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4.1.

2 Ambuja Cements

1. About Company :-
 Business Idea

Ambuja Cements Ltd. (ACL) is one of the leading cement manufacturing companies in India and
commenced cement production in 1986. Initially called Gujarat Ambuja Cements Ltd, the
Company later became Ambuja Cements Ltd. In 2006. The company from its initiation had a
vision of becoming the most sustainable and competitive company in our industry. For this
ambuja cements aimed and planned to focus on certain aspects for its success in the future. The
company focused on creating values for all and specifically in following aspects

 Delighted Customers

 Inspired Employees

 Enlightened Partners

 Energized Society

 Loyal Shareholders

 Healthy Environment

 Background

Ambuja Cements Ltd. (ACL) is one of the leading cement manufacturing companies in India and
commenced cement production in 1986. Initially called Gujarat Ambuja Cements Ltd, the
Company later became Ambuja Cements Ltd. In 2006, global cement major Holcim, acquired
management control of the Company. Today, Holcim holds a little over 50% equity in ACL. The
current capacity is 27.25 million tones. . Ambuja Cements Ltd (ACL), a part of a global
conglomerate Holcim, is one of India’s leading cement manufacturers. The company has
completed over 25 years of operations. The company has a significant presence across western,
eastern and northern markets of India as a brand for Ordinary Portland Cement (OPC) and
Pozzolana Portland Cement (PPC)

 Management Details :

N S Sekhsaria Chairman
Vice Chairman
Eric Olsen
Managing Director &
Ajay Kapur
CEO
Non Exe.Non
Martin Kreigner
Ind.Director
Rajendra P Chitale Director
Omkar Goswami Director
Usha Sangwan Director

Christof Hassig Director

Nasser Munjee Director


Shailesh
Director
Haribhakti
Haigreve Khaitan Director
B.L Taparia Director

Table. 4.8 Management details of Ambuja cements

 Key persons

Non-Executive Chairman, Non-


Mr. N. S. Sekhsaria
Independent

Non-Executive Promoter Director


Mr.Eric Olsen
representing LafargeHolcim Ltd., Non-
Independent

Executive, Non-Independent, Managing


Director & CEO
Mr. Ajay Kapur
Table 4. 9Key persons in Ambuja Cements

 Share Holding Patterns :-

Names Share Holding %

Promoters 50.3 %

Public 7.8 %

DII 40.4 %

Custodians 1.5 %
FII 0.0 %

Table no 4.10 Share Holding patterns of ambuja cements

2. Size of the company

 Market Capitalization

The Market capitalization of Ambuja cements is Rs. 39,107.82 Cr.


 Market share

Name of the companies Percentage of shares


Ultra Tech Cements 22%
ACC ltd. 15%
Ambuja cements 13%
Jai Prakash associates 10%
India Cements Ltd. 7%
Shree Cement Ltd. 6%
Century Textiles & Inds. 5%
Madras Cements 5%
Lafarge India Pvt. Ltd 5%
Birla corporation Ltd. 4%
Binani Cement Ltd. 4%
Table no. 4.11 Market share of cement companies

 Revenue or Sales

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
9461.40 9978.12 9160.35 9730.30 8554.26 7371.52 7083.21 6182.09 5671.39 6226.2
8

Table no. 4.12 Net Sales value of Ambuja cements ( In Rs. Crores)

Comments :- The company sales have gone up by 52 % since 2006

 CAGR

The CAGR of Ambuja cements for 10 years is 8. 43 %

 Profits

Net Profits
1600
1400
1200
1000
In Rs. Crs.

800
600
400
200
0
2012 2013 2014 2015 2016

Exhibits 4.2 Net Profits of Ambuja cements

Comments :- The company sales have gone up by 52 % in the last 5 years tenure.
3. Quality of Business :-

 Product Portfolio :-

a) Portland Pozzolana Cement (PPC) :- PPC constitutes 93% of our product


portfolio. They have developed an innovative way of using fly ash to produce
high strength Portland Pozzolana Cement (PPC) Millions of tons of fly ash is
generated as waste annually by thermal power plants and poses a high
environmental hazard.

b) Ambuja Plus Roof Special :- is a special quality PPC cement with advanced
SPE technology that extracts 100% of silicate gel from cement thus helps in
making the concrete stronger, denser and leak proof, resulting in strengthening of
the roof.

c) Alccofine Micro Materials :- Our wholly owned subsidiary Alccofine, specializes


in micro materials which are widely used in high strength concrete at prestigious
projects throughout India. The Alccofine Micro Materials range from high
strength concrete additives to special applications in tunnels and dams.

 Value of Migration :-

Ambuja Cement Ltd announced plans to expand its Sankrail grinding unit in West Bengal, India.
The project, which represents an investment of Rs.325 crores, will see the plant’s cement
production capacity increase from 1.5 million tpa to 2.4 million tpa. The Company has also
planned to invest Rs2,000 crore for capacity expansion in Rajasthan and the northern region with
the proposed Rajasthan project adding five million tonne capacity to the company's total
production. CRISIL has also have predicted a better growth in the cement sector in the future
which means in coming the major cement companies are likely to perform good. Prospects of
cement companies provide an opinion of assessment of problems in liquidity and profitability
analysis and prospects of the cement companies based on their balance sheet and profit and loss
a/c. The tools used and analysis and interpretation have given method for useful and productive
suggestions. The ratio analysis of the company is suitable. The company should enrich its
performance for meeting challenges and exploiting chances in future and helps the management
to take financial decisions. The movement and growth of the Ultra Tech, ACC, Ambuja, Shree
and Prism companies are favorable in future period.

 Market Dominance :-

The fact that ACL is India's most efficient producer of cement has led the analyst to rate the stock
as a 'BUY'. The management quality of the company is considered to be another factor in favour
of the company. Their plants are particular of the most effective in the world. With environment
protection actions that are on equality with the luxury in the world. Ambuja monitors an
exclusive homemade attitude of giving people the expert to set their own objectives and the
liberty to attain their objectives. Ambuja is the maximum profitable cement corporation in India,
and one of the lowermost cost producers of cement in the world

 Niche Opportunities :-

Ambuja Cements will need to create niche products and develop the market for such products by
providing solution-based offerings to the customer. Innovation will be very important, to create
high-grade and cheaper quality of cement. Indian companies have been moving from lower grade
cement to higher over the years, and would have to continue to roll out even better quality to
compete with the global players, and local competition. New cement products like RMC (Ready
Mix Concrete) will help create a company carve out a niche in the markets

4. SWOT

SWOT Analysis

Strengths 1. It has an operational experience of over many decades

2. It is one of the leading cement manufacturers in the

country.
3. It has a strong revenue year on year

4. Holcim, one of the world’s largest cement manufacturers

has a significant share in Ambuja Cements

5. Branding activities through TVCs, online marketing etc in

India make it a prominent brand

6. The company is also listed on NSE & BSE

1. It exports cement to a limited number of countries, as

compared to its global competitors.

2. It deals primarily with cement and concrete while many

global players manufacture other construction materials


Weaknesses along with cement to provide greater portfolio to the

customers.

1. Ambuja cements is planning to buy share from Holcim that

would strengthen the brand as a Indian Brand and It would

help the brand to grow in the country as Indian customers

would psychologically relate to the brand now.


Opportunities
2. It can increase its global exports business by mergers and

acquisitions.

3. The government is promoting Manufacturing sector in India

which is a huge opportunity for Ambuja cements and other

manufacturing companies.
1. It is facing strong competition from Indian and Global

players in cement sector.

2. If it tries to increase its global operations, it would face


Threats tough competition and moreover, each country has different

policies that might hamper its expansion.

Table 4.13 SWOT of Ambuja Cements

5. Competitors

Name Market Cap. Sales Net Profit Total Assets


(Rs. cr.) Turnover ( Rs. Cr.) Rs. Cr. Rs. Cr
UltraTechCement 92,750.40 24,107.36 2,174.65 25,566.00
Shree Cements 49,991.42 5,567.75 454.93 5,892.76
Ambuja Cements 39,185.41 9,461.40 807.56 10,329.55
ACC 30,092.91 11,796.83 591.57 8,478.54
Ramco Cements 13,551.49 3,678.18 558.26 4,908.82
Dalmia Bharat 10,401.69 204.31 65.55 582.33
Prism Cement 5,270.14 5,550.36 8.36 2,775.74
J. K. Cement 4,644.11 3,560.32 101.54 4,068.69
JK Lakshmi Cem 4,547.95 2,619.85 6.28 3,000.91
Birla Corp 4,287.27 3,274.99 157.35 3,646.91

Table 4.14 Competitors of Ambuja cement

6. Financials

PARAMETERS Dec 15 Dec 14


Per Share Ratios
Basic EPS (Rs.) 5.21 9.67
Diluted EPS (Rs.) 5.21 9.66
Cash EPS (Rs.) 9.24 12.94
Book Value /Share (Rs.) 66.41 65.19
Book Value /Share (Rs.) 66.41 65.19
Dividend / Share(Rs.) 2.80 5.00
Revenue from Operations/Share (Rs.) 60.97 64.39
PBDIT/Share (Rs.) 12.18 15.21
PBIT/Share (Rs.) 8.14 11.92
PBT/Share (Rs.) 7.55 11.51
Net Profit/Share (Rs.) 5.20 9.66
Profitability Ratios
PBDIT Margin (%) 19.97 23.62
PBIT Margin (%) 13.35 18.51
PBT Margin (%) 12.38 17.87
Net Profit Margin (%) 8.53 14.99
Return on Networth / Equity (%) 7.83 14.81
Return on Capital Employed (%) 7.38 13.91
Return on Assets (%) 5.70 10.76
Total Debt/Equity 0.00 0.00
Asset Turnover Ratio (%) 66.80 71.78
Liquidity Ratios
Current Ratio 2.03 1.90
Quick Ratio 1.75 1.62
Inventory Turnover Ratio 10.57 11.23
Dividend Payout Ratio (NP) (%) 53.80 51.76
Dividend Payout Ratio (CP) (%) 30.31 38.61
Earnings Retention Ratio (%) 46.20 48.24
Cash Earnings Retention Ratio (%) 69.69 61.39
Valuation Ratios
Enterprise Value (Cr.) 28,724.42 33,003.75
EV/Net Operating Revenue 3.04 3.31
EV/EBITDA 15.20 14.00
MarketCap/Net Operating Revenue 3.33 3.55
Retention Ratios (%) 46.19 48.23
Price/BV 3.06 3.51
Price/Net Operating Revenue 3.33 3.55
Earnings Yield 0.03 0.04
Table 4.15 Financial Ratios of Ambuja Cements

Analysis :-
 The EPS has declined by 46 % in the current year as compared to the previous financial
year indicating negative sign for Ambuja cements. This shows company financial health
is poor for investors
 The enterprise value has also fell down by 13 % if we compare it from the FY 14.
 Also Net profit margin and other profitable ratios show decline indicating the negative
sign for ambuja cements. ROE also fell by 47 %.
 As Cement sector doing good, There are possibilities the these numbers will show
positive sign till the end of the current financial year.

7. Capitals

Total revenue for the company for the financial year 2015 was Rs. 9819.59 crores. The expenses
recorded for the FY 15 was 8647.38 crores. Details about the expenses of the company is given
in the table below :-

Cost Of Materials Consumed 2,850.05


Purchase Of Stock-In Trade 4.20
Changes In Inventories Of FG,WIP And 25.39
Stock-In Trade
Employee Benefit Expenses 589.52
Table Finance Costs 91.79 4.16
Depreciation And Amortisation Expenses 625.66
Other Expenses 4,464.86
Expenses details of ambuja cemnts fo FY 15