Fianacial Analysis of Cement Industry (Ultratech, Ambuja, ACC)

FINANCIAL ANALYSIS AND REPORTING
ASSIGNMENT
REPORT ON
Fianacial analysis of Cement Industry(Ultratech , Ambuja, ACC)
Submitted to: Submitted by:

Prof. Vanadana Mishra ANKUR OBEROI
ANKUR SRIVASTAVA
ESHA RAIZADA
MAYANK TIWARI
MONA FEROZ
PRAGATI KATIYAR
AMBUJA CEMENT: Ratio Analysis
------------------
- in Rs. Cr.
Balance Sheet of Ambuja ------------------
Cements -
Jun '05 Dec '06 Dec '07 Dec '08 Dec '09
12 mths 18 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 270.38 303.37 304.48 304.52 304.74
Equity Share Capital 270.38 303.37 304.48 304.52 304.74
Share Application Money 0.03 1.14 0.00 0.34 0.24
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 1,908.01 3,187.21 4,356.77 5,368.01 6,165.92
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 2,178.42 3,491.72 4,661.25 5,672.87 6,470.90
Secured Loans 549.33 317.77 100.00 100.00 100.00
Unsecured Loans 578.12 547.61 230.42 188.67 65.70
Total Debt 1,127.45 865.38 330.42 288.67 165.70
Total Liabilities 3,305.87 4,357.10 4,991.67 5,961.54 6,636.60
Application Of Funds
Gross Block 3,709.17 4,542.50 5,231.05 5,706.94 6,224.13
Less: Accum. Depreciation 1,463.93 2,053.32 2,271.19 2,514.19 2,784.09
Net Block 2,245.24 2,489.18 2,959.86 3,192.75 3,440.04
Capital Work in Progress 118.10 634.93 696.79 1,947.22 2,714.43
Investments 1,125.06 1,133.12 1,288.94 332.39 727.01
Inventories 317.00 408.82 581.60 939.75 683.24
Sundry Debtors 45.84 89.95 145.68 224.60 152.20
Cash and Bank Balance 86.27 172.36 114.94 123.73 116.64
Total Current Assets 449.11 671.13 842.22 1,288.08 952.08
Loans and Advances 145.10 313.03 237.04 351.82 292.65
Fixed Deposits 0.26 205.74 535.85 728.11 764.04
Total CA, Loans & Advances 594.47 1,189.90 1,615.11 2,368.01 2,008.77
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 676.70 929.06 1,081.70 1,412.55 1,582.32
Provisions 106.77 168.68 493.55 470.56 674.04
Total CL & Provisions 783.47 1,097.74 1,575.25 1,883.11 2,256.36
Net Current Assets -189.00 92.16 39.86 484.90 -247.59
Miscellaneous Expenses 6.47 7.71 6.22 4.28 2.71
Total Assets 3,305.87 4,357.10 4,991.67 5,961.54 6,636.60
Contingent Liabilities 332.70 506.71 1,193.08 1,224.42 647.12
Book Value (Rs) 16.11 23.01 30.62 37.26 42.47

------------------
- in Rs. Cr.
Profit & Loss account of ------------------
Ambuja Cements -
Income
Sales Turnover 3,025.84 7,022.59 6,469.68 7,089.89 7,763.93
Excise Duty 428.79 796.31 798.29 907.80 680.72
Net Sales 2,597.05 6,226.28 5,671.39 6,182.09 7,083.21
Other Income 70.51 111.07 965.04 468.18 180.41
Stock Adjustments 6.97 -10.92 58.79 62.62 -49.44
Total Income 2,674.53 6,326.43 6,695.22 6,712.89 7,214.18
Expenditure
Raw Materials 435.52 1,007.07 953.32 1,251.08 1,642.09
Power & Fuel Cost 678.40 1,239.87 1,004.20 1,325.69 1,422.75
Employee Cost 106.44 235.98 209.46 266.94 274.29
Other Manufacturing Expenses 92.97 185.59 124.50 145.61 161.66
Selling and Admin Expenses 502.01 1,273.55 1,254.41 1,276.80 1,432.55
Preoperative Exp Capitalised -3.43 -10.82 -9.47 -21.19 -19.33
Total Expenses 1,873.68 4,054.20 3,677.05 4,460.57 5,116.20
Operating Profit 730.34 2,161.16 2,053.13 1,784.14 1,917.57

PBDIT 800.85 2,272.23 3,018.17 2,252.32 2,097.98
Interest 91.77 113.23 75.85 32.06 22.43
PBDT 709.08 2,159.00 2,942.32 2,220.26 2,075.55
Depreciation 195.41 326.12 236.34 259.76 296.99
Other Written Off 0.94 1.07 0.47 1.72 1.57
Profit Before Tax 512.73 1,831.81 2,705.51 1,958.78 1,776.99
Extra-ordinary items 6.08 10.17 -194.92 11.28 26.52
PBT (Post Extra-ord Items) 518.81 1,841.98 2,510.59 1,970.06 1,803.51
Tax 50.52 338.73 741.49 567.79 585.14
Reported Net Profit 468.29 1,503.25 1,769.10 1,402.27 1,218.37
Total Value Addition 1,438.16 3,047.13 2,723.73 3,209.49 3,474.11
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 189.16 461.24 532.65 334.97 365.59
Corporate Dividend Tax 26.54 64.69 90.52 56.92 62.13
Per share data (annualised)
15,168.2 15,223.7 15,225.9 15,237.1
Shares in issue (lakhs) 13,518.83 9 5 9 1
Earning Per Share (Rs) 3.46 9.91 11.62 9.21 8.00
Equity Dividend (%) 90.00 165.00 175.00 110.00 120.00
Book Value (Rs) 16.11 23.01 30.62 37.26 42.47

------------------
- in Rs. Cr.
Cash Flow of Ambuja ------------------
Cements -
Net Profit Before Tax 518.54 1841.60 2712.35 1969.84 1803.30

Net Cash
From Operating Activities 548.15 1796.18 1558.67 966.22 2129.15
Net Cash (used in)/from
Investing Activities -253.14 -627.17 -161.59 -274.90 -1196.13
Net Cash (used
in)/from Financing Activities -277.31 -888.86 -1124.44 -482.06 -466.66
Net (decrease)/increase In
Cash and Cash Equivalents 17.70 280.15 272.63 209.26 466.36
Opening Cash & Cash
Equivalents 68.83 97.95 378.16 642.58 949.11
Closing Cash & Cash
Equivalents 86.53 378.10 650.79 851.84 1415.47

------------------
- in Rs. Cr.
Key Financial Ratios of ------------------
Ambuja Cements -
Investment Valuation Ratios

Face Value 2.00 2.00 2.00 2.00 2.00
Dividend Per Share 1.80 3.30 3.50 2.20 2.40
Operating Profit Per Share
(Rs) 5.40 14.25 13.49 11.72 12.58
Net Operating Profit Per Share
(Rs) 19.21 41.05 37.25 40.60 46.49
Free Reserves Per Share (Rs) 12.08 19.66 27.48 34.13 39.35
Bonus in Equity Capital 71.98 64.15 63.92 63.91 63.86
Profitability Ratios
Operating Profit Margin(%) 28.12 34.71 36.20 28.85 27.07
Profit Before Interest And Tax
Margin(%) 20.39 29.13 31.35 24.04 22.32
Gross Profit Margin(%) 25.44 33.74 36.26 24.65 22.87
Cash Profit Margin(%) 25.29 29.04 34.61 21.17 20.46
Adjusted Cash Margin(%) 23.41 28.29 23.44 21.17 20.46
Net Profit Margin(%) 17.85 23.86 30.53 22.11 16.78
Adjusted Net Profit Margin(%) 15.93 23.09 19.35 22.11 16.78
Return On Capital
Employed(%) 16.94 43.76 38.84 28.19 27.04
Return On Net Worth(%) 21.50 43.05 37.95 24.73 18.83
Adjusted Return on Net
Worth(%) 19.24 41.77 24.09 19.07 18.35
Return on Assets 11.45 27.56 30.58 37.23 42.45
Return on Assets Including
Revaluations 11.45 27.56 30.58 37.23 42.45
Return on Long Term
Funds(%) 16.94 43.77 38.84 28.19 27.04
Liquidity And Solvency Ratios

Current Ratio 0.76 1.08 1.03 1.26 0.89
Quick Ratio 0.35 0.70 0.64 0.74 0.57
Debt Equity Ratio 0.52 0.25 0.07 0.05 0.03
Long Term Debt Equity Ratio 0.52 0.25 0.07 0.05 0.03
Debt Coverage Ratios
Interest Cover 6.28 17.61 26.02 52.66 80.15
Total Debt to Owners Fund 0.52 0.25 0.07 0.05 0.03
Financial Charges Coverage
Ratio 8.24 19.73 28.68 60.58 93.32
Ratio Post Tax 8.24 17.17 27.45 52.89 68.63
Management Efficiency Ratios

Inventory Turnover Ratio 8.28 15.41 9.96 7.54 11.36
Debtors Turnover Ratio 58.66 91.70 48.14 33.39 37.60
Investments Turnover Ratio 9.55 17.19 11.13 7.54 11.36
Fixed Assets Turnover Ratio 1.07 2.28 1.68 1.10 1.15
Total Assets Turnover Ratio 0.79 1.43 1.14 1.05 1.08
Asset Turnover Ratio 0.70 1.37 1.09 1.10 1.15

Average Raw Material Holding 30.85 43.45 30.93 36.96 14.69
Average Finished Goods Held 7.58 6.26 7.00 8.01 4.58
Number of Days In Working
Capital -26.20 7.99 2.53 28.24 -12.58
Profit & Loss Account Ratios

Material Cost Composition 16.76 16.17 16.80 20.23 23.18
Imported Composition of Raw
Materials Consumed -- 5.05 11.01 8.41 31.66
Selling Distribution Cost
Composition 17.91 19.08 20.95 19.2 18.58
Expenses as Composition of 10.48 8.36 4.9 3.69 2.6
Total Sales
Cash Flow Indicator Ratios

Dividend Payout Ratio Net
Profit 46.06 34.98 35.22 27.94 35.1
Dividend Payout Ratio Cash
Profit 32.45 28.73 31.06 23.55 28.19
Earning Retention Ratio 48.4 63.85 44.44 63.75 63.97
Cash Earning Retention Ratio 64.89 70.49 54.13 70.81 71.21
AdjustedCash Flow Times 1.84 0.49 0.24 0.22 0.11
Earnings Per Share(%) 3.46 9.91 11.62 9.21 8

Book Value 16.11 23.01 30.62 37.26 42.47
LIQUIDITY RATIOS
Liquidity is defined as having enough cash (or near-cash assets) to pay your bills when
they come due. The liquidity ratios compare the assets that will be converted into cash
soon (the numerator) to the bills that will be coming due soon (the denominator).
CURRENNT RATIO: The current ratio is a popular financial ratio used to test a
company's liquidity (also referred to as its current or working capital position) by
deriving the proportion of current assets available to cover current liabilities. The concept
behind this ratio is to ascertain whether a company's short-term assets (cash, cash
equivalents, marketable securities, receivables and inventory) are readily available to pay
off its short-term liabilities (notes payable, current portion of term debt, payables,
accrued expenses and taxes). In theory, the higher the current ratio, the better.
Current Assets
Current Ratio =
Current Liabilities
In the above graph we can see that current ratio increased from 0.75 to 1.08 in the year
2006. Further it declined by .05% to 1.03% in year 2007. In year 2008 it increased by .
23% to 1.26. Finally it declined to .89% in the year 2009. Generally it tells for every 1
rupee that company owes how much amount is available to repay its debts. Here in years
where ratio was above 1%, in those years current ratio was favorable, telling that current
assets are more than current liabilities. But in year 2009 we can see that current ratio is
just .89% which tells that current liabilities of company are greater than current assets
which is not favorable for the company.
QUICK RATIO: The quick ratio - aka the quick assets ratio or the acid-test ratio - is a
liquidity indicator that further refines the current ratio by measuring the amount of the
most liquid current assets there are to cover current liabilities. The quick ratio is more
conservative than the current ratio because it excludes inventory and other current assets,
which are more difficult to turn into cash. Therefore, a higher ratio means a more liquid
current position.
The average for all manufacturing companies is about one (1.0). This average also varies
a great deal from one industry to another.
Cash + Mkt. Securities + Acc. Receivable
Quick Ratio =
Current Liabilities
A commonly used variation of the ratio is:

Current Assets - Inventory
Quick Ratio =
Current Li abilities
Here we can see that quick ratio of the company is fluctuating. It increased in year 2006
to .7 as compared to .34 in year 2005. Further it declined in year 2007 to .63 and then
again it increased to .74 in the year 2008. Finally it declined again in year 2009 by .
17(.74-.57) and reached .57. Here we can see in the year 2009 current ratio is
significantly higher, than quick ration, it is a clear indication that the company's current
assets are dependent on inventory. Quick ratio indicates the companies’ ability to meet its
short term obligations. Since currently the ratio is .57 which is less than 1 so it is not
favorable for the company at present.
Working Capital: It is a financial metric which represents operating liquidity available
to an organization. Along with fixed assets such as plant and equipment, working capital
is considered a part of operating capital. It is calculated as current assets minus current
liabilities. If current assets are less than current liabilities, an entity has a working capital
deficiency, also called a working capital deficit. Net working capital is working capital
minus cash (which is a current asset) and minus interest bearing liabilities (i.e. short term
debt).
Working Capital = Current Assets − Current Liabilities
A company can be endowed with assets and profitability but short of liquidity if its assets
cannot readily be converted into cash. Positive working capital is required to ensure that a
firm is able to continue its operations and that it has sufficient funds to satisfy both
maturing short-term debt and upcoming operational expenses. The management of
working capital involves managing inventories, accounts receivable and payable and cash
In the above graph we can see that, there was working capital deficiency in year 2005 i.e.
-189. Working capital increased to 92.16 in year 2006. It remained positive in year 2007
but it declined to 39.86 crores. There was drastic increase in working capital due to
increase in amount of current assets, as result it increased to 484.9 crores in year 2008.
But in year 2009 the amount of current liabilities was greater than current assets which
resulted in working capital deficiency i.e. it declined to -247.59. Negative working capital
is not favorable for the company as it can’t fulfill its short term obligations and upcoming
operational expenses. Thus company has to relook its management of inventories,
accounts receivable and payable and cash in order to insure positive working capital.
LEVERAGE RATIOS

Any ratio used to calculate the financial leverage of a company to get an idea of the
company's methods of financing or to measure its ability to meet financial obligations.
There are several different ratios, but the main factors looked at include debt, equity,
assets and interest expenses. It is used to measure a company's mix of operating costs,
giving an idea of how changes in output will affect operating income. Fixed and variable
costs are the two types of operating costs; depending on the company and the
industry, the mix will differ.
Interest coverage ratio: A ratio used to determine how easily a company can pay
interest on outstanding debt. The interest coverage ratio is calculated by dividing a
company's earnings before interest and taxes (EBIT) of one period by the
company's interest expenses of the same period.
The lower the ratio, the more the company is burdened by debt expense. When a
company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may
be questionable. An interest coverage ratio below 1 indicates the company is not
generating sufficient revenues to satisfy interest expenses.
From the above graph we can see that company’s interest coverage ratio is constantly
increasing. Initially it was 6.28 in year 2005 but it increased to 17.61 in year in 2006.
Further it kept on increasing and finally reached 80.15 in year 2009. It shows company is
generating sufficient revenues to satisfy interest expenses.
Debt-equity ratio: The debt-equity ratio is another leverage ratio that compares a
company's total liabilities to its total shareholders' equity. This is a measurement of how
much suppliers, lenders, creditors and obligors have committed to the company versus
what the shareholders have committed. To a large degree, the debt-equity ratio provides
another vantage point on a company's leverage position, in this case, comparing total
liabilities to shareholders' equity, as opposed to total assets in the debt ratio.
A lower the percentage of debt-equity ratio means that a company is using less leverage
and has a stronger equity position.
Total Debt (or Liabilities)
Debt - to - Equity Ratio =
Total Equity
Here in the above case we can see that debt-equity ration is constantly declining since
year 2005. In year 2005 D/E ratio was .52 but it declined to .25 i.e. almost by half to .25
in year 2006. It further declined to .07 in year 2007 and finally declined more and
reached .03 in year 2009. A lower the percentage of debt-equity ratio means that a
company is using less leverage and has a stronger equity position.
TURNOVER OR EFFICIENCY RATIOS

Turnover ratios measure the management’s efficiency and effectiveness in managing the
firm’s assets. In general, sales (or a measure of sales, like cost of goods sold) will be in
the numerator. We would like for the value of the turnover ratios to be quite high (with
the exception of the average collection period).
Inventory Turnover: Indicates the number of times a year that the firm’s inventory has
been replaced. A low ratio may indicate that the firm has some obsolete inventory, or
that possibly, the firm is simply overstocked on inventory. If the inventory turnover is 4
times per year, the company is replacing its inventory approximately every 3 months; if
its inventory turnover is 12 times per year, it is replacing its inventory approximately
every 30 days (or 1 month).
Sales
Inventory Turnover =
Inventory
From the above graph we can see that, in 2005 the inventory turnover ratio was 8.28.It
further increase by 7.13 in 2006 and reached to 15.41. But in year 2007 the inventory turn
over ratio declined by 5.45 and was 9.96. When we talk about year 2008 there was again
a decline by 2.42 and in 2009 the ratio was 11.36 thereby increasing by 3.82. Thus we
can say that the inventory turnover of the company is fluctuating. Inventory turnover ratio
of 11.36 in year 2009 tells us that company is replacing its inventory approximately every
30 days (or 1 month).
Total Asset Turnover Ratio: The purpose of investing in assets is to generate sales:
the higher the sales per dollar invested in total assets, the better. This ratio measures
how efficiently the management is achieving its goal.
Sales
Total Asset Turnover =
Total Assets
Major fault of the ratio: Total assets are made up of current assets and fixed assets. If
the company’s fixed assets are old (and therefore almost fully depreciated), the value of
net fixed assets on the balance sheet will be quite small. This, in turn, will make total
assets appear to be small and the value of the ratio will be high. This implies that a
company with old assets is managing its assets quite efficiently. In fact, the company
may not be managing its assets well at all – they are simply old and much depreciated.
A company that has recently upgraded its assets by investing in newer equipment may
actually be better managed, but its total asset turnover ratio will look inferior to the
company with older assets. In spite of this, the total asset turnover ratio is widely used;
it’s simply important to know of its major deficiency when using it.
In 2005 the ratio was 0.79 and there was an increase of 0.64 in 2006 as it was 1.43 but in
2007 the Total Assets Turnover Ratio decreased to 1.14, it further decrease by 0.09 in
2008 as it was 1.05 and in 2009 there was a slight increase of 0.03.Therefore we can say
that the Total Assets Turnover Ratio of the company is fluctuating.
FIXED ASSETS TURNOVER RATIO: IT is the ratio of sales (on the Profit and loss
account) to the value of fixed assets (on the balance sheet). It indicates how well the
business is using its fixed assets to generate sales.
FIXED ASSET TURNOVER RATIO = Net Sales
Total Fixed Assets
The higher the ratio, the better, because a high ratio indicates the business has less money
tied up in fixed assets for each dollar of sales revenue. A declining ratio may indicate that
the business is over-invested in plant, equipment, or other fixed assets.
The Fixed Assets Turnover Ratio in 2005 was 1.07. In 2006 it increased to 2.28,
increasing by 1.21.In 2007 it declined to 1.68. Further it declined to 1.1 in year 2008. In
2009 there was a slight increase by 0.05 and it reached to 1.15. Greater the ratio more it is
beneficial for the company. Ratio of 1.15 in year 2009 tells that 1.15 times assets were
turned and converted into sales. The ratio was most favorable in year 2006 as its fixed
asset turnover was 2.28, which was highest in last 5 years.
Debtors Turnover Ratio: It indicates the velocity of debt collection of a firm. In simple
words it indicates the number of times average debtors (receivable) are turned over
during a year.
Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors
The higher the value of debtors turnover the more efficient is the management of debtors
or more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient
management of debtors or less liquid debtors. It is the reliable measure of the time of
cash flow from credit sales. There is no rule of thumb which may be used as a norm to
interpret the ratio as it may be different from firm to firm.
In 2005 the Debtors Turnover Ratio was 58.66.In 2006 there was increase by 33.04 and
reached to 91.70.In 2007 it declined by 43.56 and ratio was 48.14. In 2008 it further
decrease to 33.39. finally in year 2009 there was slight increase and it reached 37.6. ratio
was highest in 2006, it tells that in year 2006 there was most efficient management of
debtors or debtors were most liquid. Lower ratio in year 2008 i.e. 33.39 indicates
inefficient management of debtors or less liquid debtors.
PROFITABILITY RATIOS
A class of financial metrics that are used to assess a business's ability to generate earnings
as compared to its expenses and other relevant costs incurred during a specific period of
time. For most of these ratios, having a higher value relative to a competitor's ratio or
the same ratio from a previous period is indicative that the company is doing well. These
ratios, much like the operational performance ratios, give users a good understanding of
how well the company utilized its resources in generating profit and shareholder value.
The long-term profitability of a company is vital for both the survivability of the
company as well as the benefit received by shareholders. It is these ratios that can give
insight into the all important "profit".
Return on Assets: The primary purpose of investing in assets is to generate sales, which
in turn lead to profits. The return on assets ratio measures the profitability per dollar of
investment in the firm. Notice that the ratio doesn’t say anything about how the assets
are financed, i.e., where the money comes from (either debt or equity). It simply wants to
know how profitable the company is per dollar invested in total assets (no matter where
the money comes from to finance those assets).
Earnings After Taxes

Return on Assets =
Total Assets
Here we can see that ratio is continuously in creasing over the past 5 years. Initially ratio
was 11.45 in year 2005 but it kept on increasing per year and finally reached 42.45 in
year 2009. It is good sign for the company.

Net Profit Margin: Profit margin, net margin, net profit margin or net profit ratio all
refer to a measure of profitability. It is calculated by finding the net profit as a percentage
of the revenue.
The profit margin is mostly used for internal comparison. It is difficult to accurately
compare the net profit ratio for different entities. Individual businesses' operating and
financing arrangements vary so much that different entities are bound to have different
levels of expenditure, so that comparison of one with another can have little meaning. A
low profit margin indicates a low margin of safety: higher risk that a decline in sales will
erase profits and result in a net loss.
Profit margin is an indicator of a company's pricing policies and its ability to control
costs. Differences in competitive strategy and product mix cause the profit margin to vary
among different companies
Here we can see that net profit margin increased from 16.78 in year 2005 to 22.22 in year
2006. It further increased to 30.53 in year 2007. But after that it kept on declining
continuously for both years i.e. the ratio declined from 30.53 to 23.86 in year 2008 and it
further declined to 17.85 in year 2009.
Return on Equity – This ratio indicates how profitable a company is by comparing its net
income to its average shareholders' equity. The return on equity ratio (ROE) measures
how much the shareholders earned for their investment in the company. The higher the
ratio percentage, the more efficient management is in utilizing its equity base and the
better return is to investors.
Widely used by investors, the ROE ratio is an important measure of a company's earnings
performance. The ROE tells common shareholders how effectively their money is being
employed. Peer Company, industry and overall market comparisons are appropriate;
however, it should be recognized that there are variations in ROEs among some types of
businesses. In general, financial analysts consider return on equity ratios in the 15-20%
range as representing attractive levels of investment quality. While highly regarded as a
profitability indicator, the ROE metric does have a recognized weakness. Investors need
to be aware that a disproportionate amount of debt in a company's capital structure would
translate into a smaller equity base. Thus, a small amount of net income (the numerator)
could still produce a high ROE off a modest equity base (the denominator).
We can see that ROE is continuously decreasing since year 2007. In year 2007 it was
24.09, it further declined to 19.07 and then it further declined in year 2009 and reached
18.35. Here we can say that earning of shareholders of the company is continuously
decreasing which is not a good sing for the company.
Return on Investment: A performance measure used to evaluate the efficiency of
an investment or to compare the efficiency of a number of different investments. To
calculate ROI, the benefit (return) of an investment is divided by the cost of the
investment; the result is expressed as a percentage or a ratio.
The return on investment formula:
Return on investment is a very popular metric because of its versatility and simplicity.

That is, if an investment does not have a positive ROI, or if there are other opportunities
with a higher ROI, then the investment should be not be undertaken.
From the above graph we can see that ROI was 16.94 in year 2005. It increased
drastically to 43.77 in year 2006. But after that it kept on declining for all the 3 years. It
declined to 38.84 in year 2007. Further it declined more in year 2008 and reached 28.19.
finally it declined more and reached 27.04 in year 2009.
ACC RATIOS ANALYSIS
------------------
Balance Sheet - in Rs. Cr.
------------------
of ACC -
Dec '05 Dec '06 Dec '07 Dec '08 Dec '09


Sources Of Funds
Reserves 1,951.21 2,955.16 3,964.78 4,739.85 5,828.20
Networth 2,136.75 3,142.92 4,152.71 4,927.73 6,016.22
Secured Loans 950.12 720.96 266.03 450.00 550.00
Unsecured Loans 121.30 50.20 40.38 32.03 16.92
Total Debt 1,071.42 771.16 306.41 482.03 566.92


Gross Block 4,628.64 4,816.25 5,464.07 5,835.67 6,826.27
Net Block 2,906.35 2,922.49 3,314.72 3,469.70 4,158.29
Capital Work in Progress 290.95 558.42 649.19 1,602.86 2,156.21
Investments 333.80 543.09 844.81 679.08 1,475.64
Inventories 600.95 624.13 730.86 793.27 778.98
Sundry Debtors 199.17 213.96 289.29 310.17 203.70
Total Current Assets 900.72 991.07 1,099.02 1,191.01 1,078.32
Fixed Deposits 2.19 467.19 664.61 896.67 650.74
Total CA, Loans & Advances 1,436.45 2,027.47 2,307.94 2,867.44 2,443.61
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 1,449.02 1,596.50 1,991.27 2,245.39 2,558.73
Provisions 316.77 541.83 666.27 963.93 1,091.88
Total CL & Provisions 1,765.79 2,138.33 2,657.54 3,209.32 3,650.61
Net Current Assets -329.34 -110.86 -349.60 -341.88 -1,207.00
Total Assets 3,208.17 3,914.08 4,459.12 5,409.76 6,583.14

Contingent Liabilities 282.42 341.56 890.62 1,734.21 840.52
Book Value (Rs) 115.76 167.81 221.33 262.56 320.45

------------------
Profit & Loss - in Rs. Cr.
------------------
account of ACC -


Income
Sales Turnover 3,723.51 6,467.84 7,865.11 8,300.18 8,803.17
Excise Duty 539.71 736.09 970.32 1,070.21 781.58
Net Sales 3,183.80 5,731.75 6,894.79 7,229.97 8,021.59
Other Income 300.84 247.87 369.35 252.84 137.40
Stock Adjustments 45.26 -29.25 6.93 0.33 28.74
Total Income 3,529.90 5,950.37 7,271.07 7,483.14 8,187.73
Expenditure
Raw Materials 1,078.84 1,513.55 1,843.65 1,180.48 1,233.42
Power & Fuel Cost 299.52 430.98 517.56 1,598.96 1,539.65
Employee Cost 184.84 318.02 352.73 413.04 367.71
Other Manufacturing
Expenses 157.65 262.45 344.17 362.90 421.69
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Total Expenses 2,643.85 4,012.40 4,959.92 5,447.02 5,483.98


PBDIT 886.05 1,937.97 2,311.15 2,036.12 2,703.75
Interest 66.19 75.19 73.87 39.96 84.30
PBDT 819.86 1,862.78 2,237.28 1,996.16 2,619.45
Depreciation 164.64 254.61 305.43 294.18 342.09
Extra-ordinary items 46.93 14.55 -0.16 35.39 21.54
Tax 140.17 369.10 491.70 524.60 688.93
Reported Net Profit 544.18 1,231.84 1,438.59 1,212.79 1,606.73
Equity Dividend 147.61 280.92 375.02 375.33 431.76
Shares in issue (lakhs) 1,845.08 1,872.78 1,876.24 1,876.82 1,877.40
Equity Dividend (%) 80.00 150.00 200.00 200.00 230.00
Book Value (Rs) 115.76 167.81 221.33 262.56 320.45

CURRENT RATIO
0.81348858 0.948156 0.86845 0.893473 0.66937

QUICK RATIO
0.473159322 0.656278 0.593436 0.646296 0.455987

CASH RATIO
0.870460247 1.019698 0.898128 0.920759 0.695569

DEBT EQUITY RATIO
0.501425061 0.245364 0.073786 0.09782 0.094232

INTEREST COVERAGE
RATIO
13.38646321 25.77431 31.28672 50.95395 32.07295
INVENTORY TURNOVER
RATIO
2.387916 2.376543 1.409444 1.601723
DIH
150.7591 151.4806 255.4198 224.758
TOTAL ASSETS TURNOVER

RATIO
0.992403769 1.464393 1.546222 1.336468 1.218505
PROFIT MARGIN RATIO

0.17092154 0.214915 0.208649 0.167745 0.200301
DEBTORS TURNOVER
RATIO
15.98533916 26.78889 23.83349 23.3097 39.37943
RETURN ON ASSETS(%)
16.96231808 31.47202 32.26175 22.41855 24.40674
RETURN ON EQUITY
0.254676495 0.391941 0.346422 0.246115 0.267066
AVERAGE COLLECTION
PERIOD
1413.558014 918.505 1039.195 1462.729 1347.98
CURRENT RATIOS-Current ratios of ACC cement for the year 06 has increased from 05
because of the increase in the cash balance and inventory and less increase in current liability,
but in the year 07 it decreased as current liabilities are still increasing but comparatively assets
are not increasing that much but again in the year in 08 the current ratio increased to 0.893
&then in 09 it decreased to 0.66.in all the 5 years the comfort level of 1:1 thus it shows the
company is having current liability more then its current assets.
QUICK RATIOS- All current assets are not equally liquid. While cash is readily available for
making payments to suppliers & debtors can be quickly converted into cash, inventories are
two steps away from conversion into cash (sales & collection).thus a large current ratio by itself
is not a satisfactory measure of liquidity of when inventories constitute a major part of current
asset. Therefore, the quick ratio or acid test ratio is computed as a supplement to the current
ratio. One can see from the records ratio is not showing a satisfactory position at all. It is
maximum 0.65 in the year 06 but it is still not good. Decreased liquidity shows the excess of
inventory involved in the company.
CASH RATIOS-Cash ratio is in the good position for the first 4 years but then in the year 09 the
ratio drops to 0.69 that means the cash is not sufficient to meet out the liabilities.
DEBTORS TURNOVER RATIOS-Debtors turnover ratio is measuring the realization of amount

after the credit sales by the company. The calculated ratios shows a high debtor turnover ratio
that indicates a good management of receivable. It means the realization is occurring
frequently that is why company might not face liquidity problem in the coming time. It
increased from 15.9834 in the year 05 from 39.379 in the year 09.
AVERAGE COLLECTION PERIOD- It is common to express debtor turnover in average debt

collection period in order to calculate leads or lags in collection relative to the company’s credit
period. Average collection period is also decreasing as usual as the debtor turnover is
decreasing which suggest that the debtors are taking time to be realized. Year 09 shows the
worst case of them.
TOTAL ASSET TURNOVER RATIO-It shows how many times the company generates sale to a
rupee investment in current & fixed asset together as we can see that the ratios is
1.46,1.54,1.33,1.21 in the last 4 years. It shows that company is generating satisfactory sales
out of its investment.
PROFIT MARGIN- It shows that the company is earning about 16% to 20% profit on for the last
5 years. It can increase it in future by decreasing the operating expenses and increasing the
sales of company.
RETURN ON ASSET- The return on asset ratio is indicating that the company is earning how
much profit as per rupee 1 of asset investment. In our data ratios keeps on increasing which
suggest that profit earned are kept on increasing. It increased from 22.
RETURN ON EQUITY-Normal shareholders is entitled to some profit. It indicates how well the
company is using the resources of the owner. As per the given data return on equity was
0.254676 in the year 05 which increased to 0.391941 in the year 07 but again it fell to .246115.
INVENTORY TURNOVER RATIOS-This ratio is too low in the company which suggest that the
product is not turning into receivables very quickly so the holding period & the cost of holding
the inventory is quit high &kept on increasing. A lower inventory turnover ratio implies poor
inventory management.
INTEREST COVERAGE RATIO-It shows the relation between EBIDT & interest that how many
times the interest charges are covered by funds. From the data of ACC Cement we can see that
it is quit high it was 13.38646 in 05 that reached to50.95395 in the year 08 which implies
adequate safety for payment of interest even there were to be a drop in the company’s
earning.
DEBT EQUITY RATIO-The debt equity ratio is showing a sound position as this shows that the
equity proposition in the company is more than the debt proportion, thus outsiders has got a
security as well as company is almost free from the debts. We can see debt equity ratio goes
on declining from .5014 in the year 05 to .094232, thus it is showing that the role of the equity
in the structure is maintained day by day.
Analysis of financial ratios of Ultratech Cement Ltd.
------------------
- in Rs. Cr.
Balance Sheet of UltraTech ------------------
Cement -
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Sources Of Funds
Reserves 913.78 1,639.29 2,571.73 3,475.93 4,482.17
Networth 1,038.27 1,763.78 2,696.99 3,602.10 4,608.65
Secured Loans 1,221.93 1,151.25 982.66 1,175.80 854.19
Unsecured Loans 229.90 427.38 757.84 965.83 750.33
Total Debt 1,451.83 1,578.63 1,740.50 2,141.63 1,604.52
Gross Block 4,605.38 4,784.70 4,972.60 7,401.02 8,078.14
Net Block 2,537.17 2,517.28 2,500.46 4,635.69 4,941.68
Capital Work in Progress 141.03 696.95 2,283.15 677.28 259.37
Investments 172.39 483.45 170.90 1,034.80 1,669.55
Inventories 379.57 433.58 609.76 691.97 821.70
Sundry Debtors 172.55 183.50 216.61 186.18 215.83
Total Current Assets 613.62 706.67 927.06 982.64 1,121.26
Fixed Deposits 0.10 0.00 0.00 0.00 0.00
Total CA, Loans & Advances 781.95 972.13 1,317.49 1,378.35 1,496.18
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 1,103.26 1,308.93 1,708.96 1,860.59 1,992.60
Provisions 39.18 18.47 125.55 121.80 161.01
Total CL & Provisions 1,142.44 1,327.40 1,834.51 1,982.39 2,153.61
Net Current Assets -360.49 -355.27 -517.02 -604.04 -657.43
Total Assets 2,490.10 3,342.41 4,437.49 5,743.73 6,213.17
Contingent Liabilities 685.42 1,942.56 645.17 355.07 420.26
Book Value (Rs) 83.46 141.69 216.59 289.22 370.05

------------------
- in Rs. Cr.
Profit & Loss account of ------------------
UltraTech Cement -
Income
Sales Turnover 3,785.29 5,484.35 6,286.24 7,160.42 7,729.13
Excise Duty 485.84 575.30 773.81 774.92 686.31
Net Sales 3,299.45 4,909.05 5,512.43 6,385.50 7,042.82
Other Income 24.59 61.41 98.67 75.35 122.71
Stock Adjustments 39.12 -30.76 23.42 86.34 4.59
Total Income 3,363.16 4,939.70 5,634.52 6,547.19 7,170.12
Expenditure
Raw Materials 772.84 871.30 1,032.34 1,280.31 1,593.03
Power & Fuel Cost 910.11 1,138.32 1,253.26 1,712.98 1,430.91
Employee Cost 92.26 117.22 171.55 216.76 250.28
Other
Manufacturing Expenses 48.19 56.22 61.52 92.58 97.42
Preoperative Exp Capitalised 0.00 0.00 -13.37 -8.38 -4.02
Total Expenses 2,776.96 3,454.65 3,808.35 4,728.64 5,069.77

PBDIT 586.20 1,485.05 1,826.17 1,818.55 2,100.35
Interest 96.99 92.61 81.93 134.09 124.11
PBDT 489.21 1,392.44 1,744.24 1,684.46 1,976.24
Depreciation 216.03 226.25 237.23 323.00 388.08
Extra-ordinary items 12.41 0.00 0.00 0.00 0.00
Tax 55.83 383.91 499.40 384.44 494.92
Reported Net Profit 229.76 782.28 1,007.61 977.02 1,093.24
Equity Dividend 21.79 49.79 62.24 62.24 74.69

Shares in issue (lakhs) 1,243.99 1,244.86 1,244.86 1,244.86 1,244.87
Equity Dividend (%) 17.50 40.00 50.00 50.00 60.00
Book Value (Rs) 83.46 141.69 216.59 289.22 370.05

------------------
- in Rs. Cr.
Cash Flow of UltraTech ------------------
Cement -
Net Profit Before Tax 285.59 1166.19 1507.01 1361.46 1588.16

Net Cash From Operating
Activities 551.63 1113.09 1375.26 1457.57 1571.93
Net Cash (used in)/from
Investing Activities -357.24 -1046.25 -1441.79 -1645.43 -851.66
Net Cash (used
in)/from Financing Activities -191.02 -38.84 77.63 191.66 -741.03
Net (decrease)/increase In
Cash and Cash Equivalents 3.37 27.99 11.10 3.80 -20.76
Opening Cash & Cash
Equivalents 58.23 61.60 89.59 100.69 104.49
Closing Cash & Cash
Equivalents 61.60 89.59 100.69 104.49 83.73
------------------
- in Rs. Cr.
Key Financial Ratios of ------------------
UltraTech Cement -
Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 1.75 4.00 5.00 5.00 6.00
Operating Profit Per Share
(Rs) 45.15 114.36 138.77 140.03 158.86
Net Operating Profit Per Share
(Rs) 265.23 394.35 442.82 512.95 565.75
Free Reserves Per Share (Rs) 60.27 116.03 191.59 267.12 350.75
Bonus in Equity Capital -- -- -- -- --
Profitability Ratios
Operating Profit Margin(%) 17.02 29 31.33 27.29 28.08
Profit Before Interest And Tax
Margin(%) 10.4 24.1 26.61 21.9 22.24
operating Profit Margin(%) 14.9 28.07 27.03 22.24 22.56
Cash Profit Margin(%) 13.41 20.3 22.02 20.41 20.43
Adjusted Cash Margin(%) 12.99 20.23 22.02 20.41 20.43
Net Profit Margin(%) 6.91 15.75 17.99 15.06 15.3
Adjusted Net Profit Margin(%) 6.49 15.67 17.99 15.06 15.3
Return On Capital
Employed(%) 14.8 37.54 35.55 26.45 27.22
Return On Net Worth(%) 22.13 44.35 37.37 27.13 23.73
Adjusted Return on Net
Worth(%) 20.79 44.13 36.94 27.8 23.27
Return on Assets 6.33 141.69 216.59 289.22 370.05
Dividend Per Share
eps 14.89 37.78 38.25 27.93 27.43
Liquidity And Solvency Ratios

Current Ratio 0.67 0.71 0.58 0.59 0.67
Quick Ratio 0.34 0.4 0.38 0.34 0.3
Debt Equity Ratio 1.4 0.9 0.65 0.59 0.35
Long Term Debt Equity Ratio 1.38 0.88 0.53 0.51 0.34
Debt Coverage Ratios
Interest Coverage ratio 4.11 14.45 20.85 12.75 14.97
Total Debt to Owners Fund 1.4 0.9 0.65 0.59 0.35
Ratio 6.03 15.99 22.15 13.74 16.75
Ratio Post Tax 5.6 11.89 16.19 10.7 12.94
Management Efficiency Ratios

Inventory Turnover Ratio 8.75 11.46 31.16 22.89 22.65
Debtors Turnover Ratio 19.16 27.58 27.55 31.71 35.04
Investments Turnover Ratio 21.2 34.61 31.16 22.89 22.65
Fixed Assets Turnover Ratio 1.25 1.67 1.11 0.86 0.87
Total Assets Turnover Ratio 1.33 1.47 1.24 1.11 1.14
Asset Turnover Ratio 0.72 1.03 1.11 0.86 0.87

Average Raw Material Holding 16.25 21.46 23.23 28.87 29.94
Average Finished Goods Held 9.76 8.02 6.82 6.35 7.29
Number of Days In Working
Capital -39.33 -26.05 -33.77 -34.05 -33.61
Profit & Loss Account Ratios

Material Cost Composition 23.42 17.74 18.72 20.05 22.61
Imported Composition of Raw
Materials Consumed 0.24 2.43 1.53 0.72 3.01
Selling Distribution Cost
Composition 25.57 23.17 20.73 19.67 20.98
Expenses as Composition of
Total Sales 15.23 13.71 9.45 9.7 6.83
Cash Flow Indicator Ratios
Dividend Payout Ratio Net
Profit 10.81 7.25 7.22 7.45 7.96
Dividend Payout Ratio Cash
Profit 5.57 5.62 5.84 5.6 5.87
Earning Retention Ratio 88.49 92.71 92.7 92.73 91.88
Cash Earning Retention Ratio 94.25 94.35 94.1 94.5 94.04
AdjustedCash Flow Times 3.36 1.57 1.41 1.62 1.1
Earnings Per Share 18.47 62.84 80.94 78.48 87.82

Book Value 83.46 141.69 216.59 289.22 370.05
Liquidity ratios:
1. Current ratio: No trend can be observed in the current ratios over the past five years. The current
ratio has been quite fluctuating. After an increase in the current ratio from .75 in the financial year
ending March 06 to 1.08 in the year mar 07 it again drops to 1.03. Further in the year Mar 09 it
again rises to 1.26 before dropping to .89 in the year Mar 10.
The component analysis of the above ratio shows that the fluctuating nature of the above ratio is
due to the rise and fall of the current assets. However the current liabilities follow an increasing
trend over the period. The industry average for the period stands at .8 . Therefore it can be said that
Ambuja Cements Ltd is operating well above the industry standards.
2. Quick ratios: The quick ratio follows the same trend as the current ratio i.e. it is fluctuating and
does not follow any trend. The quick ratio increases to .7 in the year ending Mar 07 from .34 in d
preceding year and finally drooping to .63 in the year Mar08. It further increases to .74 in the year
Mar 09 and then again decreases to .57 in the year in Mar 10. The average quick ratios for the past
5 years stands at .45 . Comparing the quick ratio of company with the industry shows that it has is
certainly in a better position and has more liquidity than the industry average.
3. Inventory turnover ratio: The ratio shows how quick the company is able to convert its inventory to
sales. The ratio is well above the industry average in each of the years. The ratio first increases to
17.19 in the first year i.e in Mar 07 and then drops to 11.13 in the year Mar 08. It further drops to
7.54 in the year Mar 09 and finally increases to 11.36 in the year Mar 10.
Leverage ratios
1. Debt equity ratio: The debt- equity ratio has shown a declining trend over the past 5 years which
shows that the company is reducing its financial risk continuously. This also shows that company is
not trying to be very aggressive in its approach by taking large debts. Ambuja Cements Ltd. has D/E
ratio of .51 in the year Mar 06 which declines to .24 in the year in the year Mar 07 and further to .
07 in the year Mar 08. There is further drop to .05 in the year ending Mar 09 and finally the D/E
ratios comes to .02 .
2. Fixed assets turnover ratio: The above ratio shows how much sales a company is able to generate
for every 1 rupee of fixed asset involved in the business. The ratio does not follow any fixed pattern
as such. The ratio reaches 1.37 in the year ending Mar 07 from .7 in the previous year before
dropping to 1.09 in the year ending Mar 08. It increases marginally in the year Mar 09 to 1.1 and
then increases to 1.15 in the year Mar 10.
Profitability ratios
1. Gross profit margin: This ratios shows the amount of profit earned for one rupee of sale. The ratio
first follows an increasing trend and then declines. It increases to the 29.47% in the year Mar 07
from 20.59% in Mar 06. It further increases to 32.03% in the next year. However it has been
dropping in the last two years. It declined to 24.65% in the year Mar 09 and further to 22.87% in
the year Mar 07.
2. Net profit margin: : This ratios shows the amount of net profit(PAT) earned for one rupee of sale. It
follows the same trend as the gross profit margin ratio i.e. the ratio first follows an increasing trend
and then declines. It increases to the 23.86% in the year Mar 07 from 17.85% in Mar 06. It further
increases to 30.53% in the next year. However it has been dropping in the last two years. It
declined to 22.11% in the year Mar 09 and further to 16.78% in the year Mar 07.
3. Return on equity: Return on equity shows the amount of PAT earned for one rupee of equity in the
company. The ROE of Ambuja Cements Ltd. has been on the decline for the past three years
continuously. An analysis of the above ratios shows the following. The ratio reached its peak in the
year Mar 07 i.e. 43.16% from 21.56% in Mar 06. The it declined to 38% in the year Mar 08 and
further 24.73% and 18.83 in the succeeding years.
4. Dividend per share: The ratio shows the amount of dividend earned per share an investor holds.
The ratio is extremely important from the point of view of the investors. The ratio increases to 3.3
in the year Mar 07 from 1.8 in the year Mar 06. It further increased to 3.5 in the year Mar 08 before
finally dropping to 2.2 in the year Mar 09 and finally increases to 2.4 in Mar 10.
Payout ratios
1. Retention ratio: The ratio denotes the percentage of the earnings(PAT) retained by the company
for expenditure or building up reserves. The ratio first increases to 70.49% in the year Mar 07 from
64.89% in the year Mar 06 and then dropping to 54.13% in the year Mar 08. The ratio further
increases to 70.81% and 71.21% in the following years.

Fianacial Analysis of Cement Industry (Ultratech, Ambuja, ACC)

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Fianacial Analysis of Cement Industry (Ultratech, Ambuja, ACC)

Enviado por

Direitos autorais:

Formatos disponíveis

FINANCIAL ANALYSIS AND REPORTING

Fianacial analysis of Cement Industry(Ultratech , Ambuja, ACC)

Submitted to: Submitted by:

12 mths 18 mths 12 mths 12 mths 12 mths

12 mths 18 mths 12 mths 12 mths 12 mths

12 mths 18 mths 12 mths 12 mths 12 mths

12 mths 18 mths 12 mths 12 mths 12 mths

Operating Profit 730.34 2,161.16 2,053.13 1,784.14 1,917.57

12 mths 18 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 518.54 1841.60 2712.35 1969.84 1803.30

Investment Valuation Ratios

Liquidity And Solvency Ratios

Management Efficiency Ratios

Profit & Loss Account Ratios

Cash Flow Indicator Ratios

Earnings Per Share(%) 3.46 9.91 11.62 9.21 8

A commonly used variation of the ratio is:

TURNOVER OR EFFICIENCY RATIOS

FIXED ASSET TURNOVER RATIO = Net Sales

Total Fixed Assets

Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors

Earnings After Taxes

year 2009. It is good sign for the company.

The return on investment formula:

Return on investment is a very popular metric because of its versatility and simplicity.

TOTAL ASSETS TURNOVER

PROFIT MARGIN RATIO

DEBTORS TURNOVER RATIOS-Debtors turnover ratio is measuring the realization of amount

AVERAGE COLLECTION PERIOD- It is common to express debtor turnover in average debt

12 mths 12 mths 12 mths 12 mths 12 mths

12 mths 12 mths 12 mths 12 mths 12 mths

12 mths 12 mths 12 mths 12 mths 12 mths

12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 561.61 1,423.64 1,727.50 1,743.20 1,977.64

Per share data (annualised)

12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 285.59 1166.19 1507.01 1361.46 1588.16

Investment Valuation Ratios

Liquidity And Solvency Ratios

Management Efficiency Ratios

Profit & Loss Account Ratios

Earnings Per Share 18.47 62.84 80.94 78.48 87.82

Você também pode gostar