Chapter - II

REVIEW OF LITERATURE

Research study should commence with the study of earlier studies in the

relevant area of research. It requires the study of previous research publications,

articles and research findings. Systematic research works comparing

performance of companies based on their geographical location are not yet

available. However there are research works on performance and the factors

influencing the performance. Research works carried out in India and a few

works done abroad are studied carefully. The methodology and findings of these

research works had been carefully studied and analyzed. Useful hints were

drawn from these studies which helped in putting the present research work in a

proper perspective.

It is mandatory to review the literature available with respect to the area

of the research study. Measuring the performance of the corporate sector has

always been an area of controversies from the point of view of the government,

shareholders, prospective investors, creditors, employees and any other

stakeholder. Several studies have been undertaken to evaluate the financial

performance in the corporate sector. This chapter presents some of the examples

of various studies conducted by financial analyst.

Edward, I. Altman (1968)1in his study on “ Financial Ratios, Discriminate

analysis and prediction of corporate Bankruptcy”, took 66 firms general and

applied multiple discriminate analysis to discriminate the failed firms from the

24
non-failed firms, on the basis of the weighted combination of five financial

ratios, the weighted combination of working capital to total liabilities,

cumulative retained earnings to total assets, earnings before interest and tax to

total assets, market value of equity to book value of total debt and sales to total

assets, he was able to predict the bankruptcy with 45 percent degree of

accuracy. He also revealed that the predictive ability of the model declined very

sharp when number of years prior to the failure increased.

Kaura, M.N and Bala Subramanian (1979)2 in his study on “Financial

Performance of the Selected Cement Companies” evidenced by Profitability,

Liquidity and capital structure ratios has declined. Analyzed ten cement units

during the period of study 1972 to 1977.The non availability of funds has

affected the modernization of plants and periodic rehabilitation of the kilns.

Besides, the bottlenecks in supply of raw materials and power and non

remunerative prices have reduced the capacity utilization, profits and cash

flows. The profitability and liquidity position in many cement companies have

been affected adversely because of the problems in supply of raw materials,

transport and power.

Arya (1984)3 has attempted to study on “Cost Function is Cement Industry in

India” , estimated the cost function in 12 cement companies for the period 1951-

1970, on the basis of secondary data collected from profit and loss accounts and

balance sheets of these companies. He found that there was no significant

relationship between capacity and average total cost. The rate of increase of

25
inputs prices during the seventies was much more than the rate of increase of

inputs prices during the seventies was much more than the rate of increase of

output prices. According to him, utilization of capacity and technological

obsolescence also existed in the industry. He examined the self-sufficiency of

the Indian cement industry. He analyses the history of cement and of the view

that acute shortage, frequent price controls low capacity use, profiteering, black

marketing and elusive targets plague the cement industry. Infrastructure

deficiencies and unimaginative policies of pricing and distribution are

responsible for this turbulence in the industry. The technological obsolescence,

low productivity and low returns had all formed a vicious circle. He pointed that

some of the factors that affected the growth of cement industry were non-

availability of good quality coal, power, technological obsolescence and

frequent price controls. He argues that only it these defects were rectified, the

cement industry could attain self-sufficiency.

Sharma, P.V, Y.V Apparao (1990)4 in their article titled 'Indian Cement

industry - Regional Analysis‟, explained about the determents of location of

cement factories, growth of cement industry and efficiency of cement industry

in India with reference to different regions. According to them location of

cement factories depends on factors such as, a) proximity to limestone deposits,

b) nearness of steel plants, thermal power plants, etc., procuring of

supplementary raw materials like granulated blast furnace, slag and fly ash, c)

proximity to sources of coal and gypsum, d) availability of uninterrupted power

26
at lower costs, e) connection to the railway transport and f) nearness to the

cement consuming centres.

In this empirical analysis it is found that the growth of cement industry in

all India and in the selected state reveals that the industry has achieved

considerable progress in all India and in the state of Madhya Pradesh, Andhra

Pradesh and Tamil Nadu. Further increasing capital use reflects the process of

substitution of capital for labour in Indian cement industry. It is further found

that the overall efficiency has been found to be increased in Andhra Pradesh,

Gujarat, Madhya Pradesh, Tamil Nadu indicating better productivity

performance and decreased in Bihar indicating poor productivity performance.

However, it isfound to be stable in the cement industry in all India.

National Productivity Council Research Division (1991)5 analyzed

“Productivity and Performance of Cement Industry”; Between 1950-51 and

1973-74 the compound annual growth rate of installed capacity at and

production was 8.1 per cent and 7.3 per cent respectively. It, however, dropped

to 3.6 per cent and 3.0 per cent respectively between 1973-74and 1979-8.

However, it peaked to 12 per cent and 12.4 respectively between 1979-80 and

1984-85. Between 1982 and 1989 the compound growth in capacity was 11.45

per cent. The demand supply gap went up from 4.6 million tons in 1978-79 to

9.4 million tonnes in 1982- 83 and steadily declined to 51 million tonnes in

1988-89. Government is the single largest consumer and its consumption of

27
cement was stagnant at 10.75 million tonnes in 1981, 10.37 million tonnes in

1986 and 8.1 million tonnes in 1987.

N.Chandrasekaran, (1994)6 has studied in his paper about the “Market

Structure of the Indian Cement industry”. The concept of firm, industry, market

structure, conduct and performance are defined as conventionally used in the

literature of industrial organizations. It is concluded that demand and supply gap

has been reduced considerably and supply of cement during study period

increased due to creation of additional capacity and capacity utilization. Private

sector has about 84 per cent of installed capacity. It is also found that the plants

have increased over the years. Mini Cement plants came into existence in

1980s. Consumption of Portland cement increased during the period. Thus

structural analysis shows changes in structural features and competitive

condition of the industry. This is mainly due to government initiative and

corporate responses.

Bhanu (1995)7 has made an attempt to bridge the gap by the “Liberalization

Performance of the Cement Industry” during various phases of control and

decontrol. Capacity utilization is taken in this study to be the most important

factor which explains the decentralization in investment in the cement industry

after mid 1980s. This study argues that both supply and demand factors, besides

policy change, influence the performance of the industry and shortage in supply

side factor hamper higher utilization of capacity. The availability of coal as well

as power is important for higher capacity utilization in cement industry, while

28
price of cement has a positive effect on capacity utilization and levy has a

negative effect. This study also reveals that the effect of liberalization in the

cement industry was diluted by the lack of investment in coal and power which

resulted in shortage, which in turn, lead to poorer performance and deceleration

in additional investment in the industry.

Arora and Sarkar (2002)8 has studied “Detecting Cartels in the Indian Cement

Industry” observed that the boom in the real estate and construction industry in

India has caused for a sudden and sharp increase in the price of cement to the

extent of price increment as high as 17 per cent in a single month. They attempt

to use the theories of collusive behaviour to explain this sudden increase.

Collusive behaviour of cartel formation refers to the illegal behaviour of firms

within an industry to explicitly or tacitly collude to regulate their market

behaviour so as to restrict competition. There is a very thin blurred line of

distinction between legitimate cooperation and illegitimate collusion. Cartel

members agree on fixing prices, total industry output, market shares, rigging

bids, setting common sale agencies, allocating territories, or a combination of

these measures to gain supernormal profits. In the process of assessing the

behaviour of cement industry behaviour, the paper analyses the characteristics

of an ideal cartel detection policy and structural and behavioural cartel detection

methods. Parameters studied include the firm concentration index, region-wise

production and consumption, capacity utilization, cost to sales ratio, etc. Their

analysis clearly demonstrates that the sudden surge in the price of the cement is

29
neither due to the demand-supply mismatch nor a sudden increment in the cost

of producing cement. The contention that the cement industry engaged in

illegitimate collusion is further strengthened by observing the recent decline in

cement price after the government announcement to import cement.

S. Rajamohan and T. Vijayaraghavan (2004)9 in their case study have

compared the “Production Performance of Madras Cements” and all other

cement units in India. For the purpose of comparison Mann-Whitney U-Test, a

Non-Parametric Test was used and the period of study covers 1996-97 to 2004-

05. For the study, Growth Rates of production have been used referring to the

percentage increase / decrease in the production of cement in a year, compared

to the previous year. The study was concluded by accepting the null hypothesis

that there is no significant difference in the production performance of Madras

Cements and production performance of all cements units in India.

Syed Tahir Hijazi and Yasir Bin Tariq (2006)10 in their analytical study on

“Determinants of Capital Structure: A Case Study For The Pakistani Cement

Industry”, had studied the performance of the firms in the cement sector by

using pooled regression model and had identified the determinants of capital

structure of the firms in the cement industry. They had found an inverse

relationship between size of the firms and their growth. Firm‟s size according to

them was negatively correlated with leverage suggesting that the bigger the firm

size lesser the debt they would use. They contradicted the static trade off theory

which emphasized a positive relationship between firm size and leverage.

30
Ghosh (2007)11 attempted to examine the efficiency of “Working Capital

Management of the Indian Cement Companies” during 92-93 to 2001-02. The

study was based on a sample of 20 large cement companies operating in India.

These companies constitute a large part of the cement industry in terms of

market sharing within the country. This study focused on the purpose of

examining the efficiency of working capital management practices of the

selected firms in cement industry. And to test how fast the sample firms have

been able to improve their respective level of efficiency in working capital

management with respect to a target level. For measuring the efficiency of

working capital management three index values i.e. performance index,

utilization index and overall efficiency index were calculated. Efficiency index

measures the ultimate efficiency of firm‟s working capital management. Large

gap between the maximum and minimum values of efficiency index revealed

the degree of inconsistency associated with the management. Finally it

concluded that the occurrence of the most successful year followed by the most

unsuccessful year and the reverse may be considered to be the outcome of the

firms‟ inefficiency in adopting a sound working capital management policy.

S.J. Bhayani (2010)12 this article focused mainly on the “Profitability of the

firm in Indian Cement Industry”. Profitability of the firm was greatly influenced

by internal and external variables. Internal variables such as size of

organizations, liquidity, management, growth of organizations, component of

costs and external variable like inflation rate influenced the profitability. This

31
study attempted to identify which variables were influenced more on the

profitability of Indian cement industry. This study covered all the listed cement

firms working in India for the period of 2001-2008. Regression analysis was

made to analyse the cause and effect of profitability. It found out that liquidity,

age of the firm, operating profit ratio, interest rate and inflation rate has played a

vital role in the determination of the profitability of Indian cement industry.

Vinoth K (2010)13 in his empirical study analysed “Financial Performance in

Cement Manufacturing Industry with reference to TANCEM. They undertook

the study for the period of five years from 2004-05 to 2008-09. The study used

ratio analysis, common size statement and Z – score test as financial and

statistical tools. The study found that the firm‟s profitability, liquidity and other

position were satisfactory. The study suggested improving its sales, that since it

is a government firm it supplied its product mainly to its aided firms if it comes

out and sell its product to public, it can succeed and increase its profit.

Srinivasan et al. (2011)14attempted an empirical study on “Dimension of

Financial Performance of Cement Units in South India” by applying Z score

analysis from 2005 to 2009. The study was based on the secondary data of

fourteen south Indian cement companies. The study aimed to examine the

corporate financial performance, accounting profitability measures and

shareholders‟ value based measures. For the analysis of accounting profitability

measures, Return on Investment (ROI), Return on Equity (ROE), Earning per

Share (EPS), Return on Capital Employed (ROCE) and Dividend per Share

32
(DPS) were calculated. For the analysis of shareholders‟ value, the Economic

Value Added (EVA) and Market Value Added (MVA) tools were employed.

'Fiscal-Fitness' of the company has been checked by the three modes of Z score

analysis i.e. Altman Model, spring ate Model and Fulmer Model. Z score

analysis concluded that two companies, Rain Commodities Ltd. and Zuari

Cement Ltd. were rated as failure out of fourteen south Indian companies

because of the excess debt and excess working capital that deteriorate the

financial health.

Singh D P (2011)15 made an empirical study to assess the “Net Working Capital

Level and Return on Capital Employed in firms of Cement Industries in India”.

For this purpose they selected 11 major cement companies. The study period

was 12 years from 1999 to 2010. The study used Pearson correlation matrix and

various ratios as statistical tools. The study found that there was no relationship

between networking capital and profitability which was departure from earlier

study and inventory turnover and days payable outstanding were positively

related to profitability and also no relationship between day‟s sales outstanding

and cash conversion cycle with profitability of a firm. There was positive

relationship between sales to total asset ratio and profitability.

Chandrabai T and Venkatajanardha Rao (2011)16 made an empirical study

to analyse the “Working Capital Management of a Cement Company”. They

undertook the study for the period of 6 years from 2004-05 to 2009-10. The

study used various financial ratios and correlation as statistical tool. The study

33
found that working capital management of the company was satisfactory. The

cement industry faced some challenges in the year 2010 due to decrease in

sales, decline in selling price and increase in input cost. The company had

neither too high nor too low inventory turnover ratio during the study period.

The company had no problem in the management of inventory.

Roshan Shankar, Udit agarwal, Pragyagoel and Wagisha jha (2011)17 in

their article on “Business Strategies for the Indian Cement Industry” had

stressed that the business strategies particularly the strategy of consolidation of

the businesses would help for the survival and growth in the highly competitive

market dominated by big industrial houses and multinational companies. Indian

companies, according to them should concentrate on the production of products

other than cement like ready mix concrete (RMC), cement with fragrance, pre-

collared plasters etc. and research on bringing out new construction materials

that will enable them to attain a niche in the market. They had further stated that

the Indian companies should be globalized and should gain competitive strength

so as to get they enabled to compete and come out successful in achieving high

level of profitability and impressive overall growth.

Sayeda Tarmina Quayyum (2011)18 in her research work on the “Effects of

Working Capital Management and Liquidity: Evidence from the Cement

Industry of Bangladesh” had analyzed the effects of working capital

management efficiency and liquidity on the profitability of the companies. She

had collected data from the Dhaka stock Exchange. She had found out a

34
negative relationship between cash conversion cycle and profitability of the

companies and had concluded that the cement companies in Bangladesh had

enormous scope for enhancing their profitability by handling their working

capital in more efficient ways.

Johannes H. Potgieter (2012)19 in the research paper on “An overview of

cement production: How green and Sustainable is the Industry” Management

clarified and answered the question whether the Cement Industry could Achieve

Sustainable Development in the 21st Century”. To achieve sustainable

development the cement companies according to her should be green and

environment friendly. She had concluded that the cement industry with its new

modernized technology equipment‟s and concepts could contribute substantially

for the sustainable and environmental friendly development.

Sachin mittal, Nishant Joshi and Kapil Shrimali (2012)20 made a study to

analyses the “Working Capital Management of Indian Cement Industry” by

considering two major cement companies for the period of four years from 2006

to 2009. The study used various financial ratios, mean, standard deviation,

coefficient of variation, correlation, multiple correlations, simple regression and

multiple regressions as financial and statistical tools. The study evidenced that

the both the selected companies had no significant relationship between

working capital and total assets and also there was no significant relationship

between working capital and sales. The study suggested that both the companies

might be using their reserves and surpluses to meet the current needs. The study

35
suggested that these companies have to increase their capital investment in

current assets to proper management of current ratio and liquidity.

Hitesh D. Vyas and Vishal shah (2012)21 undertook a study to analyse the

“Financial Statements Analysis of Cement Industry in India”. For this purpose

they selected five major cement companies in India. They undertook the study

for the period of five years from 2007-08 to 2011-12. The study used F-test,

single factor ANOVA and ratio analysis as statistical tools. The study found that

the financial performance of Birla and Ultra-tech cement companies performed

better in terms of finance, where as that of the same in case of Binani was not

that much satisfactory during the study period, while JK cement and JK

Lakshmi cement were found performing comparatively poor during the study

period.

Kathirvel V and Dharmaraj A (2012)22 undertook a study on “Financial

Performance of Selected Cement Industries in India”. For this purpose they

selected 6 companies, for the period of 5 years from 2006-2007 to 2010- 2011.

The study used various ratios, mean, standard deviation, co-efficient of

variation, Skewness, Kurtosis and ANOVA as tools of analysis. The study

evidenced that overall financial performance of cement companies was

relatively better. But it could improve its performance by identifying and

concentrating in the relevant areas. The companies would enhance their

financial performance.

36
Venkataramana N, Agash S Md and Ramakrishnaiah K (2012)23 undertook

a study on “Financial performance and predicting the risk of bankruptcy a case

of selected cement companies in India”. For this purpose they have selected 3

companies as sample. The researchers restricted their period of study into 10

years from 2001 to 2010. The study used various ratios and ALTMAN Z-score

model. The study found that liquidity, working capital turnover efficiency and

solvency position of the selected cement companies were not satisfactory. In

this study the Z-score analysis result showed that KCP limited and Kesoram

industries limited had poor financial performance and Dalmia Bharat limited

was at the edge of bankruptcy.

Loghman Hatami, Shirkouhi, Mehran Nemati and Homa Samadi (2012)24

in their article on "Investigating the Effects of Financial Indices on Cement

Companies Performance Using Fuzzy Analytical Hierarchical Process",

extracted financial indices and categorized them using fuzzy analytical

hierarchical process (fuzzy AHP). According to them profitability ratio and

profit margin ratio were the most important financial indices which were of use

for evaluation of cement Companies listed in Tehran Stock Exchange. Apart

from the two ratios, thirteen financial indices were extracted and were used for

creating a hierarchical structure wherein indices were prioritized and evaluation

of performance was made by using fuzzy analytical hierarchical process(fuzzy

AHP).

37
J. Pavithra (2012)25 in her “Study on Distribution Channels in Cement

Industry” focused her attention on the channels of distribution in cement

industry. A channel of distribution, according to her had been constituted by a

set of institutions which did all the activities employed to exchange their

products and titles from the production to consumption. She concluded that the

people and organizations undertaking different types of marketing activities

connected with product, price, promotion and place would help to get more

suppliers and customers of cement and enabled the company to strengthen the

volume of sales and brand image.

Acharekar Sachin Vilas Vijaya and Shingare Vishal Sundar Rama (2013)26

undertook a study on “A study of working capital management of cement

industries in India”. The researchers selected 19 companies for the study for the

study period of five years from 2003-04 to 2008-09. The study used various

financial ratios, correlation, ANOVA and F test for analysis. The study

identified that Birla Corporation Ltd, Heidelberg cement India ltd and JK

lakshmi cement Ltd were leading and they were the top in terms of current and

quick ratio. Andhra cement Ltd., a public sector enterprise had shown very poor

performance in working capital management in comparison to other private

companies.

Kaur and Singh (2013)27studied the “Impact of Liberalization on Cost of

Capital of Associated Cement Companies Limited” to analyse the impact of

Liberalization on cost of capital of ACC Limited for a period of thirty one years

38
from 1979-80 to 2009-10.The period was divided into two parts i.e. pre

liberalization period (1979-80 to 1989-90) and post liberalization period (1990-

91 to 2009-10). The Overall cost of capital was used as dependent variable

whereas size, leverage, non-debt tax shields, reserves and retained earnings to

total assets, liquidity, growth, profitability, collaterals and age were used as

independent variables. The findings revealed that there was a declining trend in

cost of debt whereas an increasing trend was found in cost of equity capital and

overall cost of capital during post-liberalization period. Result of multiple

regression analysis revealed that leverage, non-debt tax shields (NDTS), growth

and profitability were significant determinants of overall cost of capital. The

regression coefficient of dummy variables appeared with negative signs in both

the cases were significant at 5 percent level of significance with overall cost of

capital as dependent variable which was healthy sign as it indicates decline in

overall cost of capital of the company during post-liberalization period as

compared to pre liberalization period.

Ray, S. (2013)28investigated the “Capital Structure Determinants of Listed

Cement Companies in India”. The author examined the impact of nine

determinants i.e. asset collateral, asset composition, age of firm, size of firm,

business risk, growth rate, flexibility, profitability, non-tax shield as

independent variables on capital structure (Debt-Equity ratio) as dependent

variable with the help of two Stage Least Square method by running multiple

regression analysis for a study period from 1991-92 to 2011-12. The analysis

39
revealed that the asset composition, size and non-debt tax shields had

statistically positive relationship with debt-equity ratio while the profitability

and asset collateral had significant negative relations with leverage. Further, it

was found that the other factors such as business risk, flexibility and growth

opportunities had insignificantly impacted on capital structure.

Sandar Simranjeet Kaur (2013)29 undertook a study on “A study on liquidity

and profitability of selected Indian cement companies-A Regression Modelling

Approach”. The study selected six companies as sample. The study period was

5 years from 2008 to 2012. The study used various ratios, Regression analysis

and Correlation Analysis. The study found that current ratio and liquid ratio

were negatively associated with ROA and ROI, while cash turnover ratio was

negatively associated with ROI and ROA. The implication of the above was that

liquidity has low degree of influence on the profitability of cement companies in

India.

Bimal Jaisawal and Namita Srivastava Sushma (2013)30 undertook a study

on “Role of capital structure in defining financial performance: a study with

respect to cement industry in India.” The researchers selected eight cement

companies namely JK Cement, Binani Cement, Ultra Cement, Everest Cement,

Ambuja Cement, India Cement, Madras Cement and Grasim Cements. The

study period covered four years from 2008 to 2012. The study applied various

ratios, correlation, regression and two way ANOVAS test. The study identified

that there was weak positive correlation between capital structure and two

40
determinants of financial performance. The factors NPR, ROCE, ROA were

negatively correlated with capital structure.

Ashok Kumar Panigrahi (2013)31 undertook a study on analyse the

relationship between “Inventory Management and Profitability of Indian

Cement Companies”. For this purpose they selected five top Indian cement

companies. Their study period was spanned ten years from 2001 to 2010. Mean,

standard deviation and Co-efficient of variation, linear regression analysis, Karl

persons Co-efficient of correlation were used as statistical tools. The results of

the study indicate that there was significant negative linear relationship between

inventory conversion period and profitability. The profitability as measured by

GOP had a negative relationship with financial debt ratio, this implied that

profitability increased with decrease in financial debt ratio. Further the result

indicated that the relationship between current ratio and

the GOP was negative.

John Jacob M (2013)32in his study analysed “Working Capital Management

and Profitability of Selected Cement Companies in India”. For this purpose they

selected five cement companies for the period of one year (2011- 12). The study

used various ratios, correlation analysis and regression analysis as financial and

statistical tools. The study found that longer the current assets, operating profit,

liquidity and interest coverage ratio had negative relationship with LTD(Long

Term Debt) and other three components of working capital management had a

positive relationship with LTD. The study also noticed that companies that had

41
a low debt ratio tend to a shorter period to keep over their inventory. Company

would use the internal finance may earn the high profitability.

Zubair Arshad and Muhammad yasir Gondal (2013)33 made a study on

“Impact of working capital management on profitability- A case of the Pakistan

cement industry”. The researchers selected 21 cement companies for a study

period of 6 years from 2004-2005 to 2009-2010. The study applied regression

analysis and various ratios. The study suggested that the profitability of the

undertaking might be increased by shortening of inventory periods. The positive

relationship between account receivable period and profitability could be

reduced. Therefore their power insufficient competition can lead to a decrease

in profitability.

Krishna Kumar P, Franklin John S and Senith S (2013)34 undertook a study

on analyse the “Progress of Indian Cement Industry”. For this purpose they

selected two major cement companies. They undertook the study for the period

of fifteen years from 1991-92 to 2005-06. The study used various financial

ratios as tools. The study identified that the Indian cement industry was on the

dynamic growth path in capacity, production, factor productivity and financial

parameters. However, it needed alteration to increase export and build net

worth.

Kavitha T N R and Manimuthu N (2014)35 undertook a study of “Working

Capital Management with Special Reference to Birla Corporation Cement Ltd,

Kolkata”. The study period was five years from 2009 to 2013. The study used

42
ratio analysis as a financial tool. The study found that the financial status of

Birla Corporation Cement Pvt. Ltd. was good and liquidity position of the

company was also good. The company did not make further investment in

current assets, as it would block the funds, which could otherwise be effectively

utilized for the some productive purpose.

Sakthivel T (2014)36 undertook a study on “Financial Performance of Selected

Cement Companies in Tamil Nadu State”. The researchers selected three

cement companies from Tamil Nadu for the period of ten years from 2002-03 to

2011-12. The study used various ratios as tools of analysis. The study found that

KCP Cements Limited performance was well in its current ratio, among the

nine selected cement industries. The proprietary ratio of madras Cement

Limited was very weak when compared with others. The study suggested that

the government should contribute additional capital for expansion and

modernization. Madras Cement Limited should adopt the appropriate policy to

improve the proprietary ratio.

Geetha T N and Ramasamy S (2014)37 undertook an empirical study on “The

financial performance efficiency of selected cement industries in India”. The

researchers selected 17 cement companies for a period of 12 years from 2001-

2002 to 2012–2013. The study used various ratios and compound aggregate

growth rate as financial and statistical tools. The study found that the cement

companies‟ performances were good during the study period. The CAGR of the

operating cost was 14.01% per year, the CAGR of the total expenses was

43
15.55% per year. There was an improvement in the performance efficiency of

the Indian cement industries.

Edwin Sitienei and Florence Memba (2015)38 in their article on “The Effect

of Inventory Management on Profitability of Cement Manufacturing Companies

in Kenya: A Case Study of Listed Cement Manufacturing Companies in

Kenya”, had revealed that inventory was a vital part of current assets mainly in

manufacturing concerns. According to them huge funds were committed to

inventories in order to ensure smooth flow of production and to meet consumer

demand. Inventory usually involved holding or carrying cost along with

opportunity cost. Inventory management therefore played a crucial role in

balancing the benefits and disadvantages associated with holding of inventory.

Efficient and effective inventory management went a long way in successful

running and survival of the business firm. They had concluded that the gross

profit margin was negatively correlated with the inventory conversion period.

This meant that by shortening ICP, firm‟s profitability improved.

Malarvizhi M (2015)39 made a study to analyse the “Impact of Capital

Structure on Profitability of Listed Cement Industry in India”. For this purpose

they selected five cement companies for the period of five years from 2008-09

to 2012-13. The study used Mean, standard Deviation, Correlation analysis and

various ratios as financial and statistical tools. The finding of the study showed

that capital structure had negative impact on the profitability of the firms.

44
Venkateswarlu P and Krishna Reddy B (2015)40 undertook “A Study on

Financial of Working Capital in Select Cement Companies of Andhra Pradesh”.

For this purpose they selected six cement companies from Andhra Pradesh.

They were Anjani Portland Cements Ltd, Bheema Cements Ltd, Panyam

Cements and Mineral Industries Ltd, and Sagar Cement Ltd, for the period of

ten years from 203-04 to 2012-13. The study found that the aggressive attitude

of the management of the select units in financing the working capital. It was

further found that excesses borrowings were noticed in all units except DCL as

per first method and in all units as per second method in some years during the

study period.

RESEARCH GAP

Review of literature done above those light on various gaps in the

previous researches carried at in this field. The research intends to put in honest

efforts to provide her sincere contribution in the field. It is seen that

performance appraisal of various industries are done like Financial statement

analysis of Banks, Cement industry, Paper industry, Sugar industry etc., But no

study till date has been conducted to study the financial statement analyses of

India Cements Limited in particular.

45
References:

1. Edward, I. Altman (1968), “Financial Ratios - Discriminate Analysis and

Prediction of Corporate Bankruptcy”. Journal of Finance, Sep 1968
vol.9, pp. 589-609.

2. Kaura M. Namd (1979), Inter Firm Comparison of“Financial

Performance of Cement Companies of India”, ASCI Journal of
Management, Vol 19/1, Hyderabad, September.

3. I.C. Arya, "Cost function is cement industry in India", Arthavikas

volume.20, No.1 & 2 Jan-Dec 1984 P.24-48

4. Sharma, P.V, Y.VApparao (1990) “Indian Cement Industry a Regional

Analysis” Indian Journal of Regional Science VOL XXII, No 2, 1990.

5. National Productivity Council Research Division, "Productivity in the

cement Industry". Productivity,April - June, PP 141 -65,1991.

6. N.Chandrasekaran, “Structural Analysis of Cement Industry”.

Management .lournal, Vol 7. No.I. .Ian 1994. P.18

7. Bhanu. “Liberalization and performance of cement industry”. Economic

and Political weekly. August 25. 1995.

8. RituRAjArora and RunaSarkar (2002):“Detecting Cartles in the Indian

cement industry”: an analytical Framework, Industrial and Management
Engineering Department, IIT, Kanpur.

9. S. Rajamohan and T. Vijayaraghavan, “Production Performance of

Madras Cements Limited and that of All Cement Units in India – A
Comparative Analysis”, The Management Accountant, April 2008, Vol.
43, No.4, pp.264-265.

10.Syed TahirHijazi and Yasir Bin Tariq, “Determinants of Capital

Structure: A Case for the Pakistani Cement Industry”, The Lahore
Journal of Economics, Vol.11, No.1, 2006, pp. 63 80.

11.Ghosh, and Arindam, "Working Capital Management Practices in Some

Selected Industries in India - A Case Study of Impact of Working Capital
Ratios on Profitability in Cement Industry", The Management
Accountant, Vol..42, No.4, April 2007, pp. 32-35.

46
12.Bhayani and Sanjay J., "Determinant of Profitability in Indian Cement
Industry", South Asian Journal of Management, Vol.17, No. 4, 2010, pp.
6-20.

13.K.Vinoth, (2010), Analytical study of “Financial Performance in Cement

Manufacturing Industry”with reference to TANCEM,

14.Srinivasan, R.&Sundari, C. U. T. (2011). “Dimension of Financial

Performance of Cement Units in South India”-An Empirical Study(Z
Score Analysis). International Journal of Research in Commerce &
Management, 2(7), 64–68.

15.Singh.D.P, (2011), “Net Working Capital Level and Return on Capital

Employed in firms of Cement Industries in India”, VSRD International
Journal of Business & Management Research, Vol.1, No.4, PP.269-280.

16.T.Chandrabai and Dr. Venkatajanardha Rao, (2011), “Working Capital

Management in Cement Company” a study, International Journal of
Management and Business Study (IFMBS), Vol.1, No.3, PP.1-3.

17.Roshan Shankar, UditAgarwal, PragyaGoel and WagishaJha, “Business

Strategies for the Indian Cement Industry”, Business and Management,
Philippines, Vol.2, 2011, pp. 1-5.

18.SayedaTahminaQuayyum, “Effects of Working Capital Management and

Liquidity: Evidence from the Cement Industry of Bangladesh”, Journal of
Business and Technology, Vol.4, No.1, June, 2011, pp. 37-47.

19.Johannes H. Potgieter, “An Overview of Cement production: How Green

and Sustainable is the industry”, Environmental Management and
Sustainable Development, Vol.1, No.2, 2012, pp. 14-37.

20.Sachin mittal, Nishant Joshi and KapilShrimali, (2012), Empirics on

“Working Capital Management of Indian Cement Industry”, International
conference on humanities economics and geography, PP.212-216.

21.Hitesh D. Vyas and Vishal shah, (2012), A study on “Financial

Statement Analysis of Cement Industry in India”, Radix International
Journal of banking, finance and accounting, Vol.1, No.12, PP.1-19.

22.Kathirvel.V and A.Dharmaraj, (2012), “Financial Performance of

Selected Cement Industries in India”, Global Journal of arts and
management, Vol.2, No.1, PP.76-79.

47
23.Venkataramana.N, Agash.S.Md and Ramakrishnaiah.K, (2012),
“Financial Performance and Predicting the Risk of Bankruptcy a case of
Selected Cement Companies in India” , International Journal of public
administration and management research, Vol.1, No.1, PP.40-56.

24.LoghmanHatami-Shirkouhi, MehranNemati and HomaSamadi,

“Investigating the Effect of Financial Indices on Cement Companies
Performance using Fuzzy Mcdm”, Indian Journal of Innovations and
Developments, Vol. 1, Issue: 10, October 2012, pp. 468-473.

25.J. Pavithra, “A Study on Distribution Channels in Cement Industry”,

International Journal of Innovative Research in Science, Engineering and
Technology, Vol.1, Issue 2, December 2012, pp. 192-199.

26.Acharekarsachinvilasvijaya and shingarevishalsundarrama, (2013), “A

study of working capital management of cement industries in India”,
International Refered Journal of Engineering and Science (IRJES), Vol.2,
No.8, PP.1-17.

27.Kaur, S., & Singh, F. (2013). “Impact of Liberalization on cost of capital

Associated Cement Companies Limited”. International Journal
ofMultidisciplinary Research, 3(7). Retrieved from http://zenithresear
ch.org.in/images/stories/pdf/2013/JULY/ZIJMR/1_ZIJMR_VOL3_ISSU
E7_JULY 2013.pdf

28.Ray, S. (2013). Investigating “Capital Structure Determinants in Listed

Cement Companies of India”. Financial and Quantitative Analysis, 1(3),
47–58. doi:10.12966/fqa.09.02.2013

29.Sandar, Simranjeet Kaur, (2013), “liquidity and profitability of selected

Indian cement companies-A Regression Modelling Approach”,
International Journal of Economics, Commerce and Management, Vol.1,
No.1, PP.1-24.

30.Dr. BimalJaisawal Dr. NamitaSrivastavaSushma, (2013), “Role of capital

structure in defining financial performance: a study with respect to
cement industry in India”, International Journal of Applied Financial
Management Perspectives.

31.Dr. Ashok Kumar Panigrahi, (2013), analyse the relationship between

“Inventory Management and Profitability: A Empirical Analysis of
Indian Cement Companies”, Asia Pacific Journal of Marketing &
Management Review, Vol.2, No.7, PP.107-120.
48
32.M.John Jacob, (2013),“Working Capital Management and Profitability:
A Study of Selected Cement Industry in India”, Indian streams Research
Journal, Vol.3, No.7, PP.1-4.

33.ZubairArshad, Muhammad yasirGondal, (2013), “Impact of Working

Capital Management on Profitability-A case of the Pakistan Cement
Industry”, Vol.5, No.2, PP.384-390.

34.Dr.P. Krishna kumar, Dr.S. Franklin John and MS.S.Senith, (2013), “A

Study on the Progress of Indian Cement Industry”, Journal of marketing
studies, Vol.1, No.1, PP.1-15.

35.Dr. T.N.R. Kavitha and N. Manimuthu, (2014) “Working Capital

Management with Special Reference to Birla Corporation Cement Ltd,
Kolkata”, National Conference on Innovative Business Practices in
Technological Era, PP.72-75.

36.T.Sakthivel, (2014), “Financial Performance of Selected Cement

Industries in Tamilnadu State”, International Journal of Recent Research
and Applied Studies, Vol.1, No.4(3), PP.10-15.

37.Geetha .T.N and Ramasamy.S, (2014), “Financial Performance

Efficiency of Selected Cement Industries in India”, International Journal
of Emerging Engineering Research and Technology, Vol.2, No.3,
PP.106-111.

38.Edwin Sitienei and Florence Memba, “The Effect of Inventory

Management on Profitability of Cement Manufacturing Companies in
Kenya: A Case Study of Listed Cement Manufacturing Companies in
Kenya”, International Journal of Management and Commerce
Innovations, Vol.3, Issue 2, October 2015, pp. 111-119.

39.M.Malarvizhi, (2015), A Study on “Impact of Capital Structure on

Profitability of Listed Cement Industry in India”, International Journal of
Research in Finance and Marketing, Vol.5, Issue 5, PP.88-97.

40.P. Venkateswarlu and B. Krishna Reddy, (2015), “Financial of Working

Capital in Select Cement Companies of Andhra Pradesh”, International
Journal of Research in Business Management, Vol.3, No.7, PP.43-50.

49