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BINANI CEMENT LIMITED

LOVELY PROFESSIONAL UNIVERSITY

DEPARTMENT OF MANAGEMENT

Report on Summer Training

RATIO ANALYSIS TO KNOW THE FINANCIAL POSITION OF BINANI CEMENT


LTD.

Submitted to Lovely Professional University

In partial fulfillment of the

Requirements for the award of Degree of

Master of Business Administration

Submitted by:

REKHA JINDAL

REGD. NO. 10907562

DEPARTMENT OF MANAGEMENT

LOVELY PROFESSIONAL UNIVERSITY, PHAGWARA

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BINANI CEMENT LIMITED

DECLERATION

I, REKHA JINDAL the student of MBA course from LOVELY PROFESSIONAL


UNIVERSITY respectively hereby declare that the Project Report on “Ratio Analysis
in Binani Cement Limited” is the outcome of my own work and the same has not been
submitted to any other University/Institute for the award of any degree or any
Professional diploma.

SIGNATURE

(REKHA JINDAL)

MBA 2ND SEMESTER

(2009-11)

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PREFACE

Theories are being developed, designed and stated on the groundwork of their practical
implementation and usage. Work experience seems to be the most effective and
indispensable factor of making an individual an adept. This is because one cannot do
without being exposed to varying circumstances and possible consequences. Training not
only develops individual skills and abilities but also provides proficiency in work
performance.

This report served as a means to share my personal experiences while working on


this project, which provided me the platform where I was face to face with practical aspects
of theoretical knowledge gained so far.

This project report has been prepared during the due course of 2ND semester of
MBA within an organization. To work on a Project Study was challenging, gainful and
interesting and it gave real insight of corporate world.

I sincerely believe that there is no better place to learn the practical side of
management studies than the industry itself.

SIGNATURE

(REKHA JINDAL)

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ACKNOLEDGEMENT

THE ROLE OF FINANCIAL MANAGEMENT IS GOING RAPID CHANGE IN THE


CHANGING ECONOMIC, SOCIAL AND BUSINESS ENVIRONMENT. THE FINANCE
DEPARTMENT IN ANY ORGANIZATION, BEING THE MOST IMPORTANT AND
VALUABLE ASSETS HAVE TO REMAIN AT THE CORE OF ALL THE
MANAGEMENT ACTIVITIES.

I AM INDEED THANKFUL TO THE MANAGEMENT OF BINANI CEMENT LTD. TO


PERMIT ME TO CARRY OUT THIS PROJECT ON “RATIO ANALYSIS TO KNOW
THE FINANCIAL POSITION OF THE COMPANY” AT THIS PRESTIGIOUS UNIT OF
BINANI INDUSTRIES LTD.

I TAKE IT AS MY PROUD PRIVILEGE TO AVAIL THIS OPPORTUNITY TO


EXPRESS MY SINCERE AND DEEP SENSE OF GRATITUDE TO MY LEARNED
GUIDE MR. PRAVEEN JAIN DY. MANAGER (F&A), FOR HIS STIMULATING
GUIDANCE, CONSTRUCTIVE SUGGESTIONS, KEEN AND SUBSTAINED INTREST
AND CONTINUOUS ENCOURAGEMENT BESTOWED DURING THE ENTIRE
PERIOD OF INVESTIGATION, AS WELL AS CRITICALLY GOING THROUGH THE
MANUSCRIPT.

I AM PRIVILEGED TO EXPRESS MY SINCERE AND DEEP SENSE OF GRATITUDE


TO MR. R. S. BHATI G.M. (WORKS), MR. TAMRAKAR ASST. MANAGER (HR&A),
MR. O.P. SAINI SR. OFFICER (SALES A/C), MR. VIVEK OFFICER (LOGISTICS) OF
BINANI CEMENT LTD. FOR HIS DUE ATTENTION AND ENCOURAGEMENT
DURING THE STUDY PERIOD AND ALSO FOR PROVIDING ME THE NECESSARY
FACILITIES DURING THE COURSE OF RESEARCH.

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I FEEL IN SHORT OF WORDS TO EXPRESS MY GRATITUDE TO MY FAMILY


MEMBERS FOR THEIR UTMOST CO-OPERATION, SACRIFICE,
ENCOURAGEMENT AND MOTIVATION DURING THE COURSE OF THIS WORK.

PLACE: V.P.O. SIROHI, NEEM KA THANA

SIKAR (RAJASTHAN)-332714

DATE: REKHA JINDAL

(2010-11)

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TABLE OF CONTENTS
Particulars: ---------------------------------------------------------------------------Page No.

Executive Summary--------------------------------------------------------------------------------- 08

Chapter 1-Introduction to Industry---------------------------------------------------------------- 12

• About Binani Industries Limited--------------------------------------------- 13

• Mission-------------------------------------------------------------------------- 16

• Milestone----------------------------------------------------------------------- 17

Chapter 2-Introduction to the Company--------------------------------------------------------- 21

• About Binani Cement Limited---------------------------------------------------------- 22

• Overseas &Location---------------------------------------------------------------------- 24

• Focus on new mini plant “Neem ka thana”------------------------------------------- 31

• Corporate Social Responsibility and Community Development------------------- 33

• Awards and Recognition----------------------------------------------------------------- 36

• Type of Product--------------------------------------------------------------------------- 38

• Cement Manufacturing Process--------------------------------------------------------- 40

• Sales Mix----------------------------------------------------------------------------------- 48

• Raw Materials----------------------------------------------------------------------------- 49

• Key business strengths of the company----------------------------------------------- 55

• Marketing strategies of the company-------------------------------------------------- 58

• SWOT Analysis-------------------------------------------------------------------------- 60

• Literature Review------------------------------------------------------------------------ 62

Chapter 3- Study on Ratio Analysis------------------------------------------------------------ 63

• Introduction to Ratio Analysis--------------------------------------------------------- 64

Chapter 4-Research Methodology-------------------------------------------------------------- 69

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• Objective of the study---------------------------------------------------------------------- 70

• Research Design---------------------------------------------------------------------------- 70

• Data Collection----------------------------------------------------------------------------- 70

• Research Tool------------------------------------------------------------------------------- 71

• Analysis and Interpretation---------------------------------------------------------------- 71

• Findings-------------------------------------------------------------------------------------- 82

• Suggestions---------------------------------------------------------------------------------- 83

• Conclusion ---------------------------------------------------------------------------------- 84

• Limitation of the study-------------------------------------------------------------------- 84

Chapter 5-Bibliography----------------------------------------------------------------------------- 85-86

Chapter 6-Appendix--------------------------------------------------------------------------------- 87-88

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EXECUTIVE SUMMARY
The operation of business enterprise is becoming more and more complicated day by day
so, it has become more essential for the management students to have a thorough understanding
of the corporate world through projects. Projects convert theory to Practice. Practical training is
considered to be an essential part of all professional institution and those who are aspiring for
master degree in Finance. The purpose of practical training for management student is to help
them to understand and apply the theories studied, in market place and in the area of their
specialization. It also helps them to broaden their mental horizons and effectively grasping the
complications of managing businesses.

The project titled “RATIO ANALYSIS” being carried out of for “BINANI CEMENT
LTD.”. This is project to know the financial position of the company, so that it achieves a good
and no. 1 position in market.

Every observation made in this study is based on response of the interviews, various
primary and secondary data and their analysis, various findings of the project.

Ratio analysis is a useful tool for analyzing financial statements. This is the measure of
inter relationship between different sections of the financial statements which then is compared
with the budgeted or forecasted results, prior year results and or the Industrial results. To be most
important ratios must include a study of underlying data. Ratios should be taken as guides that
are useful in evaluating a company’s financial position and operations and making comparisons
with results in previous years or with other companies. The primary purpose of ratios is to print
out areas needing further investigations. Ratios will not carry meaningful business reasoning if
there is no supporting quantitative and financial information. Apart from the ratios other
information which should be looked at includes:

1. The contents of any accompanying commentary on the accounts.

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2. The age and nature of company’s assets.


3. Current and future developments in the company’s markets, at home and overseas, recent
acquisitions and disposals of a subsidiary by the company.
4. Extraordinary items in the income statements.
5. The auditor opinion on the financial statements.
6. Other information in the local papers about the company.

There is vast number of users of parties interested in analyzing the financial statements,
including shareholders, lenders, customers, government, employees and competitors. Yet in
many respect, they will be interested in different things. There is not, therefore, any definitive,
all-encompassing list of points for analysis that would be useful to all these stakeholder groups.

Nevertheless, it is possible to construct a series of ratios that together will provide all of
them with something that they will find relevant and from which they can investigate further if
necessary. Ratio analysis is the first step in assessing an entity. It removes some of the mystique
surrounding the financial statements and makes it easier to pin point items which it would be
interesting to investigate further.

Ratios become more meaningful when they are compared to:

• Organization’s past performance.


• Organizations of similar size.

Advantages and uses of ratio analysis

1. To workout the profitability: Accounting ratio help to measure the profitability of the
business by calculating the various profitability ratios. It helps the management to know
about the earning capacity of the business concern. In this way profitability ratios show
the actual performance of the business.

2. To workout the solvency: With the help of solvency ratios, solvency of the company can
be measured. These ratios show the relationship between the liabilities and assets. In case
external liabilities are more than that of the assets of the company, it shows the unsound

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position of the business. In this case the business has to make it possible to repay its
loans.

3. Helpful in analysis of financial statement: Ratio analysis help the outsiders just like
creditors, shareholders, debenture-holders, bankers to know about the profitability and
ability of the company to pay them interest and dividend etc.

4. Helpful in comparative analysis of the performance: With the help of ratio analysis a
company may have comparative study of its performance to the previous years. In this
way company comes to know about its weak point and be able to improve them.

5. To simplify the accounting information: Accounting ratios are very useful as they briefly
summarise the result of detailed and complicated computations.

6. To workout the operating efficiency: Ratio analysis helps to workout the operating
efficiency of the company with the help of various turnover ratios. All turnover ratios are
worked out to evaluate the performance of the business in utilising the resources.

7. To workout short-term financial position: Ratio analysis helps to workout the short-term
financial position of the company with the help of liquidity ratios. In case short-term
financial position is not healthy efforts are made to improve it.

8. Helpful for forecasting purposes: Accounting ratios indicate the trend of the business. The
trend is useful for estimating future. With the help of previous years’ ratios, estimates for
future can be made. In this way these ratios provide the basis for preparing budgets and
also determine future line of action.

Limitations of Ratio Analysis

1. Limited Comparability: Different firms apply different accounting policies. Therefore the
ratio of one firm cannot always be compared with the ratio of other firm. Some firms may
value the closing stock on LIFO basis while some other firms may value on FIFO basis.
Similarly there may be difference in providing depreciation of fixed assets or certain of
provision for doubtful debts etc.

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2. False Results: Accounting ratios are based on data drawn from accounting records. In
case that data is correct, then only the ratios will be correct. For example, valuation of
stock is based on very high price, the profits of the concern will be inflated and it will
indicate a wrong financial position. The data therefore must be absolutely correct.

3. Effect of Price Level Changes: Price level changes often make the comparison of figures
difficult over a period of time. Changes in price affect the cost of production, sales and
also the value of assets. Therefore, it is necessary to make proper adjustment for price-
level changes before any comparison.

4. Qualitative factors are ignored: Ratio analysis is a technique of quantitative analysis and
thus, ignores qualitative factors, which may be important in decision making. For
example, average collection period may be equal to standard credit period, but some
debtors may be in the list of doubtful debts, which is not disclosed by ratio analysis.

5. Effect of window-dressing: In order to cover up their bad financial position some


companies resort to window dressing. They may record the accounting data according to
the convenience to show the financial position of the company in a better way.

6. Costly Technique: Ratio analysis is a costly technique and can be used by big business
houses. Small business units are not able to afford it.

7. Misleading Results: In the absence of absolute data, the result may be misleading. For
example, the gross profit of two firms is 25%. Whereas the profit earned by one is just
Rs. 5,000 and sales are Rs. 20,000 and profit earned by the other one is Rs. 10,00,000 and
sales are Rs. 40,00,000. Even the profitability of the two firms is same but the magnitude
of their business is quite different.

8. Absence of standard university accepted terminology: There are no standard ratios, which
are universally accepted for comparison purposes. As such, the significance of ratio
analysis technique is reduced.

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CHAPTER- 1
INTRODUCTION TO
INDUSTRY

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• ABOUT BINANI INDUSTRIES LIMITED

‘Binani’ is now consolidating on its enviable track record, with over one and a quarter century
of success behind it. It was in the turbulent times of 1872 when the ancestors of Binani, Seth
Pragdas and Seth Mathuradas Binani, ventured into the trading of non-ferrous metals. Later on,
the son of Seth Mathuradas, Seth Govardhandas, a man of profound vision, saw great potential
in manufacturing rather than just trading in non-ferrous metals.

Binani Metal Works Limited, in collaboration with Multicore Solders, UK, came into being in
1941. The plant was set up in Howrah, West Bengal to produce non-ferrous alloys, cad,
castings, and powders and solder wires. Trading operations, the forte of Binani, was also
growing stronger. An Antimony Smelter joint venture in Bombay was set up under the name of
Binani Metal Works Ltd. It was in the early 50s that Binani ventured into the international
market by establishing a trading and indenting house for non-ferrous metals in London.

Binani Metal Works Limited went public for the first time in 1953. In 1962 Binani entered into
collaboration with the world leaders in the field of non-ferrous metals, Cominco Limited
Canada, to form Cominco Binani Zinc Ltd., thus becoming the first producer of primary zinc in
India. In 1967, ‘Binani’ crossed a milestone in the world zinc industry by pioneering the
manufacture of high-grade electrolytic zinc in India. The reigns of this expanding business was
held by Late Ghanshyam Binani, the only son of Seth Govardhandas Binani. His individual
expertise and time-honed skills steered the organization towards many more milestones.

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In the span of 1970s-80s Cominco Binani Zinc Ltd. upgraded its technology to be at par with
the latest in the world. It also became the first plant in the country to commence production of
special high-grade electrolytic zinc with 99.995% purity.

On 3rd May 1991 Cominco Binani Zinc Limited was rechristened as Binani Zinc Limited. The
Company diversified into other prominent industrial enterprises in 1996, i.e. Binani Glass Fibre
at Goa & Binani Cement Limited in Rajasthan. With such diversification of the Binani
Enterprise it was imperative to rechristen the Company as Binani Industries Limited. It now
represents an amalgamation of new aspirations, new leadership & entrepreneurial skills, with
innovative thinking, and indigenous strategies.

In 1998 following the true Binani tradition of growth and excellence, the mantle of leadership
passed on to the sons of the Late Shri Ghanshyam Binani, Mr. Gokul Binani, the Captain of
Binani International operations is the Chairman & Managing Director of Metal Distributors,
UK, while Mr. Braj Binani, is the Chairman and Managing Director of Binani Industries
Limited in India.

The mantle of responsibility passed on to Mr. Braj Binani, who following the footsteps
of his father, Late Ghanshyam Binani, has successfully carried forward he family tradition of
growth and excellence, and is today heading the ‘Binani – Braj Binani Group’.

The group has come a long way from trading to production of zinc to the manufacture of glass
fibre and cement, taking on new challenges and preparing itself to make the most of global
opportunities.

In tune with its inherent growth culture the Binani Industries Limited has undergone a
thorough re-structuring process. All the three divisions of Binani Industries Limited i.e. Zinc,
Cement and Glass Fibre and BT Composite have been gradually hived off as wholly owned
subsidiaries.

• Binani Cement Limited - effective from 1st November 1997.

• Goa Glass Fiber Limited - effective from 1st December 1999.

• Binani Zinc Limited - effective from 1st April 2001.

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• BT Composite Limited

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• MISSION

 Forge ahead as a world-class organization in the core sector industry in India and abroad.
 Explore opportunities and enhance stakeholder value through ethical practices.
 Relentlessly pursue the global movement for a ‘customer-driven, quality-oriented,
socially-conscious’ industrial corporation.
 Adopt, adapt, assimilate and integrate technologies from global giants, thereby offering
value-added products and services.
 Adhere to the highest standards in manufacturing; over and above stringent environmental
stipulations.
 Pursue research and development activities diligently, consolidating on its track record
of innovation and breakthroughs in manufacturing practices on a state-of-the-art technology
platform.
 Promote human values at the forefront and nurture its people with a deep-
rooted sense of employee care, concern and commitment to people; them being
considered as assets of high intrinsic

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The Core Values of BINANI CEMENT LIMITED IS COMIT:

C- Customer Focus

O - Organizational Pride

M- Mutual Respect and Trust

I - Initiative and Speed

T - Total Quality

• MILESTONES

1940s

• Binani Metal Works Limited founded on 25th of February, 1941 near Howrah, in Kolkata
by the Founder Late Seth Govardhandas Binani.
• The company entered into collaboration with Metal Distributors Limited and its trading
activities in India expanded and grew stronger.

1950s

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• Binani’s sets up its establishments in London, UK, for international trading,


indenting of non-ferrous metals,investments,leasing and other activities.
• The company went public for the first time in 1953.
• Binani earned recognition as the largest importer and distributor of non-ferrous
metals in the country.

1960s

• In 1962 Binani entered into a technical and financial collaboration with Cominco
Limited Canada to form Cominco Binani Zinc Limited and created history becoming the
first Indian company to manufacture primary high-grade electrolytic zinc in India in
1967.
• It was the first Indian company to manufacture high-grade electrolytic zinc at
Binanipuram, Kerala in 1967.

1970s

• By leveraging technology and keeping up with a burgeoning market, Binani Zinc


Limited successfully increased its capacity from 12 kty to 20 kty.

1980s

• Binani Zinc Limited further upgraded its technology with assistance from M/s. Lurgi,
Germany.
• Binani Zinc Limited commenced production of special high-grade electrolytic zinc ingots
with 99.995% purity.

1990s

• Cominco Limited carted off its financial support from its operations in alignment
with their world policy. Cominco Binani Zinc was re-christened as Binani Zinc Limited
on 3rd March 1991.

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• Diversification was necessary for growth and hence two sectors were identified -
Glass Fiber and Cement.
• Two Public Issues, one in February 1994 and the other in February 1995, were
undertaken to raise funds for the implementation of new projects. Both the issues were
oversubscribed.
• The company was re-christened as Binani Industries Limited in 1996 reflecting
its status as a multi-divisional, multi-product and multi-location company driven by
technology and professionalism.
• In 1995 Binani Zinc entered into collaboration with M/s U.M. Engineering
Limited to adopt its state-of-the-art technology and increased its capacity to 30 kty.
• The Glass Fiber Division of Binani Industries Limited commenced commercial
production at Colvale, Goa in March 1996 and was then the single largest glass fiber
plant in India.
• Binani Cement Limited commenced commercial production in November 1997
at Pindwara, Rajasthan.
• The Cement division was hived off in November 1997 and transferred to Binani
Cement Limited as a wholly owned subsidiary.
• Goa Glass Fiber Limited received an ISO 9002 accreditation from Bureau
VERITAS Quality International Certification, UK in 1998.
• Binani Glass Fiber was hived off and transferred to Goa Glass Fiber Limited on
1st October 1998 as a wholly owned subsidiary of BIL.
• Binani Cement Limited received an ISO 9002 and ISO 14001 Certification from
KPMG in January 1999 and October 1999 respectively.

2000-01

• Binani Zinc Limited received an ISO 14001 and an ISO 9001:2000 Certification
from Bureau VERITAS Quality International for their Environment Management
System and Quality Management System respectively.
• Binani Zinc Limited adopted the '5s' housekeeping management practice and
tagged it with the international accreditation ISO 14001:1996. In April 2001, voluntary

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commitment to quality was demonstrated by getting the international accreditation on


quality ISO 9001:2000. Leveraging people potential, Binani Zinc Limited became the
first company in the manufacturing sector to go for international accreditation.

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CHAPTER 2
INTRODUCTION TO THE
COMPANY

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Mr. Braj Binani

The Binani Group has a board comprising of eminent individuals from diverse fields. Headed
by Mr. Braj Binani, it acts with independence in exercising strategic supervision, discharging its
fiduciary responsibilities with professionalism. The board acts as the standard-bearer for the
company, ensuring that the management observes the highest standards of ethics, transparency
and governance.

ABOUT BINANI CEMENT LIMITED

Binani Cement has been working in this core sector from 1997. Growing from strength to
strength to become a leading cement manufacturer in Northern India. By employing cutting-
edge technologies and world-class manufacturing practices.

Binani Cement has established itself as one of the top companies in the industry in terms of
efficiency and performance. What’s more, constant improvement of operating efficiency and
cement quality has worked to improve profitability for the company. And has ideally placed it
to take advantage of growing markets. Always keeping true to its core promise: ‘for generations
to come’.

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Registered Office of the Company


Binani Cement Limited
706 Om Tower
32, Chowringhee Road
Kolkata - 700071
Registration Number: 21-76612
CIN: U26941WB1996PLC076612
The Company is registered with the Registrar of Companies, West Bengal situated at Nizam
Palace, 2nd MSO Building, 2nd Floor, 234/4, A.J.C.B Road, Kolkata – 700020.

Corporate Office

Mercantile Chambers,12, J.N. Heredia Marg, Ballard Estate, Mumbai-400001, Ph no.


+912971225001 web site-www.binani.com

Board of Directors
The following persons constitute the Board:
1. Mr. Braj Binani, Chairman;
2. Mr. Sushil Bhatter, Director;
3. Mr. D. Sundararajan, Whole time Director designated as “Executive Director”;
4. Mr. P Sheoran, Wholetime Director designated as “President (Works)”;
5. Mr. Sanjai Vohra, Nominee of JPMSSM;
6. Mr. S. Padmakumar, Independent Director;
7. Dr. V.C. Shah, Independent Director; and
8. Mr. V. Subramanian, Independent Director.

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• OVERSEAS & LOCATION

Binani,Dubai
The Binani Cement Factory LLC, established in 1996, is located in the Jebel Ali Industrial Area.
With its close proximity to the two ports, and a construction hub, it serves as a perfect vantage
point for Binani Cement to tap into potential markets. In 2006, responding to the ever increasing
demands, Binani Cement showcased its unmatched capabilities by expanding the capacity of its
plant from 0.5 million tonnes to an overwhelming 1 million tonnes of OPC and GGBFS.
Subsequently, in 2007, clinker grinding capacity was increased to 1.2 mtpa.

Binani,Shanghai
Identifying China as a pivotal market, the Braj Binani Group acquired a 70% stake with
management control for an operational 2 year old clinker plant in the Shandong province of
North China, The Shandong Binani Rongon Cement Company Ltd. (SBRCCL). Along with
its strategic location advantage due to its close proximity to the two ports, the plant has a current
production capacity of 0.5 mtpa of clinker and 0.5 mtpa of cement annually. The clinker capacity
is projected to be upgraded to 3 mtpa by 2011. It is currently running at 100% capacity with
majority of its produce being exported setting aside a small quantity for the domestic markets.

• Binani Cement Limited --effective from 1 st november 1997.

• Goa Glass Fibre Limited-- effected from 1st December 1999.

• Binani Zink Limited – efeective from 1st April 2001.

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The plant is located in Neem ka thana District Sirohi, and Rajasthan which is in close proximity
to the customers in the states of Rajasthan, Gujarat Haryana and North Central Region. The
facility is well connected by road through NH – 14 & to rail through main Delhi – Ahmadabad
broad gauge line. The nearest airport is at Udaipur which is 135 km. from the plant.

BCL, an ISO 9001, 14001 & 18001 certified companies,


has capacity to manufacture 6.0 MTPA of cement (4.6 MTPA at Binanigram, Sirohi & 1.4
MTPA at Neem Ka Thana, Sikar), along with 70 MW coal / lignite based captive Power Plant.
(Present generation capacity is 45 MW; third phase of 25 MW is under erection). Both the
cement plants were set up with the technical support from M/s F.L.Smidth, Denmark.

A. Line-1 Cement Plant

The first plant was set up in April 1997 with an initial production capacity of 1.65 MTPA
cement. Subsequently, over the years installed capacity of the plant was increased to 2.25

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MTPA in 2005 through a series of de-bottlenecking exercises. The plant was set up in a record
period of 18 months.

B. Line-2 Cement Plant

In order to achieve the company’s objective of increasing its presence in North Indian Markets,
it increased its clinker production capacity by 2.3 MTPA with the commissioning of one
separate cement manufacturing facility (Line-2) in the existing premises in July ’2007 along
with 44.6 MW ( 2 x 22.3 MW ) captive power plant.

In addition, Company has also commissioned one split grinding facility with 1.4 MTPA cement
grinding capacity at Neem Ka Thana in March 2008. The total cement production capacity thus
has been increased to 6.0 MTPA.

C. Captive Mines

The Company has two limestone mines, located at Amli and Thandiberi which are located at
distance of 2 KM and 7Km from the Sirohi facility respectively. The mines are leased to the
Company by the Government of Rajasthan for a period of 20 years expiring on 2015. As per
the report of Holtec Consulting Private Limited, these mines have proven reserves, as on
April1, 2008, of up to 185 million tones sufficient to run the plant for another 27 years at
expanded capacity (4 MTPA clinker).

D. Marketing and Distribution network

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The Company is a leading Indian Cement manufacturer focused on the key markets of states in
northern India and Gujarat in western India. The Company is one of the leading players in
Rajasthan with a market share of 13% as on June 30, 2006 in the state (Source: Crisil Research
and CMA dated September 27, 2006). The Company also has significant presence in Gujarat,
Haryana and Delhi markets. The company manufacturers OPC and PPC, with an OPC: PPC
product mix of about 71:29 in fiscal 2005, 63:37 in fiscal 2006 and 51:49 in fiscal 2007. The
company’s cement is marketed under the brand name of “Binani”, which over the last 10 years,
has established significant brand presence especially in the Rajasthan & Gujarat markets. The
Company has a distribution network of 2512 dealers and 42 Market Organizers (MO) in the
states of Rajasthan, Gujarat, Delhi, Haryana, parts of Uttar Pradesh and Punjab.

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The sales and marketing functions of the Company are managed from New Delhi, with a team
of professionals based at six main centers viz. Ahmadabad, New Delhi, Jaipur, Jodhpur,
Ghaziabad and Chandigarh. In addition to its staff, the marketing team is supported by MOs
who work on commission basis. The Company has 42 MOs of which 13 are located in
Rajasthan, 9 in Gujarat and 20 spread across New Delhi, Haryana, Punjab and Uttar Pradesh.

E. Company’s operational performance

The Company has an EBITDA margin of 35.5% for the year ended March 31, 2008. The
Company believes it is able to operate at these levels of operating efficiency due to its technical
base, cost management initiatives, the quality of its manufacturing facilities and its marketing and
distribution network.

F. Research and Development (R&D)

The Company has a research and development center located at the plant. That center is involved
in day to day quality control measurers and also contributes towards continuous quality
improvement. The center’s main activities pertain to innovative projects for modifying of
processes, products and maintaining quality control. R&D Center follows various testing
procedures pertaining to BIS, ISO, NCBM as deemed fit for the job concerned.

G. Energy Efficiency

The company, through its efficient energy management system, dedicated teamwork & by
implementing various energy improvement schemes, has made significant improvement during a
span of 11 years in its overall energy efficiency and has thus managed to reduce the Specific
Power consumption from 92.7 to 70.87 (23.55%) and Specific Thermal Energy consumption from
737 to 676 Kcal/Kg Clinker (8.2%).

Details of specific consumption of these resources per unit of product output for the last 3 years
are given below:

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Description Unit 2005-06 2006-07 2007-08

Electrical Energy kWh/T cement 72.79 74.91 70.87

Thermal Energy KCal/T Clinker 683 676 679

Total Manufacturing cost Rs. Lacs 29190.96 31454.45 44207.40

Total Energy Bill Rs. Lacs

14585.74 15504.46 25378.24

Energy as % of total cost of%


production
49.97 49.29 57.41

H. Environmental Practices

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Both the Sirohi & Neem Ka Thana facilities are located in Rajasthan and are regulated by the
Rajasthan State Pollution Control Board (“RSPCB”). All the required environmental clearances
have been obtained by the Company from the MoEF for its current operations. Company always
comply with all the applicable statutory & regulatory requirements pertaining to its operations
and timely submits the related reports, returns etc. to the concerned regulatory bodies.

Binani Cement Ltd. is an ISO 14001 certified company having policies and practices which
ensure that our facilities operate in full compliance with all laws and regulations designed to
protect the earth’s natural resources and human health & safety.

I. Occupational Health & Safety

BCL is an OHSAS 18001:2007 certified company with well defined & documented systems are
in place to identify, control and manage the OHS related risks and hazards.

Risk & hazard identification is an ongoing activity which is subject to periodic review and audit
by internal & external agencies. We maintain a quantified OHS Risk metrics which comprises of
850 identified hazards/risks. All of them have been categorized as Significant & Non-significant
based on their quantified ratings and all Significant Risks are subject to review and control in
accordance with the provisions of OHSAS:18001 2007 and prevalent Health & Safety
legislations including, but not limited to, Factories Act & Rules made there under.

Top management accords high priority to the Health & Safety of its employees, contractors and
visitors at the work place and the management’s intent is prominently exhibited in its QEHS as
well as Health & Safety policy. In order to realize the objectives of the policy, it is ensured that
everyone, including the visitors plays an active part in the management’s initiative for
maintaining a Safe Work Place conductive to the development of people, environment & society.

To deal with day to day safety issues, the organization is supported by a well managed Safety
Cell’ working under a senior level Safety Officer, a Safety Committee with equal no. of
representatives from management & Workmen under the auspices of Factory Manager,
department level Safety Representatives and above all a big employees force with strong attitude
towards Health & Safety.

• FOCOUS ON NEW MINI PLANT


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IN “NEEMKATHANA”

Binani cement limited is the subsidiary of Bnani industry.In 2005-06 the company started with a
brown field facility with railway siding and a split grinding unit at Neem Ka Thana to increase
the capacity of the cement facility to 6 mtpa and power facility to 69.6 MW.

Clinker unit and one grinding unit commenced commercial operation in October 2007 and
December 2007 respactively.The split grinding unit and one 22.3 MW power plant commenced
operation in March 2008.The company has two limestone mines,namely Amli and Thandiberi,on
a long term leases basis at a distance of 2 and 7 Km from the plant .

These mines have proven reserves of up to 195 MnT(as on April 1.2005).In the new grinding
unit the total capacity for cement production now standes at SIX Million Tonnes per annum.

It is deals with the manufacturing and sale of cement in India. The company expands its plant
capacity at that time and established a new plant unite in NEEM KA THANA,DIST. SEROHI
(RAJASTHAN).Due to the continuous growth in cement industry and demand of Binani cement
its working capital requirement is also undergoing revision from time to time while for nessesry
for optimum working capital is felt by the company to meet the augmented production capacity.
The company also wanted to explore the scope availability for better management of working
capital and adopt the requisite measure for improving the return on working capital.

BCL in Neem Ka Thana,has a wide distribution network comprising over 2,360 dealers and 68
market organisers and caters to Rajasthan ,Gujarat,Northen Capital Resion and Maharastra.The
company pioneered the cash and carry system in its markets.The company is active in the OPC as
well as the PPC markets.

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&
NEEM KA THANA
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• CORPORATE SOCIAL RESPONSIBILITY AND


COMMUNITY DEVELOPMENT

BCL’s CSR initiatives are mainly focused on :

A. Direct & Indirect Employment and support to economy

Binani Cement accords high priority & preference to local population in employment on the
basis of job & respective skills. As on 31.03.08, about 23% of the total man power employed
belongs to Sirohi district while 54% belongs to other districts of Rajasthan. Out of the total
contracted labour, about 48% belongs to Sirohi district while 35% belongs to other districts of
Rajasthan.

In addition, our contractors also provide preferential employment to local people as and when
additional manpower is required to be deployed.

B. Educational Aid

We provide infrastructure and aid towards educational material, salary to Para teaching staff, in
addition to running a full-fledge High School in our township. Company managed Padma Binani
DAV Public school, upto class XII, has been operational since 1996 and is open to all. Children
from colony as well as nearby areas are receiving good education at a fee structure designed to
suit all strata of the society. In addition, company is also operating a Vaikalpik Vidyalaya at

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village Thandiberi to impart education to Adivasi and under privileged children of the village.
Under its CSR initiative, every year company provides free

C. Medical

Extending healthcare facilities to the communities surrounding our plants has been a focus
activity since long. We operate a well equipped Health Centre in Binanigram Township where
free medical consultation is provided to all including outsiders & nearby people. We partner with
the health authorities and other agencies to organize eye camps annually for the needy
communities. Our doctor & medical staff also visit the area periodically for consultation &
distribution of medicines.

D. Community Development & Environment

Highlights of the community development activities are as under:

1. Construction of tar road in Thandiberi to reduce fugitive emission on roads.

2. Construction of By-pass road from connecting NH-14 to reduce the traffic load in Pindwara
Village resulting reduction in dust/vehicular pollution and accident.

3. Construction of water tank & water supply for cattle in nearby area

4. for cattle Construction of 240 Nos. of Hand pumps in nearby area

5. Distribution of Text Books and other stationary free of cost to the needy students in Adivasi
School.

6. Provided furniture and mattress to the Adivasi School.

7. Provided drinking water for Pindwara on regular basis during draught.

8. Weekly health monitoring of inhabitants in nearby area by our medical team.

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9. Monetary contribution for the construction of rooms in Adivasi School.

10. Annual Eye camp since 1998

11. Salary for two para teachers, employed by Government at two of the schools in Thandiberi
village.

12. Installation of Diesel Pump on Public Well for providing drinking water for cattle.

13. Repairing of Amli School Building (Govt. Primary School)

14. Organized Asthma Camp for Amli Thandiberi people

15. Repairing of School Building at Govt. Secondary School, Amli (Rs.66000/-)

16. Construction of Annicut at Malap in collaboration with State Govt. (Rs. 2 Lacs)

17. Construction of Railway Quarters at Pindwara (Rs.3,50,000/-)

18. Significant donations given during natural disasters like Tsunami, Earthquake, Floods,
Kargil war etc.

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• AWARDS AND RECOGNITION

S.
Award Description Certifying Organization Year
No

1. Second Best National Award for National Council for Cement & 2001-02
Quality Excellence Building Materials, New Delhi

2. Certificate of Honor-first prize in XXVI Mines Safety Week, 2002-03


overall performance (Amli LS Mine) 2002, DGMS Udaipur Region

3. Certificate of honor - first prize in XIII MEMCW, 2002-03, Under 2002-03


overall performance – (Amli the Aegis of Indian Bureau of
Limestone Mine) Mines, Ajmer Region

4. “Certificate of Excellence – 2003” for Rajasthan State Productivity 2003-04


Cement Sector Council, Jaipur

5. Second Best “Quality Excellence National Council for Cement & 2003-04
Award” for Quality Excellence in Building Materials, New Delhi
Cement Industry

6. “Rajasthan State Productivity Council Rajasthan State Productivity 2003-04


Efficiency Award – 2004” Council, Jaipur

7. National Award of “Best Thermal National Council for Cement & 2003-04
Energy Performance Building Materials, New Delhi

8. Certificate of Merit for Energy Ministry of Power, Govt. of 2006


Conservation in Cement Industry India, New Delhi

9. Three Leaves Status, Cement Industry Centre for Science & 2005-06
– Green Rating Project, 2005 Environment, New Delhi

10. National Award for Best Thermal National Council for Cement & 2005-06
Energy efficiency for the year 2003-04 Building Materials, New Delhi

11. Vriksha Vardhak Award (2004) to our By Department. Of Forests, 2006

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horticulturist for meritorious Govt. of Rajasthan’ Jaipur


performance in plantation & Green
Belt development

12. Certificate of Honor, II prize in the XVII MEMCW, 2006-07, Under 2006-07
field of Overall Performance the Aegis of Indian Bureau of
Mines, Ajmer Region

13. Certificate of Honor, II prize in the XVIII MEMCW, 2007-08, 2007-08


field of Overall Performance Under the Aegis of Indian
(Mechanized opencast mining) Bureau of Mines, Ajmer Region

14. Certificate of Excellence, Best Employees Association of 2007


Employer 2007 Rajasthan, Jaipur

15. Genentech Environmental Excellence Genentech Foundation, New 2008


Gold Award Delhi

16. CII-ITC Sustainability Award, 2008 CII, New Delhi 2008

17. Certificate of Merit for Productivity Rajasthan State Productivity 2008


Council, Jaipur

• BVQI also certified Binani Zinc to be qualified for Social Accountability Management
system, SA 8000:1997 as well as OHSAS 18001:1999. Occupational Health and Safety
Assessment Series.

• Binani Zinc becomes the first Indian company to have been certified under the four
international accreditations, besides also following the '5s' housekeeping as a
management practice.

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• TYPE OF PRODUCT
Ordinary Portland Cement

OPC is produced by intergrinding cement clinker prepared in a rotary cement kiln with 7%
gypsum. Basedon compressive strength, which is expressed in mega pascals, OPC is further
classified as 43 grade and 53grade OPC. The range of applications, the physical and chemical
requirements of the BIS and strength of OPC .
53 Grade OPC
53 grade OPC is high strength cement. According to BIS requirements, 53 Grade OPC should
have a 28 day compressive strength of no less than 53 Mpa. For certain specialized products,
such as prestressed concrete and certain precast concrete items requiring consistent, high
strength, the use of 53 grade OPC is considered very useful, as 53 grade OPC can produce high-
grade concrete at very economical cement content levels.

53Grade OPC can be used for the following applications:


• Resource conservation challenge works.

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• Precast concrete items such as paving blocks, tiles and building blocks.
• Prestressed concrete components.
• Runways, concrete roads, bridges.

43 Grade OPC
43Grade OPC is the most popular general-purpose cement in India and constitutes a significant
portion of total production of cement in India. 43 grade OPC can be used for the following
applications:
• General civil engineering construction work.
• Resource conservation challenge works.
• Precast items such as blocks, tiles and pipes.
• Asbestos products such as sheets and pipes.

In the year ended March 31, 2005, OPC accounted for 71% of the Company’s net sales of Rs.
4382 Mn.

Portland Pozzolana Cement

PPC is blended cement produced by adding pozzolanic materials, such as fly ash, volcanic ash
and calcined clay, to clinker. The Company has encouraged customer awareness and acceptance
of PPC (through training programs designed by the Company for engineers and masons) as it has
lower production costs and offers higher margins than OPC. PPC can be used for the majority of
construction projects, such as in the building of houses, high-rise buildings and bridges.

The production process for PPC is similar to that for OPC, but fly ash, the pozzolonic material
which is generally used, is mixed with clinker in the cement mill stage of manufacturing. The fly
ash content of PPC produced by the Company is normally between 20% and 25%. The use of fly
ash enables cement to be produced using less clinker.

This helps to reduce production costs as fly ash, being a waste product from the operation of coal
fired power stations, is a readily available and cheaper commodity than clinker .The Company

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generally obtain fly ash from nearest thermal power stations located in Ahmedabad region and
Suratgarh. It is supplied free of cost as only administrative charge of Rs. 60 to Rs. 100 per ton is
charged by the power companies. It is usually transported by the contracted fleet of closed
tankers. The Company’s annual consumption of fly ash is approximately 0.3 MTPA for the
existing capacity-.

In the year ended March 31, 2005, PPC accounted for 29%of Company’s total revenue, up from
22% and 16 % in the years ended March 31, 2004 and 2003, respectively.

• CEMENT MANUFACTURING PROCESS


The production process for cement consists of drying, grinding and mixing limestone and silica
into a powder known as a raw meal. The raw meal is then heated and burnt in a pre–heater and
kiln and then cooled in an air cooling system to form a semi-finished product, known as a
clinker. Clinker (95%) cooled by air and subsequently with gypsum (5%) to form OPC.

PROCESS
MINING (LIMESTONE) PURCHASED
POWER
CRUSHING

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GRINDING
OTHER RAW
MATERIALS
AUXITE, IRON
ORE AND RAW MEAL
REDMUD

BLENDING & STORAGE

PRE-HEATING/PRE-CALCINER
FUEL (COAL & CLINKERIZATION
AND OIL)

CLINKER STORAGE

GYPSUM
CEMENT GRINDING
PURCHASED
FLY ASH/SLAG POWER/
CEMENT STORAGE GENERATED

PACKING

MARKET

Ordinary Portland Cement (OPC) is a binding agent mainly consisting of calcium oxide (CaO),
silicon oxide (SiO2), aluminium oxide (Al2O3) and ferric oxide (Fe2O3). Limestone is the main
raw material for manufacturing of cement. The whole process of manufacturing of cement can be
divided in the following sections:

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• Mining
• Crushing Raw Material Grinding
• Coal Grinding
• Pyro Processing
• Cement Grinding
• Cement Packing

 Mining

Binani Cement at Binanigram, Village - Amli, Tehsil - Pindwara, Distt. Sirohi (Rajasthan) is a
4.6 million TPA cement manufacturing plant based on dry process technology. Total annual
limestone requirement is around 7.0 million TPA which is met by two captive mines, Amli and
Thandiberi. The total area of Amli and Thandiberi mines are 4.68 km2 and 2.54 km2 respectively.
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As per the report of Holtec Consulting Private Limited, these mines have proven reserves, as on
April1, 2008, of up to 185 million tones sufficient to run the plant for another 27 years at
expanded capacity (4 MTPA clinker).

ROM (Run off Mines) limestone from both the mines is fed to the crusher with the help of
dumpers and shovels.

 Crushing

ROM upto max. feed size of 1.1 x 1.0 x 0.6 m3 is dumped in crusher dump hopper. Speed
regulated apron conveyor below the dump hopper propagates this material to grizzly feeder.
Material fraction below 75 mm goes to the screening plant and the fraction above 75 mm is fed
to impactor having the capacity of 1700 tph. Impactor reduces the size of material down to 90
mm.

In screening plant, -10 mm material fraction (mainly clay matters) is separated and rejected. Rest
+10 mm material is again mixed with crusher main product. This mixed material is stored in
surge bin from where, this material is fed to limestone stacker through apron conveyor and belt
conveyors. For better homogenization, the material is stacked in layers in the stacker yard with
the help of stacker. Pile formation takes place according to the Chevron method.

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 Raw Material Grinding

As the crushed material is of 90 mm size, it is not suitable for pyro processing. It requires further
grinding. For good burning of the material, almost 85 % of the material should pass through 90
microns sieves. For achieving fineness of this level, the crushed material is further ground in
vertical roller mills.

 Coal Grinding

For grinding of coal, we have a 2 vertical roller mills, each one with 45 TPH & 50 TPH capacity
installed in Unit-1 & Unit -2 respectively. Process operation of these mills is same as that of the
raw mills described above. Coal grinding specifically requires a constant watch over the mill
outlet temperature in order to avoid any explosion. Dust laden gases are de-dusted in electro-
static precipitator and the final product (Fine Coal) is stored in bins.

 Pyro-Processing

Binani Cement plant has two Rotary Kilns. Dimensions of both the kilns are as under :

Pre - Heater Type 6 stage PH with SLC (FLS) 6 stage PH with SLC-I (FLS)

Kiln : 4.55 ø x 68 mts Kiln : 4.75 ø x 74 mts


Kiln & Cooler
Cooler : FLS-CFG, 99 m2 Cooler : FLS-MMR, 140m2

Kiln Capacity 6300 tpd 7600 tpd

Clinker is produced by burning the Raw Mix (a mixture of finely ground limestone with required
additives) at about 1400-1450 deg. C temperature in the rotary kiln for about 25 minutes.

The process taking place in the kiln system consist of a temperature dependent decomposition of
the raw material minerals according to the nature, followed by a recombination of the liberated
free reactive oxides forming clinker minerals, the most important being C3S (Alite - Tricalcium
Silicate), C2S (Belite - Dicalcium Silicate), C3A (Tricalcium Aluminate) and C4AF (Tetracalcium

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Alumino Ferrite). The clinker formation sequence as a function of the temperature can briefly be
characterized as follows:

Temp. Description of Process Type of Reaction


(deg.C)

100 Drying & evaporation of free water Endothermic

100-400 Elimination of absorbed water Endothermic

400-750 Decomposition of clay minerals Endothermic

Kaolinite – Metakaolinite

600-900 Decomposition of Metakaolinite to Endothermic


reactive oxides

600-1000 Decomposition of carbonates to free Endothermic


reactive oxides

800-1300 Combination of reactive oxides to form Exothermic


intermediate clinker minerals

1300-1380 Formation of aluminates & ferrites Endothermic

1250-1450 Formation of Alite (C3S) Endothermic

The process takes place in an oxidising environment. Among the chemical process described
above, the reaction rate of the first five groups of reaction comprises the decomposition of the
minerals in the raw meal and the liberation of reactive oxides is determined by the rate of the
heat transfer to the solid material in 6-stage SLC pre heater.

The reaction rate of the two last groups of clinker forming reactions is determined in the rotary
kiln by the contact rate of the mutual chemical reactive compounds present in different solid
phases and later in the burning zone by the diffusion of the reactive compounds in the clinker
melt. The overall chemical reactions transforming the mixture of raw material minerals in the
raw meal to the mixture of the clinker minerals in the clinker is endothermic (heat consuming).
The theoretical heat required for the clinker formation is around 410 kcal/kg-clinker, but

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practically, the heat consumption comes around 680 kcal/kg-clinker due to heat losses in the
system.

Clinker so formed is cooled in Clinker Cooler from 1450 deg. C to around 110 deg. C and
subsequently stored in respective clinker silos each having storage capacity of 45000 tons.

 Cement Grinding

The final manufacturing stage at a cement plant is the grinding of cement clinker with some 6-
7% of gypsum into a fine powder to produce OPC & with additional 15-35% of fly ash to
produce what is known as PPC. It is important to obtain a certain specific surface for the finished

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cement to facilitate easy hydration and subsequent concrete strength development within a
reasonable time. In addition to the specific surface, the particle size distribution also influences
the strength properties especially at the later age.

At Binani Cement, we have 3 identical grinding ball mills having design capacity of 150 tph each
used for manufacturing OPC & PPC. Two dosimat feeders feed the material, clinker & gypsum.
Gypsum is mixed with clinker during grinding operation for retarding setting time and to
increase the workability of cement. Clinker and gypsum in required proportions are fed to the
ball mill through the inlet chute of the mill.

The mill inlet consists of a chute for material and a pipe for sucking in ventilation air. The air
intake is provided with a throttle valve so as to ensure a suitable negative pressure at the inlet and
to avoid dust nuisance around the surrounding area.

In case of PPC grinding, the same process as mentioned above is employed; the only difference
being is addition of around 25% of fly ash at mill outlet.

 Cement Packing

Cement is stored in cement silos (6 nos. at Binani Cement) from where it is extracted & bagged
by 4 electronic rotary packers, 3 of them with 180 TPH while one with 240 TPH capacity.
Packed cement is conveyed directly into trucks or wagons through belt conveyors & is finally.

Cement Mill: Clinker from the silo along with gypsum and pozzolanic materials such as fly ash
are stored in hoppers, are extracted in the required proportion, mixed and fed for grinding. The
final grinding of the clinker is done in a vertical roller mill .The fine cement that emerges from
the high efficiency separator is transported to cement silos by bucket elevator. In this stage,
closed circuit grinding is preferred to open circuit grinding as it is a time saving as well as a fuel
efficient process.

Cement Packing and Storage: Cement is stored in concrete silos, numbering four, each having a
capacity of 7500 MT. It is then extracted from the bottom of the silos by screw conveyors and
packed into bags of 50 kg by rotary multi-spout packer with electronic weighing system of the
older stationary packers. The packed cement is then loaded on trucks by bag loading machines.

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• SALES MIX

The Company’s primary markets are in Rajasthan and Gujarat. The region-wise mix of the
Company’s sales is as under:

The Company is a strong player in the important markets of Rajasthan, Gujarat, Haryana, and
Delhi. With the construction boom in the NCR, the Company’s strong performance and brand
establishment is expected to reap rich dividends in the near future.

REGION 2008% 2007%


OPC PPC TOTAL OPC PPC TOTAL
Rajasthan 39% 48% 49% 42% 48% 45%
Gujarat 31% 27% 27% 38% 22% 29%
Haryana + Delhi 17% 42% 14% 12% 33% 16%
Rest of North India 15% 32% 10% 11% 27% 10%

With 45% of total sales in Rajasthan, the Company is one of the leading players in Rajasthan
with 13.4% market share. In Gujarat also, the Company is among the top seven producers with a
market share of over 7%.

The Company’s access to the north Indian markets of Delhi and Haryana has ensured its presence
in these high growth markets.

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• RAW MATERIALS
The main raw materials used to manufacture Portland cement are limestone and additives such as
silica sand, iron ore, and gypsum. Clinker, an intermediate product in the manufacture of cement,
comprises lime, silica, alumina, and iron compounds. Silica sand, iron ore, and shale are added to
alter the chemical characteristics of lime, silica, aluminum and iron ore present in the raw
material feed; gypsum is added to regulate the setting time of cement. Portland cement is
manufactured in three main stages: raw-meal preparation, heat treatment, and clinker grinding.

The costs of raw materials and energy (fuel and power) accounted for approximately 12%, 13%
and 16% of the total expenditure for the three years ended March 31, 2003, 2004 and 2005,
respectively. During the nine months ended December 2005, the same was 16%.

Limestone

The main raw material used in the production of cement is limestone. The cement production
process requires about 1.51 tonnes of limestone for every one tonne of cement produced, thus
generating an annual requirement of about 3 MTPA to supply the plant. The cost of raising
limestone per tonne of clinker produced was Rs. 113 MT during FY 2005.

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The Company currently operates 2 limestone mines near the plant namely Amli & Thandiberi.
The Amli mine is at a distance of about 2 kilometres from the plant while the Thandiberi mine is
slightly further away at a distance of about 7 kms.

Both mines are leased from the State of Rajasthan for a term of 20 years. Pursuant to current
provisions of Mines and Minerals (Regulation and Development) Act, 1957 and Mineral
Concession Rules, 1960, such leases can be renewed for another 20 years at a time. The
Company currently pays a royalty of Rs.46 per tonne of limestone extracted.

The proven limestone reserves position for various mines is given in the table below:

Source – Mine Mineable Reserves (MnT) Area of mine (Sq. Km)


Amli 169 4.68
Thandiberi 26 2.56
Total 195 7.24

The yearly estimated limestone consumption of the Company given the expanded clinker
capacity would be approximately 6.5 MnT. With this consumption rate, the proven reserves are
sufficient for approximately 30 years.

At present, the limestone requirement of the plant is met by the Amli and Thandiberi mines in the
ratio of about 85:15 respectively, primarily on account of the difference in the grade of limestone
in these two mines. Limestone is a bulky commodity and proximity of limestone mines helps in
keeping the overall transportation cost lower, thus giving an added advantage to BCL. The
average variable cost (including royalty) of excavation, crushing and transportation to the plant
works out around Rs. 74 per MT.

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Silica and Iron Ore

Silica and iron-ore are added to the limestone in small quantities, as ‘additives’ to ensure an
acceptable chemical composition of the ‘raw meal’, the input for the clinkerization process. The
requirements of silica and iron ore inputs per tonne of clinker are not significant. The Company
is sourcing its silica requirements from western Rajasthan at a cost of Rs. 317 per MT.

Gypsum

Gypsum is ground with clinker to produce cement. Usually, about 0.07 tonne of gypsum is used I
production of 1 tone of cement thus the total requirement is about 0.1568 MT. The Company at
present is sourcing the gypsum requirements from two suppliers – one in Gujarat and the other in
Rajasthan. The landed cost of Gypsum is about Rs. 591 per MT.
Fly ash

Fly ash is a key requirement for the production of PPC. About 0.20 – 0.25 MT of fly ash is used
to manufacture PPC along with about 0.07 MT of gypsum and balance clinker. The availability
of fly ash at reasonable landed cost gives a cement producer the advantage of producing more of
PPC and thereby increasing overall contribution. As fly ash directly replaces the clinker in
cement manufacturing process, it increases the overall production and contribution and improves
the margins of the Company.

The total requirement of fly ash is about 0.3 MTPA out of which is sourced from AEC,
Ahmedabad, GEB, Gandhinagar and NTPC, Suratgarh. While the power plants charge only Rs.
60 to Rs. 100 per mt as administrative charges to allow the Company to lift the fly ash, the main
cost is incurred in transportation. Presently, the landed cost of fly ash works out to be around Rs.
460 / MT. The Company does not use the fly ash generated by its power plant, as the fly ash
from the captive power plant has high carbon content and is efficiently recycled by the plant.

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Power & Fuel

While coal, natural gas, or oil can be used as fuel, the choice of fuel depends on the availability
of fuel, its cost and the process used. The costs energy (fuel and power) accounted for
approximately 26% , 26% and 30% of the total expenditure for the three years ended March 31,
2003, 2004 and 2005, respectively. During the nine months ended December 2005, the same was
33%.

Power

Dedicated and low cost supply of electricity is one of the most critical factors in cement
manufacturing. At 100% capacity utilization, the power requirement of the plant is about 170 Mn
Kwh. In order to cater to its power requirements, the Company has a 25MW thermal captive
power plant which has a capacity of about 160 Mn Kwh. The power plant meets about 85% of
the present power requirements of the Company (after self consumption), while the balance is
drawn from the grid, supplied by JdVVNL. The Company has also inadvertently exported 1.42
Mn Kwh to RSEB during off-peak and maintenance period in FY 2005.
The Company is continuously improving the operating efficiency to optimize the overall
requirements of power. The Company has managed to reduce the power utilization per tonne of
cement from about 100kWh in FY 1998 to about 77 kWh in FY 2005. It may be mentioned that
the average power requirement per ton of cement in the industry is close to 90~95 kWh,
showcasing the Company’s efficiency in power utilization.

The reliance on captive power has also translated into significant costs savings for the Company,
given the existing tariff structures. While the Company purchased grid power at Rs. 4.73 per unit,
the variable cost of power produced by the captive power plant was about Rs. 1.97 per kWh in
2005.
The hot clinker drops into the grate cooler where it is carried on wide grate sections. From
underneath the grates, air is pushed up through the holes in the grate through the clinker bed. The
heat from the clinker is transferred to the air, most of which is then utilised as secondary air for
combustion of the coal inside the Kiln. The excess air is dedusted in an ESP. Apart from the

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reciprocating grate cooler, planetary coolers and rotary coolers are also in popular use. The
cooled clinker is transported via a conveyor belt to a stockpile or a silo for storage.

Financial Restructuring

Strong operational parameters coupled with the Company’s presence in the robust North India
market have contributed to a better financial performance of the Company. The Company’s
strength in managing the costs has ensured that its EBITDA margins are high compared to the
industry leaders.

In FY 2005 the holding company BIL underwent financial restructuring. As per the Restructuring
package granted by IDBI and IIBI, an amount of Rs. 1100 Mn was transferred from BIL to the
Company along with rescheduling of the installment and re-fixation of interest rate. Consequent
to the transfer of loans, a financial restructuring package was granted by the lenders to the
Company also from October 1, 2004 and the full benefit of the restructuring will be seen during
FY 2006.

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Effective April 1, 2000, vide a Scheme of Arrangement u/s 391 of the Companies Act, 1956
MHL, a listed company in Delhi Stock Exchange merged with the Company. In the merger
process, the Company acquired investments to the tune of Rs. 231.6 Mn from MHL. Vide a
Scheme of Arrangement u/s 391 of the Companies Act, 1956 approved by the High Court of
Calcutta vide order dated August 17, 2005, the investment division of the Company was hived-
off into a separate company viz. Daisy Commercials Private Limited effective from April 1,
2005.

Cost of the Project

The cost of the project is estimated to be Rs. 5750 Mn, comprising Rs. 4150 Mn for the cement
plant and Rs. 1600 Mn for the 40 MW power plants.

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• KEY BUSINESS STRENGTHS OF THE COMPANY

The Company is an established player in the Indian cement industry and enjoys a number of key
competitive Advantages that have helped it to maintain a leading position in the Northern and
Western Indian markets. The principal strengths and competitive advantages of the Company are
as follows:
 Excellent North India market prospects

The cement industry is region-based due to the heavy cost incurred from transportation.
Historically Northern Indian cement manufacturers have operated at a higher level of capacity
utilization compared to other regions. Currently North India has a very strong demand for cement
due to reasons such as increased construction for the Commonwealth games, increased spending
on infrastructure by the government etc.

According to Cris Infac, the demand of cement is expected to continue to grow at growth rates
of over 7%, but the capacity additions in the North is not expected to bridge the demand-supply
gap. It is expected that the Northern market can absorb an additional capacity of 4-5 MTPA
without affecting prices adversely.

 Locational Advantages

Location is a key advantage to the Company as its limestone reserves are at a close proximity
to its plant. As the plant is located in Pindwara, Sirohi District, Rajasthan which is in close
proximity to the customers in the states of Rajasthan, Gujarat, Haryana and NCR it reduces the
Company’s transportation costs which contribute significantly to the overall cost reduction.
The Company has its own captive power plant for which high grade coal is imported from
South Africa and Indonesia. This coal comes in from Navlakhi / Kandla port which is
approximately 450 kms from the plant.

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The Sirohi facility is well connected by road through NH – 14 to the primary markets of
the Company; namely Rajasthan and Gujarat. In terms of outward freight, about 90% of the
dispatches’ are sent through road with the balance through rail. The Company services
western Uttar Pradesh and parts of Delhi by rail, while the other markets are serviced by road.
A railway siding is also being set up at the Sirohi facility to link it with the nearest railway
station of Keshavganj, which is approximately 12 kms from the Sirohi facility.

 Strong brand

Over the last 8 years, the ‘Binani’ brand has established significant brand recall especially in the
Rajasthan and Gujarat markets, primarily on account of attributes such as strength, quality and
consistency. This has allowed the Company to operate on a limited advertising budget, as
compared to its competitors. The Company is one of the leading players in each of the key
markets of Rajasthan, Gujarat and NCR. It has a large distribution network in place with more
than 1740 dealers and 41 MOs supported by their own sales staff.

 Among the leading Cement sector players in the cement industry

The Company is one of the leading cement producers of India with an annual production of 2.25
MnT. It is also one of the market leaders in Rajasthan with a 13.4% market share and with over
45% of its total sales being dispatched to that state. In Gujarat also, the Company is among the

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top seven players with a market share of 7.6%. The Company’s leadership position enables it to
leverage its existing in-house skills, relationship with customers and provides potential to
increase the products being sold.
 Plentiful supply of limestone and other raw materials

The Company has large reserves of high quality limestone serving its plant enabling it to
continue operations well into the future. Independent reports from the technical experts indicate
that the mines have sufficient deposits of limestone to support the Company’s operations for at
least another 30 years on expanded capacity.

 Superior operational performance

The Company has one of the highest operational efficiency compared to its competitors. With
good technical base, lower overheads, international standard manufacturing facilities and
effective marketing network the Company has shown consistent growth in revenues. It has also
maintained stringent control over its operating costs.

The Company has been continuously improving the efficiency of its grinders, to optimize the
overall requirements of power. The Company’s power consumption norms are among the lowest
in the industry at 74 KwH/ MT. It can also be rated high on kiln efficiency with fuel consumption
norms that are better than the industry standards. The facilities are also state-of-the-art and
environmentally compliant, being ISO9001, ISO14001 and OHSAS 18001 certified.

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• MARKETING STRATEGIES OF THE COMPANY

 Developing the Company’s product mix and enhancing products

The Company’s production mix in the year ended March 31, 2005 were 29% PPC
and 71% ordinary cement, compared to 22% and 78% in the year ended March 31,
2004. Through its marketing efforts, the Company intends to continue to develop
customer awareness and acceptance of its blended products which has lower
production costs and offer higher margins than the ordinary cement products. In
addition, it intends to further enhance the quantum of the blended products towards
a mix of 60% PPC and 40% OPC.

 Increasing promotion of the qualities of Company’s product and


brand

The cement manufactured by the Company is one of the finest qualities of cement available in
the market with maximum strength. To promote this to the dealers who are the customers of the
Company, it organizes seminars, workshops and conferences where it educates its
dealers/customers about the strengths of its product. Annually, it also organizes a MOs meet
where dealers and MOs from all over the country are invited and based on their feedback of the
Company further fine-tunes its marketing strategy. On account of superior quality of its product
the Company’s advertising is limited to wall paintings and hoardings thus reducing its
promotional and advertising expenses. Direct promotional efforts to reach out to contractors and
builders are done by the MOs, supported by the sales and marketing team of the Company.

 Increase in distribution and sales network

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The Company’s products are currently marketed through a widespread distribution network
comprising 1,740 dealers who in turn sell the product to end users such as contractors, retailers,
etc. The Company does not market its products directly to institutions as this is a less profitable
segment. It continues to focus on building a dedicated and motivated dealer network spread
across all the States of Northern India.
Quality products backed with transparent dealer policies and efficient services have helped the
Company to build up a network of loyal dealers; around 70%-75% of the total network is
exclusively dealing in Company’s products. The Company’s strategy is to saturate the markets
which are close to the plant where it enjoys a relative freight advantage. The Company monitors
the activities of its competitors and takes proactive steps to ensure healthy market shares in its
preferred markets. Below is the Company’s the latest distribution pattern of total sales to
different markets with its market share.

 Entering new markets

As freight costs play a crucial role in determining the end markets for cement the Company
intends to consolidate its position in the key markets of Rajasthan, Gujarat and NCR. However
the vibrant growth in the markets has opened up growth opportunities for the Company. The
Company is actively evaluating an entry into new markets including Mumbai and other parts of
Maharashtra once its railway siding comes into operations.

 FUTURE PLANS

Cement Project at Sutrapada, District Junagad in Gujarat

The Company proposes to set up a Greenfield Cement plant of 2.5 million tonnes per annum
capacity at Sutrapada which is proposed to be funded through a mix of debt and internal accruals.

Orders for the long delivery major equipments and the engineering of the project have been
initiated. No further progress could be made as the Company’s application for the lease of mines
and government land for the plant are held up pending revision of the mining guidelines by
Government of Gujarat. Although, the Government of Gujarat has announced the new mining
guidelines, the notification of ML blocks for Saurashtra is yet to be finalized.

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Lignite Project at Nimbri Chandrawatan in District. Nagaur, Rajasthan


The Government of India allocated lignite block in District :Nagaur, Rajasthan on 7th February,
2007 for use of lignite as raw materials captively for power generation. 64 Hectare of private
land has been acquired by the Company for the project. Most of the Government clearances for
the setting up of the project have been obtained. Site location for 120 MW Power plant has been
finalized. The project is expected to be completed by March 2011.

• SWOT ANALYSIS

STRENGTH
WEEKNESS

Country Wide
Recognition Availability
Need Base Analysis No parent image
Same Standard Hidden Charges
Services in all
Branches
Fair Deal in all
Transactions
Customers Centric
Approach
Infrastructure

OPPORTUNITY

THREAT
Scope In world as it is
in the developing
STRENGTH
phase
Only 30%COVER THE Other Brands
MARKET Upcoming private
Higher possibility of companies.
 Country
growth Wide share
in Indian
Recognition
Market
 Need Base
Analysis
 Same
Standard
Services in all
Branches
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 Fair Deal in all
Transactions
 Customers
Centric
BINANI CEMENT LIMITED

SWOT –Analysis

SWOT-analysis is done to understand the external and internal environment of the organization. SWOT,
which is acronym for strength, weakness, opportunity and threats is also known by TOWS-analysis.
Though such an analysis, is strength and weakness exist within an organization can be matched with the
opportunity and threats operating in environment , so that an effective strategy can be formulated. An
effective organizational strategy, therefore, is one that capitalizes on the opportunity through the use of
strength and neutralizes the threats by minimizing the impact of weakness. Below is the SWOT- analysis
of Lafarge India Pvt. Ltd. in cement market

. Strength

People ask for bleakness in cement and Binani has this.

Cement grade is good and people are satisfied.

Customer choice.

Binani being an MNC has a global leverage.

It has a good brand image in Cement.

Weakness

Great need of strategic way for promotion and advertisement for both dealers and customers.

Not an easy task to overtake Konark, Ultratech and ACC.

Price and margins is not match with dealers and retailers expectation respectively.

Guaranty given by company is from the date of manufacturing which is not acceptable for the dealers
and retailers.

Take large time in the replacement of Cement.

Opportunity

Strong infrastructure requirement for the development of the country and the country is developing in
the utter pace.

No of the medium class people is growing.

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Institutional market like corporate and government offices, school society complexes are growing in
large scale, which will increase the requirement.

Threats

Cheep priced brand are grabbing rapidly a large chunk of lower income customer base.

Other brands like Duncan and Grasim provide maximum profit to the both customer as well as to the
retailers.

It was found from my survey that Ultra tech maximum market share is due to brand loyalty.

Dealers expect more margin and gift to sell of the Lafarge cement.

• LITERATURE REVIEW

1) Binani Cement goes public with over 2 cr equity shares.

A report in The Press Trust of India Ltd.(2007) States that Binani is entering the capital market
with a public offer of 2.05 crore equity shares of Rs.10 each. The company is launching an IPO
about of 2 crore which is proposed to be listed both on NSE and BSE.

2) Binani Cement eyes coal blocks in Indonesia.


A Report in The Press Trust of India Ltd states that Binani Industries is looking to acquire coal
blocks in Indonesia to meet its energy requirements.

3) WHAT CORPORATE LEADERS SAY: Vinod juneja, Managing Director - BINANI


CEMENT (to enhance capacities of its plants in India and abroad)
An article in India Business Insight states that Binani Industries is planning to enhance its
capacity of its plants in India and abroad. The company has planned to invest $200 million to set
up one million tone grinding unit in Africa. The company also proposes to set up units in Orissa
and West Bengal and two plants in Gujarat.

4) Binani cement in expansion mode

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An article in tenderinfo states that Binani is planning to boost its capacityfrom the current 6.5
million tons by 2011 and to 20 million tons by 2020 as per expansion plan.

CHAPTER 3
STUDY ON RATIO
ANALYSIS

INTRODUCTION TO RATIO ANALYSIS


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Ratio analysis is a useful tool for analyzing financial statements. This is the measure of inter
relationship between different sections of the financial statements which then is compared with
the budgeted or forecasted results, prior year results and or the Industrial results. Ratios should be
taken as guides that are useful in evaluating a company’s financial position and operations and
making comparisons with results in previous years or with other companies.

Types of Ratios

1. Liquidity Ratio

2. Profitability Ratio

3. Activity Ratio

4. Leverage Ratio

I. Liquidity Ratio

Liquidity ratios also referred to as solvency ratios, show the ability of a company to meet
financial obligations over the short-term. It evaluates the liquidity position or measures the
ability of the firm to pay debts. This ratio includes current ratio, acid test ratio or quick ratio and
net working capital ratio. It is also called the short term solvency ratio.

 Current Ratio - The Current ratio is the relationship between the current assets and current
liabilities indicates enterprise ability to meet the current obligation. Current assets refer to
liquid resources and must be sufficient enough to pay current liabilities when they mature.

 The current ratio is calculated as follows:

Current assets

Current ratio=

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Current liabilities

 Quick Ratio - It is also called Acid test ratio. It is the ratio between quick current assets and
current liabilities. Quick current assets are [current assets-(stock+prepayments)]. If bank
overdraft is given in particulars then it should be deducted from current liabilities. This ratio
measures the capacity of the organization to pay off current liabilities of the urgent nature
immediately.

Quick ratio is calculated as follows:

Quick assets

Quick Ratio=

Current liabilities

II. Profitability Ratio -

Profitability ratio indicates the efficiency of the organization in generation of income and surplus
out of main business. It measures the company’s use of its assets and control of its expenses to
generate an acceptable rate of return. The computation of the following ratios shows the
profitability of the firm:

 Gross Margin or gross profit margin or gross profit rate- Gross profit is considered to be the
surplus of sales over cost of goods sold and the ratio can be worked out as under:

Gross Profit

Gross Profit Ratio = x 100

Net Sales

Gross Profit can also be computed as Net Sales- COGS, where COGS is Cost of Goods Sold

 Operating Profit Ratio denotes the margin of profit on the main operations revealing the
operational efficiency of the organization. This ratio can be computed as follows:

Operating Profit Ratio= Operating Income ×100

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Net Sales

Operating Income= Operating revenue- Operating expenses

Operating Income=EBIT=Operating Profit

 Net Profit Ratio- Net Profit is the surplus of gross profit after meeting other expenses. This
ratio can be computed as under:

Net Profit

Net Profit Ratio = x 100

Net Sales

 Return on investment or capital employed- This ratio help us to know how much the
organization is earning on its capital employed. This ratio can be calculated as follows:

EBIT

Return on Capital Employed (ROCE) =

Capital Employed

 Return on Assets- Profitability Ratio can also be measured in terms of relationship between
net profit and assets.

Net Income

Return on Assets =

Average total assets

III. Activity Ratio

Activity Ratio measures how effectively the organization is managing its resources. It is
constructed to measure how effectively the firm’s assets are being managed. It is also called the
efficiency ratio. The following ratios are worked out under activity ratio:

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 Assets Turnover Ratio - This ratio is intended to indicate how effectively a firm is using all
of its assets.

Net Income

Assets Turnover Ratio=

Average total assets

 Inventory Turnover Ratio - This ratio is measured to indicate how quickly


inventory is produced and sold and can be calculated as follows:

COGS

Inventory Turnover Ratio =

Average Inventory

 Receivables Turnover Ratio - This ratio provides information on the success of the
organization in managing its investment in accounts receivable and is calculated as below:

Total operating revenue

Receivables Turnover=

Average receivables

IV. Leveraging Ratio

Leveraging ratio is also called as Debt ratio and Capital Structure analysis ratio. This ratio
measures the extent to which an organization relies on debt financing rather than equity. It is a

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tool in determining the probability that the firm will default on its debt contracts. The important
ratios are as under:

 Debt ratio - It shows the dependence of the organization on outside long term finance as is
calculated as follows:

Total debt Total debt

Debt Ratio= OR Debt to equity ratio =

Total assets Total Equity

 Interest Coverage Ratio - This ratio emphasizes the ability of the firm to generate enough
income to cover interest expense which is calculated as follows:

EBIT

Interest Coverage Ratio=

Annual Interest Expense

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CHAPTER 4
RESEARCH
METHODOLOGY

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• OBJECTIVE OF THE STUDY

The following objectives were kept in view for present study after extensively reviewing the
literature:-

• To compare different years financial position.

• To ascertain the financial health of the company.

• To analyze the current financial methods adopted by BINANI CEMENT.

• To provide information for managerial decision making.

• RESEARCH DESIGTN

The research design used in this project is Analytical in nature the procedure using, which
researcher has to use facts or information already available, and analyze these to make a critical
evaluation of the performance.

• DATA COLLECTION

• Primary Sources

Data are collected through personal interviews and discussion with Finance Executive.

• Secondary Sources

Data is collected from company’s website

Annual reports maintained by Binani Industries.

Newspaper, journal and magazines.

Books pertaining to the topic

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• RESEARCH TOOL

“Ratio Analysis” is the tool to ascertain the financial position of the company. The financial
figures are taken from balance sheet and profit and loss account to carry out financial analysis.

• ANALYSIS AND INTERPRETATION

 Liquidity Ratio

 Current Assets

Current Ratio =

Current Liabilities

Particulars 2007 2008 2009 2010


Current Assets 10,494.92 31,337.84 48,454.72 47,941.74
Current Liabilities 14,288.28 34,893.16 51,091.78 43,832.71
Current Ratio 0.73 0.89 0.95 1.09

Graphical Presentation

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Interpretation

Current Ratio measures the firms’ obligation to meet current obligations. The data shows that current
ratio has increased from 0.73 in 2007 to 1.09 in 2010.

Current assets were less than current liabilities from 2007 till 2009 and both were correspondingly
increasing leading to increase in current ratio.

From 2007 to 2009, firm was not able to meet its obligations and had to extend its bank credit and thus
were its current liabilities increasing.

But in 2010, its current assets are more than current liabilities indicating that it is able to pay its bills.

Quick Assets

Quick Ratio=

Current Liabilities

Particulars 2007 2008 2009 2010


Quick assets 4769.74 9593.4 8721.46 30943.59
Current Liabilities 14,288.28 34,893.16 51,091.78 43,832.71
Quick Ratio 0.33 0.27 0.17 0.71

Graphical Presentation

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Interpretation

The above figure shows that quick ratio has been decreasing from 0.33 in 2007 to 0.17 in 2009 and
has again increased to 0.71 in 2010

.The reason behind the decrease in quick ratio till year 2009 is that there has been increase in
current liabilities over the years.

There is an increase in quick ratio in 2010 because current liability has decreased compared to
previous year figure

Net Working Capital

Net Working Capital Ratio=

Total Assets

Particulars 2007 2008 2009 2010


Net Working Capital -3793.36 -3555.32 -2637.06 4109.03
Total Assets 101032.26 121975.70 131979.37 134769.47

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Net Working Capital Ratio -0.04 -0.03 -0.02 0.03

Graphical Presentation

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Interpretation

Working Capital Ratio is negative till 2009 because current liabilities are more than current assets.

This ratio is decreasing as there is a decrease in the current liabilities over the years.

This indicates that firm did not have enough working capital to meet its daily obligations till the
year 2009 but it has improved in the year 2010 because current assets are more than current
liabilities.

 Profitability Ratio

Gross Profit

Gross Profit Ratio =

Net Sales

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Particulars 2007 2008 2009 2010


Gross Profit 15657.28 24483.51 15455.77 42161.24
Net Sales 67983.39 97867.68 148978.72 185105.08
Gross Profit Ratio 23.03% 25.01% 10.37% 22.77%

Graphical Presentation

Interpretation

Gross Profit Ratio depends on the total operating revenue.

The Gross Profit Ratio was highest in the year 2008 at 25.01% and has decreased to 10.37%
though the net sales have increased.

The Gross Profit Ratio is seen increasing to 22.77% in 2010 due to increase in gross profit and
net sales.

Net Profit

Net Profit Ratio=

Net Sales

Particulars 2007 2008 2009 2010

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Net Profit 9561.10 17581.91 15874.32 42934.15


Net Sales 67983.39 97867.68 148978.72 185105.08
Net Profit Ratio 14.06% 17.96% 11% 23%

Graphical Presentation

Interpretation

The above figure shows that Sales has been increasing over the years but Net Profit Ratio is
highest in the year 2010 at 23%

Net Income

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Return on Asset s=

Average Total Assets

Particulars 2007 2008 2009 2010


Net Income 52783.90 74697.98 15455.77 42161.24
Avg. Total Assets 92385.41 132420.36 189213.48 222962.89
Return on Assets 0.57 0.56 0.08 0.19

Graphical Presentation

Interpretation

The above data shows that return on assets has decreased from 0.57 in 2007 to 0.08 in 2009 and
has again increased to 0.19 in 2010.

This indicates that that the investment in total assets from the year 2007 to 2009 is not able to
generate profitable income.

But in 2010, the firm has increasing return on assets which indicates that it has gained a
substantial income from investments in total assets of the company.

 Activity Ratio

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Net Sales

Assets Turnover Ratio=

Average Total Assets

Particulars 2007 2008 2009 2010


Net Sales 67983.39 97867.68 148978.72 185105.08
Average Total Assets 92385.41 132420.36 189213.48 222962.89
Assets Turnover Ratio 0.74 0.74 0.79 0.83

Graphical Presentation

Interpretation

The above table of the company shows that in 2007 and 2008 the assets turnover ratio stood
unchanged at 0.74

In the year 2009, it was 0.74 and has increased to 0.79 in 2009 and again increased to 0.83 in the
year 2010

The reason for this increase indicates that the firm is effectively using its assets to generate sales.

Cost of Goods Sold

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Inventory Turnover Ratio=

Average Inventory

Particulars 2007 2008 2009 2010


Cost of Goods Sold 52326.11 73384.17 133522.95 142943.84
Avg. Inventory 4540.27 13734.81 21499.20 19126.05
Inventory Turnover Ratio 11.52 5.34 6.21 7.47

Graphical Presentation

Interpretation

The Inventory Turnover Ratio calculated above has decreased from 11.52 in the year 2007 to
5.34 in the year 2008 and has increased in 2009 to 6.21 and to 7.47 in the year 2010.

This indicates that the firm was not able to quickly produce and sell its inventory due to many
reasons like change in production technology of goods being manufactured, etc.

But after the year 2008, the company is able to quickly produce and sell its inventory leading to
the increase in inventory turnover ratio.

 Leveraging Ratio

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Total Liabilities

Debt Ratio=

Total Assets

Particulars 2007 2008 2009 2010


Total Liabilities 125462.96 176862.99 201563.96 244361.78
Total Assets 54532.96 176862.99 201563.96 244361.81
Debt Ratio 3.6 1 1 0.99

Graphical Presentation

Interpretation

The standard debt ratio for any firm should be 2:1 which indicates that firm is leveraging more of
debts in its capital structure.

This ratio provides information about protection of creditors from insolvency and which is
highest at 3.6 in the year 2007. In the year 2007, the firm has used more of debt than equity
which was beneficial for the investors.

EBIT

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Interest Coverage Ratio=

Annual Interest Expense

Particulars 2007 2008 2009 2010


EBIT 15657.28 24483.51 15455.77 42161.24
Annual Interest Expense 3022.04 4351.76 6788.15 7328.07
Interest Coverage Ratio 5.18 5.62 2.27 5.75

Graphical Presentation

Interpretation

The figure shows that Interest Coverage Ratio has increased for the year 2007 and 2008 and it
has fallen to 2.27 in the year 2009.

The reason behind the fall in interest coverage ratio is that EBIT has decreased and was not
enough to meet its interest expenses.

But Interest Coverage Ratio has increased in the year 2010 to 5.75 as EBIT has increased to
Rs.42161.24 and is able to meet its interest expenses.

• FINDINGS

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During the project study at Binani Cement, I have gone through the manuals, annual
report, and websites of the company and collected the information from various reports in
connection with my project under study. The information found from the above analysis is given
below:-

 The company’s current ratio and quick ratio was not good till the year 2009 but has
improved in the year 2010.

 The company’s current assets were more than current liabilities till the year 2009 but this
situation has changed in the year 2010.

 The company has shown a negative working capital till the year 2009 which means that
the company did not have enough working capital to meet its daily expenses but in 2010
it has shown a positive working capital which means that current assets have become
more than current liabilities.

 Gross profit ratio and net profit ratio has decreased in the year 2009 and has again
increased due to increase in sales.

 Return on assets was not satisfactory till the year 2009 but has increased in the year 2010
which shows that company has gained a substantial income from investing in total assets.

 The assets turnover has increased over the years indicating that company is effectively
using its assets to generate sales.

 Inventory turnover is increasing over the last 3 years which indicates that company has
been able to quickly produce inventory and sell the same.

 The Debt ratio for the company was highest in the year 2007 as it was relying more on
debt or borrowings was has decreased till 2007 as it is now preferring more of equity
capital than debt capital.

 Interest coverage ratio had fallen in the year 2009 because the company did not have
enough income to cover its interest income but the same is seen to increase due to
increasing income. The overall financial position was good in the years 2007 and 2008

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and became instable in the year 2009. In the year 2010, the company has shown a sound
financial position.

• SUGGESTIONS

The financial position in Binani Cement Limited for the last two years is not satisfactory
in comparison to the last few years. The ratio analysis made in pre-pages show less efficiency to
the company progress. The organization and its workforce are being benefitted a lot to the extent
of coping up with technologies and varities. However the following suggestions may be taken
into account in order to bring success in the effectiveness to the growth of financial strength of
the company:

 The company should take care to strengthen the working capital which will improve
profit figures.

 The company should take steps to reduce its current liabilities and borrowings.

 The company should maintain less of closing stock which will reduce maintenance cost
and damages.

 The company should opt for leveraging to some extent so as to gain faith of having
financial security by the investors.

 The company should take steps to increase operational income by controlling all
operational expenses and material consumption, labor efficiency, production, etc.

 The production level and other revenues have to increase to show a better profit.

 The company should check the abnormal increase of expenses.

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• CONCLUSION

From the Ratio Analysis of Binani Cement, it is found that overall performance is
satisfactory. But for the year 2009 operational efficiency is decreased due to market recession. So
managers should have utilized their expertise, talents in the day to day operation, so as to
maintain a consistency in the operational efficiency.

Subject to the observation in course of this study as mentioned in the previous pages, i.e.;
Findings, Binani Cement Limited (BCL) has to take innovative steps and new and well
developed mechanism to stable the financial position of the company in future days for
company’s wealth and the whole cement industry. On the whole it may be stated that the
organization would fetch still more flying colors in the area of financial position.

LIMITATIONS OF THE STUDY

This project does have certain limitations and they can be enumerated below:-

• During a short period of time, I was unable to collect some more financial information,
due to which I have concentrated to the limited area of the financial statement analysis
i.e., Ratio Analysis.

• The study mainly depends upon the reliability of data and information collected from
secondary sources, thus the study incorporates limitations that are inherent in the
available public information.

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Chapter 5
BIBLIOGRAPHY

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BIBLIOGRAPHY

1) Stephen A. Ross, (2008), Corporate Finance, 7th Ed., New Delhi: Tata Mac Graw Hill, pp.
34-40

2) N.S. Toor, (2010), Handbook of Banking Information, 30th Ed., New Delhi: Skylark
Publications, pp. 7.5-7.7

3) http://binaniindustries.com/news1.asp?newsid=19[ viewed on 22/07/2010]

4) http://binaniindustries.com/hist.html [viewed on 22/07/2007]

5) http://binaniindustries.com/cement_products.html [viewed on 22/07/2010]

6) http://binaniindustries.com/awards.html [viewed on 22/07/2010]

7) http://binaniindustries.com/leader.html [viewed on 22/07/2010]

8) http://www.encyclopedia.com/doc/1G1-162702623.html [viewed 24/07/2010]

9) http://www.encyclopedia.com/doc/1G1-136735997.html [viewed on 24/07/2010]

10) http://www.accessmylibrary.com/coms2/summary_0286-37094718_ITM
[viewed on 24/07/2010]

11) http://www.accessmylibrary.com/article-1G1-188480749/corporate-leaders-say-
vinod.html [viewed on 24/07/2010]

12) http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/Binani-
Cement-to-buy-back-145-mn-shares-at-Rs-90-each/articleshow/6055641.cms[viewed on
24/07/2010]

13) http://www.accessmylibrary.com/coms2/summary_0286-32495706_ITM[viewed
on 24/07/2010]

14) http://www.netmba.com/finance/financial/ratios/ [viewed on 27/07/2010]

15) http://www.universalteacher4u.com/cbse/xii/acctheory/ch11/page1.htm[view on
27/7/10]

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16) http://www.tutorsonnet.com/homework_help/capital_market_analysis_ratios/capit
al_market_analysis_ratio_assignment_help_online_tutoring.htm [viewed on 27/07/2010]

17) http://www.cpaclass.com/fsa/ratio-01a.htm [viewed on 27/07/2010]

18) http://financial-dictionary.thefreedictionary.com/activity+ratio [viewed on 27/07/2010]

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Chapter 6
APPENDIX

BALANCE SHEET (IN Rs. Lakhs)

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PARTICULARS 2010 2009 2008 2007

SOURCES OF FUNDS
Shareholders’ Funds
Share Capital 20,310.38 20,310.38 20,310.38 20,310.38
Reserves and Surplus 47,205.37 27,330.41 21,453.89 9,812.44

Loan Funds
Secured Loans 92,295.59 74,019.60 73,232.91 65,876.98
Unsecured Loans 6,013.54 3,813.54 3,813.54 3,223.27

Deferred Tax Liability(Net) 18,677.00 15,542.00 12,752.00 4,312.00


Trade Deposit 2,871.09 2,476.08 2,175.36 1,504.80
TOTAL 187,372.97 143,492.01 133,738.08 105,039.87

APPLICATION OF FUNDS
Fixed Assets
Gross Block 180,050.99 158,868.08 144,539.47 83,998.69
Depreciation (55,282.38 (47,118.85 (39,711.26 (34,703.17)
Net Block ) ) ) 49,295.52
Capital work in progress 124,768.61 111,749.23 104,828.21 51,736.74
10,000.86 20,230.14 17,147.49

Investments 37,457.20 21,129.87 4,676.60 -


Current Assets, Loans and Advances
Inventories 16,998.15 21,253.95 21,744.44 5725.18
Sundry Debtors - - 0.53 -
Cash and Bank Balances 30,943.59 8,721.46 9,592.87 4,769.74
Loans and Advances 24,193.40 18,479.31 18,872.85 13,935.78

Current Liabilities and Provisions


Current Liabilities (43,832.71 (51,091.78 (34,893.16 (14,288.28)
Provisions ) ) ) (6,134.81)
(13,156.13 (6,980.17 (8,231.75
) ) )
TOTAL 187,372.97 143,492.01 133,738.08 105,039.87

Binani Cement Limited

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PROFIT AND LOSS ACCOUNT (in Rs.Lakhs)

PARTICULARS 2010 2009 2008 2007

Income
Gross Sales 206,710.8 171,392.5 114,855.3 78,200.49
Less: Excise Duty on Sales 6 0 7 10,217.10
Net Sales 21,605.7 22,413.7 16,987.6 67,983.39
Other Income 8 8 9 457.79
185,105.0 148,978.7 97,867.6
8 2 8
2,110.5 1,291.1 1,313.8
1 8 1

TOTAL 187,215.5 150,269.9 99,181.4 66,441.18


9 0 9

Expenditure
Raw Materials, Packing Materials &
Goods Consumption 25,010.4 13,922.3 8,719.2 8,585.26
Other Manufacturing Expenses 3 9 7 16,645.25
Payment to & Provision for Employees 54,560.1 62,472.1 27,371.4 1,878.30
Selling and Administrative Expenses 7 6 3 18,067.43
Interest and Finance Charges 3,435.2 2,939.3 2,549.6 3,262.02
Depreciation and Amortisation of Fixed 4 6 4 4,345.64
Assets 45,031.7 40,296.5 25,843.6
3 6 6
7,850.5 7,152.3 4,646.9
8 1 0
9,166.2 9,166,2 5,567.0
0 0 8
TOTAL 145,054.3 134,814.1 74,697.9 52,783.90
5 3 8

Profit Before Taxation and Prior period 42,161.2 15,455.7 24,483.5 15,657.28
item 4 7 1
Prior Period adjustments -
(1,361.21) - -
Profit Before Tax 40,800.0 15,455.7 24,483.5 15,657.28
Provision for Tax: 3 7 1
Less-Current Tax(MAT) 1,753.28
Add- MAT Credit Entitlement 11,298.5 1,740.00 2,770.0 -
Less-Deferred Tax 2 - 0 4,312.00
Less-FBT 1,747.7 2,790.0 4,359.3 30.90
3 0 6
3,135.0 59.2 8,440.0
0 7 0

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- 50.9
6

Profit After Tax 28,191.6 10,866.5 17,581.9 9,561.10


2 0 1
Balance brought forward from previous 19,597.4 13,720.8 5,179.4 4,870.71
year 0 9 4
Transfer from /(to)Debenture 1,200.00 1,100.00 (1,300.00) (3,500.00)
Redemption Reserve
Transfer to General Reserve (2,900.00) (1,100.00) (1,800.00) (1,000.00)
Proposed Dividend (7,108.54) (4,265.13) (5,077.53) (4,062.03)
Tax on Proposed Dividend (1,208.10) (724.86) (862.93) (690.34)
Balance Carried to Balance Sheet 37,772.38 19,597.40 13,720.89 5,179.44

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