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CMYK

Financial Analysis of ACC Limited (Standalone)


THE FOLL
THE OWI
FOLLO NG TAB
WING LE SET FOR
ABLE TH THE B
FORT REAK
BR UP OF THE CO
AKU MP
COMPAN
MPANY’S EEXPENSES
ANY’S XPENSES ASP
AS AR
PART OF THE N
ART ET SALES
NET
Figures in ` Crore

2010 % of Net sales 2009 % of Net sales

Net Sales 7,717.33 100% 8,027.20 100%


Other income 356.93 5% 240.42 3%
Increase in stock in trade and work in progress (56.58) -1% (28.74) 0%
Consumption of Raw materials 1,123.20 15% 891.51 11%
Purchase of Traded Cement 117.63 1% 93.16 1%
Personnel Expenses 461.89 6% 367.72 5%
Power and Fuel 1,598.67 21% 1,539.65 19%
Outward Freight charges on Cement etc. 1,070.30 14% 1,054.41 13%
Depreciation and Amortisation 392.68 5% 342.09 4%
Other Expenditure 1,848.24 24% 1,629.13 20%
Interest Expenses 56.78 1% 84.30 1%
Pr ofit bef
Profit or
befor e Tax
ore 1,461.45 19% 2,294.39 29%

Components of Net Sales (%)


omponents

Raw Materials 15% 11%

19%
Power & Fuel 21%

13%
Outward Freight 14% 5%
Personnel Expenses 4%
6%
Depreciation 5%
19%
Others 20%

29%
Profit before Tax 19%

2010 2009

1. NET SALES:
Figures in ` Crore

2010 2009 Change Change%

Sale of Products and Services (Gross) 8,563.71 8,724.24 (160.53) -1.84%


Less - Excise Duty 846.38 697.04 149.34 21.42%
Sale of Products and Services (Net) 7,717.33 8,027.20 (309.87) -3.86%

Net sales decreased by 3.86% during current year over previous year due to reduction in cement sales volumes by
1.12% which can be seen from the below mentioned table. The price per ton of cement has increased marginally
by ` 26.51 per ton as compared to previous year.

75th Annual Report 2010 77


CMYK

Financial Analysis

Figures in million tonnes

2010 2009 Change Change%

Cement (Mt) 21.28 21.52 (0.24) -1.12%


Clinker 0.12 0.20 (0.08) -40.00%

2. OT
OTHH ER INCOME:
INCO
Figures in ` Crore

2010 2009 Change Change%

Other operating income 258.45 163.70 94.75 57.88%


Other income 98.48 76.72 21.76 28.36%

Other Operating income has increased by 57.88% as it includes ` 64.45 Crore arising due to a write back of
provisions made in earlier years in relation to claims of Gagal Sales Tax Subsidy, such provision is considered to be
no longer required pursuant to a decision of the Supreme Court in the matter of Transport Subsidy delivered
during the year.
Other income is increased by 28.36% as compared to previous year, primarily on account of increase in dividend
income from mutual funds.

3. PU
PURRCHASE OF TR
HASE ADI
TRADI NG CEMENT
ADING CEMENT::
Figures in ` Crore

2010 2009 Change Change%

Purchase of Trading Cement 117.63 93.16 24.47 26.27%

Purchase of trading cement has increased by 26.27% due to increase in quantity by 25% from 0.24 to 0.30 million
tons.

4. RAW MA
RAW TER
MAT IAL
ERIALS CONSU
IALS MED:
CONSUMED:
Figures in ` Crore

2010 2009 Change Change%

Raw Materials Consumed 1,123.20 891.51 231.69 25.99%

Consumption of raw materials has increased by 25.99% over the previous year mainly due to following:-
O Average cost of slag has increased by ` 375.39 per ton.
O Purchased clinker has gone up by 0.38 million tons.

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CMYK

5. PACKI
PAC NG MA
KING TER
MAT IAL
ERIALS CONSU
IALS MED:
CONSUMED:
Figures in ` Crore

2010 2009 Change Change%

Packing Materials Consumed 268.55 238.72 29.83 12.50%

Consumption of packing material has increased by 12.50% mainly due to increase in the price of bags consumed
for dispatch of cement.

6. POWER AN
POWER ANDD FU EL:
FUEL:
Figures in ` Crore

2010 2009 Change Change%

Power and Fuel 1,598.67 1,539.65 59.02 3.83%

Power and fuel cost has marginally increased by 3.83%. By prudent sourcing we were able to bring the fuel costs
under control both imported and coal. The increase in purchased power tariff led to increase in costs.

7. REPAI
REPAI
AIRRS:
Figures in ` Crore

2010 2009 Change Change%

Repairs 474.03 371.06 102.97 27.75%

Expenditure on account of repairs has increased by 27.75% due to following:-


O Provision of ` 71.16 Crore (including ` 47.36 Crore pertaining to the period until December 31, 2009) is made
during the year, consequent to change its basis of identifying obsolescence of spare parts based on the actual
usage pattern.
O Increase in maintenance costs in various units of the company.

8. ROYAL
ROY TY
TY::
ALTY
Figures in ` Crore

2010 2009 Change Change%

Royalty 116.59 98.39 18.20 18.50

Royalty paid on limestone has increased by 18.50% since the rate of royalty on limestone had been increased from
` 45 to ` 63 per ton in the previous year w.e.f. August 13, 2009.

9. PERSON N EL EXPENSES:
SONN
PERSON
Figures in ` Crore

2010 2009 Change Change%

Personnel Expenses 461.89 367.71 94.18 25.61%

75th Annual Report 2010 79


CMYK

Financial Analysis

Personnel expenses have increased by 25.61% mainly on account of following:-


O Annual increase in salary and impact of revision in wage agreement with the trade unions.
O The company has recognized a debit of ` 53.50 Crore (Previous year credit of ` 22.00 Crore) due to change in
discounting rate and salary escalation rate in valuation of present value of employee benefit liabilities.

10. LOADI
LOADI NG, TR
ADING, ANSP
TRANSP OR
ANSPORTATION AN
ORT ANDDOTH ER C
OT HAR
CHAR GES:
HARGES:
Figures in ` Crore

2010 2009 Change Change%

Loading, Transportation and other charges 186.21 169.69 16.52 9.74%

Cost of Loading, Transportation and other charges has increased by 9.74% as compared to previous year due to
increase in Clearing and forwarding charges.

11. DISCOU
DISCOU NT
NT,, REB
OUNT ATES AN
REBA ANDD ALLOWANC
ALLO ES:
ANCES:
Figures in ` Crore

2010 2009 Change Change%

Discount, Rebates and Allowances 88.23 93.49 (5.26) -5.63%

The cost of Discount, Rebates and allowances has been decreased by 5.63% on account of decrease in sales
volumes.

12. RATES AN
RAT ANDD TAXES
Figures in ` Crore

2010 2009 Change Change%

Rates and taxes 97.20 101.45 (4.25) -4.19%

During the current year, there is marginal decrease in rates and taxes by 4.19% as compared to previous year.

13. ADVER
ADVERTISEMENT
VERT ISEMENT::
Figures in ` Crore

2010 2009 Change Change%

Advertisement 68.85 53.16 15.69 29.51%

Advertisement expenditure has increased by 29.51% as compared to previous year. During the current year, the
Company stepped up its advertising spending to improve its brand visibility.

14. OUTW
OUTW AR
TWAR
ARDD FR EIGHT CHAR
FREIGHT GES ON CEMENT ET
CHARGES C:
ETC:
Figures in ` Crore

2010 2009 Change Change%

Outward Freight Charges on Cement etc 1,070.30 1,054.41 15.89 1.51%

Freight charge has marginally increased by 1.51%. During the current year, there is increase in average freight cost
by 9.37% which is partially offset by decrease in sales volume.

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15. OT
OTHH ER EXPENSES:
Figures in ` Crore

2010 2009 Change Change%

Excise Duties (Net) 115.14 84.52 30.62 36.23%


Rent 19.75 19.14 0.61 3.19%
Insurance 18.32 17.60 0.72 4.09%
Stores and Spare parts Consumed 11.30 10.03 1.27 12.66%
Commission on Sales 23.64 23.12 0.52 2.25%
Miscellaneous Expenses 354.64 317.51 37.13 11.69%
Provision for Bad and Doubtful Debts 5.79 31.26 (25.47) -81.48%
TOTAL 548.58 503.18 45.40 9.02%

a) Excise Duties (Net):- There is increase in excise duty charges during the current year by 36.23%, due to increase
in excise duty rate on captive consumption of clinker at exempted units from ` 300 per ton to ` 375 per ton.
b) Miscellaneous Expenses: - Miscellaneous expenses has gone up by ` 37.13 crore as compared to previous year
due to loss on sale / discarding of assets at various locations.
c) Provision for Bad and Doubtful debts: - During the current year, there is decrease in provision for bad and
doubtful debts by ` 25.47 crore as in the previous year provision was made of ` 29 crore in respect of sales tax
incentive available under a state government policy in respect of one of its cement plants.

16. DEPR EC
DEPREC IA
ECIA TION AN
IAT ANDD AMOR
AMOR TIS
ORT ATION:
ISA
Figures in ` Crore

2010 2009 Change Change%

Depreciation and Amortisation 392.68 342.09 50.59 14.79%

There is increase in depreciation on account of asset capitalization of ` 1,333.67 Crore as compared to ` 1,005.71
Crore in the previous year.
During the current year, there is commissioning of Bargarh capacity expansion, Wadi capacity expansion, installation
of grinding units at Kudithini and Thondebhavi and other capitalization.

17. INTER
INTER ES
EREST EXPENSES:
EST
Figures in ` Crore

2010 2009 Change Change%

Interest Expenses 56.78 84.30 (27.52) -32.65%

Interest expenses has decreased by 32.65% due to following:-


O Repayment of Rupee Term loan of ` 50 crore (` 200 Crore was repaid in the month of Dec 2009).
O Interest claim on delayed payment of royalty on limestone provided in the previous year of ` 22.43 Crore.

75th Annual Report 2010 81


CMYK

Financial Analysis

18. FIXED ASSETS:


ASSETS:
Figures in ` Crore

2010 2009 Change Change%

Net Fixed Assets 5,082.44 4,158.29 924.15 22.22%


Capital Work in progress 1,562.80 2,156.21 (593.41) -27.52%

Net Fixed assets increased by 22.22% as compared to previous year mainly due to commissioning of Bargarh
expansion / modernization project, Wadi capacity expansion, captive power plants at Chanda and Bargarh, grinding
units at Kudithini and Thondebhavi and other capitalizations.
Capital work in progress decreased by 27.52% as compared to previous year mainly due to capitalization of projects.

19. INVESTMENT
INVEST S:
MENTS:
Figures in ` Crore

2010 2009 Change Change%


Investments 1,702.67 1,475.64 227.03 15.39%

There is increase in investments by 15.38% due to following:-


O Increase in the investment of mutual funds as compared to previous year. As on December 31, 2010 the
company invested ` 1,307.56 Crore (Previous Year ` 1,129.47 Crore) in mutual funds of its surplus cash.
O 100% Investment in Encore Cement and Additives Private Limited, a Company engaged in manufacturing and
supply of ground Slag.
O 45% Investment in Asian Concretes and Cements Private Limited, a Company engaged in cement grinding.

20. INVENTOR
ORII ES:
INVENTOR
Figures in ` Crore

2010 2009 Change Change%


Stock-in-trade and Stores & Spares 914.98 778.98 136.00 17.46%

Inventories has increased by 17.46% due to following:-


O Stock-in-trade as on December 31, 2010 was higher than the level of December 31, 2009 by ` 56.57 Crore.
O Raw materials inventory was higher by 50.45% due to increase in inventories of gypsum and slag.
O Inventory of Coal increased by 44.28% as compared to previous year.
O Provision of ` 71.16 Crore is made during the year, consequent to change its basis of identifying obsolescence
of spare parts based on the actual usage pattern

21. SU
SUNN DRY DEB
DRY TOR
DEBT S:
ORS:
Figures in ` Crore

2010 2009 Change Change%


Sundry Debtors 178.28 203.70 (25.42) -12.48%

Sundry Debtor has decreased by 12.48% as compared to previous year. During the current year, the Company has
received ` 45.19 from state government on account of Transport subsidy claim from director of Industries Simla.
The average collection period outstanding for cement customer third party sales as on December 31, 2010 is 4.37
days as compared to 2.95 days as on December 31, 2009.

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22. OT
OTHH ER CU
CURR R ENT ASSETS:
ASSETS:
Figures in ` Crore

2010 2009 Change Change%

Other Current assets 56.12 10.99 45.13 410.65%

During the current year, the other current assets have gone up as compared to previous year due to increase in
accrued interest on investment. Further there is increase in asset held for disposal at various locations.

23. LOANS AN
LOANS ANDD ADVANC
ADV ES:
ANCES:
Figures in ` Crore

2010 2009 Change Change%

Loans and Advances 523.94 516.11 7.83 1.52%

Loans and advances increased by 1.52 % as compared to previous year due to following:-
O Increase in advances and deposits on account of ` 57.45 Crore pertaining to sales tax incentive scheme at one
of the location.
O Decrease in balance with excise, customs ports & other authorities by ` 77.10 crore on account of utilization of
cenvat credit on capital items of capex projects, as the company has registered itself under the Large Tax Payer
Unit (LTU) w.e.f October 1, 2009.

24. CU
CURR R ENT LIAB LITII ES:
LIABII LIT
Figures in ` Crore

2010 2009 Change Change%

Current Liabilities 2,093.96 1,963.91 130.05 6.62%

Current liabilities have increased marginally by 6.62 % as compared to previous year.

25. PR
PROOVISIONS:
Figures in ` Crore

2010 2009 Change Change%

Provisions 1,652.46 1,150.00 502.46 43.69%

Provisions has increased by 43.69% due to following:-


O Employee benefits provision has increased by ` 22.99 crore on account of change in discount rate as well as
change in assumption for salary escalation rate.
O Proposed a one-time special Platinum Jubilee final dividend of ` 7.50 per share.
O Higher Provision for income tax.

75th Annual Report 2010 83


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Financial Analysis

26. LOAN FU
LOAN FUNN DS:
Figures in ` Crore

2010 2009 Change Change%

Secured Loans 509.93 550.00 (40.07) -7.29%

Unsecured Loans 13.89 16.92 (3.03) -17.91%

There is decrease in secured loans primarily on account of repayment of rupee term loan of ` 50 crore during the
current year.
There is marginal decrease in unsecured loan of ` 3.03 on account of repayment as compared to previous year.

27. CASH FL
CASH OW:
FLO
Figures in ` Crore

2010 2009 Change Change%

Net cash flow from operating activities 1,950.72 2,397.08 (446.36) -18.62%

The net cash from operating activities is decreased by ` 446.36 Crore due to following:-
O Lower operating EBITDA during the current year.
O Marginal decrease in net working capital.
O Decrease in Direct taxes paid (net) during the current year.
Figures in ` Crore

2010 2009 Change Change%

Net cash flow from investing activities 802.25 1,504.94 (702.69) -46.69%

During the current year, fund used in investing activities has decreased by ` 702.69 Crores due to following:

O Decreased in cash outflow for Capex purpose by ` 690 Crore.


O Decreased in purchase of investment by ` 72.20 Crore.
O Increased in loans to subsidiary companies by ` 81.51 Crore.
Figures in ` Crore

2010 2009 Change Change%

Net cash flow from financing activities 636.73 454.58 182.15 40.07%

The net cash from financing activities is increased by ` 182.15 Crore due to following:
O Higher payment of dividend and dividend distribution tax as compaired to previous year.
O No fund raised during the current year while ` 300 Crores was raised in previous year through issue of
debentures.

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CMYK

ECONO
ECONO MIC VAL
ONOMIC U E ADDED [E
ALU VA] SST
[EV TATEMENT
` Crore

2010 2009 2008 2007 2006


Capital employed 7,355 6,932 5,746 4,791 4,234

Avg Capital Employed 7,144 6,339 5,268 4,512 3,868

EVA

Net operating profit after taxes 1,120 1,607 1,213 1,439 1,232

Cost of Capital 819 694 643 538 419


EVA 301 913 570 901 813
Return on Capital employed (%) 15.68 25.35 23.02 31.89 31.85

Weighted Average Cost of Capital (%) 11.47 10.95 12.20 11.92 10.83
EVA / Aver
Av age C
erage apital Emplo
Capital Employyed (%) 4.21 14.40 10.82 19.96 21.02
En terprise Value
Enterprise

Market Capitalisation 20,194 16,362 9,012 19,228 20,349

Add: Debts 524 567 482 306 771

Less: Cash and Cash Equivalents 2,388 1,876 1,438 1,489 1,080

EV (En terprise Value)


(Enterprise 18,330 15,053 8,056 18,045 20,040
EV / Yr. End Capital Emplo
Capital yed ((T
Employ Times
imes)) 2.49 2.17 1.40 3.77 4.73

75th Annual Report 2010 85