FINANCIAL MANAGEMENT

TOPIC:-

Dividend Policies of Birla sun life and Ambuja

cement

TERM PAPER REPORT

Submitted by:-
NEHA MAHENDRU
In partial fulfillment of the requirement

for the Award of the

MASTER’S DEGREE IN
BUSINESS ADMINISTRATION

Under the Guidance

Of

Ms. NEHA TIKOO

 LOVELY INSTITUTE
OF MANAGEMENT
 Lovely Campus, Jalandhar-Delhi G.T. Road (NH-1), Phagwara (PUNJAB) INDIA

ACKNOWLEDGEMENT

First and foremost, I thank the Almighty God for sustaining the enthusiasm with which
plunged into this endeavor.
I avail this opportunity to express my profound sense of sincere and deep gratitude to
many people who are responsible for the knowledge and experience I have gained during the
term paper work.

I extend my overwhelming gratitude to Ms. NEHA TIKOO, for her valuable guidance and meticulous
supervision during the preparation of this Report.

My hearty and inevitable thanks to all the respondents who is helped me to bring out the term paper in
a successful manner.

Last but not the least; I extend my gratitude towards my, faculties and friends who extended their
wholehearted support towards the successful completion of this term paper Work.

NEHA MAHENDRU
MBA (194)

SECTION-T1902

REG.NO.-10907171

ROLL NO. RT1902B61

Introduction of AMBUJA CEMENTS
Ambuja cements limited, formerly known as Gujarat Ambuja Limited is a major cement
producing company in India. The Group's principal activity is to manufacture and market
cement and clinker for both domestic and export markets. Ambuja Cements Limited was set up
in the late 80s. The cement industry presented an opportunity of steady growth and ethical
competition to the promoters. However, a decade later, it became one of world’s most efficient
cement companies producing the finest cement in the world at the lowest cost. While adhering
to the most stringent international pollution-control norms. Today, Ambuja is the 3 rd largest
Cement Company in India, with an annual plant capacity of 16 million tonnes including
Ambuja Cement Eastern Ltd. and revenue in excess of Rs.3298 crores. More importantly, its
plants are some of the most efficient in the world. With environment protection measures that
are on par with the finest in the developed world.

But the company’s most distinctive attribute is its approach to the business.
Ambuja believes its most valuable assets aren’t cement plants. They are the people who run the
plants. This unique vision is encapsulated in the company’s homegrown philosophy of giving
people the authority to set their own targets, and the freedom to achieve their goals. It’s called
‘I can’’ This simple vision has created an environment where there are no limits to excellence,
no limits to efficiency.And has proved to be a powerful engine of growth for the company.
Be it transportation, plant efficiency, brand building or human resource development.

The Company also operates a Hotel through its subsidiary GGL Hotel and Resort Company. It
has shown innovation in utilizing measures like sea transport, captive power plants, and
imported coal and availing of govt. sops and subsidies to constantly check the costs.

The company has entered into a strategic partnership with Holcim, the second largest cement
manufacturer in the world. Holcim had, in January, bought a 14.8 per cent promoters` stake in
the GACL for INR 21.4 billion.

Currently (2010) Holcim holds about 46% of shares in Ambuja Cements Limited.

The shares of the company are traded publicly on the Bombay stock Exchange (BSE) and the
National Stock Exchange (NSE). Following are the codes assigned to Ambuja Cement Limited

 BSE:500425
 NSE:AMBUJACEM
 Bloomberg:ACEM:IN
 Reuters:GACM.BO
 Technical Details
 Established – 1986.
 Total Capacity – 15 million tonnes.
 Infrastructure – Dedicated port at Gujarat. Capable of berthing 40,000 DWT
vessels with carrying capacity of 20,000 tonnes.
 Packing terminals at Mumbai, Surat and Sri Lanka.
 Seven dedicated bulk cement ships.

DIVIDEND POLICY OF AMBUJA CEMENTS

Dividends Declared

Announcement Effective Dividend Type Dividend (%) Remarks

Date Date
05-02-10 18-02-10 Final 60.00 -
24-07-09 04-08-09 Interim 60.00 -
06-02-09 18-02-09 Final 50.00 -
25-07-08 08-08-08 Interim 60.00 -
01-02-08 14-02-08 Final 50.00 -
From the above information it is clear that the company gave dividend to its shareholder every 6
months in a year whether in the form of interim dividend or final dividend. If we compare the
dividends declared by the company in last 3 years we find that the company gave 60%
dividend in Feb. 2010 in the form of final dividend which means Rs.6 per share. In 2009 also
60% dividend was given in the first 6 months and 50%(rs.5 per share) in the second 6 months
by the company to its shareholders but in 2008 company gave interim dividend to its
shareholders which was Rs.6 per share . So we can say that the company gave dividend to its
shareholders after every 6 months, 50% in the first 6 months and 60% in the second 6 months.

Dividend given by Ambuja cement is good from the shareholder’s point of view. It is because
Rs. 5-6 per share, semi annually is a good dividend, as the share price of Ambuja cement is
Rs.112 .Having a share of Ambuja cement of Rs.112 and semi-annually dividend declaration is

good for shareholders benefit point of view. Some shareholders think that if the share price is
less it means less investment in one company and according to them it is good.. But it is the
individual choice whether he wants more dividends or less investment. Overall dividend given
by Ambuja cement is good.

INTRODUCTION OF BIRLA SUN LIFE

Birla sun life financial services
Birla Sun Life Financial Services offers a range of financial  
services for resident Indians and Non Resident Indians.
Brought together by two large, powerful and reputed
business houses, the Aditya Birla Group and Sun Life
Financial , it offer diverse and top quality financial services
to customers. The Mutual Fund and Insurance companies
provide wealth management and protection products to
customers while the Distribution and Securities companies
provide brokerage and trading services for investment in
equities, debt securities, fixed deposits, etc.

  
Birla Sun Life Asset Management Company  
Limited
Birla Sun Life Mutual Fund follows a conservative long-
term approach to investment, which is based on identifying
companies that have good credit-worthiness and are
fundamentally strong. It places a lot of emphasis on quality
of management and risk control. This is done through
extensive analysis that includes factory visits and field
research. It has one of the largest team of research analysts
in the industry. The company is one of India's leading,
private mutual funds with a large customer base. It has been
recognized nationally with coveted awards.

Birla Sun Life Insurance Company Limited  

Insurance is not about something going wrong. It's often
about things going right. One of the wonders of human
nature is that never believe anything can actually go wrong.
Surely, life has its share of Birla Sun Life stand committed
in helping and realise happy moments which make a life. Be
it living the same lifestyle in post retirement days or
providing a secure future for loved ones, in case something
happens to you.
 

 
 
 
Birla Sun Life Distribution Company Limited
At Birla Sun Life Distribution, we put knowledge, expertise
and experience to good use to preserve, nurture and nourish
your wealth. For your today and your tomorrow.
 They are a part of the Joint Venture between The Aditya
Birla Group and Sun Life Financial of Canada.
 
It is said that: "To acquire wealth is difficult, to preserve
it more difficult, but to nourish it wisely, the most
difficult of all."
 .

FEW ACHIEVEMENTS OF BIRLA SUN LIFE

 
  One hundred thousand investors country wide  
  1500 Plus Business Associates
  Business across all important segments: Institutional,
Private Client Group and Retail
  National presence in 13 cities
  Emerged strongly in Life Insurance and advisory in the
first full year of business
  Assets under management over Rs.25 billion

DIVIDEND POLICY OF BIRLA SUN LIFE

Dividends Declared

Announcement Effective Dividend Dividend Remarks

Date Date Type (%)
23-04-10 - Final 35.00 -
07-05-09 10-07-09 Final 45.00 -
09-05-08 14-07-08 Final 40.00 -

From the above it is clears that the company gave dividend to its shareholder every year
whether in the form of interim dividend or final dividend. If we compare the dividends declared
by the company in last 3 years we find that the company gave 35% dividend in 2010 in the
form of final dividend which mean Rs.3.5 per share. In 2009 45% dividend given by the
company to its shareholders (Rs.4.5 per share) but in 2008 company gave final dividend to its
shareholders which was (Rs.4 per share.). From the above data we can also say that the
company gave dividend to its shareholders every year, more or less in comparison to the last
year’s dividend.

Dividend given by Birla sun life is not good from the shareholder’s point of view, because Rs.
4-4.5 per share, per year is a not a good dividend as the share price of Birla sun life is Rs.383.3.
COMPARISON IN DIVIDEND POLICIES OF
AMBUJA CEMENT AND BIRLA SUN LIFE

After studying the dividend policy of both BIRLA SUN LIFE AND AMBUJA CEMENT I
found that the Birla sun life pays dividend to its share holders Rs4-4.5 per share per year. On
the other hand Ambuja Cement pays Rs. 5-6 per share semi annually. If we talk about the
amount or % paid by the both companies to its share holders we find that the Ambuja Cement
pays more dividend than Birla sun life .It is because Ambuja cement pays Rs. 5-6 on a share of
Rs.112 semi annually. And Birla sun life pays a dividend of Rs. 4-4.5 on a share costing Rs
383.3 annually. There is a very huge difference in term of dividend declared by both the
companies.

Also the share price of Birla sun life is also very less than the share
price of Ambuja cement. It means the investor have to invest less amount in Birla sun life than
Ambuja Cement. Less amount of investment means less risk and less returns .

Over all if we talk about the returns from the both companies
we can say that Ambuja Cement is better than Birla sun life. But it is individual’s choice
whether they want more return from a company or less investment in a company.