" to (7.7+), in

6perating profit margin increased by $$$.7+, from ".-#,in /arch 2 in /arch 2 +.

" to -.$$,

'he India Cements &td. was able to prune down its pre tax losses due to partial recovery of cement prices during the earlier part of this year, coupled with all round cost cutting and the reduction in the interest costs conseGuent to the Corporate 4ebt Bestructuring exercise. 'he pre tax loss for the % months ended "$st 4ecember 2 " was at Bs.-#.2( crores (after considering an extra ordinary income of Bs.2$.-$ crores) against the loss of Bs.2$-.27 crores during the corresponding period of the previous year. 'his improved performance is despite the free fall in cement price from the month of 0uly 2 " which reached its lowest level during the month of 6ctober 2 ". 'he gross sales realisation per tn. of cement which was at Bs.22($Dtn. in the first Guarter came down to Bs.2 22Dtn. in the second Guarter and steeply went down to Bs.$-#(Dtn. during the month of 6ctober 2 ". 1owever, this free fall was arrested and the prices were resurrected to a reasonable level from mid 3ovember 2 " and the average sales reali@ation for this Guarter was at Bs.2 %(Dtn. 'he company had to absorb the impact of the freGuent increase in the diesel prices and also the enhancement in the >xcise 4uty by Bs.# Dtn. which could not be passed on under the circumstances. 1owever, the company continued its cost cutting measures through improvement of operating parameters and pruning of discretionary overheads which have contributed substantially towards the above performance. 'he sales and other income for the % months ended "$st 4ecember 2 " was at Bs.--%.(- crores registering an increase of $+, over that of the corresponding period which was at Bs.(-$.%7 crores. 'he profit before interest and depreciation was also significantly higher at Bs.-+ crores (Bs.2-.-" crores) and was even higher than the 5=I4 for the whole year of Bs.+#.($ crores. Interest charges were at Bs.$$-.2( crores (Bs.$(7. % crores) and depreciation accounted for Bs.7$.$+ crores (Bs.7$.2+ crores). 'he amorti@ation of deferred revenue expenditure was Bs.%.-+ crores for the current period of % months (Bs.%.(7 crores). In addition there was a charge of Bs.$.-" crores on account of HB8 scheme on the profit ? loss account as per )8 27 (Intangible assets) and considered as an extra ordinary expenses during the period under review. )fter considering an extra ordinary income of Bs.2$.-$ crores, the pre tax loss for the % months was lower at Bs.-#.2( crores against Bs.2$-.27 crores in the corresponding period of the previous year. . #uture Plans India Cements is planning to hive off its shipping division into a separate company in order to focus on cement. It has also proposed to merge Baasi Cements with itself once it has acGuired the entire eGuity of the company. ) possible sale of Baasi "+

Ceramics and 'elengana 5aper /ills is in theoffing as they are loss!ma.ing ventures. 6ver the next couple of years, India Cements is to reduce its debt!eGuity ratio from the current 2E$ to $E$. IC& has appointed management consultants Coopers and &ybrand to suggest an appropriate swap ratio for the proposed merger of Baasi Cement with itself. 'he total cost of the acGuisition is slated at Bs "- mn and will ma.e IC& the second!largest cement company in the country. 'he company has brushed past speculations about IC& allowing a foreign ma*or to pic. up sta.e. 1owever, IC& are .eeping all options open in the case of acGuired units li.e 8ri Hishnu and Hisa.a cement. 8ale of 8ri Hishnu alone is expected to fetch about Bs - crore. India Cements &td (IC&) is planning to convert its wet process cement plant in 8an.aridurg into a dry process plant. 'his is expected to increase plant capacity from .7 million tonnes per annum (/'5)) to .% /'5).

"#

"7

Shree cement
Company Pro,ile Incorporated in $%(%, Calcutta based 8hree Cements &imited (8C&) was promoted by the =.G.=angur group.'he companyJs plant is located in =eawar, Ba*asthan. 'he capacity has been increased from .( /' to 2.7 /', through an expansion plan underta.en during the two years ending /arch $%%-. 8hift to circa 2 , where it grows to around " million tonnes. 8hree Cement continues to earn a ma*or part on revenues through cement sales, while leasing ? hire purchase account for a small amount. 'he company is considered one of the more power efficient units in the country with a power consumption of (% units per tonne. 'he Aorld =an. impressed with the companyJs futuristic and environment!friendly programme involving the use of fuel, sanctioned a Bs 27 million loan at a concessional rate of interest. 8C& has installed 4G sets with aggregate capacity of 2$.% /A, which is nearly sufficient to meet its entire power reGuirement. 'he company has also pioneered the use of high! sulphur coal in the cement industry, which has reduced costs. 8hree Cement is commissioning a captive "7 /A thermal power pro*ect at a cost of Bs $2 crore at its 2.7 million tonne manufacturing facility in Ba*asthan. It has placed an order with 'hermax and the pro*ect is expected to be commissioned by 4ecember 2 2. 8hree Cement expects to save about Bs " crore a year from the installation of the plant and is hoping to recover its cost within four years. 8hree Cement plans to set up a new unit in Ba*asthan with a capacity of 2 million tonnes. 'he expansion will cost the company Bs 7 crore. 'he company will fund the pro*ect through internal accruals and a combination of debt and eGuity. 'he funding for the pro*ect has not been completed due to lac. of environmental clearance. 'he funding plan has a very small portion of eGuity. 8hree Cements &td has informed the 3ational 8toc. >xchange that it has decided to change its accounting year to )pril!/arch and accordingly current accounting year will be for a period of nine months, that is, from 0uly $, 2 $!/arch "$, 2 2. Cement 0usiness statistics

"(

Production and dispatches 2 5roduction 4ispatches "! +(ton) 2-,+ ,7$ 2-,7$,-% 2 "! 2(ton) 2+,$%,2% 2(,2(,$# ,change $(.+ +.%

Products
9r#inar. 6ortlan# ement (96 ) 6o::olona 6ortlan# ement (66 ).

/alance Sheet -s on -ssets Gross =loc. 3et =loc. Capital AI5 Investments Inventory Beceivables 6ther Current )ssets /alance Sheet "otal &1-Mar-%& Rs cr (+%. + +"-.-( $ ".+2 . # 72.$% "2.(+ ((.-# 51(41' &1-Mar-%3 Rs cr ( ."$ "2.#7 .+# +$. " " . " $ ".#" :(94%% +# ."-

"-

+ia0ilities >Guity 8hare Capital Beserves 'otal 4ebt Creditors and )cceptances 6ther current liabDprov. /alance Sheet "otal

Rs cr "+.-" $-(.#7 "#%.($ "$.7# $ $."51(41'

Rs cr "+.-" $7#.(7 " %.-( "(.#+ $ %.%( :(94%%

Pro,it and loss account

E
Description )a)) )pr ! /ar L + ue )pr )/ar L +

value(Bs.crores)
% change

3et 8ales 6ther Income 'otal Income >xpenditure 6perating 5rofit Interest Gross 5rofit 4epreciation 5rofit before 'ax 'ax 5rofit after 'ax >xtraordinary items 3et 5rofit >Guity Capital Beserves >58 3os. of 8hares ! 3on 5romoters 5ercentage of 8hares ! 3on 5romoters

+(".22 2.-# +(7. !"+2.2+ $"".-+ !"-.7%#.$# !+#.( +%.+# !-.7( + .(( !2(.(" $". " "+.-" 2$7.#+ ".(+ $2, 7+,"77. "+.7"

+-+.27 +.7 +--.-7 !"-2.27 $ 7.#% !"".-( (2.(2 !"2.# + .22 !#.7$ "+.7 !2(.% 7.( "+.-" $-(.#7 ".2% $2,"7+,#72. "#.+%

!2.2!"-. # !2.7$ !$ .+( 2#.#7 $+.22 " .-+ + .7$ 22.%# #+.## $(.-2 ! .7$ %+.#. $#.+# $".7!2.+" !2.+2

Ratio analysis
)s on 6perating profit margin 3et profit margin /ar 2 "! + #.%+, /ar 2 "! 2 7.(2,

$-." ,

22. #,

"%

>58 =oo. value(Bs)

2.%$ (2.$(

".(+ #(.#-

-nnual result highlight

3et sales decreased by 2.2-, from Bs +,-+.27cr in /arch 2 " to Bs. +,(".22cr
in /arch 2 + 3et profit increased by %+.#-, from Bs. 7.( cr in /arch 2 " to Bs. $". "cr in /arch 2 + this is mainly because expenditure has decreased by $ .+(,. 3et profit margin increased by $".$", from #.%+,in /arch 2 2 +. " to 7.(2, in /arch

6perating profit margin increased by 2 .+%, from $-." ,in /arch 2 22. #,in /arch 2 +.

" to

6ne of the .ey strengths of 8hree2s cost restructuring is reflected in its energy management trac. record. >nergy costs have declined over a #!year period. )s a percentage of turnover, power and fuel costs have declined from 2-.7+ per cent in $%%%!2 to 2 .# per cent in 2 2! " 6n the cost reduction front, better control on administrative operations and the practice of lean operations here helped control costs. )dministration expenses fell from ". " per cent to 2.$7 per cent in 2 2! ". )nother ma*or cost head is freight and mar.eting costs that fell from 2$.+7 per cent of sales in 2 $! 2 to 2 .7+ per cent in 2 2! ". 'he fall was largely on account of lower freight costs. >ven though freight costs fell, the mar.eting efficiencies rose M this clearly reflects superior distribution and selling strategies. In a capital!intensive industry li.e cement, loans and conseGuently, interest costs hold the .ey. 'he company has been continuously focused on lowering its interest costs and improving its debt service efficiencies. ConseGuently, interest costs reduced from -.2" per cent in 2 $! 2 of turnover to #.-2 per cent in 2 2! ". .

Company wise comparison

Dispatches o* key players %mn ton)

-pr-Mar %' )CC G)C& &?' =irla Corp 8hree Cement /adras Cement India Cement "otal
Source: CMA

-pr-Mar %& $#.+$ $".2+ $2.$+.(2.-7 ".## 7.2" (943' $".-$$.-$2. % +.#( 2.(" ".+2 #.('4&:

yoy(;) $ .% $$.# .+.#.2 ".(.+ 541

Ratio analysis )s on march 2 -CC 8hare Capital(crores) Beserves 6perating profit margin 3et operating margin >58 =oo. value(Bs) 5> Batio 5riceD=oo. Halue $((.%+ $$#(.(% $".(#, #.$+, $$.7(+ $%.7$ ". % 6-C+(*anmar<%') $77."# $#7#.$"". 7, 22.2(, $7.+2 $ +. % $#.7# 2.## + 6rasim %$.7% "#$".-" 2-.2 , $+.-%, -+.%% "%".2" $ .-2 2."+ Madras $2. 2- .#2+. +, +.-, 2" .2+ 22.7( 2 .%% IC+ $"-.#% Shree "+.-"(

$(.(2$7.#+# -.$$, 22. #, (7.7+), 7.(2, ((.$-) " .2$ ! .-% ".(+ (2.$( "%.#( 2. # +$

4ividend(,) ;ree ;loat Capital e0t=e>uity ratio )s on march 2 " )s on march 2 2

+ $

(+.+#

$+ (-. 7

# #-.

! ##.2$

" "+.7"

$.#7 $.7-

$.$ $.$$

.7% .(2

2.77 2.-$

".2" +.(%

$. " .%2

&oo.ing at the ratios we can say that Grasim has the highest >58 which indicates the earnings attributable to a share. 'his shows that the company has good prospects. 'he higher the >58 the better it is for the company and the investors. &oo.ing at the 5> ratio we can say that shree cements has the highest value which indicates it is a growth company but it also indicates the ris. characteristics of a company.)CC, G)C&, Grasim have moderate 5> ratio which is good and there are less ris.ier as far as investment in these companies is considered. )s far as net operating margin is considered G)C& has reported highest growth 22.2(, followed by Grasim $+.-%, while India cements is still recovering from losses. &oo.ing at the debt eGuity ratio we can say that the companies are aggressively reducing their debt which is a positive sign for the growth of the companies

+2

#uture outloo?
'he consumption of cement is determined by factors influencing the level of housing and industrial Construction, irrigation pro*ects, and roads and lying of water supply and drainage pipes etc. 'hese factors in turn are determined by the level and growth of G45 and its sectorial composition, capital formation, development expenditure, growth in population, level of urbani@ation etc. =ut the domestic demand for cement is mainly from the building activities and infrastructure development. 'he government paved the way for entry of private sector in road pro*ects. It has amended the 3ational 1ighway act to allow private toll collection and identified pro*ects, bridges, expressways and big passes for private construction. 'he budget gave substantial incentives to private sector construction companies. 6ngoing liberali@ation will lead to increase in industrial activities and infrastructural development. )lso, tax benefits for housing sector is a ma*or positive for the industry. In the light of these factors, it is hoped that Indian cement industry shall witness reasonable growth in near future. 4emand for cement is expected to pea., as economic growth is ta.ing place. )lso the yoy increase in cement prices in ;C #, the earnings are expected to remain high in ;C #. )s per the estimates, the combined earnings of )CC, Gu*arat )mbu*a and Grasim are expected to grow by "", in ;C #. )s a result, valuations will continue to remain firm.

+"

/i0liography
Fortune India July 15,2003 www indiainfoline co! www "ar#y co! www accli!ited co! www ciionline co! www $seindia co! www %dfcsec co! www &rasi! co! www &ujarata!$uja co! www indiace!entsltd co in www s%reece!entltd co! www ca'ital!ar"et co! www !oney'ore co!

++

+#