Saturday, July 4, 2020
India is second largest producer of cement - Free Essay Example
After china, India is the second largest producer of cement with approx capacity of 151 million tonnes every year to be a gigantic industry. As govt. of India promotes better infrastructure in every sector, the cement industry is growing at a very faster pace and is analysed a big booming industry in future, it is predicted that cement production will rise to 236 MT in FY11. 70% of the total cement production in India is produced by around 20 big players e.g.- Acc, ultratech, Birla, jaypee, india cements, Gujarat Abuja, century cements, madras cements, Grasim . In the early 1889 a small Kolkata based company started manufacturing in India. After the first World War the importance and thrust of this industry was known and started to grow in terms of installation, capacity, production and manufacturing units. This stage was referred to as the Nascent Stage of Indian Cement Industry. In 1927, Concrete Association of India was set up to create public awareness on the utility of cement as well as to propagate cement consumption. In 1956 price and distribution control system was established for the industry to make fair prices for the customers and manufacturers. A couple of years later, government introduced a three-tier pricing system with different pricing on cement produced in different cost plants. BACKGROUND AND S.W.O.T ANALYSIS OF J.K CEMENT ƒ J.K cement is a part of J.K ltd which was founded by Lala Kamlapat Singhania. ƒ First commercial cement production in 1975 at nimbahera (Rajasthan) with production capacity of 0.3 million tonnes ƒ Commissioned a second grey cement plant at our Mangrol plant in 2001, with a production capacity of 0.75 ƒ White cement plant was completed in 1984 with a capacity of 50,000 tons. ƒ One of the largest producers of cement in northern india STRENGHTS ƒ Holds export market in Nigeria, Bangladesh, Singapore, Tanzania, Sri lanka, south Africa, Nepal and UAE. ƒ Producer of high quality white and grey cement. ƒ Backed by state of the art technology and highly skilled labour or manpower. ƒ Strong brand name and quality of products ƒ Follows extensive marketing with excellent distribution network. ƒ Holds a good knowledge in the cement industry, with advanced working models developed buy technical experts ƒ Experienced and stable management structure with a focus on corporate social responsibility. Weakness ƒ Unable to match the production capacity of the other big competitors in the industry. ƒ Need of more capital requirement for more projects and plan expansion. ƒ Less mergers and acquisitions than other companies to build a healthier network. Opportunities ƒ Strong and rapid growth of economy focusing on to build infrastructure would give a rise in the revenues to the companies ƒ New upcoming plans and strategies by private and public sector will increase the demand of cement in future as predicted by the experts. ƒ Advanced technologies adapted by the company would play vital role in reducing the cost of production and time consumption. ƒ Government liberalisation and relaxation in the duties will make the company more profitable. Threats ƒ Easy entry by new companies offering lower prices. ƒ Inflation in the country gives price rise to the production which can give fall in the demand. BACKGROUND AND S.W.O.T OF ULTRA TECH CEMENT Ultra tech cement is a part of Aditya Birla group which was incorporated on 24 august 2000 as LT cements which demerged and vested in the year 2004 later management tools were operated by Grasim, together with this new company it later on become the largest cement producer in india. ƒ In 2004 14 Oct the company name was changed to ultra tech cements ƒ In May 2006 Narmada cement amalgamated with ultra tech cements. ƒ Cement business of Grasim demerged and vested in Samruddhi Cement Limited in May 2010 ƒ Samruddhi Cement Limited amalgamated with UltraTech Cement Limited in July 2010.  UltraTechs subsidiaries are Dakshin Cements Limited, Harish Cements Limited, UltraTech Ceylinco (P) Limited and UltraTech Cement Middle East Investments Limited. (Source https://www.ultratechcement.com/about_us/index.htm) STRENGHTS ƒ Ultra tech cements is one of the largest exporters of cement in Africa, Europe and Middle East which are considered as strong market economy. ƒ UltraTech Cement Limited has an annual capacity of 48.8 million tonnes. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzalana Cement. It also manufactures ready mix concrete (RMC). ƒ The company has 11 integrated plants, one white cement plant, 12 grinding units and five terminals four in India and one in Sri Lanka. ƒ Ultra techs have a strong brand image and excellent advertising campaign team (Source https://www.ultratechcement.com/about_us/index.htm) WEAKNESS ƒ Ultra tech cements faces a drought of high skilled manpower. ƒ Weak supply of cement in the market, main reason improper management. ƒ Dominated by government policies. OPPORTUNITIES ƒ Maintain its present market share nationally and internationally and increase in future. ƒ It can collaborate with government of different countries for undertaking future govt. projects and increase its sales. ƒ Can come up with economical cement for targeting the rural market. THREATS ƒ Other big players in the industry like ACC, AMBUJA, and LAFARGE can absorb the market share of ultra tech cement in future if the company fails to adapt its external variables to grab the new emerging opportunities. VERTICAL ANALYSIS OF ULTRATECH CEMENT Balance Sheet of UltraTech Cement in cr Mar 09  Mar 10        12 mths  12 mths       Sources Of Funds         Total Share Capital 124.49 2.17 124.49 2.00     Equity Share Capital 124.49 2.17 124.49 2.00     Share Application Money 1.68 0.03 1.99 0.03     Preference Share Capital 0 0.00 0 0.00     Reserves 3,475.93 60.52 4,482.17 72.14     Revaluation Reserves 0 0.00 0 0.00     Networth 3,602.10 62.71 4,608.65 74.18     Secured Loans 1,175.80 20.47 854.19 13.75     Unsecured Loans 965.83 16.82 750.33 12.08     Total Debt 2,141.63 37.29 1,604.52 25.82     Total Liabilities 5,743.73 100.00 6,213.17 100.00      Mar 09  Mar 10        Application Of Funds         Gross Block 7,401.02  8,078.14      Less: Accum. Depreciation 2,765.33  3,136.46      Net Block 4,635.69  4,941.68      Capital Work in Progress 677.28  259.37      Investments 1,034.80 52.20 1,669.55 77.52     Inventories 691.97 34.91 821.7 38.15     Sundry Debtors 186.18 9.39 215.83 10.02     Cash and Bank Balance 104.49 5.27 83.73 3.89     Total Current Assets 982.64 49.57 1,121.26 52.06     Loans and Advances 395.71 19.96 374.92 17.41     Fixed Deposits 0 0.00 0 0.00     Total CA, Loans Advances 1,378.35 69.53 1,496.18 69.47     Deffered Credit 0 0.00 0 0.00     Current Liabilities 1,860.59 93.86 1,992.60 92.52     Provisions 121.8 6.14 161.01 7.48     Total CL Provisions 1,982.39 100.00 2,153.61 100.00     Net Current Assets -604.04  -657.43      Miscellaneous Expenses 0  0      Total Assets 5,743.73  6,213.17       Contingent Liabilities 355.07  420.26      Book Value (Rs) 289.22  370.05      Horizontal analysis of ultratech cement Key Financial Ratios of UltraTech Cement    Mar 09 Mar 10 % change      Investment Valuation Ratios        Face Value 10 10      Dividend Per Share 5 6      Operating Profit Per Share (Rs) 140.03 158.86 13.45         Net Operating Profit Per Share (Rs) 512.95 565.75 10.29         Free Reserves Per Share (Rs) 267.12 350.75 31.31     Bonus in Equity Capital      Profitability Ratios        Operating Profit Margin(%) 27.29 28.08 2.89     Profit Before Interest And Tax Margin(%) 21.9 22.24 1.55     Gross Profit Margin(%) 22.24 22.56 1.44     Cash Profit Margin(%) 20.41 20.43 0.10     Adjusted Cash Margin(%) 20.41 20.43 0.10     Net Profit Margin(%) 15.06 15.3 1.59     Adjusted Net Profit Margin(%) 15.06 15.3 1.59     Return On Capital Employed(%) 26.45 27.22 2.91     Return On Net Worth(%) 27.13 23.73 -12.53     Adjusted Return on Net Worth(%) 27.8 23.27 -16.29     Return on Assets Excluding Revaluations 289.22 370.05 27.95     Return on Assets Including Revaluations 289.22 370.05 27.95     Return on Long Term Funds(%) 27.93 27.43 -1.79     Liquidity And Solvency Ratios       Current Ratio 0.59 0.67 13.56     Quick Ratio 0.34 0.3 -11.76     Debt Equity Ratio 0.59 0.35 -40.68     Long Term Debt Equity Ratio 0.51 0.34 -33.33     Debt Coverage Ratios       Interest Cover 12.75 14.97 17.41     Total Debt to Owners Fund 0.59 0.35 -40.68     Financial Charges Coverage Ratio 13.74 16.75 21.91     Financial Charges Coverage Ratio Post Tax 10.7 12.94 20.93     Management Efficiency Ratios       Inventory Turnover Ratio 22.89 22.65 -1.05     Debtors Turnover Ratio 31.71 35.04 10.50     Investments Turnover Ratio 22.89 22.65 -1.05     Fixed Assets Turnover Ratio 0.86 0.87 1.16     Total Assets Turnover Ratio 1.11 1.14 2.70     Asset Turnover Ratio 0.86 0.87 1.16             Average Raw Material Holding 28.87 29.94 3.71     Average Finished Goods Held 6.35 7.29 14.80     Number of Days In Working Capital -34.05 -33.61 -1.29     Profit Loss Account Ratios       Material Cost Composition 20.05 22.61 12.77     Imported Composition of Raw Materials Consumed 0.72 3.01 318.06     Selling Distribution Cost Composition 19.67 20.98 6.66     Expenses as Composition of Total Sales 9.7 6.83 -29.59     Cash Flow Indicator Ratios        Dividend Payout Ratio Net Profit 7.45 7.96 6.85     Dividend Payout Ratio Cash Profit 5.6 5.87 4.82     Earning Retention Ratio 92.73 91.88 -0.92     Cash Earning Retention Ratio 94.5 94.04 -0.49     Adjusted Cash Flow Times 1.62 1.1 -32.10        Mar 09 Mar 10       Earnings Per Share 78.48 87.82 11.90     Book Value 289.22 370.05 27.95             Vertical analysis of J.K cement BALANCE SHEET OF JK CEMENT in cr Mar 09  Mar 10        12 mths  12 mths       Sources Of Funds         Total Share Capital 69.93 3.99 69.93 2.88     Equity Share Capital 69.93 3.99 69.93 2.88     Share Application Money 0 0.00 0 0.00     Preference Share Capital 0 0.00 0 0.00     Reserves 838.27 47.89 1,018.58 41.96     Revaluation Reserves 277.85 15.87 265.24 10.93     Networth 1,186.05 67.76 1,353.75 55.77     Secured Loans 436.86 24.96 937.61 38.62     Unsecured Loans 127.54 7.29 136.11 5.61     Total Debt 564.4 32.24 1,073.72 44.23     Total Liabilities 1,750.45 100.00 2,427.47 100.00      Mar 09  Mar 10        12 mths  12 mths       Application Of Funds         Gross Block 1,215.75  2,052.21      Less: Accum. Depreciation 0  0      Net Block 1,215.75  2,052.21      Capital Work in Progress 35.06  225.28      Investments 10.74 0.61 5.99 0.25     Inventories 136.13 7.78 237.62 9.79     Sundry Debtors 53.04 3.03 81.87 3.37     Cash and Bank Balance 125.2 7.15 131.67 5.42     Total Current Assets 314.37 17.96 451.16 18.59     Loans and Advances 598.53 34.19 233.62 9.62     Fixed Deposits 0 0.00 0 0.00     Total CA, Loans Advances 912.9 52.15 684.78 28.21     Differed Credit 0 0.00 0 0.00     Current Liabilities 382.69 21.86 514.95 21.21     Provisions 43.74 2.50 28.54 1.18     Total CL Provisions 426.43 24.36 543.49 22.39     Net Current Assets 486.47 27.79 141.29 5.82     Miscellaneous Expenses 2.44 0.14 2.69 0.11     Total Assets 1,750.46 100.00 2,427.46 100.00      Contingent Liabilities 581.86  106.5      Book Value (Rs) 129.88  155.66      Horizontal analysis of J.K cement Key Financial Ratios of JK Cement    Mar 09 Mar 10       Investment Valuation Ratios        Face Value 10 10      Dividend Per Share 3.5 6 71.43     Operating Profit Per Share (Rs) 46.33 62.8 35.55     Net Operating Profit Per Share (Rs) 214.06 261.24 22.04     Free Reserves Per Share (Rs) 109.98 134.13 21.96     Bonus in Equity Capital      Profitability Ratios        Operating Profit Margin(%) 21.64 24.03 11.04     Profit Before Interest And Tax Margin(%) 17.93 19.07 6.36     Gross Profit Margin(%) 18.14 19.35 6.67     Cash Profit Margin(%) 12.86 16.8 30.64     Adjusted Cash Margin(%) 12.86 16.8 30.64     Net Profit Margin(%) 9.4 12.19 29.68     Adjusted Net Profit Margin(%) 9.4 12.19 29.68     Return On Capital Employed(%) 19.6 17.6 -10.20     Return On Net Worth(%) 15.71 20.81 32.46     Adjusted Return on Net Worth(%) 15.71 20.81 32.46     Return on Assets Excluding Revaluations 129.53 155.28 19.88     Return on Assets Including Revaluations 169.26 193.21 14.15     Return on Long Term Funds(%) 19.6 17.6 -10.20     Liquidity And Solvency Ratios        Current Ratio 2.14 1.26 -41.12     Quick Ratio 1.78 0.82 -53.93     Debt Equity Ratio 0.62 0.99 59.68     Long Term Debt Equity Ratio 0.62 0.99 59.68     Debt Coverage Ratios        Interest Cover 5.28 5.48 3.79     Total Debt to Owners Fund 0.62 0.99 59.68     Financial Charges Coverage Ratio 6.24 6.72 7.69     Financial Charges Coverage Ratio Post Tax 4.56 5.49 20.39     Management Efficiency Ratios        Inventory Turnover Ratio 11 7.69 -30.09     Debtors Turnover Ratio 27.14 27.08 -0.22     Investments Turnover Ratio 11 7.69 -30.09     Fixed Assets Turnover Ratio 1.23 0.89 -27.64     Total Assets Turnover Ratio 1.02 0.84 -17.65     Asset Turnover Ratio 1.23 0.89 -27.64             Average Raw Material Holding      Average Finished Goods Held      Number of Days In Working Capital 117 27.85 -76.20     Profit Loss Account Ratios        Material Cost Composition 10.91 10.92 0.09     Imported Composition of Raw Materials Consumed      Selling Distribution Cost Composition 24.28 25.21 3.83     Expenses as Composition of Total Sales      Cash Flow Indicator Ratios        Dividend Payout Ratio Net Profit 20.11 21.67 7.76     Dividend Payout Ratio Cash Profit 14.7 15.72 6.94     Earning Retention Ratio 79.89 78.33 -1.95     Cash Earning Retention Ratio 85.3 84.28 -1.20     Adjusted Cash Flow Times 2.9 3.45 18.97        Mar 09 Mar 10       Earnings Per Share 20.36 32.32      Book Value 129.88 155.66              BENCHMARK ANALYSIS 2009 2010 current ratio of J k Cement 2.14 1.26 current ratio of utratech 0.59 0.67 quick ratio of JK cement 1.78 0.82 quick ratio of ultra tech cement 0.34 0.3 debt equity ratio of JK cement 0.62 0.99 debt equity ratio of ultra tech cement 0.59 0.35 long term debt equity ratio of JK cement 0.62 0.99 long term debt equity ratio of ultra tech cement 0.51 profitability ratios of JK cement Operating Profit Margin(%) 21.64 24.03 Profit Before Interest And Tax Margin(%) 17.93 19.07 Gross Profit Margin(%) 18.14 19.35 Cash Profit Margin(%) 12.86 16.8 Adjusted Cash Margin(%) 12.86 12.86 Net Profit Margin(%) 9.4 12.19 Adjusted Net Profit Margin(%) 9.4 12.19 Return On Capital Employed(%) 19.6 17.6 Return On Net Worth(%) 15.71 20.81 Adjusted Return on Net Worth(%) 15.71 20.81 Return on Assets Excluding Revaluations 129.53 155.28 Return on Assets Including Revaluations 169.26 193.21 Return on Long Term Funds(%) 19.6 17.6 profitability ratios of ultra tech cement Operating Profit Margin(%) 27.29 28.08 Profit Before Interest And Tax Margin(%) 21.9 22.24 Gross Profit Margin(%) 22.24 22.56 Cash Profit Margin(%) 20.41 20.43 Adjusted Cash Margin(%) 20.41 20.43 Net Profit Margin(%) 15.06 15.3 Adjusted Net Profit Margin(%) 15.06 15.3 Return On Capital Employed(%) 26.45 27.22 Return On Net Worth(%) 27.13 23.73 Adjusted Return on Net Worth(%) 27.8 23.27 Return on Assets Excluding Revaluations 289.22 370.05 Return on Assets Including Revaluations 289.22 370.05 Return on Long Term Funds(%) 27.93 27.43 Inventory turnover ratio of JK cement 11 7.69 Inventory turnover ratio of ultra tech cement 22.89 22.65 debtors turnover ratio of JK cement 27.14 27.08 debtors turnover ratio of ultra tech cement 31.71 35.04 investment turnover ratio of JK cement 11 7.69 investment turnover ratio of ultra tech cement 22.89 22.65 fixed assets turnover ratio of JK cement 1.23 0.89 fixed assets turnover ratio of ultra tech tech cement 0.86 0.87 total assets turn over ratios of JK cement 1.02 0.84 total assets turn over ratios of ultra tech cement 1.11 1.14 assets turnover ratio of JK cement 1.23 0.89 assets turnover ratios of ultra tech cement 0.86 0.87 ANALYSIS
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