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IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
Vol. 5, No.1, February 2015
to measure firm's overall financial health over a given period
of time and can also be used to compare similar firms across • Interest Coverage ratio: Measures your ability to
the same industry or to compare industries or sectors in meet interest payment obligations with business
aggregation. In short, the firm itself as well as various income. Ratios close to 1 indicates company having
interested groups such as managers, shareholders, creditors, difficulty generating enough cash flow to pay interest
tax authorities, and others. on its debt. Ideally, a ratio should be over 1.5.
Ratio analysis is a technique of analysis and • Return on Assets ratio: Measures your ability to
interpretation of financial statement. It is the process of turn assets into profit. This is a very useful measure
establishing and interpreting various ratios for helping in of comparison within an industry. A low ratio
making certain decisions. It is the only means of better compared to industry may mean that your
understanding of financial strengths and weakness of a firm. competitors have found a way to operate more
There are various ratios which can be calculated from the efficiently. After tax interest expense can be added
information given in the financial statements, but in the study back to numerator since ROA measures profitability
we select the appropriate data and calculate only a few on all assets whether or not they are financed by
appropriate ratios. The important ratios taken are liquidity equity or debt.
ratio, long term solvency activity and profitability ratios.
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IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
Vol. 5, No.1, February 2015
Limitations
• This study is based on the secondary data from • The India Cements Limited
published reports and in journals articles for the
cement industry during 2004-05 to 2013-14. The India Cements Limited began its humble
moorings in the form of a cement factory at Talaiyuthu, an
• The secondary data such as problems of aggregation, almost unmapped tiny hamlet in Tirunelveli district, Tamil
missing data and differences in the same data Nadu. As one of the oldest Indian corporate, established in
collected from different sources are met with. Care 1946, the company set up its first plant in 1949 at Sankarnagar
was taken to minimize the errors arising from those (Talaiyuthu). Indian Cement is a leading cement
problems. manufacturing company of India and capture huge market
share of cement industry. Over the years India Cements has
• The period of study marks a period of adjustments by become the largest cement manufacture of South India and
the industry to the new business environment. How almost acquire 30% of cement market.
far the industry has succeed in achieving growth and
sustaining it, is studied with the secondary data it has • The Ramco Cements Limited
to be recognized in generalizing the findings.
The Ramco Cements Limited is one of the best
performing, highly efficient producers of Fibre Cement Sheets
• There are also limitations of the tools of analysis used
in India and is the Market leader. Ramco's first asbestos
the choice of trend equations and methods of
cement sheet plant was set up at Arakkonam (Tamil Nadu) in
estimation and figures stated.
1967 and since then the production technology has been
• These limitations are minimized and explicitly stated updated continuously. The second sheet plant was
wherever need attention. commissioned at Karur (Tamil Nadu) in 1974 followed by one
more sheet plant at Maksi (Madhya Pradesh) in 1987. This
was the first plant in India to introduce pipes of 5 M length
and diameters of above 600 mm.
III. PROFILE OF THE SELECT COMPANIES
Cement is an essential component of infrastructure
development and most important input of construction • Chettinad Cement Corporation Limited
industry, particularly in the government’s infrastructure and
housing programs, which are necessary for the country’s Chettinad Cement established in 1962 with a wet
socio-economic growth and development. process cement plant at Puliyur near Karur, Chettinad cement
has been expanding and making itself versatile in the field of
• ACC Limited cement products. Chettinad Cement has established its
position in the southern market by innovatively aligning its
ACC (ACC Limited) is India's foremost manufacturer products and services to the needs of cement users. For over
of cement and concrete. ACC's operations are spread four decades, the Chettinad cement companies have built a
throughout the country with 17 modern cement factories, more reputation for serving the construction industry with high-
than 40 Ready mix concrete plants, 21 sales offices, and performance products that encourage creativity and ensure
several zonal offices. ACC has a unique track record of longevity.
innovative research, product development and specialized
consultancy services. Results and Discussions
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IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
Vol. 5, No.1, February 2015
IV. ANALYSIS AND INTERPRETATION India Cement
The cement industry in India is globally competitive From the above data analysis it has been found that,
as the industry continues to witness positive trends such as at the beginning of the financial year 2004-05 the total cement
cost control, continuous technology upgradation and increased production of India limited was Rs.688 crores and its had
construction activities. The results and discussions of this increased to Rs.2579 crores at the end of the financial year
objective is present with the support of multiple regression 2013-14. The total cement production of India limited had
test. registered growth rate of 15.81 per cent during the study
period from 2004-05 to 2013-14.
Production Trend
The cement production has remained subdued during Ramco Cement
financial year 2014 growing by a modest 3.70 per cent during It has been clearly observed that, the total cement
April-December 2013 primarily due to weak demand from production of Ramco cements was Rs.463 crores at the
end-user industries. The cement production of selected cement beginning of the financial year 2004-05 and it had gradually
companies functioning in Tamil Nadu for a period of 10 years increased to Rs.2368 crores by the end of the financial year
from 2004-05 to 2013-14 is depicted in figure.1. 2013-14. The total cement production of Ramco limited had
the growth rate of 19.88 per cent during the study period from
ANNUAL PRODUCTION OF CEMENT 2004-05 to 2013-14.
Sales Trend
The cement sales in India have been expanding on the
back of increasing infrastructure activities and demand from
the housing sector. The housing segment accounts for a major
portion of the total domestic demand for cement in India. In
the 12th Five Year Plan government of India, there is a strong
Years
focus on infrastructure development and it plans to increase
This chart indicates the annual cement production of select investment in infrastructure. The cement sales of selected
cement companies during the study period from 2004-05 to cement companies functioning in Tamil Nadu for a period of
2013-14. 10 years during study period is shown in figure.2.
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IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
Vol. 5, No.1, February 2015
ACC Cement
Long-Term Financial Feasibility of the Select Cement
From the above data analysis it has been observed
Companies
that, at the beginning of the financial year 2004-05 the total
cement sales of ACC limited was Rs.3887 crores and its Long term Solvency means the ability of the
cement sales had massively increased to Rs.11169 crores by enterprise to meet its long term obligation, to evaluate the
the end of the financial year 2013-14. The total cement ratios like inventory ratio, debtors ratio, long term debtequity
production of ACC limited had the growth rate of 13.92 per ratio, fixed asset ratio, etc., of the select cement companies.
cent during the study period from 2004-05 to 2013-14. Long term lenders are basically interested in two things:
payment of interest periodically and repayment of principal
Ultra Tech Cement amount at the end of the loan period. Financial solvency ratios
The above table infers that, the total cement sales of are used to judge the long term financial soundness of any
Ultra Tech cements was Rs.2607 crores at the beginning of the business.
financial year 2004-05 and it had tremendously increased to
Rs.20078 crores at the end of the financial year 2013-14. The
total cement sales of Ultra Tech limited was growth rate of Profitability position of the Select Cement Companies
27.63 per cent during the study period from 2004-05 to
2013-14. The most important financial objective of any
business is to earn profit. So, the managers lay more emphasis
India Cement towards profit. The higher the profit, the more efficient is the
From the above data analysis it has been found that, business considered. The profitability ratios are calculated to
at the beginning of the financial year 2004-05 the total cement measure the overall efficiency of the business. The net profit
sales of India limited was Rs.1017 crores and it had increased of select cement companies in Tamil Nadu for a period of
to Rs.4597 crores at the end of the financial year 2013-14. The 10 years during study period is shown in figure.3.
total cement sales of India limited had the growth rate of 18.67 NET PROFIT RATIO OF THE SELECT CEMENT
per cent during the study period from 2004-05 to 2013-14. COMPANIES
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IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
Vol. 5, No.1, February 2015
India Cement • The profitability can be increased by controlling cost or
From the above data analysis it has been found that, increasing sales.
at the beginning of the financial year 2004-05 the net profit • The management is able to pinpoint weak spots and take
ratio of India limited was -.01 and 0.04 by the end of the corrective measures to improve more.
financial year 2013-14. The net profit ratio of India limited
had the compound value of 183.33 per cent during the study CONCLUSIONS
period from 2004-05 to 2013-14. The efficiency of a firm depends upon the working
operations of the concern. Profit earning is considered
Ramco Cement essential for survival of the business. Both long term and
It has been clearly observed that, the net profit ratio short term solvency ratios prove the solvency position and
of Ramco cements was 0.08 at the financial year 2004-05 and efficiency of the select companies. The financial positions of
it had gradually increased to 0.03 by the end of the financial the selected cement companies are satisfactory.
year 2013-14. The net profit ratio of Ramco limited was 41.67
per cent during the study period from 2004-05 to 2013-14.
ACKNOWLEDGMENT
Chettinad Cement Any achievement should have behind it a catalytic
From the empirical data analysis it has been and constant encouragement and advice of valuable and
identified that the net profit ratio of Chettinad cements was notable minds for my efforts to bring out this research work.
0.04 at the financial year 2004-05 and it had 0.06 by the end of I take this opportunity to express my thanks and gratitude to
the financial year 2013-14. The net profit ratio of Chettinad and every one of them.I thank all of them for their support and
limited was 55.56 per cent during the study period from encouragement.
2004-05 to 2013-14.
REFERENCES
FINDINGS [1] Jayant Sathaye (2005) Assessment of Energy Use and Energy Savings
• The highest total cement production of Ultra Tech cements Potential in Selected Industrial Sectors in India U.S. Environmental
was Rs.2956 crores in the year 2004-05 and it had Protection Agency through the U.S. Department of Energy. [Reference]
tremendous increased to Rs.19765 crores by the end of the [2] Alovsat Muslumov (2005), The financial and operating performance of
privatized companies in the Turkish cement industry, METU Studies in
financial year 2013-14 and the lowest cement production Development, 32 (June), 2005, 59-1012. [Reference]
of Chettinad cements was Rs.230 crores at the financial [3] 'Global Cement Directory 2013,' PRo Publications International Ltd.,
year 2004-05 and it had inclined to Rs.1787 crores by the Epsom, UK, November 2012.
end of the financial year 2013-14. [4] Sharma R K and Shashi K Gupta, “Management accounting – Principles
• The highest total cement sales of Ultra Tech cements was and practice”, Kalyani publishers, 7th Edition, 1998.
2607 crores at the financial year 2004-05 and [5] Back issues of 'Global Cement Magazine,' PRo Pubications International
tremendously increased to 20078 crores by the end of the Ltd., Epsom, UK, January 2012 - January 2013.
financial year 2013-14 whereas the least total cement sales [6] Brigham E.F., “Fundamental of financial management”, The Dryden
press Hinsdale, Illinois, 1978.
of Chettinad cements was 325 crores at the financial year
[7] Wright M.G., “Financial Management”, Tata McGraw-Hill publishing
2004-05 and gradually increased to 2451 crores by the end Co. New Delhi, 1978.
of the financial year 2013-14. [8] Annual reports of select cement companies.
• The net profit percentage of compound value of Ultra Tech [9] Media Reports, India in Business, Cement Corporation of India,
and Ramco limited was least as compared to ACC Limited Department of Industrial Policy and Promotion (DIPP), Cement
and Chettinad limited whereas India limited was highest of Manufacturers Association (CMA).
select cement companies.
• Multiple Regression Analysis indicated out of nine AUTHORS PROFILE
variables tested only one variable (Fixed assets ratio) was
found to be statistically significant. Hence it has been Authors Profile …
concluded that there exists no association between return
of total assets and the financial ratios of select cement 1. Manjula Devi B is a Research Scholar of the Department of
companies. Management Science (PG), SNR Sons College (Autonomous),
Coimbatore, Tamil Nadu, India.
• Multiple Regression Analysis indicated out of nine 2. Sabarinathan K, Associate Professor, Management Sciences (PG),
variables tested only one variable (Interest Coverage ratio) SNR Sons College (Autonomous), Coimbatore, Tamil Nadu, India.
was found to be statistically significant. Hence it has been He has 3 years of industry experience and 12 years of teaching
concluded that there exists no association between return experience.
of total assets and the financial ratios of select cement
companies.
SUGGESTIONS
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