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ACC Cements

FINANCIAL ANALYSIS AND RATIO ANALYSIS


PRESENTED BY: SHAMMI KUMAR

ACC- An Introduction

Indias foremost cement manufacturer with a countrywide network of factories and marketing offices.

It has been a pioneer and trend-setter in cement and concrete technology.

It is among the first companies in India to include commitment to environment protection as a corporate objective.

ACC has won accolades for environment friendly measures taken at its plants and mines, and has also been felicitated for its acts of good corporate citizenship.

Brief History

Established in year 1936 as a result of a merger of 10 existing companies 1947 -Indias first indigenous cement plant, designed and built by ACC at Chaibasa 1956 -Pioneered bulk cement distribution at Okhla, Delhi 1961 -First production of slag cement in India at above plant (Okhla), Delhi 1965 Commenced a Central Research Station at Thane 1979 - Award of management contract for Yanbu (Saudi Arabia) 1993 Pioneered Commercial Ready Mix Concrete in Mumbai, India 2004 -ACC named Indias only Super Brand in cement sector

2006 Change of name to ACC Limited with effect from from The Associated Cement Companies Limited. 2006 ACC receives Good Corporate Citizen Award 2005-06 from Bombay Chamber of Commerce and Industry 2006 New corporate brand identity and logo adopted from 2006 ACC establishes Anti Retroviral Treatment Centre for HIV/AIDS patients at Wadi in Karnataka the first ever such project by a private sector company in .

2007

ACC partners with for treatment of HIV/AIDS in Tamil Nadu

2007

Sumant Moolgaokar Technical Institute completes 50 years and reopens with new curriculum

2007

ACC commissions Wind energy farm in Tamilnadu.

2008

Ready mixed concrete business hived off to a new subsidiary called ACC Concrete Limited.

Subsidiary companies

Bulk Cement Corporation (India) Limited: Year of Incorporation: 1992-93 Business: Pioneering of bulk handling facility funded by World Bank. Located at Kalamboli, Mumbai ACCs Stake & [Investment]: 94.65% [ Rs 37.27 Cr] Lucky Minmat Private Limited: Year of Acquisition: 2007 Business: Limestone mining. Location Sikar district, Rajasthan ACCs Stake & [Investment]: 100% [ Rs 38.10 Cr]

ACC Concrete Limited: Year of Incorporation: 2008 [ACC transferred the RMX business] Business: Ready Mix Concrete. 29 plants located pan India ACCs Stake & [Investment] 100% [ Rs 100.00 Cr]

A New Vision

Commitment To be one of the most respected companies in India; recognized for challenging conventions and delivering on our promises

Mission of ACC
Leadership Maintain our leadership of the Indian cement industry through the continuous modernization and expansion of our manufacturing facilities and activities, and through the establishment of a wide and efficient marketing network. Achieve a fair and reasonable return on capital by promoting productivity throughout the company. Ensure a steady growth of business by strengthening our position in the cement sector. Maintain the high quality of our products and services and ensure their supply at fair prices. Promote and maintain fair industrial relations and an environment for the effective involvement, welfare and development of staff at all levels. Promote research and development efforts in the areas of product development and energy, and fuel conservation, and to innovate and optimize productivity. Fulfill our obligations to society, specifically in the areas of integrated rural development and in safeguarding the environment and natural ecological balance.

Profitability Growth

Quality
Equity

Pioneering

Responsibility

Major Players of Cement Industry in India


ACC Limited Gujarat Ambuja Cement Ultra tech Grasim India cements JK cements ltd Jaypee group Century cements Madras cements Birla Corp

ACC Cement plants in India


Name of the Company
ACC Ltd. ACC Ltd. (G) ACC Ltd. ACC Ltd. ACC Ltd. ACC Ltd. ACC Ltd. ACC Ltd.

Location
Gagal Tikaria Lakheri Kymore Chaibasa Sindri Jamul Chanda

State
Himachal Pradesh Uttar Pradesh Rajasthan Madhya Pradesh Jharkhand Jharkhand Chhattisgarh Maharashtra

Process Used
Dry Grinding Unit Dry Dry Chaibasa Grinding Unit Dry and Semi-Dry Dry

ACC Ltd.
ACC Ltd. - New ACC Ltd. ACC Ltd.

Wadi
Wadi Macherial Madukkarai

Karnataka
Karnataka Andhra Pradesh Tamil Nadu

Dry
Dry Grinding Unit Semi-Dry

ACC PLANT LOCATIONS

Types of Cement produced by ACC


Ordinary Portland cement (OPC) Portland Pozzolana Cement (PPC) White Cement Portland Blast Furnace Slag Cement (PBFSC) Specialized Cement Rapid Hardening Portland cement Water Proof Cement

ACC BARMANA ( H .P)

COMARATIVE BLANCE SHEET OF ACC

SOURCES OF FUNDS: Shareholders Funds:Loan Funds: Deferred Tax Liabilities (Net) TOTAL FUNDS APP. OF FUNDS:---

2006 (%) Rs.(Cror e) 46.96 44.36 8.68 100

2007(%) 2008(%) 2009(%) 2010(%) Rs.(Cror Rs.(Cror Rs.(Cror Rs.(Cror e) e) e) e) 71.76 83.84 85.77 86.78 20.91 7.32 100 79.48 11.50 9.00 9.47 6.69 100 80.03 17.06 2.92 8.39 5.84 100 88.29 11.82 (0.11) 8.18 5.04 100 91.08 21.28 (12.37)

Fixed Assets: 84.16 Investments:9.60 Net Current Assets( Curr Assests- current 5.62 liabilities & provision) MISC EXP. (to the extent not written off or adjusted) TOTAL ASSETS (Net) 0.61

0.02

0.00

0.00

0.00

100

100

100

100

100

Common size statement analysis of ACC cements Ltd. from 2006-2010 Interpretation:There is a significant increase in shareholders fund & decrease in loan funds continuously over a period of time. There is also a significant increase in the amount invested by the company for the purpose of future growth. There is a significant decrease in current assetsa period of time.

TREND ANALYSIS OF ACC

PARTICULARS SOURCES OF FUNDS:

2007* Rs.(Crore)

2008 Rs.(Crore)

2009 Rs.(Crore)

2010 Rs.(Crore)

Shareholders Funds:-

100

132.06

156.79

191.42

Loan Funds

100

51.21

52.62

61.9

Deferred Tax Liabilities TOTAL FUNDS APP. OF FUNDS:Fixed Assets Investments Curr Assets,Loans & Adv: ---

100 100

103.4 113.1

104.7 131.2

108.9 158.3

100 100 100

113.9 167.8 114.7

145.7 134.9 143.6

181.4 293.1 119.4

(Less):-Current Liabilities &Prov. MISC EXP. (to the extent not written off or adjusted)

100 100

134.8 0.00

181.1 0.00

206.4 0.00

TOTAL ASSETS (Net)

100

113.1

131.2

158.3

RATIO ANALYSIS OF ACC

WORKING CAPITAL RATIOS

Dec0 Dec0 Dec08 Dec09 Dec10 6 7 Liquidity Ratio Current Ratio Quick Ratio

0.58 0.42

0.77 0.61

0.86 0.55

0.89 0.61

0.67 0.42

Interpretation: - As we know that ideal current ratio for any firm is 2:1.The current ratio of company is less than the ideal ratio. This depicts that companys liquidity position is not sound. Its current assets are less than its current liabilities. Generally a QR of 1:1 is considered to represent satisfactory current financial position. The trend of quick ratio is uneven & the ratio is around 0.5:1 over a period of time. A quick ratio is an indication that the firm is liquid and has the less confidence to meet its current liabilities in time. This shows company has liquidity problem.

Solvency Ratio

Debt-equity ratio.

0.50

0.25

0.07

0.10

0.09

Debt-equity ratio shows relationship between borrowed funds and owners capital is a popular measure of the long term financial solvency of the firm. For ACC it was the highest around 0.5:1 in 2005.After that it shows fluctuation.

Activity/mgmt efficiency Ratio:Dec,06 5.37 Dec07 9.33


27.75 22.40 (6.96)

Inventory Turnover Ratio Debtor Turnover 16.34 Ratio Investment 12.29 Turnover Ratio Work cap turn. (27.93)

Dec08 24.85
27.40 24.85 (18.25)

Dec09 27.51
24.12 27.51 (17.02)

Dec10 25.22
31.22 25.22 (54.17)

INTERPRETATION: 1.It shows increasing trend which is favorable for the company. As it indicates how rapidly the inventory is turning into receivable through sales. A high ratio is good from the view point of liquidity. A low ratio would signify that inventory does not sell fast. 2. A high ratio is indicative of shorter time lag between credit sales and cash collection. The higher the value of debtors turnover the more efficient is the management of debtors or more liquid the debtors are. A low ratio shows that debts are not being collected rapidly. As the graph reveals that the debts are collected in time & the process is improving consistently. This shows that company is utilizing its debtors efficiently as compare to previous year. 3. This ratio indicates high net working capital requires for sales. This company having negative working capital because, they have more current liabilities over current assets. It shows that the short term loans are not sufficient and more money are invested in the purchase of fixed assets. Thus this ratio is helpful to forecast the working capital requirement on the basis of sale.

Profitability & Investment turnover Ratio:Profitability Dec,06 Dec07 Dec08 Dec09 Dec10 Ratio Gross Profit 17.32 28.97 23.72 20.59 27.68 Ratio Net Profit 16.85 21.16 20.44 16.29 19.69 Ratio Investment Valuation Ratio Face value 10.00 10.00 10.00 10.00 10.00 Dividend per 8.00 15.00 20.00 20.00 23.00 Share G/P margin ratio shows the profit relative to sales. A high ratio of gross profits to sales is a sign of good management as it implies that the cost of production of the firm is relatively low. For ACC it is uneven but it was good in FY07 & FY10. The net profit margin is indicative of management ability to operate the business with sufficient success not only to recover from revenues, but also to leave a reasonable margin to the owners. A high net profit margin would ensure adequate return to the owners as well as enable a firm to face adverse economic conditions. It is significant & satisfactory for the company. As it shows the dividend per share ratio is increasing over years. It means that the investors have faith in the company.

Suggestion:-

It is suggested that the company has to increase its current assets to meet its shortterm obligations. Company has to improve debtors collection period continuously so that effective receivable management will possible. Reserves should be utilized for the growth of the company. While forecasting cash flow, the management should take into account the impact of unforeseen events, market cycles and actions by competitors. The effect of unforeseen demands of working capital should be factored in. Collaborating with the customers & suppliers instead of being focused only on own operations will also yield good results. If feasible, helping them to plan their inventory requirements efficiently to match their production with their consumption will help reduce inventory levels.

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