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M.P.BIRLA INSTITUTE OF MANAGEMENT A Research Report On Analysis of Financial Performance ofCement Industry

Submitted in partial fulfillment of requirement for the award of thedegree of Master of Business Administration OfBangalore University By VISHAL CHOPRAReg. No: 05XQCM6116 Under the Guidance and SupervisionOf Prof.S.SANTHANAM M.P.BIRLA INSTITUTE OF MANAGEMENT Associate Bharathiya Vidya Bhavan#43, Race Course Road, BANGALORE-560001

M.P.BIRLA INSTITUTE OF MANAGEMENT Declaration I hereby declare, that this project report titled Analysis of FinancialPerformance of Cement Industry , has been successfully completedunder the guidance of Prof.S.SANTHANAM , Project Guide, M P BirlaInstitute of Management in partial fulfillment of Masters in BusinessAdministration degree at Bangalore University. I further declare that this project report is the result of my ownefforts and that it has not been submitted to any other university for theaward of a degree or does not

form the basis of any degree or diploma of other similar title of recognition in any other university. Place: Bangalore Vishal Chopra Date: (Reg. No. 05XQCM6116) M.P.BIRLA INSTITUTE OF MANAGEMENT Guides Certificate This is to certify that the Project titled Analysis of FinancialPerformance of Cement Industry, has been prepared by Mr.Vishal Chopra bearing the registration number 05XQCM6116 under my guidance. This has not formed a basis for the award of anyDegree/Diploma by any other University . Place: Bangalore Prof.S.SANTHANAM Date: (Faculty, MPBIM) M.P.BIRLA INSTITUTE OF MANAGEMENT Principals Certificate This to certify that this report entitled Analysis of FinancialPerformance of Cement Industry, has been prepared by Mr.Vishal Chopra

bearing Reg. No. 05XQCM6116 of M P BirlaInstitute of Management in partial fulfillment of the award of thedegree, Master of Business Administration at BangaloreUniversity , under the guidance and supervision of Prof.S.Santhanam , MPBIM , Bangalore. This report or a similar reporton this topic has not been submitted for any other examination anddoes not form a part of any other course undergone by Mr.Vinay.RPlace: Bangalore (Dr. N S Malavalli)Date: Principal M.P.BIRLA INSTITUTE OF MANAGEMENT ACKNOWLEDGMENT I sincerely thank Dr.Nagesh.S.Malavalli (Principal), M.P.Birla Institute of Management, Bangalore for granting me the permission to do this ResearchProject.I extend my gratitude to Prof. T.V.N.Rao , and also Prof S.Santhanam ,professor, MPBIM who kindly spared their valuable time giving informationwithout which this report would have been incomplete.I extend my deep sense of gratitude to

my parents who have encouraged andhelped me to complete this project successfully.I would like to extend my thanks to all my friends & the unseen hands thathave made this project possible.Place: Bangalore VISHAL CHOPRA.V. Date: (Reg. No. 05XQCM6116) M.P.BIRLA INSTITUTE OF MANAGEMENT TABLE OF CONTENTS CHAPTERS PARTICULARSEXECUTIVE SUMMARY 1. INTRODUCTION & THEORICALBACKGROUND 2. LITERATURE REVIEW 3 RESEARCH METHODOLOGY 3.1 Research problem statement 3.2 Methodology 4 DATA ANALYSIS ANDINTERPRETATION 4.1 Empirical Results 5. CONCLUSION BIBLIOGRAPHY

M.P.BIRLA INSTITUTE OF MANAGEMENT Executive Summary:Cement is a key infrastructure industry. Indian cement industry is 84 years old. It has 120large cement plants besides some 300 mini plants with installed capacity of about 163million tones and a production of 131.88 million Prices moved above rs.160-180everywhere in last year. The demand is expected to remain strongThe Indian cement Industry not only ranks second in the production of cement in theworld but also produces quality cement

which meets global standards. , the industry facesa number of constraints in terms of high cost of power, high railway tariff; high incidenceof state and central levies and duties; lack of private and public investment ininfrastructure projects; poor quality coal and inadequate growth of related infrastructurelike sea and rail transport, ports and bulk terminals. In order to utilize excess capacityavailable with the cement industry, the government has identified the following thrustareas for increasing demand for cement:-Housing development programmes;-Promotion of concrete highways and roads;-Use of ready-mix concrete in large infrastructure projects;-Construction of concrete roads in rural areas under Prime Ministers Gram Sadak Yojana.The financial analysis has been done on1) India Cements Ltd.2) Birla Corporation Ltd.3) Madras Cements4) K.C.P.LtdChettinad cements ltd. M.P.BIRLA INSTITUTE OF MANAGEMENT Cement Industry M.P.BIRLA INSTITUTE OF MANAGEMENT CEMENT INDUSTRYIntroduction Cement is a key infrastructure industry. It has been decontrolled from price anddistribution on 1 st March, 1989 and delicensed on 25 th July, 1991. However, theperformance of the industry and prices of cement are monitored regularly. Theconstraints faced by the industry are reviewed in the Infrastructure CoordinationCommittee meetings held in the Cabinet

Secretariat under the Chairmanship of Secretary(Coordination). Its performance is also reviewed by the Cabinet Committee onInfrastructure.The Indian cement industry is one of the pillar sectors of our economy as it accounts for asignificant portion of total industrial output of our country. Further it plays a dominantrole in satisfying basic needs (house construction) of human kind. In view of LPG, whileIndia Cements Industry faces many challenges, it gets good opportunities to improvesales. As a result of this, Cement Industry continues to adopt a series of readjusting andrestructuring measures including up gradation of technology.India is largest market with a great potential, as the country possesses more than a billionpeople, vast territory and abundant resources. The cement industry can enlarge globalmarket shares so long as the industry players firmly seize the business opportunities,promptly solve outstanding problems and improve weak links in their existing productionchain.The industry is expected to perform well in all the dimensions and achieve a healthygrowth in its operations. In order to manage stiff competition, drastic steps are to be takento reduce cost of production. In the changed environment, application of financialmanagement techniques would help the cement companies in increasing theirproductivity and profitability. An attempt has been made in the present study to have aninsight into the examination of financial health of the cement companies in India. M.P.BIRLA INSTITUTE OF MANAGEMENTThe Indian cement industry is on a roll. Driven by a booming housing sector, globaldemand and increased activity in infrastructure development such as state and nationalhighways, the cement industry has outpaced itself, ramping up

production capacity,attracting the top cement companies in the world, and sparking off a spate of mergers andacquisitions to spur growth.The recent boom in the housing and construction industry in India has worked wondersfor cement manufacturing companies with capacity utilization crossing the 100 per centmark for the first time in January 2007. Cement consumption this fiscal is all set toexceed the 150-million tonne mark for the first time. The industry is expected to end thefiscal with a dispatch of about 155 million tonne. The overall capacity utilization duringthe 10-month period is estimated to be in the range of 95 per cent or more . Major cement companies witnessed a 32 per cent surge in their sales volume and, acrossthe board, companies reported higher production, higher sales and lower productioncosts.Cement industry at present is enjoying one of the best time in terms of demand and price.What more one could ask for as the most of the cement companies have seen their topline as well as bottom line surging back on the strong spending on the Infrastructure.Today, Indian cement industry comprises of more than 400 large and mini plants rankingsecond in the world only after China. The industry at present has an installed capacity of 165 million tones and most of the industry players are operating at the healthy capacityutilization. For the year 2005-06, capacity utilization was at 81 per cent and for thecurrent year, we expect it to be higher. Many cement companies have undertakenexpansion plans to meet the growing demand but most of the new capacity will go onstream only by 2008. Hence, we expect the prices of cement to remain firm in the monthsto come.

M.P.BIRLA INSTITUTE OF MANAGEMENTGrowth and India can easily be taken for synonyms in recent times. Its not just for thepotential of IT and ITES sectors that India is considered a goldmine, but also in a lot of other sectors, the prerequisites, of course, is that investments are made in key areas whichwould be the drivers for future growth. The top slot for the key areas would easily betaken up by the infrastructure sector. Not only does the sector have enormous scope forgrowth in itself, it is an important component of the entire growth eco-system.The cement industry would play a crucial role in building up the infrastructure requiredfor aviation, transportation, ports, and fuel terminals (for energy requirements) amongstothers.The Cement Industry in India has made major strides ever since inception of the firstcement plant in 1914 with a humble capacity of 1000 tons/annum. At 145 metric tones ayear the country is the second largest

producer of cement producing around 5% of theglobal produce. GLOBAL SCENARIO Cement demand throughout 2006 will remain strong with growth expected in mostcountries. There are exceptions, notably the Philippines, Malaysia, the UK, Switzerlandand Germany. As expected, the emerging markets are on course to register high annualgrowth rates. In the Middle East, India and Vietnam, rates of 8% are on the card, while inother countries rates of 3% to 6% have already been reported.The shift of focusIn the recent Building Materials Report from Exane BNP Paribas, there was muchmention of the shift in the centre of gravity of the cement industry to the East, and fromthe mature markets to the emerging markets. Asia represents 70% of global cementconsumption, with China accounting for about 45% of the world total; by 2020 theemerging markets are expected to represent 90% of world consumption. For the period2005 2010 it is anticipated that there will be a net increase in capacity of 648 million

M.P.BIRLA INSTITUTE OF MANAGEMENT Bibliography and Annexure The Indian cement industry, ICRA, JULY 2006 Indian cement industry-a perspective of environment friendliness Indian cement industry on concrete foundation, moneycontrol.com The Indian Cement Industry, ICRA Industry Watch Series#1 , Update-II, Aug1995

Cement, equitymaster.com, November 28,2006 www.capitaline.com www.saurasthracements.com www.kcpltd.com www.birlacorpltd.com www.madrascement.com www.nseindia.com www.bseindia.com M.P.BIRLA INSTITUTE OF MANAGEMENT M.P.BIRLA INSTITUTE OF MANAGEMENT Analysis of Financial Performance of Cement Industry Download this Document for FreePrintMobileCollectionsReport Document Report this document? Please tell us reason(s) for reporting this document Top of Form
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