Project of Corporate

Finance
On
Comparative Analysis of
Company
Company name:
J.K.Cement

Submitted to: Submitted By:

Mrs. Mamta Simhar Abhishek Hasiza
Ankush Bhatia
Ankush Soni
Dhaval Patel
Divyabhan Singh
 Mohit Khandelwal
Rahul Katoch

Table of Content

1. Objectives
2. Company Profile
3. Its Competitors
4. Market Share of J.K Cement
5. Financial Statement of company
6. Ratio’s
– Liquidity ratio’s
– Solvency Ratio’s
– Turnover Ratio’s
– Profitability Ratio’s
1. Financial Position of company
2. Summary
 Objectives

We have chosen this project because we want to know how to analyze of

financial and interoperate the financial statement of J.K.Cement Limited. By this
project we are able to understand how ratios analysis of any company helpful in
decision making related to liquidity, profitability and activity.
 Company Profile

J.K. Cement is an affiliate of the J.K. Organization, which was founded by Lala
Kamlapat Singhania. The J.K. Organization is an association of industrial and
commercial companies and has operations in a broad number of industries.

Our cement operations commenced commercial production in May 1975 at our

first plant at Nimbahera in the state of Rajasthan. At Nimbahera, Company started
with a single kiln with a production capacity of 0.3 million tons. Company added a
second kiln in 1979 with production capacity of 0.42 million tons, and a third kiln
in 1982 with a production capacity of 0.42 million tons. Company added a
precalciner with a capacity of 0.4 million tons in 1988, which increased our
capacity at Nimbahera to 1.54 million tons. During the years 1998 through 2003, it
continued to implement modifications to each of our kilns, which increased our
aggregate capacity at Nimbahera to 2.8 million tons as of September 30, 2005.

It has commissioned a second grey cement plant at our Mangrol plant in 2001,
with a production capacity of 0.75 million tons. As of September 30, 2005,
company had an aggregate production capacity of 3.55 million tons per annum of
grey cement. Its white cement plant was completed in 1984 with a capacity of
50,000 tons. Company increases the plant’s production capacity to 300,000 tons as
of September 30, 2005.

Today, J. K. Cement Ltd. is one of the largest cement manufacturers in Northern

India. J.K.Cemant is the second largest white cement manufacturer in India by
production capacity. While the grey cement is primarily sold in the northern India
market, the white cement enjoys demand in the export market including countries
like South Africa, Nigeria, Singapore, Bahrain, Bangladesh, Sri Lanka, Kenya,
Tanzania, UAE and Nepal.

Market cap (Rs): 13bn

52 - wk Hi/Lo (Rs): 211 / 109
Avg. daily vol. (3mth): 169,547
Face Value (Rs): 10

Competitors

Comparison of cement industry on the basis of EPS and Price

earning ratios:

Company EPS P/E

FY09E FY10E FY09E FY10E
ACC 73.2 78.4 10.9 10.2
Grasim 299.2 316.7 8.6 7.1
Ambuja 9.6 10.8 11.8 10.5
cement
Ultra tech 105.3 122.3 7.4 6.4
cement
India cements 26.2 30.3 6.9 5.9
JK cement 51.8 60.6 2.9 2.5
Shree cement 175.1 235.4 6.2 4.6
Comparison of competitors on the basis of market
capitalization, sales turnover, net profit and total assets:
Company Mkt Cap cr Sale Net Profit Total
Turnover Assets
ACC 17124.73 7474.15 1212.78 5409.74
Ambuja 16178.94 6281,73 1402.275 5961.54
Cement
Ultra Tech 12327.84 6326.96 977.02 5743.73
Cement
Shree 7734.04 2740.57 577.97 2644.31
cement
India 3619.87 3470.78 432.18 5619.41
Cement
Madras 2834.22 2538.50 363.72 3723.65
Cement
Birla Corp 2832.64 1809.70 323.51 1515.48
Rain 1692.59 1112.16 85.06 988.11
Commoditie
s
Dalmia 1528.94 1778.68 158.63 3606.48
Cement
Binani 1526.31 1497.32 108.66 1254.73
Cement
J.K Cement 1147.86 1502.46 142.34 1750.46

Market Share
Cement and clinker exports have grown at a CAGR of 18.1 per cent since 1995-96
with total exports of 9 million tones in 2007-08. This accounts for 7.7 per cent of
the total production. As cement is bulky item those companies, who have their own
jetties, have a higher share in exports. Trade in cement is underway with the
neighboring countries and countries in Africa and West Asia. L&T (now a part of
Grasim), Gujarat Ambuja Cements Ltd and Jaiprakash Industries are the top
exporters. The western region, due to its proximity to the coasts accounts for 92.4
per cent of total exports, of which Gujarat holds a share of 76 per cent.

Birla Corp's product portfolio includes acetylene gas, auto trim parts, casting,
cement, jute goods, yarn, calcium carbide etc. The cement division has an installed
capacity of 4.78 million metric tones and produced 4.77 million metric tones of
cement in 2007-08. The company has two plants in Madhya Pradesh and Rajasthan
and one each in West Bengal and Uttar Pradesh and holds a market share of 4.1 per
cent.

The product portfolio of CTIL includes textiles, rayon, cement, pulp & paper,
shipping, property & land development, builders and floriculture. Cement is the
largest division of CTIL and contributes to over 40 per cent of the company's
revenues. The company has an installed capacity of 4.7 million tones with a total
cement production of 5.43 million tones in 2007-08.

Grasim-UltraTech Cemco

Grasim's product profile includes viscose staple fibre (VSF), grey cement, white
cement, sponge iron, chemicals and textiles. With the acquisition of UltraTech,
L&T's cement division in early 2004, Grasim has now become the world's seventh
largest cement producer with a combined capacity of 31 million tonnes. Grasim
(with UltraTech) held a market share of around 21 per cent in 2007-08.

Jaiprakash Associates Limited

Jaiprakash Industries, now known as Jaiprakash Associates Limited JAL) is part of

the Jaypee Group with businesses in civil (engineering, hospitality, cement,
hydropower, design consultancy and IT. It has an annual capacity of 4.6 million
tones with plants located in Rewa & Bela (Madhya Pradesh) and Sadva Khurd
(Uttar Pradesh). The company has a market share of 3.8 per cent with the cement
division contributing US$ 172 million to revenue in 2007-08.

India Cements

India Cements is the largest cement producer in southern India with a total
capacity of 8.81 million tones and plants in Andhra Pradesh and Tamil Nadu. The
company has a market share of 5.4 per cent with a total cement production of 6.36
million tones in 2007-08.
 JK Cement

JK Cement, a Singhania Group company, started manufacturing nylon at Kota in

1962. Subsequently, it diversified into PSY/PFY, nylon tyre-cord, cement (in
1975), acrylic and white cement (in 1984). The company has a market share of 2.7
per cent.

Company Name Market Share

Grasim Ultra 21%

Jaiprakash Associates 3.8%

Indian Cements 5.4%

J.K Cement 2.7%

Others 67.1%

Financial Statement of company

Rs./Lacs
BALANCE SHEET 31-03-2009 31-03-2008
SOURCE OF FUNDS
Shareholder's Funds
Capital-Equity 6992.72 6992.72

Reserve & Surplus

a) Capital Reserve 6680.43 3470.14
b) Revenue Reserve 36733.82 26733.82
c) Revaluation Reserve 27785.45 29115.19
d) Surpluse in Profit & Loss Account 14489.48 13118.47
e) Share Premium Account 25923.60 25903.61
111612.78 98341.23
Loan Funds
a) Secured Loans 43686.44 38278.60
b) Unsecured Loans 12753.64 12773.98
56440.08 51052.58
Deferred Tax Liability 10060.00 5099.30
185105.5 161485.8
8 3
APPLICATION OF FUNDS
Fixed Assets
a) Net Block :
Historical 93789.62 79798.19
 Revaluation 27785.45 29115.19
121575.07 108913.38
b) Capital Work-in-Progress 3505.73 13384.01
125080.80 122297.39
Investments
a) Investment in Subsidiary Companies
Unquoted 651.07 527.38
b) Others
Unquoted 423.01 423.01
1074.08 950.39
Current Assets, Loans & Advances
a) Inventories 13612.58 11453.15
b) Sundry Debtors 5303.82 5725.59
c) Revaluation Reserve 12520.06 14544.35
d) Other Current Assents 131.63 133.31
e) Loans & Advances
i) To Subsidiary Companies 47763.18 26354.18
ii) Others 10386.01 8895.38
89717.28 67105.96
Less: Current Liabilities & Provisions
Liabilities 26636.95 23862.95
Provisions 4373.57 5200.96
31010.52 29063.91
Net Current Assets 58706.76 38042.05
Miscellaneous Expenditure
( to the extent not written-off or adjusted) 243.94 196.00
185105.5 161485.8
TOTAL 8 3

Rs./Lacs
INCOME AND EXPENDITURE 31-03-
ACCOUNT 31-03-2009 2008
INCOME
145825.2
Sales (Net) 149683.56 8
Dividend - 27.93
Interest 914.26 1533.16
Other Income 791.18 757.78
148144.1
TOTAL 151389.00 5
EXPENDITURE
Cost of goods Consumed/Sold 15821.83 15816.98
i) Opening Stock of WIP & Finished
goods 2104.63 3831.18
ii) Raw Materials Consumed 16344.43 14090.43
Less: Closing Stock of WIP & Finished
Goods 2627.23 2104.63
Power & Fuel 37614.01 32969.06
Manufacturing Expenses 12496.59 11625.23
Selling & Distribution Expenses 36353.56 32039.49
Salaries, Wages and Other Employees
benefits 7776.84 6200.88
Managerial Remuneration 684.89 646.99
Interest 5467.33 5120.87
Depreciation (Net) 5242.22 4106.92
- Depreciation 6510.47 5380.51
- Less: Transfer from Revaluation
Reserve 1268.25 1273.59
Auditor's Remuneration 13.09 9.58
Provision for doubtful debts/Advances 16.40 399.86
Other Expenses 6506.18 4551.40
113487.2
TOTAL 127992.94 6
PROFIT BEFORE TAX 23396.06 34656.89
PROVISION FOR TAX
Fringe Benefit Tax 196.50 210.00
Current Tax 5568.00 7150.00
Deferred Tax 3397.16 780.30
PROFIT AFTER TAX 14234.40 26516.59
Balance from previous year 13118.47 5692.45
Amount Available For
Appropriations 27352.87 32209.04
APPROPRIATIONS
General Reserve 10000.00 15000.00
Proposed Dividend - Equity Shares 2447.45 3496.36
Dividend Tax on above 415.94 12863.39 594.21 19090.57
Balance carried to Balance Sheet 14489.48 13118.47
Earning per share - Basic and Diluted
(In Rs.) 20.36 37.92
Refer Notes forming part of Abridged
Accounts.

Ratio Analysis
Liquidity Ratio’s
Current Ratio = Current Assets/ Current Liabilities
2009 = 89717.28/31010.52
= 2.89:1 (Thumb rule 2:1)
 2008 = 67105.96/29063.91
= 2.31:1
Liquid Ratio = Quick assets/Current Liabilities
2009 = 76104.7/31010.52
= 2.45 (Thumb Rule 1:1)
2008 = 55652.81/29063.91
= 1.91
Absolute Liquid Ratio = Absolute Liquid assets/current liabilities
2009 = 17823.88/31010.52
= 0.57 (Thumb Rule 0.5:1)
2008 = 20269.94/29063.91
= 0.69

Solvency Ratio’s
Debt-Equity Ratio = Outsider’s Fund/Shareholder’s Fund
2009 = 56440.08/111612.78
= 0.505
2008 = 51052.58/98341.23
 = 0.519
Equity Ratio = Shareholder’s Fund/Total Assets
2009 = 111612.78/215872.16
= 0.517
2008 = 98341.23/190353.74
= 0.516
Solvency Ratio = Total Liabilities to outsiders/ Total assets
2009 = 56440.08/215872.16
= 0.267
2008 = 51052.58/190353.7
= 0.261
Fixed assets Net worth ratio= Fixed assets/Shareholder’s Fund
2009 = 125080.80/112612.78
= 1.11
2008 = 122297.39/98341.23
= 1.24

Profitability Ratio’s
Net Profit Ratio = N.P after tax/ Net Sales*100
2009 = 14234.10/149683.56*100
= 9.51%
2008 = 26516.59/145825.28*100
 = 18.18%
Return on Shareholder’s Funds = Net profit/ Shareholder’s Fund*100
2009 = 14234.10/111612.78*100
= 12.75%
2008 = 26516.59/98342.23*100
= 26.96%
Earning per share (EPS) = Net Profit after Tax/No. of equity shares
2009 = 14234.5(in lacs)/69927250
= 20.36
2008 = 26516.59(in lacs)/69927250
= 37.92
Price Earning ratio (P/E ratio) = Market price per equity share/Earning per share
2009 = 168.4/20.36
= 8.27
2008 = 167/37.92
= 4.04

Activity Ratio’s
Working Capital Turnover Ratio= Cost of sales or Sales/Working capital
2009 = 149683.56/31010.52
= 4.826 times
2008 = 145825.28/29063.91
 = 5.017 times
Inventory Turnover ratio = Cost of goods sold or sales/Average inventory
2009 = 149683.56/13612.58
= 10.99 times
2008 = 145825.28/11453.15
= 12.73 times
Debtors turnover ratio = Net Credit Annual sales/Av. Trade Debtors
2009 = 149683.56/5303.82
= 28.22times
2008 = 145825.28/5725.59
= 25.46times
Average Collection Period = No. of working Days/Debtors turnover ratio
2009 = 360/28.22
= 12.75days
2008 = 360/25.46
= 14.13days

Financial Position of company

Liquidity Ratios
Liquidity ratio of the Company is quite satisfactory because the Current ratio is
good of company. In 2009 it 2.89:1 as compared to 2008 2.31:1. It shows
company’s solvency position is better. Acid test ratio or Quick ratio is useful in
measuring the liquidity position of Company. Acid test ratio of company in 2009 is
2.45:1 as compared to its standard of 1:1. It also shows that there is not much
difference between current ratio and acid test ratio which is quite good for
company. It shows that there is Limited stock available at the end of year.

Solvency Ratios
Solvency ratio’s of company shows ability of a concern to meet its Long term
obligations. Like Debt-equity ratio it shows outsider’s fund as compared to
Shareholder’s Fund. In 2009 it is 0.505:1 as compared to 0.519:1 in 2008. Lower
debt equity ratio is better for the company. Equity Ratio shows a relationship
between shareholder’s funds to total assets of the Firm. Higher the ratio or the
share of the shareholders in the total capital of company better is the long term
solvency position of the company. In 2009 it is 0.517 as compared to 0.516 in
2008. It is satisfactory from company point of view. Solvency ratio indicates the
relationship between the total liabilities to outsiders to total assets of a firm. Lower
the solvency ratio more satisfactory or stable is the long term position of a firm. In
2009 company’s solvency ratio is 0.267 as compared to 0.261 in 2008, which is
not good it is increasing.

Profitability Ratios
These ratios measure the results of business operation or overall performance and
effectiveness of the firm. Net profit ratio shows percentage of net profit as
compared to sales. Higher the rate better for the company. In 2009 N.P ratio of
company is 9.19% as compared to 18.18% in 2008. It is not good for the company
because N.P ratio shows firm’s capacity to face adverse economic conditions such
as price competition, low demand etc. Return on shareholder’s fund used for
measuring the overall efficiency of a firm. In 2009 company’s ROS is 12.75% as
compared to 26% in 2008. It shows negative site to its shareholders because net
profit of company are decreasing. EPS of company shows earning power of a firm
as compare to its competitors. In 2009 company’s EPS is 20.36 as compared to
37.92 in 2008. It is also not good from investor’s point of view. It reduces the
market price of equity shares. Price earning ratio is the ratio between market price
per equity share and earning per share. The ratio is calculated to make an estimate
of appreciation in the value of a share of a company and is widely used by
investors to decide whether or not to buy shares. Higher the P/E ratio the better it
is. P/E ratio in 2009 of company is 8.27 as compared to 4.04 in 2008. Overall
profitability of company is not satisfactory apart from P/E ratio.

Activity Ratios
Activity ratios measure the efficiency or effectiveness with which a firm manages
its resources or assets. Working capital turnover ratio indicates the velocity of the
utilization of net working capital. This ratio indicates the number of times the
working capital is turned over in the course of a year. Higher ratio indicates
efficient utilization of working capital and a low ratio indicates otherwise. In 2009
it is 4.826 times and 2008 it is 5.017 times. Inventory Turnover ratio indicates the
number of times the stock has been turned over during the period and evaluates the
efficiency with which a firm is able to manage its inventory. Higher it is better for
the company. In 2009 it is 10.99 times as compared 12.73 times. Debtor velocity
indicates the number of times is tuned over during a year. Generally the higher the
value of debtor turnover the more efficient is the management of debtors or more
liquid is the debtors. It basically shows in how much times money collected from
debtors. In 2009 it is 12.75 days as compared in2008 it is 14.13 days.

Summary

In this project we came to know about market capitalization of JK cement in

the cement industry and in this project we also came to know about dramatically
change in share of JK cement over a period of time. From this project we are able
to know about the financial position of JK Cement and How to analyze the
Financial Statement of any company. This will helpful us in future while analyzing
the financial statement.

Thank You