AMBUJA CEMENT Ltd.

A FINANCIAL STATEMENT ANALYSIS OF AMBUJA CEMENT Ltd. Project Report Submitted to Prof. Riddhi Sanghvi Faculty Member, NGI – MBA College, (Affiliated with GTU) On Date 28 JULY, 2011.
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In partial fulfillment of the requirement for MBA programme Sem - II Batch 2010-12 Submitted by Bina H. Raval

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AMBUJA CEMENT Ltd.

A PROJECT REPORT ON AMBUJA CEMENT Ltd.

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AMBUJA CEMENT Ltd.

Preface

As a student of MBA it is important to study practical things with theoretical knowledge of financial management. The Financial Analysis of “AMBUJA CEMENT LIMITED-KODINAR” based on the Annual reports for five consecutive years from the year 2006 to 2010. The basic objective behind making such analytical reports is to have the knowledge of Financial structure and corporate environment. Moreover I can develop written communication and analytical skill. The report contains information about financial condition of the company. It also highlight future plan of the company. Also it contains growth rate of company in various aspects and financial soundness of company. From this financial statement analysis, I learnt a lot.

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Ajit Kachhela (Mechanical Engineer). First foremost. H.) who helped me a lot to do my project successfully.. personnel dept. Riddhi Sanghvi who guided me and my principal sir Dr. Kodinar for getting me acquainted to the company and giving me the golden opportunity to carry out this interesting training at Ambuja Cement Ltd. S. Harshad Patel (G.ACL who helped me a lot.M.R. Mr. He gave me knowledge about production system. Ved Vyas Dwivedi (NGI-MBA) who give me this golden opportunity. Transportation system.AMBUJA CEMENT Ltd. I am extremely thankful to my faculty member Prof. I am extremely thankful to Mr.K Udaiwal (D. I would like to thank Mr. H. my intellectual debt is to those people who have contributed significantly guidance to complete my project report successfully.R) ACL. Import & Export policy and also many other areas about Ambujanagar Plant NGI-MBA 4 .M. I am extremely thankful to Mr. officer. Sunil Kumar (Sr.G. Acknowledgement This successful project report has been made possible through the direct and indirect cooperation and guidance of various people for whom I wish to express my appreciation and gratitude. Dept).

Date: 28/07/2011 Place: Junagadh Signature Raval Bina H. Hereby declare that the project work presented in this report is my own work and has been carried out in charge of M.B. a student of M. This work has not been previously submitted to any other university for any examination.A.B.A. NGI-MBA 5 . DECLARATION I the undersigned Raval Bina H. Junagadh. section. of Noble Engineering College.AMBUJA CEMENT Ltd.

NGI-MBA 6 . Most of the graphs and Ratios are supporting me to say ACL LIMITED a good company. Executive Summary My Financial Analysis project is on “AMBUJA CEMENT LIMITED-KODINAR”. DU-Pont Charts etc.AMBUJA CEMENT Ltd. ACL is consistently going ahead. as well as the whole industry. In addition to these annual reports of ACL LIMITED I had also used various Books and Web based information to cover the current trends of the company and its competitors. I found that the ACL LIMITED is doing well in general. I have used various calculation based ratios and also study some other statements like Trends analysis. Main objective of this project is to know the financial strengths and weaknesses of ACL LIMITED For that I had taken the five consecutive years’ annual report from 2006 to 2010. To analyze the firm.

2 PURPOSE OF STUDY INTRODUCTION TO FINANCIAL ANALYSIS TREND ANALYSIS HORIZONTAL ANALYSIS VERTICAL ANALYSIS DU PONT ANALYSIS RATIO ANALYSIS FINDINGS RESULT AND SUGGESTION CONCLUSION BIBLIOGRAPHY ANNEXURE     1 2 3 4 5 6 7 8 9 10 11 12 I II III 7 8 10 12 13 14 15 16 17 18 20 22 24 26 33 49 57 65 69 79 81 86 88 90 NGI-MBA 7 .AMBUJA CEMENT Ltd.2 COMPANY AT GLANCE 1.1 HISTORY 1.8 ORGANIZATION CHART 1.3 EXISTING MANAGEMENT BODY 1.0 SWOT ANALYSIS 1. INDEX CERTIFICATE PREFACE ACKNOWLEDGEMENT EXECUTIVE SUMMARY GENERAL INFORMATION 1.6 DIFFERENT PRODUCTION UNITS 1.9 AWARDS & ACHIEVEMENTS 1.7 MISSION & VISION 1.4 COMPANY VALUES 1.5 DEPARTMENTS OF COMPANY 1.1 PORTER’S FIVE FORCES MODEL 1.

General Information NGI-MBA 8 .AMBUJA CEMENT Ltd.

It is one of the most profitable and NGI-MBA 9 . Later the company in order to expand its production setup and another plant in Kodinar itself called Gaj Ambuja Line-1 in 1992 followed by the third one Gaj Ambuja Line-2 in 1998 making the total production to reach approximately three million tons per annum marks. Its current cement capacity is about 25 million tones.AMBUJA CEMENT Ltd. was founded by Narotam Sekhsaria in 1983 with a partner. ACL has grown dynamically over the past decade. The Company is currently known as Ambuja Cements Ltd. Suresh Neotia. The global cement major Holcim acquired management control of ACL in 2006. (ACL) is one of the leading cement manufacturing companies in India. The Company. initially called Gujarat Ambuja Cements Ltd. Its environment protection measures are on par with the finest in the country. The Company has five integrated cement manufacturing plants and eight cement grinding units across the country.. ACL enjoys a reputation of being one of the most efficient cement manufacturers in the world. The company started its commercial production in October in 1986. Sekhsaria’s business acumen and leadership skills put the company on a fast track to growth. Holcim today holds little over 46% equity in ACL. The Company commenced cement production in 1986. Ambuja Cements Ltd.

and Galle. NGI-MBA 10 . The company has bulk cement terminals at Surat. Gujarat. Ambuja cements have a port terminal at Muldwarka.AMBUJA CEMENT Ltd. This resulted in speedier transportation and brought many coastal markets within easy reach. ACL has always met tough challenges and seized the opportunities that have come its way. The Company has its own fleet of ships. It thus continues to be the driving force and in many ways a benchmark for the cement industry in India. innovative cement companies in India. The port has a fleet of seven ships with a capacity of 20500 DWT to ferry bulk cement to the packaging units. ACL is the first Indian cement manufacturers to build a captive port with three terminals along the country’s western coastline to facilitate timely. It is an all weather port that handles ships with 40. cost effective and environmentally cleaner shipments of bulk cement to its customers. Ambuja Company is the first company to introduce the concept of bulk cement movement by sea in India. Panvel. It has nurtured the same spirit of enterprise and search for cutting-edge technology with which it started.000 DWT. ACL has also pioneered the development of the multiple bio-mass co-fired technologies for generating greener power in its captive plants.

AMBUJA CEMENT Ltd. Gaj Ambuja cement Ltd. Line-1 Gaj Ambuja cement Ltd. Ambujanagar. COMPANY AT A GLANCE  DIVISIONS: Ambuja cement Ltd. Line-2  YEAR OF ESTABLISHMENT : Sept. District-Junagadh.Kodinar. : Rs. Gujarat .362 715  CORPORATE OFFICE: Mumbai NGI-MBA 11 .. 1986  INVESTMENT :  PROMOTORS OF THE CO. Taluka. O. Suresh Neotia  REGISTERED OFFICE: - P. 86 crores Mr. Narrotam Sekhsaria Mr.

 BANKER: - Bank of India Bank of Baroda ANZ Grind lays Bank Punjab National Bank  AUDITOR: - M/s. M/s. Chaturvedi & co.Dalal & Shah M/s.M.AMBUJA CEMENT Ltd. P. Nanabhoy  SIZE OF THE FIRM: Large scale unit  COMPETITORS Sanghi Ultra tech cement Jaypee cement India cement Grasim NGI-MBA 12 .

Shakti Arora NGI-MBA 13 . Sanjeev Churiwala Company Secretary & Head Corporate Services CFO Head .AMBUJA CEMENT Ltd. B. Ajay Kapur Business Head (West & South) Ms.N. Meenakshi Narain Joint President (HR) Head .L. Taparia Mr.Central Purchase Officer Mr. EXECUTIVE MANAGEMENT TEAM NAME Mr.Technical Support Services Business Head (East) Mr. Onne van der Weijde  DESIGNATION Managing Director Mr. Ghassan Broummana Mr. S. Toshniwal Business Head (North) Mr. J.C. Toshniwal Mr.

2. therefore. That. But. Or to meet them either. COMPANY VALUES 1. ultimately leads to satisfying him. however remote to the customer. is I CAN. Cleaner Environment . Inspired Employees I don't need orders to trust my colleagues. Cleaner Environment – natural resources NGI-MBA 14 . suppliers.Pollution control I will leave a cleaner planet for my children. The communities around me are a part of my support system. 4. involve and enable people around me to realize their potential. 5. For this. The full benefit of our engagement with dealers and suppliers will only come when they act as partners in satisfying the customer. Delighted Customers My actions speak more about my company than a mere advertisement. I know. A small improvement in their life will have a multiplier effect for everyone.AMBUJA CEMENT Ltd. I don't need orders to seek challenges. create winwin associations between my dealers. my company and my customers. it exists. I may not see it. My function. Enlightened partners I will build enduring relationships with my dealers and suppliers. 3. Energised Society I will energise. I don’t need the rule book. My connection to him is like God. 6. I will.

And. I will use Nature responsibly and conserve its resources. the benefit will extend even to my children’s children. DEPARTMENTS AT AMBUJANAGAR 1) 2) 3) 4) 5) 6) 7) 8) 9) Personnel Department H. it will provide me with a permanent livelihood.D Department Account Department Sales & Distribution Department Administration Department Land Department Stores Department Costing Department Security Department 10) Electronic Data Processing Department 11) Purchasing Department 12) Packing Department 13) Bulk Cement Terminal Department 14) Mines Department 15) Project Planning & Development Department 16) Civil Department 17) Instrumentation Department 18) Electrical Department 19) Mechanical Department 20) Diesel Generator Department & Thermal Power Plant 21) Research & Development Department 22) Laboratory Department NGI-MBA 15 .R.AMBUJA CEMENT Ltd. If I allow Nature to replenish itself.

away from Veraval in Saurastra. 4. AMBUJANAGAR 40km. Gujarat. 3. Gaj Ambuja Line – 2 2. Ambuja b. GADCHANDUR: Near Chandrapur in Maharastra with one unit. This location consists of three units namely: a. THEIR LOCATION & PRODUCTION UNITS 1. 5. 23) Production Department 24) Hospital 25) Audit Department DIFFERENT PLANTS & SUBSIDIARY COMPANIES. ROOPNAGARSS: Punjab – Grinding unit NGI-MBA 16 .AMBUJA CEMENT Ltd. BHATINDA: Punjab – Grinding unit. DARLAGHAT: Near Simla in Himachal Pradesh with one unit. Gaj Ambuja Line – 1 c.

MISSION & VISION OF THE COMPANY NGI-MBA 17 .AMBUJA CEMENT Ltd.

ORGANISATION CHART Unit Head Head Works Head Commercial Head BCTMuldwarka Headp&c Head plant Headmaint Head-Opm Head DG Plant Head Amb Plant Head Gaj Head Prod HeadMech Head E&I Head Civil QC Manager Head Mines Sanand (GU) Head-HR Head-Gaj Head operations Head maint Head min res Head Trg & De Head-A/c Head Environment Head OH&S Head Prod HeadMech Head E&I Head QC Manager Head proj Head AFR Head Dev Civil Process Eng Head Civil NGI-MBA 18 .AMBUJA CEMENT Ltd.

air. Bhatinda o 'Environment Week awards' for plantation. Jaipur NGI-MBA 19 . Head QA&RD Academy AWARDS AND ACHIVEMENTS 2004-2005 Ernst & Young ‘Entrepreneur of the Year’ (Manufacturing) Asian Institute of Management Award for ‘Environmental Excellence’ Genentech 'Environment Excellence Award' in the Gold category by Genentech Foundation to GACL. noise and water pollution control and community development o 'Safety Week awards' for safer mining o o o • o 2005-2006 'Asian CSR Award' (Environment Excellence) 2005 for corporate sustainable development at GAC (India) Works o Centre for Science and Environment Green rating Project award to GACL (second rank) o 'Best Environment Management Practices Award' for the Ropar unit from the State Pollution Control Board o Capelin 'Certificate of Export Recognition' to GACL (Mumbai) in recognition of outstanding export performance o Awards won by the Maratha Limestone Mine of Maratha Cement Works (a unit of Ambuja Cements Ltd) Upparwahi • o 2007 In Mines Environment & Mineral Conservation Week–Indian Bureau of Mines o 'Corporate Excellence Award 2007' awarded to ACL by the Indian Institute of Materials Management.AMBUJA CEMENT Ltd. Chandigarh o Dun & Bradstreet 'American Express Corporate Award 2007' to ACL o 'National Award for Environmental Excellence' in Opencast Mining from NCBM (2nd place – to Abuja’s Sugala Limestone Mine) • o 2008 'Certificate of Merit' by Rajasthan State Productivity Council.

 Received ISO 14000 certification for environmental systems. The pollution levels at all its cement plants are lower than the rigorous Swiss standards of 100 mg/NM3.  First cement company to first to receive the ISO 9002 quality certification.  Lowest cost producer of cement in the world.  First company to introduce the concept of bulk cements movement by sea in die. 'Gobar Times Green Schools Programmed Awards' by Centre for Science and Environment (CSE) For the Year 2008 : Ambuja Public School : Rabriyawas o MAJOR ACHIEVEMENTS  Most profitable cement company in India.AMBUJA CEMENT Ltd.  The only cement company to be awarded with the National Quality Award. NGI-MBA 20 .  India’s largest exporter of cement.  Its environment protection measures are at par with the best in the world.  Received best award for highest exports by CAPEXIL.

AMBUJA CEMENT Ltd. SWOT ANALYSIS NGI-MBA 21 .

I. 4) Very less dependent on government coal and power. which avoid is presence in very sub regional markets. 2) Lower transportation cost due to increased transport through sea router fro bulk shipping. 6) Processing own Jetty and Ships useful for timely and cheap transport. Recession or growth. 3) Exchange rate fluctuation having direct effect on bottom line as well as on export. 4) Can get more foreign exchange by increase bulk cement capacity through the ship. 2) Basic raw material is easily available so can reduce cost and can compete other. 2) Government policies. NGI-MBA 22 . 5) High distribution efficiency and sound to cope up with economic situation. therefore pricing pressure. 3) Housing construction in the urban. & affordable housing loan provision by bank can hike demand. 4) Market competitor’s price. INTERNAL ENVIRONMENT POSITIVE 1) Lower energy cost due to improved value coal and use of non conventional fuels.e. local political changes & interruption in management. WEAKNESS THREATS 1) Threats from the economic cycles.AMBUJA CEMENT Ltd. STRENGTH EXTERNAL ENVIRONMENT OPPORTUNITY 1) Company’s financial condition is good so can start a new manufacturing unit and can increase production. 3) Excellent management team to cope with changing environment. 3) The pace of new capacity addition by the industry has not been as fast as previously. 2) Very limited fragmentation of plant. NEGATIVE 1) No national geographic coverage as in case of competition.

Porter’s Five Forces Model NGI-MBA 23 .AMBUJA CEMENT Ltd.

AMBUJA CEMENT Ltd. THREATS OF NEW ENTRANCE Unorganized player New upcoming units BUYER POWER NEW ENTRANTS u Large volume buyers Real estate contractors Foreign countries RIVALRY SUPPLIER SUPPLIER POWER Local suppliers Different inputs -Raw material Gypsum Silica Red clay Fly ash Coal Ultra tech cement Jaypee cement Sandhi ACC BUYER THREAT OF SUBSTITUTE SUBSTITUTES Fly ash Silica NGI-MBA 24 .

PURPOSE OF STUDY PRIMARY OBJECTIVE :  To assist in decision making the accounting analysis. PPC(Pozolonz Port line Cement) 2.  production department Raw Material 1. Coal  Types of Cement : 1.AMBUJA CEMENT Ltd.  To provide reliable financial information about economic resources & obligations of a business firm. OPC(Ordinary Port line Cement) NGI-MBA 25 . Red clay 5.  To provide other needed information about changes in such economic resources and obligations. Lime stone 2. Fly ash 6. Gypsum 3. Silica 4. SECONDARY OBJECTIVE:  To know the details of other departments and its work system in the company.

 Human Resource Department  For Plant: Shift .AMBUJA CEMENT Ltd.C For Table Work Job: 09:00am to 01:00pm (01:00pm to 02:00pm – Lunch Time) 02:00pm to 06:00pm  Research & Development Department a) Physical Laboratory b) Chemical Laboratory c) XRF(X-Ray Florescence Spectrometer)  Marketing Department    Marketing channel distribution in all over saurastra region.B Shift .A Shift . Advertisements Transportation facility for a bulk cement through sea in foreign. 06:00am to 02:00pm 02:00pm to 10:00am 10:00pm to 06:00am Time Keeping System NGI-MBA 26 .

AMBUJA CEMENT Ltd. Financial Statement Analysis NGI-MBA 27 .

credit and other decisions. and professional analysis for analyzing and interpreting the information contained in financial statements. Any successful business owner is constantly evaluating the performance of his or her company. and return on investment provide a basis for evaluating the efficiency of a company’s performance and aid in assessing its prospects. and even with successful businesses from other industries. You must be able to read between the lines of your financial statements and make the seemingly inconsequential numbers accessible and comprehensible. comparing it with the company's historical figures. earning. For Example. Information about past performance is useful in judging future performance. Financial statement analysis enables investors and creditors to (1) Evaluate past performance and financial position The starting point in the analysis of a company is to look at the record. profit margin. profits. however. INTRODUCTION The primary objective of financial reporting is to provide information to present and potential investors and creditors and other in making rational investment. you need to look at more than just easily attainable numbers like sales. OBJECTIVE OF FINANCIAL STATEMENT ANALYSIS Financial statement analysis is the collective name for the tools and techniques that are intended to provide relevant information to decision-makers. and total assets. NGI-MBA 28 . Effective decision making requires evaluation of the past performance of companies and used by investors. trends of past sales. To complete a thorough examination of your company's effectiveness.AMBUJA CEMENT Ltd. The purpose of financial statement analysis is to assess a company’s financial health and performance. with its industry competitors. cash flow. creditors. Financial statement analysis consists of comparisons for the same company over period of time and comparisons of different companies either in the same industry or in different industries.

business periodicals. Investor and creditors try to balance expected risks and returns. At the end of the information gathering process. Creditors expect the company to pay interest and repay the principal in accordance with the terms of lending. Therefore. the expectation of investors and creditors about future performance are shaped by their evaluation of past performance and current position. Investors expect an adequate return from the company in the form of dividends and market price appreciation. and investors who are dissatisfied with institutional investors are generally more actives and may insist on major management changes when the company does not fare well. they are interested in predicting the earning power and debt-paying ability of the company. Thus. 1) Company Reports:Every company publishes an annual report. and cash position. and information services. Their evaluation of the company helps them assess prospects for their investments. stock exchange. The returns they receive should be commensurate with the risks they perceive. As a starter they provide an overview of the company’s business. An assessment of current status will show where the company stands at present. annual reports are used to corroborate the vast array of company-specific data assembled from various sources. investors and creditors would invest in. borrowings. which contains valuable financial and other information about the company. such as the company’s inventories. Annual reports are the beginning and ending points in obtaining information about individual companies. If future returns are expected to fluctuate widely. or lend to. The most common sources of information about listed companies are company reports.AMBUJA CEMENT Ltd. they are much more difficult to predict then when results are expected to fluctuate within a narrow range. Individual investors are often passive and they rarely intervene in the working of a company as long as the company is reasonably successful. Creditors are concerned with (2) Predication of future performance Investors and creditors use information about the past to assess the prospects of a company. its status and its performance for a series of years. To a large extent. high-risk ventures only if they expect adequately high returns and would accept low returns only if the expected risk is low. SOURCE OF INFORMATION Individual investors and creditors must often depend upon published sources of information about a company. The typical Indian Company includes the following documents in its annual report: NGI-MBA 29 .

Most general newspapers devote a few pages to business news. 2) Stock Exchanges:Listed companies must file copies of their annual reports. with the stock exchanges in which they are listed. Business World and Business Today regularly carry studies of companies and industries.AMBUJA CEMENT Ltd. Both BSE and NSE have number publications giving useful financial and other information about companies. Business Standard. often. Listed companies are also required to publish a quarterly statement of financial results within one month from the end of the quarter. as well as additional documents such as a statement of distribution of share ownership and the quarterly statement. Financial and business magazines such as Business India. such as change of management. Listing agreements require that companies keep stock exchanges promptly informed of major developments affecting them. free of charge. All these papers give daily stock prices and carry news items and analytical write-ups on companies. These studies NGI-MBA 30 . • • • • Directors’ report Financial statements Schedules and notes to the financial statements Auditor’s report In addition. Business Line. and plant closures. The Economic Times is the oldest and the most widely read financial daily in the country. timely sources of financial and business news. The annual report is sent to the shareholders of the company. These statements are typically not audited unlike the annual financial statements and are published in leading newspapers. bonus and dividend decisions. The National Stock Exchange (NSE) is the other leading stock exchange in India. 3) Business Periodicals:Business newspaper and magazines are important and. and Financial Express are the other leading financial dailies in India. The Bombay Stock Exchange (BSE) is the oldest with it. 4) Information Services:In recent years. a number of information services have sprung up. Periodical Company and industry studies are brought out by CRISIL and ICRA. strikes. some companies provide financial highlights and a summary of financial performance for the past five or ten years.

USERS OF FINANCIAL ANALYSIS: Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the items of the balance sheet and the relationships between the items of the balance sheet and the profit and loss account. Economic reports and forecasts are available from the government and the Reserve Bank of India and from private sources. and a variety of other sources. Several useful studies of financial ratios are also available. credit rating agencies need considerably more information from companies requesting rating than that available from published reports. Owners. For example. Local area networks are also key source of information now a day. Similarly. Increasing interdependence among the various sub units of the business has made LAN networks a future to consider as a useful source of secondary information. NGI-MBA 31 . Analysts in stock brokerage firms and investment advisory services prepare periodic reports on companies and industries for their clients and sometimes for outsiders. 5) Internet & intranet: Search engines like Google go a long way in providing useful information for such projects. banks and financial institutions often demand additional information for processing loan requests. Information technology and Internet has brought the global world at your fingertip. major competitors. viz. foreign collaboration. and industry overview. there are many agencies that undertake private information search for a fee.AMBUJA CEMENT Ltd. notably the ones published by the Center for Monitoring Indian Economy (CMIE). Sophisticated users of financial statements invariably seek more information for their purpose. In additions. investors and others. trade associations. Industry-specific data come from the government. Days have gone when you have to wait for hours to gather information related to any particular topic. contain condensed financial statements of companies as well as other information such as management. or by parties outside the firm. creditors. The nature of analysis will differ depending on the purpose of the analyst. Financial analysis can be undertaken by management of the firm. Professional analysts collect information from company executive during plant visits and field trips.

on the other hand. are concerned with the firm’s long-term solvency and survival. They restore more confidence in those firms that show steady growth in earnings. financial statements to make analysis about its future solvency and profitability. but they place more emphasis on the firm’s projected. • SUPPLIERS OF LONG-TERM DEBT Suppliers of long term debt. • MANAGEMENT Management of the firm would be interested in every aspect of the financial analysis. confine to the evaluation of the firm’s liquidity position. They analyze the firm’s profitability over time. who have invested their money in the firm’s share. • TRADE CREDITORS: Trade creditors are interested in firm’s ability to meet their claims over a very short period of time. Long term creditors do analyze the historical financial statements. or Performa. its ability to generate cash to be able to pay interest and repay principal and the relationship between various sources of funds. They are also interested in the firm’s financial structure to the extent it influences the firm’s earnings ability and risk. As such. therefore. • INVESTORS Investors. NGI-MBA 32 . It is their overall responsibility to see that the resources of the firm are used most effectively and efficiently. they concentrate on the analysis of the firm’s present and future profitability. and that the firm’s financial condition is sound. are most concerned about the firm’s earnings. Their analysis will.AMBUJA CEMENT Ltd.

TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS Very few numbers in financial statements are significant in themselves.AMBUJA CEMENT Ltd. but meaning inferences can be drawn from their relationship to other amounts or their change from one period to another. The tools of financial statement analysis help in establishing significant relationships and changes. The most commonly used analytical techniques are: 1) 2) 3) 4) 5) TREND ANALYSIS (Index Analysis) HORIZONTAL ANALYSIS (Comparative Analysis) VERTICAL ANALYSIS (Common size Analysis) DU PONT ANALYSIS RATIO ANALYSIS NGI-MBA 33 .

AMBUJA CEMENT Ltd. TREND ANALYSIS NGI-MBA 34 .

NGI-MBA 35 . it is possible to perform trend analysis using published reports. INTRODUCTION Trend analysis involves calculation of percentage changes in financial statement items for a number of successive years.AMBUJA CEMENT Ltd. It is an extension of horizontal analysis to several years. Most preferred method. Trend analysis is carried out by first assigning a value of 100 to the financial statement items in the following years as a percentage of the base-year value. reliable for well-established firm. Trend analysis over longer periods helps in identifying certain basic changes in the nature of the business. Easier to understand. USE OF THE TREND ANALYSIS: • • • Provide information related to well-observed behavior of accounting an entity. Since many large corporations publish a summary of operating results and selected financial indicators for five years or more.

AMBUJA CEMENT Ltd. Balance Sheet Analysis Profit & Loss Analysis NGI-MBA 36 . TREND ANALYSIS: For carrying out the trend analysis. I have selected 2006 as the base year. This analysis is carried out in two phases as balance sheet analysis and profit and loss account analysis. All the financial data of the year 2006 have been arbitrarily assigned the value of 100.The values of other financial data is expressed in terms of these data as reference data.

BALANCE SHEET ANALYSIS: SOURCES OF FUNDS:  SHAREHOLDER’S FUND: YEAR 2006 2007 2008 2009 2010 RS(Cr) 3491.AMBUJA CEMENT Ltd.87 6470.32 209.90 7330.76 162.26 5672.92 NGI-MBA 37 .10 PERCENTAGE 100 127.72 4859.46 185.

92%.70 65.59 NGI-MBA 38 .71 19.AMBUJA CEMENT Ltd.It shows that company’s credit is increasing  LOAN FUNDS: YEAR 2006 2007 2008 2009 2010 Rs(Cr) 865.13 33.67 165. From the graph given above we can analyze that there is a continuous increase in the Shareholder’s fund of the company over the last five financial years is 109.35 7.70 288.03 PERCENTAGE 100 39.38 338.

In the present financial year there is a sudden decrement in the percentage of the loan funds.23 167.  TOTAL SOURCES OF FUNDS: YEAR 2006 2007 2008 2009 2010 RS (Cr) 4740.18 NGI-MBA 39 . From the above graph we can analyze that there is a continuous decrease in the loan fund of the company until the previous financial year 92.96 5576.41.AMBUJA CEMENT Ltd.76 6342.29 7122. It shows that company is making profit.77 150.44 7926.62 113.01 PERCENTAGE 100 117.

Grow is 67.AMBUJA CEMENT Ltd. This shows that on a whole the company is expanding.75 5139. From the above graph we can analyze that due to an overall increase in the equity funds used there is an overall increase in the sources of funds available to the company except in the year 2006.11 3674.62 164.52 197. APPLICATIONS OF FUNDS:  FIXED ASSETS: YEAR 2006 2007 2008 2009 RS (Cr) 3124.18%.97 6165.47 PERCENTAGE 100 117.00 NGI-MBA 40 .

16 55.93%.33 64.  INVESTMENTS: YEAR 2006 2007 2008 2009 2010 RS (Cr) 1133.24 NGI-MBA 41 . Ii increase 109.93 From the above graph we can analyze that there is a steady growth of the fixed assets for the company except in the year 2006.45 209.39 727.95 PERCENTAGE 100 130.AMBUJA CEMENT Ltd.36 332.12 1480.01 625. 2010 6558.This shows efficient utilization of the sources of funds by the company.64 29.

AMBUJA CEMENT Ltd.

From the above graph we can say that there is fluctuating increase and decrease in the investment made by the company but in the year 2009 there is sudden increment in the investment. It is decrease 44.76%.

 CURRENT ASEETS, LOAN AND ADVANCES:

YEAR 2006 2007 2008 2009 2010

RS (Cr) 1177.61 1583.72 2339.45 1979.34 3135.33

PERCENTAGE 100 134.48 198.66 168.08 266.24

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From the above graph we can analyze that there is a continuous growth in the current assets, loan and advances of the company. However the major contributors to this growth in the current assets are debtors and other current assets. Inventories contribute a very little portion of the same. The rise in quantity of debtors is a major cause of concern. It is increase 166.24%.

 CURRENT LIABILITIES, PROVISIONS:

YEAR 2006 2007 2008 2009

RS (Cr) 701.59 1168.29 1473.80 1741.09

PERCENTAGE 100 166.52 210.06 248.16

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AMBUJA CEMENT Ltd.

2010

2394.18

341.25

From the above graph we can analyze that there is a continuous rise in the current liabilities and provisions of the company. This shows that the company is expanding its operations on a continuous basis. However on the other hand a similar rise in the current assets is also required. It is increase 241.25%.

 NET CURRENT ASSETS:

YEAR 2006 2007 2008 2009 2010

RS (Cr) 474.12 415.43 865.65 238.25 741.15

PERCENTAGE 100 87.62 182.58 50.25 156.32

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32%.44 NGI-MBA 45 . PROFIT & LOSS ANALYSIS:  INCOME: YEAR 2006 2007 2008 RS (Cr) 6381.04 PERCENTAGE 100 93. From the above graph we can analyze that there is a fluctuation in the net current asset of the company. This also indicates that major part of the company is financed into its dayto-day operations. But in 2010 it again increased.AMBUJA CEMENT Ltd.91 6410.79 100. It is increase 56.95 5985.

67 From the above graph we can analyze that there is a continuous rise in the income levels of the company.81 114.71 7637.53 5529.58 121.48 4748. 2009 2010 7332. Income of the company is dependent mostly on sales of its products.  EXPENDITURE: YEAR 2006 2007 2008 2009 RS (Cr) 4540.87 104.35 4080.89 119.AMBUJA CEMENT Ltd.78 NGI-MBA 46 . It is increase 19.67%.41 PERCENTAGE 100 89.

60 2789. It is increase 32.20 From the above graph we can analyze that there is a continuous rise in the total expenditure of the company. This should be a major cause of concern for the company.84 1803.20%. 2010 6002.86 47 .AMBUJA CEMENT Ltd.30 NGI-MBA PERCENTAGE 100 149.36 1969.83 105.81 96.47 132.  PROFIT BEFORE TAX: YEAR 2006 2007 2008 2009 RS(Cr) 1861.

AMBUJA CEMENT Ltd.11 1402.27 From the above graph we can analyze that there is a fluctuation in the profit before taxation.04 48 . It is decrease 10. Obviously a sharp rise in the profits is not experienced for the present financial year. This is not a good sign for the company.27 1218. 2010 1661.  NET PROFIT: YEAR 2006 2007 2008 2009 RS(Cr) 1503.25 1846.87 89.80 93.28 81.37 NGI-MBA PERCENTAGE 100 122.73%.

2010 1263.AMBUJA CEMENT Ltd.61 84.95%. This present financial year shows a strong net profit for the company compare to the year 2006. BALANCE SHEET ANALYSIS RESULT NGI-MBA 49 .05 From the above graph we can analyze that there is a fluctuation in the net profit of the company.It is decrease 15.

76 166.24 241. NO 1 2 3 4 5 6 7 8 PARTICULARS Share Holders Fund Loan Funds Total Sources Of Fund Fixed Assets Investment Current Assets.73 15.AMBUJA CEMENT Ltd.20 DECREASE (%) 10.25 56.67 32.92 67.32 PROFIT & LOSS ANALYSIS RESULT NO 1 2 3 4 PARTICULARS Income Expenditure Profit Before Tax Net Profit INCREASE (%) 19.95 NGI-MBA 50 . Loan & Advances Current Liabilities Net Current Assets INCREASE (%) 109.41 44.18 109.93 DECREASE (%) 92.

AMBUJA CEMENT Ltd. HORIZONTAL ANALYSIS NGI-MBA 51 .

A simple approach to financial statement analysis. • These changes can be obtained for a series of years. • This information provides insights related to variances in two results. HORIZONTAL ANALYSIS: INTRODUCTION: Financial statements present comparative information for the current year and the previous year. • This variance facilitates decision-making. is to calculate amount changes and percentage changes from the previous year to the current year. known as Horizontal analysis.AMBUJA CEMENT Ltd. • It helps in formation of financial strategies. NGI-MBA 52 . converting amount changes to percentages is more useful in appreciating the order of magnitude of the change. While an amount change in itself may mean something. USE OF THE HORIZONTAL ANALYSIS: • To obtain the changes among various accounting information in respect to a base year.

the total change occurring in the equity funds is not similar to the changes occurring as a result of the changes in the reserves and surplus of the company.AMBUJA CEMENT Ltd.  LOAN FUNDS: YEAR 2009 2010 VALUE (in Cr) 165. BALANCE SHEET ANALYSIS: SOURCES OF FUNDS:  SHAREHOLDER’S FUNDS: YEAR 2009 2010 VALUE (in Cr) 6470.70 65. HORIZONTAL ANALYSIS: For carrying out the horizontal analysis.27 Due to changes in the shareholders funds.03 CHANGE (%) -60.10 CHANGE (%) 13.75 From the above table we can observe that the increment in the total loan funds is mainly due to the increment in the unsecured loan funds being used by the company.90 7330. I have selected the two financial years of 2009 and 2010. This analysis is carried out in two phases as the balance sheet analysis and profit and loss account analysis. NGI-MBA 53 .

45 CHANGE (%) 6.  INVESTMENT: YEAR 2009 2010 VALUE (in Cr) 727.AMBUJA CEMENT Ltd.90 percent compare to the year 2009.39 percent in the value of fixed assets as compared to last financial year.47 6558.95 CHANGE (%) -13.39 Due to the increase in the depreciation value of the fixed assets then also there is an increment of about 6. APPLICATIONS OF FUNDS:  FIXED ASSETS: YEAR 2009 2010 VALUE (in Cr) 6164. NGI-MBA 54 .90 Here we observe that there is sudden decrement in the value of investment made by the company which changes up to 13.01 625.

From the above table we can observe that the increase in the working capital of the company as compared to the previous financial year is about 211.34 3135.15 CHANGE (%) 211. This increase is mostly provided due to the increase in the creditors of the company. PROVISIONS: YEAR 2009 2010 VALUE (in Cr) 1741.33 CHANGE (%) 58.08 Net current assets are obtained as the difference between the current assets and the current liabilities.08 percent.09 2394.40 From the above table we can observe that the increase in the current assets as compared to the previous financial year is about 58.  CURRENT ASSETS.40 percent.AMBUJA CEMENT Ltd.51 percent as compared to the previous financial year.  NET CURRENT ASSETS: YEAR 2009 2010 VALUE (in Cr) 238.25 741. However here the analysis of the quality of the current assets for the company is major concern.51 From the above table we can observe that the increase in the current liabilities of the company is around 37.18 CHANGE (%) 37.  CURRENT LIABILITIES. NGI-MBA 55 . LOAN AND ADVANCES: YEAR 2009 2010 VALUE (in Cr) 1979.

16 From the above table we observe that there is an increase in the total income of the company compare to previous year. PROFIT & LOSS ANALYSIS:  INCOME: YEAR 2009 2010 VALUE (in Cr) 7332.71 7637.81 CHANGE (%) 04.30 1661. NGI-MBA 56 . It shows inverse effect on the company.84 From the above table we observe that the decrease in the profit before taxation is significantly high as compared to the previous financial year.47 From the above table we observe that there is an increase in the total expenditure of the company compare to previous year. It shows the good efficiency of the company.71 From the above table we can observe that the increase in the net profit is significantly higher as compared to previous financial year.55 2010 6002.61 CHANGE (%) 03.AMBUJA CEMENT Ltd.87 CHANGE (%) -7.37 1263.  EXPENDITURE: YEAR VALUE (in Cr) CHANGE (%) 2009 5529.  NET PROFIT: YEAR 2009 2010 VALUE (in Cr) 1218.41 08.  PROFIT BEFORE TAX: YEAR 2009 2010 VALUE (in Cr) 1803.

AMBUJA CEMENT Ltd.57 CHANGE (%) 58. NGI-MBA 57 . It shows companies good growth.  BALANCE TO BALANCE SHEET: YEAR 2009 2010 VALUE (in Cr) 169.81 From the above table we can observe that the increase in the net profit is significantly higher as compared to previous financial year.74 269.

16 08. BALANCE SHEET ANALYSIS RESULT NO 1 2 3 4 5 6 7 PARTICULARS Share Holders Fund Loan Funds Fixed Assets Investment Current Assets.08 DECREASE (%) 60.71 58.27 6.40 37.51 211.75 PROFIT & LOSS ANALYSIS RESULT NO 1 2 3 4 5 PARTICULARS Income Expenditure Profit Before Tax Net Profit Balance to Balance Sheet INCREASE (%) 04.90 58. Loan & Advances Current Liabilities & Provisions Net Current Assets INCREASE (%) 13.84 NGI-MBA 58 .AMBUJA CEMENT Ltd.55 03.39 13.81 DECREASE (%) 7.

AMBUJA CEMENT Ltd. VERTICAL ANALYSIS NGI-MBA 59 .

Helps in formation strategies to eliminate necessary expenses. VERTICAL ANALYSIS INTRODUCTION: Vertical analysis is the proportional expression of each item on a financial statement to the statement total. a comparison of common-size statements for several years may reveal important changes in the components from one year to the next. Vertical analysis helps in making comparisons of companies that differ in size since the financial statements are expressed in comparable common-size form. and which contributes the least. Help on focusing which expenses contribute the most. NGI-MBA 60 . The results of vertical analysis are presented in the form of common-size-statements in which all the elements within each statement are expressed in percentage of some common number and always add up to 100 per cent. The items in the profit and loss account are usually expressed as percentages of sales. Helps in providing information related to high return & low return assets.AMBUJA CEMENT Ltd. Help in formation of strategies to achieve high return from assets. USE OF THE VERTICAL ANALYSIS: • • • • • Give information related to proportion of factors contributing to the assets or the liabilities. Further. while the balance sheet items are given as percentages of total shareholders’ funds and liabilities or of total assets.

03 530. TYPESOF FUNDS 2009 R.44 % 4.AMBUJA CEMENT Ltd.34 7022.70 100 EQUITY CAPITAL EMP.40 0.57 1.70 485. BALANCE-SHEET ANALYSIS  SOURCES OF FUNDS: In this analysis the total sources of funds are assumed to be 100 percent and the percentage formation by the debt and equity funds is calculated.84 7122.01 2010 % 3.86 0.24 6165.STOCK OPTION OUTSTANDING RESERVE & SURPLUS SECURED LOAN UNSECURED LOAN DEFF TAX LIAB TOTAL NGI-MBA 61 .60 0 0.97 1.02 88.92 100. The entire vertical analysis is carried out in the various phases as explained below step by step.88 7926.92 6.S(Cr) SHARE 304. VERTICAL ANALYSIS For carrying out the vertical analysis the financial years selected are 2009 and 2010.00 65.79 0 65.S(Cr) 305.003 86.28 0.82 100 R.82 6.74 0.

57% and in year 2010 is 88.35 0.01 NET CURRENT 238. TYPES OF FUNDS 2009 R.  APPLICATION OF FUNDS In this analysis the total application of funds are assumed as 100 and the percentage formation by each of the individual components is carried out by calculation.41 10.71 TOTAL 7122.82%.47 INVESTMENT 727.46 7926. The graph given above shows the changes occurring in the sources of funds being used by the company in the last two financial years. Talking about Reserve & Surplus the total holding of it from total sources of fund in the year 2009 is 86.16 2010 % 82.44 % 86.92% and in year 2010 is 0.S(Cr) 6558.00% and unsecured loan the total holding of it from total sources of fund in the year 2009 is 0.40% and in year 2010 is 0.45 625.25 ASSETS MISCCELENEOUS 2.S(Cr) FIXED ASSETS 6154.04 100 R.AMBUJA CEMENT Ltd.60% and secured loan the total holding of it from total sources of fund in the year 2009 is 1.30 0.74 7.95 741.35 0.42 percent in the shareholders funds forming the total sources of funds.005 100 NGI-MBA 62 . Analyzing point by point we can observe that there is a decrease of about 0.21 3.90 9.

67% in the fixed assets constitution in the application of funds.24 100 NGI-MBA 63 . To finalize we can say that the company constitutes a majority of its funds on the net current assets or the day-to-day operations financing.  PROFIT AND LOSS ANALYSIS INCOME: In carrying out this financial analysis we have assumed the total income of the company equal to 100 percent and by calculation we want to obtain how much percentages each of the components constitutes to the total incomes.390.49 100 RS(Cr) 7.87 255. This shows that the company is expanding its operations on a whole. So the company needs to manage this working capital arrangement properly. This shows that the company is using a very aggressive mode of financing in the recent two financial years.81 2010 % 96.60 7637.21 247. There is an increase of 6. INCOME NET SALES OTHER REVENUE TOTAL 2009 RS(Cr) 7076. Another important point to be noted is that the investment also decreases 2.71 % 96.84 7332.AMBUJA CEMENT Ltd.75 3. From the above graph we can observe that comparing the two financial years there is a reduction of almost 3. Net current assets are increased 6% than previous year 2009 this shows company has strong liquidity than 2009.31%.51 3.00% in the net current assets constitution of the application of funds.

67 % 85.43 296.S(Cr) 5577.37 6449.49 0.55% in the year 2009 and in the year 2010 is 96.75%.19 435.37 4.67% in the year 2009 and in the year 2010 is 3.00 6. Talking about other income we can observe that there is reduction of 0.69 387.S(Cr) 5229.75 6.84 9.75 100 NGI-MBA 64 . EXPENDITURE COST OF SALES INTEREST DEPRECIATION TAX TOTAL 2009 R.99 584.95 48.2 2010 % 86.32 22.24%.54 100 R.26 0.93 6133.  EXPENDITURE: In carrying out this financial analysis we have assumed the total expenditure of the company equal to 100 percent and by calculation we want to obtain how much percentages each of the components constitutes to the total expenses. From above graph we can conclude that net sales of the company increases by 0.AMBUJA CEMENT Ltd.25 percent in the year 2010 which is not a good sign for the company and overall contribution made by the other income is 3.24 percent in the year 2010 which indicates higher achievement of sales and overall contribution made by the net sales is 96.

interest and depreciation expenses. but may be because sales also increased by 0. NGI-MBA 65 .24%. employees. Tax liability of the company is decreased than previous year is 2.23%.AMBUJA CEMENT Ltd. From the above graph we can observe that there is an increase in the formation of each type of the expenses except the purchase. However these increases are quite ineffective as to comment on the financial strategy.79%. Because the cost of sales is increased than the previous year is 1.

24 1.38 1.42 PROFIT & LOSS ANALYSIS RESULT NO 1 2 3 4 5 6 PARTICULARS Net Sales Other Revenue Cost of Sales Interest Depreciation Tax INCREASE (%) 0.017 2.00 0.40 0.16 2.67 2.12 3.31 6.AMBUJA CEMENT Ltd.23 0. BALANCE SHEET ANALYSIS RESULT NO 1 2 3 4 5 6 7 8 9 10 PARTICULARS Equity Share Capital Employee Stock Option Outstanding Reserve & Surplus Secured Loan Unsecured Loan Defer Tax Liability Fixed Assets Investment Net Current Assets Miscellaneous INCREASE (%) 0.035 DECREASE (%) 0.10 0.79 DECREASE (%) 0.25 NGI-MBA 66 .03 1.

AMBUJA CEMENT Ltd. DUPONT ANALYSIS NGI-MBA 67 .

It is especially well suited for benchmarking. it cannot replace a detailed analysis. It is a technique that can be used to analyze the profitability of a company using traditional performance figures. DUPONT ANALYSIS The DuPont Model. ROI = Net Profit Margin x Total Assets Turnover The analysis of the DuPont tree (by looking at each branch and its figures) allows the manager/investor to identify the key drivers. Although the DuPont analysis offers a clear overview of the most relevant drivers of the ROI and their interconnection. as well as their impact on the ROI. is a set of financial ratios and key figures relating to the Return on Investment (ROI). The figures and ratios may only indicate general tendencies and developments. NGI-MBA 68 . developed in 1914 by F.AMBUJA CEMENT Ltd. It integrates elements of the Income Statement with those of the Balance Sheet. Identified weaknesses simultaneously show up potential for improvement. Donaldson Brown of chemical company DuPont de Nemours & Co.

82) INVEST MENT. 2009: RETURN ON INVESTMENT 0.32) OPER.C. We can observe that for the year 2009 the net profit margin is of 0. (629.17 percent which shows that out of the revenue earned of Rs 1 the net profit earned is about 0.AMBUJA CEMENT Ltd.01) W. We can observe that the net profit margin of the company is dependent on the sales while the asset turnover ratios of the company are also dependent on the sales.87) / TOTAL INVT. NGI-MBA 69 .12) COST OF ++ SALES (5229. We can observe that for the year 2009 the asset turnover ratios for the company is 1. (6970. We can also observe that the return on assets for the company is about 0.25) From the above analysis we can observe that the return on investment for any company is a function of the net profit margin and the asset turnover ratios of the company.17 paisa.02) NET PROFIT (1218. (238.37) / SALES (7076.37) FIXED + ASSETS (3440.87) SALES (7076. which shows that for the investment of Rs1 in the company assets the profit obtained by the company is about 0.04) WIP (2564.02 percent which reveals that for an Rs 1 investment in the assets of the company the sales obtained is of Rs 1. DUPONT ANALYSIS The DuPont analysis is carried out for the two financial years and its explanation is described by each and every phase.18) PROFIT (1218.1734% NET PROFIT RATIO (0.02.1734 paisa.17) X INVESTMENT TURNOVER (1.1734 percent. ++ EXP. (727.

2010: RETURN ON INVESTMENT (0. We can observe that for the year 2010 the asset turnover ratios for the company is 0. which shows that for the investment of Rs1 in the company assets the profit obtained by the company is about 0.15) From the above analysis we can observe that the return on investment for any company is a function of the net profit margin and the asset turnover ratios of the company. We can observe that for the year 2010 the net profit margin is of 0.75) WIP (803. We can observe that the net profit margin of the company is dependent on the sales while the asset turnover ratios of the company are also dependent on the sales.95) NET PROFIT (1263.AMBUJA CEMENT Ltd.98 paisa.95) OPERATI + NG EXP.21) SALES (7390.5) TOTAL COST OF ++ SALES (5577. C (741.17) X INVESTMENT TURNOVER (0. (548.95 percent which reveals that for an Rs 1 investment in the assets of the company the sales obtained is of 0.65) INVEST MENT.16 paisa. (7798.61) FIXED ASSETS (5627.17 percent which shows that out of the revenue earned of Rs 1 the net profit earned is about 0. We can also observe that the return on assets for the company is about 0.95) W.17 paisa. NGI-MBA 70 .61) / SALES (7390.21) / INVESTMENT.16%) NET PROFIT RATIO (0.65) PROFIT (1263.16 percent. (625.

AMBUJA CEMENT Ltd. RATIO ANALYSIS NGI-MBA 71 .

AMBUJA CEMENT Ltd. RATIO ANALYSIS The ratio analysis is carried out under the following various subtopics. These subtopics will be explained one by one. Liquidity Ratios Current Ratio Quick Ratio Profitability Ratios Gross Profit Ratio Net Profit Ratio Return on Equity Activity Ratios Inventory Turnover Ratio Debtors Turnover Ratio Net WorkingCapital Ratio NGI-MBA 72 .

31:1 of 2010 and 1.31:1 Ideal ratio of any company should be 2:1 but here the ratio is 1. which cannot be readily converted into cash. inventories. which indicates favorable relationship between current assets and current liabilities. loans and advances paid etc.18 = 1.14:1 2010 CURRENT RATIO = CURRENT ASSETS CURRENT LIABILITIES = 3135. The current assets of the company would include cash.  LIQUIDITY RATIOS: These ratios would include the following ratios explained as below: 1) CURRENT RATIO: Current ratio is obtained by dividing the current assets of the company by the current liabilities.AMBUJA CEMENT Ltd. The ideal quick ratio is assumed to be 1:1 for any company. 2009 CURRENT RATIO = CURRENT ASSETS CURRENT LIABILITIES = 1979.14:1 of 2009.33 2394. This ratio measures the short term solvency of the firm.34 1741. debtors. This is because the current ratio includes inventories. Generally a current ratio of 2:1 is considered as ideal for the firm.09 = 1. It shows company is growing. 2) QUICK RATIO: Quick ratio is considered to be a better measure of the liquidity of a company as compared to the current ratio. NGI-MBA 73 .

Net assets are obtained as the sum total of the fixed assets and net current assets of the company.93:1 of 2010 and 0.9 2394. But it is better than next year.93 1741.7 Times NGI-MBA 74 . 2009 NET WORKING CAPITAL RATIO = NET SALES WORKING CAPITAL = 7076.09 = 0.93:1 For any company better quick ratio would be 1:1 but here the quick ratio is 0.25 =29.74:1 2010 QUICK RATIO = CURRENT ASSETS CURRENT LIABILITIES = 2216. 3) NET WORKING CAPITAL RATIO: This ratio on a whole shows the ability of the firm to meet its current obligations .87 238. 2009 QUICK RATIO = CURRENT ASSESTS CURRENT LIABILITIES = 1285. which tells us about liquid position of the company is not very well.74:1 of 2009.Net working capital is obtained as the difference between the current assets and the current liabilities of the firm.18 = 0.AMBUJA CEMENT Ltd.

AMBUJA CEMENT Ltd.03 741.30 7721. 2010 NET WORKING CAPITAL RATIO = NET SALES WORKING CAPITAL = 8257.35% 2010 GROSS PROFIT RATIO = GROSS PROFIT SALES = 1661. Company’s net working capital ratio is better than current year.42 X 100 X 100 = 23.  PROFITABILITY RATIOS: 1) GROSS PROFIT RATIO: The gross profit margin reflects the efficiency with which the management produces each unit of the product.13% X 100 X 100 NGI-MBA 75 .87 8257. It is calculated as follows: 2009 GROSS PROFIT RATIO = GROSS PROFIT SALES = 1803.15 =11 Times Here we can observe that need of the working capital to the total assets is not sufficient which is not a good sign for the company.03 = 20. This ratio indicates the average spread between the cost of goods sold and the sales.

78% X 100 X 100 2010 NET PROFIT RATIO = NET PROFIT SALES = 1263. 2) NET PROFIT RATIO: This ratio establishes the relationship between net profit and sales and indicates the efficiency of the management in manufacturing administering and selling the products. which can be good for the company so that company can fulfill its requirement also they can use for distribution of dividends and also for future projects. Here we can observe that company has 20.30% net profit.61 8257.03 =15. It is calculated as follows: 2009 NET PROFIT RATIO = NET PROFIT SALES = 1218. which are carried by the company.42 =15.37 7721.30% Here we can observe that company has 15. which can be not good for the company so that company can not fulfill its day-today requirement and other operation.AMBUJA CEMENT Ltd.13 % gross profit of 2010 that is less than 2009. X 100 X 100 NGI-MBA 76 .

98% return on their funds.37 304. which creates a good image against all shareholders.74 = 399.61 305.97 = 412. 3) RETURN ON EQUITY: This ratio indicates how many times the earnings are obtained as related to the return provided to the shareholders.98% As this year the profit of the company is not good then also they provide their shareholders 412. X 100 NGI-MBA 77 .AMBUJA CEMENT Ltd.81% X 100 2010 RETURN ON EQUITY = PROFIT AFTER TAX X 100 EQUITY FUND = 1263. It is calculated as follows: 2009 RETURN ON EQUITY = PROFIT AFTER TAX X 100 EQUITY FUND = 1218.

NGI-MBA 78 .55 = 8. It is calculated as under: 2009 INVENTORY TURNOVER = COST OF GOODS SOLD AVERAGE INVENTORY = 5918.50 = 7.32 times which is good for the company and if it is low then it indicate high cost of inventory holding which directly lead to increase in cost and low profits.16 792.29 Times 2010 INVENTORY TURNOVER = COST OF GOODS SOLD AVERAGE INVENTORY = 6595.18 811.  ACTIVITY RATIOS: The various ratios under this topic are calculated as under: 1) INVENTORY TURNOVER RATIO: This ratio indicates how much efficiently the inventories of the company are converted into sales.AMBUJA CEMENT Ltd.32 Times We can observe that inventory turnover is 8.

2) DEBTORS TURNOVER RATIO: This ratio indicates the number of times the debtors’ turnover each year.89 times which is not much good for the company situation but if it would be some more then it would shows greater efficiency of the company. NGI-MBA 79 .42 188.98 Times 2010 DEBTORS TURNOVER = CREDIT SALES AVERAGE DEBTORS = 8257.AMBUJA CEMENT Ltd.89 Times Here we can observe that debtor’s turnover is 58.03 140.4 = 40. It is calculated as follows: 2009 DEBTORS TURNOVER = CREDIT SALES AVERAGE DEBTORS = 7721.19 = 58.

AMBUJA CEMENT Ltd. NGI-MBA 80 .

74 0.89times Increased NGI-MBA 81 .97% Increased Inventory 7.98times 50.93 Increased Net Working 29.32times Increased Turnover Debtors Turnover 40.31 Increased Quick Ratio 0.81% 412. RESULT OF ALL RATIOS NO 1 2 3 4 5 6 7 8 PARTICULARS 2009 2010 INCREASE DECREASE Current Ratio 1.7times 11times Decreased Capital Ratio Gross Profit 23.13% Decreased Ratio Net Profit Ratio 15.14 1.78% 15.30% Decreased Return on Equity 399.AMBUJA CEMENT Ltd.35% 20.29times 8.

AMBUJA CEMENT Ltd. FINDINGS NGI-MBA 82 .

17% more than last year.48% than 2009.32times and the debtor’s collection period of the company also increased 40.  Company is not incurring profit than last year 2009 but it’s giving to shareholders more return on investment that is 412.29times to 8.  After 2007 in the gross profit is decreased 10.AMBUJA CEMENT Ltd.89times which has a direct impact on the current ratio of the company which increased 1.22%.  Company has a good future and opportunity for growth and development as continues profits are observed.14:1 to 1.98% which is 13. FINDINGS At the end of the financial analysis of the company the following are the various findings:  In the last financial years the inventory holding period increased 7.98times to 58. NGI-MBA 83 .  Decrease in net profit indicates that the net profit margins are affected a lot by the operating expenses of the company. there are decreases observed in the net profit margins is 0. by this observed that company has a good reputation in the market.73% and the gross profit margin of the company also decreased 3.31:1.

RESULTS AND SUGGESTIONS NGI-MBA 84 .AMBUJA CEMENT Ltd.

RECOMMENDATIONS & SUGGESTIONS BALANCE SHEET ANALYSIS: (1) SOURCES OF FUNDS: SHAREHOLDER’S FUND: As per study share holder fund increase approximately 109. NGI-MBA 85 .93% in last five 2006 to 2010 Company has made more fixed assets in all other area.18% in last five 2006 to 2010 Company has made more investment in long term fix assets by increasing long internal sources of fund & external sources of fund.41% in last five 2006 to 2010 In current year company loan fund is decrease more so tries to reduce by reducing external sources & internal sources.92% in last five 2006 to 2010. There is more increase in profit. So the fixed assets is an increase INVESTMENTS: As per study investment fund decrease approximately 44. LOAN FUNDS As per analysis loan fund decrease approximately 92.76% in last five 2006 to 2010 The company has tries to increase in investment in share of subsidiary company increase in investment there is more increase in interest. TOTAL SOURCES OF FUNDS As per study total sources of fund increase approximately 67.AMBUJA CEMENT Ltd. (2) APPLICATIONS OF FUNDS: FIXED ASSETS: As per analysis fixed assets fund increase approximately 109. Company tries to increase its capital by using the internal sources like reserve and its own capital.

73 % in last five 2006 to 2010 Company due the tax before profit is low. product sales.20 % in last five 2006 to 2010 Company has tries to increase its all material. LOAN AND ADVANCES: As per analysis current assets loan and advances fund increase approximately 166. selling exp.67 % in last five 2006 to 2010 So the company income is increase is the profit is increase in next years \ EXPENDITURE: As per analysis expenditure fund increase approximately 32.AMBUJA CEMENT Ltd. NET CURRENT ASSETS: As per analysis net current assets fund increase approximately 56.25% in last five 2006 to 2010 The company has tries to increase current liability and provisions so the company is not a good in future. company has to reduce expenditures. PROFIT BEFORE TAX: As per analysis profit before tax fund decrease approximately 10. CURRENT ASSETS.95 % in last five 2006 to 2010 NGI-MBA 86 . So the right decision of company CURRENT LIABILITIES. depreciation Interested all other expenses are increase. In next years.32% in last five 2005-06 to 2009-10 Company has tries to increase its net current assets in last years so the good decision in company. PROVISIONS: As per study current liabilities provisions fund increase approximately 241.24 % in last five 2006 to 2010 Company has tries to increase in current assets and loan advance. PROFIT AFTER TAX As per analysis profit after tax fund decrease approximately 15. PROFIT & LOSS ANALYSIS: INCOME: As per analysis income fund increase approximately 19.

16% as compare to 2009 it is not good for company and ROI is decrease because there is little decrease in profit RATIO ANALYSIS LIQUIDITY RATIOS 1) CURRENT RATIO: Ideal ratio of any company should be 2:1 but here the ratio is 1.AMBUJA CEMENT Ltd. It is 11 Times which is very less than previous year.31:1. which are carried by the company. which indicates favorable relationship between current assets and current liabilities 2) QUICK RATIO: For any company better quick ratio would be 1:1 but here the quick ratio is 0. As per the studies companies ROI is decrease approximately 0. NGI-MBA 87 . Company due the tax after tax is increase the company further long term profit is good DUPONT ANALYSIS The DuPont analysis is carried out for the two financial years and its explanation is described by each and every phase. PROFITABILITY RATIOS: (1) GROSS PROFIT RATIO: Here we can observe that company has 20% gross profit.94:1. is not very well 3) NET WORKING CAPITAL RATIO: Here we can observe that need of the working capital to the total assets is not sufficient which is not a good sign for the company. however it is less than previous year so company have to find out sales data which are responsible for this. which can be good for the company so that company can fulfill its day-to-day requirement and other operation. which tells us about liquid position of the company.

AMBUJA CEMENT Ltd.

(2) NET PROFIT RATIO
Here we can observe that company has 15.30% Net profit, which can be good for the company so that company can fulfill his requirement also they can use for distribution of dividends and also for future projects.

(3)RETURN ON EQUITY:
As this year the profit of the company is not good then also they provide their shareholders 412.98% return on their funds, which creates a good image against all shareholders.

ACTIVITY RATIOS: (1) INVENTORY TURNOVER RATIO:
We can observe that inventory turnover is 8.32 times which is good for the company and if it is low then it indicate high cost of inventory holding which directly lead to increase in cost and low profits.

(2)DEBTORS TURNOVER RATIO:
Here we can observe that debtor’s turnover is 58.89 times which is not much good for the company situation but if it would be some more then it would shows greater efficiency of the company.

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AMBUJA CEMENT Ltd.

CONCLUSION

NGI-MBA

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AMBUJA CEMENT Ltd.

CONCLUSION
After completing my training in ACL, which is one of the major cement manufacturing unit of India. I conclude that the ACL is a well-developed unit and is progressing day by day. All the departments of the company are very well. Organized and present condition of the company is very good. However, they were fully co-operated during my visit. The company has enough funds to implement new development projects like increase in production capacity etc. The Company’s employees and all the staff were very co-operative. Company has the better future and it can increase its market share and is developing day by day. I can observe that net profit of the company is increasing from the last financial years, which indicate good future and better working of the company. Lastly I wish all the best for the future development of the company.

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AMBUJA CEMENT Ltd. BIBLIOGRAPHY NGI-MBA 91 .

com NGI-MBA 92 .Theory and Practice”.com  www.” Financial Management.  Ambrish Gupta. “Financial Accounting for Management –: An Analytical Perspective”.ambujacement. Pearson Education 3rd Edition 2009  www. Fourth Edition. Tata-McGraw Hill Publications.stockmarket.AMBUJA CEMENT Ltd. BIBLIOGRAPHY  Prasanna Chandra.

AMBUJA CEMENT Ltd. ANNEXURE NGI-MBA 93 .

02 581.741.231.1 8 541.77 547.82 89.560.71 Miscellaneous Expenditure (To the extent not written off) Total 4.03 1.42 378.00 188.20 880.25 2.38 4.68 10.46 7.01 4.86 4.342.5 0 2.75 803.0 6.926.79 65.97 1.86 128.1 2 5.03 530.65 4.75 1.187.87 1.022.71 7.368.15 0.07 5.3 2 2.55 418.192.2 1 317.096.24 152.34 5.95 408.86 510. 96 5.59 476.514.05 2008 304.370.28 683.91 205.926.748.60 145.70 1.75 224.04 295.19 2.09 3440.778.9 6 2007 304.706.05 2.740.01 94 7.29 2009 304.271.17 16.979.54 493.13 2784.39 299.65 625.94 5. 44 901.6 1 701.39 6224.39 100.177.74 0.84 23.75 6.84 7122.79 3.01 100.00 65. BALANCE SHEET Particular Sources of Funds Equity Share Capital Employees stock option Reserves & Surplus Secured loan Un-secured loan Deferred Tax Liability Total Application of Funds Fixed Assets Gross block (-) Accumulate Depreciation Net block Capital Work-in-Progress Investments Current Assets loans and advances Inventories Sundry Debtors Cash and Bank balance Other current assets Loans and advances Current Liabilities Provision Net current assets 2006 303.3 4 1.44 2010 305.48 0.70 485.342.288.10 5.0 9 238.003.122.489.19 3.75 332.133.04 2564.01 8.95 378.22 939.24 470.60 851.61 1.67 380.92 100.82 3.55 1.00 230.18 1.68 650.82 727.92 1.24 6.627.88 7.52 0.24 6165.370.151.356.94 2.57 340.2 NGI-MBA 9 5 .542.34 7.61 383.AMBUJA CEMENT Ltd.740.17 253.053.35 675.05 1.297.56 865.959.37 1.57 741.38 5.09 3.

47) 1.06 22.76 296. PROFIT & LOSS ACCOUNT INCOME Sales Less: Excise duty Net sales Other revenue 2006 7.36) 1.00 (0.27 1.263.517.55 7.90) 5.24 6.61 Net Profit 1.229.803.95 48.AMBUJA CEMENT Ltd.25 1.85 32.84 2010 8.477.89 2.21 247.07 5.390.10 1.51 308.402.84 1.00 105.25 (10.90 5.15 560.68 764.47 742.69 387. cement and limestone Profit before tax and exceptional items Exceptional items Profit before tax Provision for Taxation Current tax Deferred tax Fringe benefit tax 2.03 866.60 (9.89 855.84 193.00 2.089.34 259.076.47 2.503.268.32 5.00 3.60 EXPENDITURE Manufacturing and other expenses Interest and Finance Charges Depreciation and Amortization Self consumption of clinker.30 1.19) 1.34 26.33 1.010.33) 1.42 644.721.234.28 737.43 326.03 75.84 5.35 (21.99 (10.18 6.12 236.37 5.84 (19.53 1.20 479.577.82 7.29 113.30 392.661.06 4.803.969.53 2008 7.841.87 446.469.19 (11.37 NGI-MBA 95 .09 0.46 785.87 255.82) 1.66 2007 6.257.704.39 2009 7.218.135.926.769.88) 79.65 175.635.712.661.

AMBUJA CEMENT Ltd. NGI-MBA 96 .

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