SUMMER INTERNSHIP PROJECT ON FINANCE AND COST ANALYSIS

OF

AMBUJA CEMENTS LIMITED

GIVE A MAN ORDERS AND HE WILL DO THE TASK REASONABLY

WELL.

BUT LET HIM SET HIS OWN TARGETS, GIVE HIM FREEDOM AND
THE AUTHORITY, AND HIS TASK BECOMES A PERSONAL MISSION:
I CAN
INTRODUCTION-

Summer training included a period of one month which had an indispensable effect
in the enlightening of knowledge and sagacity to build faith and confidence in
oneself to get the knowledge sharpened up and be optimistic for a bright career
ahead.

The purpose of pursuing this training was to get a thorough knowledge about the
finance system in firm and know more about the working of one of the most
robustly growing companies i.e. Ambuja Cements Ltd.

CEMENT INDUSTRY-

INTRODUCTION-

The Indian cement industry is the second largest in the world after China,
employing in excess of a million people throughout the country. The cement
industry contributes a big deal to the Indian economy, more so because the
construction industry in India relies heavily on the cement industry for natural
reasons. Indian as well as foreign companies have invested billions in the Indian
cement industry after regulations were lifted off in 1982. The cement industry in
India is currently undergoing a turnaround phase striving hard to come at par with
its global competitors in terms of health, safety, environment , production and
energyefficiency.

India has a lot of potential for development in the infrastructure and construction
sector and the cement sector is expected to largely benefit from it. Some of the
recent major government initiatives such as development of 100 smart cities are
expected to provide a major boost to the sector.

Expecting such developments in the country and aided by suitable government

foreign policies, several foreign players such as Lafarge-Holcim, Heidelberg
Cement, and Vicar have invested in the country in the recent past. A significant
factor which aids the growth of this sector is the ready availability of the raw
materials for making cement, such as limestone and coal.
MARKET SIZE-

During the next four to five years, the Indian cement market is projected to witness
a Compound Annual Growth Rate (CAGR) of around 8.96 percent. Approximately
67 percent of the cement consumption can be attributed to the housing sector in
India, 13 percent to the infrastructure sector, 11 percent to the commercial
construction and the rest to the industrial construction segment. The next two years
might see the cement industry add on 5.6 croretonnes to its capacity due to a steep
rise in the demand. The overall cement capacity in India is expected to reach 39.5
croretons by the next year and 42.1 croretonnes by the end of 2017 from the
present 36.6 croretonnes.

A staggering 97 percent of the total cement production in India comes from the
188 large plants set up across the country, while 365 small cement plants are
responsible for the remaining three percent. Just the three states of Tamil Nadu,
Andhra Pradesh and Rajasthan are home to 77 of the 188 large plants. Some of the
world's top cement companies are based in India. Seventy percent of all the cement
produced in India belongs to the top 20 companies operating in the industry.

ABOUT AMBUJA

Ambuja Cements Ltd, a part of the global conglomerate LafargeHolcim, is one of

the leading cement companies in India and is known for its hassle-free, home-
building solutions. Its unique products tailor-made for Indian climatic conditions,
sustainable operations and initiatives that advance the company's philosophy of
contributing to the larger good of the society have made it the most trusted brand in
Indian cement industry.
COMPANY PROFILE

Name of The Ambuja cements limited

Company
Year of 1983
establishment
Revenue 76,378.1 million
Corporate address P O Ambujanagar, Taluka, Kodinar, Junagadh Dist-
362715, Gujarat.
Email ID www.ambujacement.com
Management  Chairman and principal founder- Mr. N.S.
Details Sekhsaria.

 MD & CEO- Mr. Ajay Kapur.

 Directors- Mr. Martin Kriegner ,OmkarGoswami,

B.L Taparia, ShaileshHaribhakti
,HaigreveKhatain , ChristofHassig.

 CFO- Mr.Suresh Joshi

 CS-Mr.Rajiv Gandhi

Business Cement & Construction Materials.

Operation
Financial Net Worth- 19,074 (Rs. In crores)
Statement
Net Profit- 970 (Rs. in crores)
Company Mr. Rajiv Gandhi
Secretary
Auditors M/s. SRBC& Co. LLP (Statutory Auditors)

Achievements

Name of award Award Details

Year
FICCI CSR Award ACL won under "category 5 Any Other
2016 projects" for Water Resource Management
2016 Bombay Chamber Civic Award 2015- ACL won this award under the social
16 development category
2016 The Derozio Award for Education and AMK won this award in "Special
Human Enrichment 2016 Education"
2016 Championship trophy at 19th Punjab AMK won this championship 11th time in
State Special Olympics a row
2016 Rashtrapita Mahatma Gandhi Won by ACF Chandrapur
Vyasanmukti Seva Puraskar
2016 Best Continued Support from NGO ACF Ropar conferred with 'Best Continued
Project Director Support from NGO Project Director' by
Chandigarh State AIDS Control Society
2015 Pt. Madan Mohan Maliyah Silver Best CSR Practices in Education
Award
2015 World Summer Special Olympics, Los Two athletes from Ambuja Manovikas
Angeles Kendra won medals
2015 Championship trophy at 18th Punjab Participants from Ambuja Manovikas
State Special Olympics Kendra grabbed first position in six
different categories
2014 Best Partnership Award based Awarded by NABARD on excellent
performance in implementation of
Watershed Development Projects in
Himachal Pradesh during FY 2013-14
2014 Improving productivity of crops” We are pleased to inform you that
NABARD NABARD selected Ambuja Cement
Foundation (ACF) for the Partnership
Excellence Award (based on the
performance / achievement during FY
2013-14) in the following category:
 “Improving productivity of crops” (ACF
- NABARD Project at Bathinda)
2014 Social Work- Bathinda Deputy Chief Minister of Punjab, Shri
Sukhveer Singh Badal appreciated Ambuja
Cement Foundation for its remarkable
social welfare work in Bathinda.

The work done by ACF in Agriculture &

Drugs-De-Addiction sector was
appreciated by Deputy Commissioner
during the receiving of Appreciation
Letters.
2013 Award Name :- Water Digest Water  Ambuja Cement Foundation-Chirawa has
Award 2013-14 -Supported by won "Best Water NGO - Water
UNESCO Harvesting" category 
2013 Best NGO Award for working in the Awarded by Northern India Cotton
cotton sector Association Ltd.
 

 
Recognition

 National Award for commitment to quality by the Prime Minister of India.

 National Award for outstanding pollution control by the Prime Minister of

India.

 ISO 9002 Quality Certification.

 ISO 14000 Certification for environmental systems.

 Best Award for highest exports by CAPEXIL.

 Economic Times - Harvard Business School Association Award for

corporate excellence.

Vision of ACL
To be the most sustainable and competitive company in the cement industry.

Mission of ACL

Create Value for All

 Delighted  Inspired Employees  Enlightened Partners

Customers
 Energized Society  Loyal Share Holder  Healthy
Environment
 COST ANALYSIS
INTRODUCTION

Cost accounting is the application of accounting and costing principles, methods,

and techniques in the ascertainment of costs and the analysis of saving or excess
cost incurred as compared with previous experience or with standards.

It is a process of collecting, recording, classifying, analyzing, summarizing,

allocating and evaluating various alternative courses of action & control of costs.
Its goal is to advise the management on the most appropriate course of action
based on the cost efficiency and capability. Cost accounting provides the detailed
cost information that management needs to control current operations and plan for
the future.

Cost accounting information is commonly used in financial

accounting information, but its primary function is for use by managers to facilitate
making decisions.

Following are the main concepts of cost accounting:

1. COST
An amount that has to be paid or given up in order to get something.In
business, cost is usually a monetary valuation of effort, material, resources,
time and utilities consumed, risks incurred, and opportunity forgone in
production and delivery of a good or service. All expenses are costs, but not
all costs (such as those incurred in acquisition of an income-generating
asset) are expenses.

2. EXPENSES
Money spent or cost incurred in an organization's efforts to generate
revenue, representing the cost of doing business. Expenses may be in the
form of actual cash payments (such as wages and salaries), a computed
expired portion (depreciation) of an asset, or an amount taken out of
earnings (such as bad debts). Expenses are summarized and charged in the
income statement as deductions from the income before assessing income
tax.
3. LOSS
Loss is a cost that produces no benefit. It may be in the form of decrease in
value, excess of expenditure over income, excess of cost over the net
proceeds from a transaction. Expenses are incurred to obtain something and
losses are incurred without any compensation. They add to the cost of
product or services without any value addition to it.

4. COST CENTER
A cost center refers to a defined area, machine, or person to whom direct and
indirect costs are allocated. It is a distinctly identifiable department,
division, or unit of an organization whose managers are responsible for all
its associated costs and for ensuring adherence to its budgets. It is also called
cost pool or expense center.

5. PROFIT CENTER
It is a distinctly identifiable department or unit that contributes to the overall
financial results of a firm. Where adequate cost accounting systems are in
place, profit centers are given responsibility to target certain percentages of
the total revenue and are given adequate authority to control their costs to
achieve those targets. See also cost center and revenue center.

6. COST DRIVERS
A factor that can cause a change in the cost of an activity.
An activity can have more than one cost driver attached to it. For example, a
production activity may have the following associated cost-drivers: a
machine, machine operator(s), floor space occupied, power consumed, and
the quantity of waste and/or rejected output.
METHODS OF COSTING

Different industries follow different methods to establish the cost of their product.
This varies by the nature and specifics of each business. There are different
principles and procedures for performing the costing. However, the basic
principles and procedures of costing remain the same. Some of the methods are
mentioned below:

 Unit costing: This method is also known as "single output costing." This

method of costing is used for products that can be expressed in identical
quantitative units. Unit costing is suitable for products that are manufactured
by continuous manufacturing activity: for example, brick making, mining,
cement manufacturing, dairy operations, or flour mills. Costs are ascertained
for convenient units of output.

 Job costing: Under this method, costs are ascertained for each work order
separately as each job has its own specifications and scope. Job costing is
used, for example, in painting, car repair, decoration, and building repair.

 Contract costing: Contract costing is performed for big jobs involving

heavy expenditure, long periods of time, and often different work sites. Each
contract is treated as a separate unit for costing. This is also known as
terminal costing. Projects requiring contract costing include construction of
bridges, roads, and buildings.

 Batch costing: This method of costing is used where units produced in a

batch are uniform in nature and design. For the purpose of costing, each
batch is treated as an individual job or separate unit. Industries like bakeries
and pharmaceuticals usually use the batch costing method.

 Operating costing or service costing: Operating or service costing is used

to ascertain the cost of particular service-oriented units, such as nursing
homes, busses, or railways. Each particular service is treated as a separate
unit in operating costing. In the case of a nursing home, a unit is treated as
the cost of a bed per day, while, for busses, operating cost for a kilometer is
treated as a unit.
 Process costing: This kind of costing is used for products that go through
different processes. For example, the manufacturing of clothes involves
several processes. The first process is spinning. The output of that spinning
process, yarn, is a finished product which can either be sold on the market to
weavers, or used as a raw material for a weaving process in the same
manufacturing unit. To find out the cost of the yarn, one needs to determine
the cost of the spinning process. In the second step, the output of the
weaving process, cloth, can also can be sold as a finished product in the
market. In this case, the cost of cloth needs to be evaluated. The third
process is converting the cloth to a finished product, for example a shirt or
pair of trousers. Each process that can result in either a finished good or a
raw material for the next process must be evaluated separately. In such
multi-process industries, process costing is used to ascertain the cost at each
stage of production.

 Multiple costing or composite costing: When the output is comprised of

many assembled parts or components, as with television, motor cars, or
electronics gadgets, costs have to be ascertained for each component, as well
as with the finished product. Such costing may involve different methods of
costing for different components. Therefore, this type of costing is known as
composite costing or multiple costing.

 Uniform costing: This is not a separate method of costing, but rather a

system in which a number of firms in the same industry use the same
method of costing, using agreed-on principles and standard accounting
practices. This helps in setting the price of the product and in inter-firm
comparisons.

 ACL follows process costing to ascertain the cost at each stage of

production or manufacturing of cement.
CEMENT MANUFACTURING PROCESS AT ACL

The cement manufacturing process comprises of 5 main process which

comprises of
1. Mining ,
2. Crushing,
3. Raw Meal Preparation,
4. Clinker Production And
5. Cement Production.

ACLbhatapara unit has two lines

Bhatapara line 1 which involves process 1 to 5

Bhataparaline 2 which involved process 1 to 4.

1. MINING
 Extraction of limestone and clay from query using drilling and blasting
techniques and modern extraction techniques.
 Uncrushed limestone is obtained from this process.
 Dumper loads the big rocks or boulders and unloads them to crushers.

2. CRUSHING
 The quarried material is then reduced in size by compression and/or impact
in various mechanical crushers
 The uncrushed limestone is converted into crushed lime stone.

3. RAW MEAL PREPARATION

Preparation of a homogeneous mix of
Crushed limestone - 97-99%

Iron ore
Phospho gypsum
Coarse ash 1-2%
Red mud- 1-2%

4.CLINKER PRODUCTION
 Heatingof raw meal at a very high temperature in the rotating kiln,
 Fuels required for the same are - coal, pet coke, alternative fuel, diesel.
 Due to heating 1.5 unit of material shrinks to 1unit.
 The kiln is designed to maximize the efficiency of heat transfer from fuel
burning to the raw material
 At this high temperature, minerals fuse together to form predominantly
calcium silicate crystals - cement clinker.
 The molten cement clinker is then cooled as rapidly as possible
 Clinker may be either stored on site in preparation for grinding to form
cement or transported to other sites
 5. CEMENT PRODUCTION
 The grinding together of cement clinker, with around 5% of natural or
synthetic gypsum in cement or ball mill containing steel balls to grind the
mixture into cement
 Other cementations materials such as slag, phosphor gypsum, imported
gypsum, fly ash are added to the cement.
 Thecement or ball mill contains steel balls to grind the mixture into cement.
 The types of cement produced at ACL are PPC, PPC+, OPC43, OPC53 and
composite cement.

REPORT 15 A – COST OF GOOD PRODUCED AT ACL

Report 15 A of ACL is a report generated by using SAP that helps to ascertain the
total cost of goods produced at mines,crushers,rawmill,kiln and cement mill.

The entire cost information regarding line 1 and line 2 can be obtained in an
organized manner and format from report 15 A.
Line 1-file NE06
Line 2-file NE08
Combined- file NE06+NE08

SAP

PROCEDURES OF ENTERING DATA FROM SAP TO EXCEL

SHEET (15A)-
1. Login to SAP with user id
2. Enter T-Code GRR 3
3. A 15
4. Go to ACL 15A New 2012.
5. Execute
6. Get variant
7. Selection of company’s code; line 1- NE06
 Line 2- NE 08
Combine – NE06+NE08.
8. Then comes the controlling -
Area code- IN01
Fiscal year-
From –current period
To- current period
Plan version-0
Company code-IN20
9. Execute
10.Enable macros in excel sheet
11.Copy the data from SAP sheet to excel sheet.

PRODUCTION PROCESS AND 15A

MAIN PROCESS COST CENTER

Mines 10 E 06
Crusher 20 E 06
Raw mill 30 E 06
Kiln 40 E 06
Cement mill 50 E 06

There are various departments supporting and involved in production

in these five processes. Some of them are-
1. Accounts dept.
2. Purchase dept.
3. Production dept.
4. Human Resource dept.
5. Electrical dept.
6. Mechanical dept.
7. Quality control dept.
Cost center code is used by the departments to record the specific process related
data through filing up the transaction in the cost center of the given process.

ANALYSIS OF THE COST SHEET

VARIABLE COSTS INCLUDE-

 Raw material (iron ore, coarse ash, phosphor gypsum, pet

coke, red mud, fly ash)
 Fuel (diesel, coal, pet coke)
 Electricity/ power
 Wear parts (refractory, grinding media)
 Diesel (mines)
 Outsourced activities
 Production and distribution material (explosive)
 Mining royalties

FIXED COSTS INCLUDE-

 Electricity energy; fixed

 3rd party services
 3rd party maintenance
 Personnel expenses (employees expenses)
 By products (damaged cement)
 Fixed labor expenses
 Maintenance material and other cost center expenses

PROVISIONS INCLUDE-
  Bad debts written off.
 Provision for wear parts
 Other provisions.

DEPRECIATION INCLUDES-

 Depreciation/amortization of PPEs
 Depreciation/amortization of Long term assets
 Depreciation/amortization of operating assets

STATEMENT OF COST OF ACL UNIT BHATAPARA FOR THE YEAR

ENDED31ST DECEMBER, 2016

1. COST SHEET OF CLINKER

Quantitative details of clinker

Year Production Finished Finished Captive Other Quantity
Goods Stock Consumption Adjustments Sold
Purchased Adjustment
Current 772,812. (1,622,446.0 1,1 367,25
Year 00 - 59,811.78 0) 57,078.32 6.10
Previous 927,243. (1,487,672.0 7 250,75
Year 00 - 41,933.96 0) 69,254.24 9.20

Amount in ₹ crores CURRENT YEAR 2016

PREVIOUS YEAR 2015
Particulars Amount Cost/Un Amount Cost/unit
it
Materials Consumed 521,078, 664,530,885 71
* 028.24 674.26 .78 6.67
Process   -
Materials/Chemicals   -

Utilities * 687,285, 889.33 1,019,528,959. 1,09

 15 9.53
870.63
14,631,272 1
Direct Employees 11,992, .25 5.78
Cost 636.28 15.52
1,504,049
2,178, .17 1.62
Direct Expenses 030.98 2.82
67,849,598 7
Consumable Stores & 64,485, .70 3.17
Spares 777.60 83.44
22,702,841 2
Repairs & 19,545, .11 4.48
Maintenance 988.37 25.29
12,972,565 1
Quality Control 12,636, .43 3.99
Expenses 719.63 16.35
Research &
Development   -
Expenses   -
19,405,099 2
Technical know-how 22,102, .59 0.93
Fee / Royalty 929.51 28.60
72,949,393 7
Depreciation/Amortiz 47,998, .96 8.67
ation 807.27 62.11
388,724,774 41
Other Production 381,090, .98 9.23
Overheads 576.08 493.12
Industry Specific - -
Operating Expenses * - -
2,464.
1,770,395,364. 2,284,799,440.13 08
Total 59 2,290.85
Increase/Decrease in    
Work-in-Progress    
Less: Credits for    
Recoveries    
   
Primary Packing Cost    
Cost of 1,770,395,364. 2,284,799,440.13 2,464.
 08
Production/Operations 59 2,290.85
Cost of Finished    
Goods Purchased    
Total Cost of
production and 1,770,395,364. 2,284,799,440.13 2464.078392
purchases 59 2290.85
Increase/Decrease in
Stock of Finished 124,531,212 91,136,788.55  
Goods .67  
(2,983,572,405.84
Less: Self/Captive (2,862,337,551. )  
Consumption 12)  
1,615,329,009. 1,110,542,067.26  
Other Adjustments 37  
2,005.
Cost of Production of 647,918,035 502,905,890.09 53
Goods Sold .51 1,764.21
Administrative   -
Overheads   -
Secondary Packing   -
Cost   -
Selling & Distribution   -
Overheads   -

Interest & Financing   -

Charges   -
2,005.
647,918,035 502,905,890.09 53
Cost of Sales .51 1,764.21
2,843.
838,819,552 713,023,598.19 46
Net Sales Realization .70 2,284.02
837.
Margin 190,901,517 210,117,708.10 93
[Profit/(Loss)] .19 519.80

ANALYSIS-

 A cost sheet is used to compile the margin earned on a product or job, and
can form the basis for the setting of prices on similar products in the future.
  From the cost sheet of clinker of ACL for the year ended 2016, following
observations can be made –

1. In the year 2016 ACL has produced 772812 units of clinker ,the
captive consumption of clinker is 1622446 while the quantity sold is
367256
2. The total operating expenses of clinker for the year 2016 is
1770395364.59 rupees while the per unit operating cost is 2,290.85
rupees which is less as compared to previous year .
3. In the year 2016 there has been a decrease in the cost of production
of clinker i.e. 1770395364.59 rupees while an increase in the per unit
cost of production of clinker i.e. 2290.85 rupees as compared to
previous year.
4. The cost of production of goods sold of clinker has increased to
647918035 rupees while the per unit cost goods sold has reduced to
176421 rupees.
5. There are no administration ,selling and distribution over heads,
packing and interest and financing cost associated with clinker thus
the cost of sales of clinker has increased to 647918035 rupees while
the per unit cost of sales reduced to 176421 rupees.
6. The net sale realization from clinker has increased to 83881955270
rupees
7. The profit margin of clinker for the year 2016 can be obtained from
the difference between the cost of sale and net sales of clinker which
comes to be 190901517.19 rupees.

2. COST SHEET OF CEMENT

Quantitative details of cement

Year Production Finished Finished Captive Other Quantity

Goods Stock Consumption Adjustments Sold
Purchased Adjustment

Current 2,351,830. (877.7 (1 2,340,440.

Year 00 - 6,426.58 1) 6,938.21) 66

Previous 2,164,431. (1,115.0 2,153,020.

Year 00 - (10,141.81) 0) (153.69) 50
  CURRENT YEAR 2016 PREVIOUS YEAR 2015

Particulars Amount Cost/Unit Amount Cost/Unit

  Rs. Rs.
Rs.
Rs.
1,538
3,208,267,282 1, 3,330,328,469.28 .66
Materials Consumed * .67 364.16

Process   -
Materials/Chemicals   -
507,789,407. 234
506,190,96 61 .61
Utilities * 0.61 215.23
7,641,866.
4,097,67 78 3.53
Direct Employees Cost 1.00 1.74
57,900
.00 0.03
Direct Expenses   -
88,614,592. 40
Consumable Stores & 108,942,24 27 .94
Spares 5.20 46.32
5,369,341.
10,087,71 81 2.48
Repairs & Maintenance 0.17 4.29
5,559,670.
5,415,73 90 2.57
Quality Control Expenses 6.98 2.30

Research & Development   -

Expenses   -
12,901,982.
Technical know-how Fee / 9,472,68 42 5.96
Royalty 4.08 4.03
77,113,588. 35
79,508,94 16 .63
Depreciation/Amortization 8.32 33.81
160,659,963. 74
Other Production 163,947,95 78 .23
Overheads 7.46 69.71
Industry Specific Operating - -
Expenses * - -
4,196,036,783. 1,938
4,095,931,196 1, 01 .63
Total .48 741.59

Increase/Decrease in    
Work-in-Progress    

Less: Credits for    

Recoveries    
576,526,565.
614,280,57 73  
Primary Packing Cost 0.77  
4,772,563,348. 2,205
Cost of 4,710,211,767 2, 74 .00
Production/Operations .25 002.79

Cost of Finished Goods    

Purchased    
4,772,563,348.
Total Cost of production 4,710,211,767 74 2205.00
and purchases .25 2002.8
(21,100,583.
Increase/Decrease in Stock (6,151,91 62)  
of Finished Goods 9.48)
(2,393,989.
Less: Self/Captive (1,411,46 36)  
Consumption 0.56)

-  
Other Adjustments -  
4,749,068,775. 2,205
Cost of Production of 4,702,648,387 2, 76 .77
Goods Sold .22 009.30
353,535,958. 164
355,188,15 32 .20
Administrative Overheads 7.04 151.76

  -
Secondary Packing Cost   -
2,755,896,271. 1,280
Selling & Distribution 3,082,761,358 1, 52 .01
Overheads .61 317.17
 708,075
Interest & Financing 1,468,43 .27 0.33
Charges 8.66 0.63
7,859,209,080. 3,650
8,142,066,341 3, 87 .32
Cost of Sales .52 478.86
8,578,473,539. 3,984
8,816,797,252 3, 83 .39
Net Sales Realization .97 767.15
719,264,458. 334
674,730,91 96 .07
Margin [Profit/(Loss)] 1.45 288.29

ANALYSIS-

 From the cost sheet of cement of ACL for the year ended 2016, following
observations can be made –

 In the year 2016 ACL has produced 2351830 units of cement ,the captive
consumption of cement is 87771 while the quantity sold is 2340440.66.
 The total operating expenses of cement for the year 2016 is 409593196.48
rupees while the per unit operating cost is 174159 rupees which is less as
compared to previous year .
 In the year 2016 there has been a decrease in the cost of production and the per
unit cost of production of cement i.e. 4710211767.25 rupees and 2002.79 rupees
respectively.
 The cost of production of goods sold and the per unit cost goods sold of cement
has decreased to 4702648387.22 rupees and 2009.30 rupees respectively.
 There has been an increase in the administration ,selling and distribution over
heads, and a decrease in interest and financing cost associated with cement thus
the cost of sales of cement has increased to 8142066341.52 rupees while the per
unit cost of sales reduced to 3478.86 rupees.
 The net sale realization from cement has increased to 8816797252.97 rupees.
 The profit margin of cement for the year 2016 can be obtained from the
difference between the cost of sale and net sales of cement which comes to be
674730911.45 rupees.
 FINANCIAL ANALYSIS

FINANCIAL HIGHLIGHTS OF 5 YEARS

Amount in ₹ crores
2016 2015 2014 2013 2012
INCOME STATEMENT
NET SALES 9,160 9,368 9,911 9,079 9,675
OPERATING EBITDA 1,683 1,531 1,928 1,667 2,473
PROFIT BEFORE TAX 1,337 1,172 1,783 1,514 1,902
PROFIT AFTER TAX 970 808 1,496 1,295 1,297

BALANCE SHEET
NET WORTH 19,074 10,307 10,103 9,486 8,805
BORROWINGS 37 33 29 29 35
CAPITAL EMPLOYED 19,656 10,946 10,763 10,121 9,414
FIXED ASSETS - GROSS BLOCK 15,289 12,013 11,429 10,826 10,184
FIXED ASSETS - NET BLOCK 5,979 6,092 6,227 6,063 5,862
CURRENT ASSETS 4,109 6,549 6,995 5,537 5,276
CURRENT LIABILITIES 3,611 3,226 3,138 2,843 2,899

CASH FLOW STATEMENT

NET CASH GENERATED FROM 1,415 1,553 1,675 1,287 1,858
OPERATIONS
CASH AND CASH EQUIVALENTS 2,420 5,032 4,459 3,961 3,860

2016 2015 2014 2103 2012

SIGNIFICANTS RATIOS
OPERATING EBITDA/ NET SALES 18% 16% 19% 18% 26%
RETURN ON CAPITAL EMPLOYED 9% 12% 18% 16% 22%
DEBT EQUITY RATIO 0 0 0 0 0
PRICE EARNING RATIO 42.17 39.02 23.65 21.79 23.83
BOOK VALUE PER SHARE 96.15 66.52 65.29 61.43 57.24
BASIC EARNING PER SHARE 4.89 5.21 9.67 8.39 8.43
DIVIDEND PER SHARE 2.80 2.8 5 3.6 3.6
DIVIDEND PAYOUT RATIO 76% 65% 62% 50% 50%
CURRENT RATIO 1.14 2.03 1.91 1.95 1.82
 OPERATIONS
CEMENT CAPACITY - MILLION
TONNES 29.65 29.65 28.75 27.95 27.95
CEMENT PRODUCTION - MILLION
TONNES 21.19 21.54 21.43 20.96 21.62

COMPARITIVE BALANCE SHEET ANALYSIS OF ACL

Amount in ₹ crores

PARTIC NO CURR PREV ABSOL PERCE

ULARS TE ENT IOUS UTE NTAGE
S YEAR YEAR DIFFE DIFFER
RENCE ENCE
(%)
EQUITY
AND
LIABILI
TIES
Sharehold
ers’ funds
Share 397.13 310.38 86.75 27.94961
capital 016
Reserves 18676. 9996.4 8679.94 86.82987
and 43 9 729
surplus
19073. 10306. 8766.69 85.05676
56 87 311

Non-
current
liabilities
Long- 23.58 22.68 0.9 3.968253
term 968
borrowin
gs
Deferred 492.89 564.9 -72.01 -
tax 12.74738
liabilities 892
(net)
Other 7.95 5.99 1.96 32.72120
long-term 2
liabilities
Long- 45.28 35.4 9.88 27.90960
term 452
provision
s
569.7 628.97 -59.27 -
9.423342
926

Current
liabilities
Trade 0.78 0.52 0.26 50
payables
Micro 896.2 679.3 216.9 31.92992
enterprise 787
s and
small
enterprise
s
Other 1464.2 1461.9 2.33 0.159378
current 6 3 356
liabilities
Short- 1249.7 1084.3 165.39 15.25259
term 3 4 605
provision
s
3610.9 3226.0 384.88 11.93023
7 9 133

TOTAL 23254. 14161. 9092.3 64.20240

23 93 744

ASSETS
Non-
current
assets
Fixed 5978.3 6091.7 -113.36 -
assets 6 2 1.860886
58
Tangible 0.29 0.31 -0.02 -
assets 6.451612
903
Intangible 320.02 414.12 -94.1 -
assets 22.72288
226
Capital 6298.6 6506.1 -207.48 -
work-in- 7 5 3.188982
progress 732

Non- 11844. 106.9 11737.8 10980.16

current 7 838
investmen
ts
Long- 682.64 720.71 -38.07 -
term 5.282291
loans and 074
advances
other non- 319.27 279.57 39.7 14.20037
current 915
assets
12846. 1107.1 11739.4 1060.300
61 8 3 042

CURRE
NT
ASSETS
current 1065.0 2119.2 -1054.21 -49.74
investmen 2 3
ts
inventorie 937.54 895.45 42.09 4.70
s
trade 300.08 286.36 13.72 4.79
receivable
s
cash and 1412.8 2848.3 -1435.52 -50.39
bank 7 9
balance
short term 358.92 336.26 22.66 6.738833
loans 046
other 34.52 62.91 -28.39 -
current 45.12796
assets 058
4108.9 6548.6 -2439.65 -
5 37.25452
769

TOTAL 23254. 14161. 9092.3 64.20240

 23 93 744

ANALYSIS –

 A comparative balance sheet analysis is a method of analysing a company's balance

sheet over time to identify changes and trends. 

 From the balance sheet of Ambuja Cements Limited the following observations can be
made:-

1. The share capital and reserves have increased in the year 2016 which has led to
85.05% increase in the shareholders fund i.e. 19,073.56 crore rupees.

2. There has been an increase in the long term borrowings ,liabilities and provisions and
a decrease in the differed tax liability which has led to 9.42 % decrease in
noncurrent liabilities of ACL in the year 2016 i.e. 569.70 crore rupees.

3. The trade payables, micro and small enterprises, current liabilities and short term
provisions have increased in the year 2016 which has led to 11.93 % increase in the
current liabilities i.e.3610.97 crore rupees.

4. This increase in shareholders fund and current liabilities and a decrease in non-
current liabilities has led to an overall increase of 64.20 % in the total equity and
liabilities of ACL i.e. 23,254 crore rupees.

5. It is also observed that in the year 2016 there has been a fall of 3.18 % in capital
work in progress which includes tangible, intangible and fixed assets of ACL
i.e.6298.67 crore rupees.

6. However there has been an increase in the non-current investment and other
noncurrent assets and a decrease in the long term loans and advances which has led to
a rise of 1060.30 % in the total non-current assets of ACL i.e. 12,846.61 crore
rupees.

7. There has been an increase in the inventories, trade receivables ,short term loans and
a decrease in the current investments ,cash and bank balances and other current assets
which has led to a fall of 37.25 % in the total current assets of ACL i.e. 4108.95
crore rupees.
 8. The proportionate increase in the non-current assets of ACL is more as
compared to the proportionate decrease in the total current assets which has led
to an overall increase of 64.20% in the total assets of ACL i.e23254 crore rupees.

POWER PLANT

ACL (byt) has a captive power plant. The production of energy

in which is done in six ways –
 15 MW (STG 1)
 15 MW (STG 2)
 33 MW (STG 3)
 18 MW (Power grid/ CSEB)
 1 MW (Solar power)
 Generator (in case of sudden power cut, to avoid any sort
of breakdown )
Energy is generated as per the requirement as it cannot be
stored.

A separate 15A is prepared for power plant as well as

packing plant.
METER READING
METERREADING

 KWH means kilo watt hours it is units of active energy consumption

(active). These type of energy measurement is used for domestic loads
 KVARH means kilo volt amperes reactive hours, units of reactive energy
consumption, used in industries
 KVAH kilo volt ampere hours, means total energy consumption
 i. Determination of Maximum Demand- The maximum demand means the
highest load measured by sliding window principle of measurement in
average kVA at the point of supply of a consumer during any consecutive
period of 30 minutes during the billing period. ii. Billing Demand – The
billing demand for the month shall be the actual maximum kW demand of
the consumer recorded during the month or 75% of the contract demand or
15 kW, whichever is higher. The billing demand shall be rounded off to the
next whole number. iii. Minimum Charge – The demand charge on contract
demand (CD) is a monthly minimum charge whether any energy is
consumed during the month or not. iv. There shall be no restriction on
connected load for applicability of demand based tariff.

 Maximum Demand-
MD is measured in Kilowatt (kW). It is the highest level
of electrical demand monitored in a particular period usually
for a month period.
 Billing demand-
Maximum flow of power at a given point of time.
 Normal -
 On peak- time period between 6 pm to 11 pm. Value to
be calculated at 135% of normal time.
 Off peak- time period between 11 pm to 5 am. Value to
be calculated at 85% of normal time.
ACL borrows 18,000 units from CSEB every month.
75% of the above amount is to be paid every month as a
 mandatory amount. Additional amount is to be charged if
the consumption exceeds.
Units generated are to be converted to KVAH.
15% OF THE RATE OF NORMAL ENERGY
CHARGE WILL BE PAID AS ELECTRICITY DUTY
TO GOVERNMENT.
Generation of energy is done in ratio of 9:1 i.e. 90% from
TPP and 10% from CSEB.

GST- GOODS AND SERVICE TAX

  GST- One nation one tax. GST has established one common market
place for all.
 Tax structure
i. State
ii. Central
 Components
i. CGST- Central Goods and Service Tax
ii. SGST- State Goods and Service Tax.
iii. IGST- Integrated Goods and Service Tax.

If sale or transfer of goods and services is done within the state, the calculation of
GST is done on the basis of summation of central and state GST.

For example- if rate of tax on a good is 28% and sale is done within the state, the
amount to be charged is to be divided in two equal parts i.e. 14% + 14%.

 WORKING OF GST
STAGE PURCHAS VALUE VALUE RAT GST ON INPUT NET
E VALUE ADDITION/PROFI OF E OF OUTPU TAX GST ON
OF GST T GOODS GST T CREDI OUTPU
AND T T
SERVICE
S AT
NEXT
STAGE
MANUFACTURE 50 80 130 20% 26 10 26-
R 10=16
DEALER 130 20 150 20% 30 26 30-26=4
RETAILER 150 20 170 20% 34 30 34-30=4

Input tax rebate plays a very indispensable role in GST. The tax
already paid on input is thereafter reduced when tax on output is paid.
Input tax rebate can be claimed only when the assurance of both the
parties i.e. buyer and the seller is received.
 BENEFITS OF GST-
i. Elimination of multiple taxes.
ii. Cascading effect reduction
iii. Ease of business
iv. Help to build a corruption free tax administration.

 GST REGISTERATION
Registration of GST is compulsory for companies with minimum capital of:-

i. For North east + Sikkim , Rs. 10 lakhs

ii. For rest of India, Rs. 20 lakhs.
 CONSIDERATION – One has to pay tax even if he provides the
service for free of cost. For instance, if a lawyer feels not to receive
remuneration in return of a case solved by him, then too he has to pay
tax for the same.
 NEW REGISTRATION
Basic information are to be provided which include –
PAN details
Phone number
Office agreements
Constitution of tax payer
At the end- digital signature

Those who don’t prefer GST can choose COMPOSITIONSCHEME

UNDER GST to avoid tax and pay up to 1-2.5% of tax. When opting
for the Composition Scheme under GST, a taxpayer will be required
to file summarized returns on a quarterly basis, instead of three
monthly returns (as applicable for normal businesses). Those who
prefer this are not liable to get Input tax rebate as sufficient relaxation
is already provided in tax.
 IMPACT OF GST ON RETAILER
  TAX INVOICE
i. Material-
Original (recipient)
Duplicate (transporter)
Triplicate (supplier)
ii. Service-
Original (recipient)
Duplicate (supplier)

 Harmonized System of Nomenclature (HSN) Codes –

Such codes are used forGST enrolment/registration purposes.
Commodities can be identified with the use of these codes. Tax rate
appears automatically as soon as HSN code is filled in the column.
 ACCOUNTS AND RECORDS TO BE MAINTAINED
1) Inward supply of goods/services
2) Outward supply of goods and services
3) Stock of goods
4) Input tax credit availed
5) Output tax payable and paid.
THESE ARE TO BE KEPT UPTO ATLEAST SIX YEARS
FROM THE DATE THEY ARE PREPARED.

 DUE DATES OF RETURN

Up to 10th – outward sales/service GSTR-1

11th-15th – Inward sales/service GSTR-2

15th -17th – Amendments, if any for outward sales/service GSTR-1A

Up to 20th –Monthly return and discharge of tax GSTR-3

Up to 31st December- Annual filing GSTR-9

  Slabs in GST include rates – 0%, 5%, 12%, 18%, 28%

 ELECTRONIC WAY BILL- The transporter has to compulsorily

carry this bill with him at the time of transporting goods. If not, he has
to pay the penalty.

 SOME IMPORTANT POINTS-

Both buyer and seller have to be sure about filing return on time. If
not so, the benefit of Input tax rebate cannot be filed.
GST is to be calculated till the place where the registered office of the
buyer, not till the place where the supply is done.

IMPLICATIONS OF GST ON ACL

 CEMENT IS SOLD ON EX WORKS/FOR BASIS –

GST is applicable on transaction value. No separate concept of FOR and
EX works supply.
 SALE TO SEZ/EOU/EXPORT –
Tax invoice with IGST shall be issued. 90% refund within 7 days.
 DAMAGED CEMENT –
 Return of damaged cement by warehouse/3 rd party will be done by tax
invoice if returned from stock.
 INCENTIVE SCHEME –
No scheme of incentive in GST. Commitment given by state govt. has
to reimburse industry by way of budgetary allocation.

CONCLUSION-

One month of summer training under the guidance of Mr. Vishwas Soni sir
made us to discover a lot of things related to finance and costing of any
industry. Ambuja Cement follows the strategy of utmost care of its employees.
The company follows ‘SAFETY FIRST PRODUCTION NEXT’ approach.
The financial position of the company is stable and adding stars in the sky.
The company follows a procedure of process costing. Some details about
POWER PLANT were also provided.

Additionally, we got to know about the most burning topic among all
companies i.e. ‘GST’.

Thanking Mr. Gulzar Aneja sir and Mr. Arun Sen sir for their utmost
support and permitting for one month summer training course. Special
thanks to Mr. Vishwas Soni sir for being a great guardian at every step during
the internship.

Prepared by- Prerna Kannouje