CHAPTER I

INTRODUCTION

1. INTRODUCTION TO THE STUDY

1.1OUTLINE OF THE STUDY
Cement Industry originated in India when the first plant commenced production in 1914 in
Porbandar, Gujarat. The industry has since been growing at a steady pace, but in the initial stage,
particularly during the period before Independence, the growth had been very slow. Since
indigenous production was not sufficient to meet the entire domestic demand, the Government
had to control its price and distribution statutorily. Large quantities of cement had to be imported
for meeting the deficit. Installed capacity more than doubled during the period 1980-90. It
increased from 27 million tonnes in 1980-81 to 62 million tonnes in 1989-90.
Encouraged by the positive response of the industry to the policy liberalization in the cement
industry, Government decontrolled the industry fully on 1st March 1989. With the Industrial
Policy Statement made by the Government on 24th July 1991, the cement industry stands
delicensed. It has also been listed as a priority industry in Schedule III of the Industry Policy
Statement making it eligible for automatic approval for foreign investment up to 51 per cent and
also for technical collaboration on normal terms of payment of royalty and lump sum know-how
fee.
Indian cement industry has thus been one of the pioneering industries in introducing policy
reforms. After the liberalization measures and globalization of Indian economy, the cement
industry has been growing rapidly at an average rate of 8 per cent except for a short period in
1991-92 when the industry faced demand recession. The country is now the second largest
producer of cement in the world. India has also started exporting large quantities of cement and
clinker.
According to latest research report Indian Cement Industry Forecast to 2012, produced by
RNCOS, cement production in India has grown at a brisk pace during the last few years. Despite
recession, Indian cement industry performed incredibly well amid recent boom in the
infrastructure and housing markets. In view of the upcoming massive infrastructure projects,
manufacturers are aggressively increasing their production capacities and the study foresees a
10.5 per cent CAGR growth in cement production during FY 2010-FY 2014.
2

1.1.1 NEED FOR THE STUDY

The study mainly focused on the impact of cement price fluctuation in the growth prospects of
cement industry. These study clearly identifies the volatility of stock price based on the cement
price .This study is mainly based on period of five years ,therefore from (January 2006-december
2010).The study also focus on identifying the factors which help in the selection of securities for
investment.
This study is mainly conducted to give suggestion to the investors about investing in cement
industry by analyzing their past performance and also to identify fluctuation in Indian capital
market.

1.1.2 SCOPE OF THE STUDY

The study provides a comprehensive overview of the cement industry in India covering the entire
value chain of the industry. The study gives a detailed analysis of the investment climate in each
segment highlighting the growth potential, competitive activity and the impact of government
policy and regulations. The study also analyses the expected demand for cement products until
the year 2010 emphasizing the need to address particularly the fast growing demand and also
analyses the performance of various cement industry from period 2006-2010.

1.1.3 OBJECTIVES OF THE STUDY

To find out the performance select cement companies in the Indian capital market
To find out the beta value of each stock.
To find out their competitive advantage of each stock.
To find out the volatility of each stock.

1.1.4 RESEARCH METHODOLOGY

MEANING
It is the way scheme the research problem systematically. It may be understood as a science of
studying how research is done scientifically. In other words, it is the specification of the methods
and procedures for acquiring the information needed to structure or solve the problems. It is the
overall operational pattern or framework of the project that stipulates what information is to be
collected, from which sources and with what procedures.
RESEARCH DESIGN
The research design is Analytical Research. In this the researcher has to use facts or information
already available and analysis these to make critical evaluation of the material. It is used to
estimate the future performance or to identify the effects of the problem.

SOURCE OF DATA
The source of data is in secondary in nature. Secondary data is those which have already
been collected by someone else and which already available.
Secondary data pertaining to this study was obtained from
company documents
financial statements of companies
Books, magazines
Reports of the company
News wires
Various websites.

RESEARCH TOOLS:
Ratio analysis.
Statistical analysis.

RATIO ANALYSIS
A ratio is a mathematical relationship between two or more items taken from the financial
statements. Ratio analysis is the process of computing, determining, and presenting the
relationship of items. Ratio analysis is helpful to management and outsiders to diagnose the
financial health of a business concern. It helps in measuring the profitability, solvency and
activity of a firm.

RATIOS USED IN THIS STUDY

Proprietory ratio
Proprietory ratio is the relationship between proprietors funds and total tangible assets. It
indicates the proportion of shareholders funds in the total assets. A high proprietory ratio
indicates less danger and risk to creditors in the event of winding up.
Shareholders funds
Proprietory ratio

-----------------------------Total tangible assets

Gross profit ratio

This ratio expresses the relationship between gross profit and net sales. It indicates the
efficiency of production or trading operations. A high profit ratio is a sign of good
management as it implies that the cost of production is relatively low.
Gross profit
Gross profit ratio

--------------------------- *100
Sales

Net profit ratio

The ratio measures the relationship between net profit and net sales. It indicates the overall
operations of the firm. It shows what percentage of sales is left the owners after meeting all

costs. An increase in net profit ratio year after year is an indication of improving working
condition and vice versa.
Net profit
Net profit ratio =

--------------------------- *100
Sales

Operating profit ratio

Operating ratio matches cost of goods sold and other operating expenses with sales. The ratio
shows the percentage of sales absorbed by the cost of goods and operating expenses. A lower
ratio is more favorable as it would leave a higher margin for operating profit. Operating
expenses include selling and distribution expenses and administration expenses.

Cost of goods sold + operating expenses

Operating profit ratio =

---------------------------------------------------------- *100
Sales

Fixed asset turnover ratio

Fixed asset turnover ratio explains the relationship between sales and fixed assets. This ratio
indicates the sales generated by every rupee invested in fixed assets. A higher ratio is an
indicator of greater efficiency in utilization of fixed assets.
Sales
Fixed asset turnover ratio

------------------------Net fixed assets

Return on total asset

Return on total asset establishes the relationship between profits and capital employed. It is
most widely used to measure the overall profitability and efficiency of the business.

Net profit + Interest + Taxes

Return on total asset

------------------------------------------- *100
Average capital employed

 Dividend yield ratio

Dividend yield ratio is the relationship between dividends per share and the market value of
the shares. It is often expressed as a percentage. Its reciprocal is the Price Dividend ratio.
Dividend per share
Dividend yield ratio

-----------------------------Market value per share

Earnings per share

Earnings per share are the amount of earnings per each outstanding share of a company's
stock. The portion of a company's profit allocated to each outstanding share of common
stock. Earnings per share serve as an indicator of a company's profitability.
Net Profit
Earnings per share

----------------------------- *100
No. Of Share

Payout ratio
Payout ratio is the relationship between dividend per share and earnings per share. The
amount of earnings paid out in dividends to shareholders. Investors can use the payout ratio
to determine what companies are doing with their earnings.
Dividend per share
Payout ratio

-----------------------------Earnings per share

Current ratio
Current ratio is the relationship between current assets and current liabilities. A current ratio
of 2:1 is considered ideal. That is, for every one rupee of current liability there must be
current assets of Rs.2.

Current assets
Current ratio

-----------------------------Current liabilities
9

PRICE EARTNING RATIO

The price per share in the numerator is the market price of a single share of the stock.
The earnings per share in the denominator depends on the type of P/E:

Here earnings per share is the net income of the company for the most recent 12 month
period, divided by the number of shares issued. This is the most common meaning of "P/E"
if no other qualifier is specified. Monthly earning data for individual companies are not
available, so the previous four quarterly earnings reports are used and earnings per share are
updated quarterly. Note, each company chooses its own financial year so the timing of
updates will vary from one to another.

"Trailing P/E from continued operations": Instead of net income, this uses operating
earnings, which exclude earnings from discontinued operations, extraordinary items (e.g.,
one-off windfalls and write-downs), or accounting changes. Note, longer-term P/E data, such
as Shiller's, use net earnings.

"Forward P/E", "P/Ef", or "estimated P/E": Instead of net income, this uses estimated net
earnings over next 12 months. Estimates are typically derived as the mean of a select group
of analysts (note, selection criteria is rarely cited). In times of rapid economic dislocation,
such estimates become less relevant as the situation changes (e.g., new economic data is
published, and/or the basis of forecasts becomes obsolete) more quickly than analysts adjust
their forecasts.

10

Statistical analysis

Beta value calculation.

Beta value
The beta factor represents the movements of the price of a stock with the movement
of the market.
If the beta value = 1 is considered to be good and in tandem with movement of the
market
If it is > 1 means if 1% change in market return causes more than 1% change in
stock return
If it is <1 means the stock return moves in the opposite direction to the market
return.

Formula for calculating Beta value:

Covariance (index, stock)
-------------------------------------Variance (index)

11

1.1.5 LIMITATIONS OF THE STUDY

The data is mainly secondary in nature. The main source of the data is the annual report
of the companies and from other database. So the figures and accuracy of findings and
suggestions are limited.
The study is limited to the period of five years data. So the accuracy is limited.
Only past proceedings are considered for the study. They dont guarantee in the future
performance growth.

12

1.2 INDUSTRY PROFILE

STOCK EXCHANGES IN INDIA:Stock exchanges provide an organized market for transactions in shares and other securities. As
of 2003, there are 23 stock exchanges in the country, 20 of them regional ones with allocated
areas of operation. Of the 9855 or so public companies that have listed their shares in stock
exchanges, around500 account for 99.6 per cent of the trading turnover, nearly all of which is on
the primary exchanges i.e. Bombay stock exchange and National stock exchange. The Bombay
stock exchange and National stock exchange together account for nearly 72 per cent of all capital
market activity in India. The other major exchanges are the Calcutta, Delhi, and Ahmadabad.
The remaining exchanges account for only 4 per cent of the Indian capital market activity.
BOMBAY STOCK EXCHANGE:The Bombay Stock Exchange (BSE) is a stock exchange located on Dalal Street, Mumbai and
is the oldest stock exchange in Asia. The equity market capitalization of the companies listed on
the BSE was US$1.63 trillion as of December 2010, making it the 4th largest stock exchange in
Asia and the 8th largest in the world. The BSE has the largest number of listed companies in the
world.
As of December 2010, there are over 5,034 listed Indian companies and over 7700 scrips on the
stock exchange, the Bombay Stock Exchange has a significant trading volume. The BSE
SENSEX, also called "BSE 30", is a widely used market index in India and Asia. Though many
other exchanges exist, BSE and the National Stock Exchange of India account for the majority of
the equity trading in India. While both have similar total market capitalization (about USD 1.6
trillion), share volume in NSE is typically five times that of BSE.
History:The Bombay Stock Exchange is the oldest exchange in Asia. It traces its history to the 1850s,
when 4 Gujarati and 1 Parsi stockbroker would gather under banyan trees in front of Mumbai's
Town Hall. The location of these meetings changed many times, as the number of brokers
13

constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an
official organization known as 'The Native Share & Stock Brokers Association'. In 1956, the
BSE became the first stock exchange to be recognized by the Indian Government under the
Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE SENSEX
in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the
BSE used this index to open its derivatives market, trading SENSEX futures contracts. The
development of SENSEX options along with equity derivatives followed in 2001 and 2002,
expanding the BSE's trading platform. Historically an open outcry floor trading exchange, the
Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange
only fifty days to make this transition. This automated, screen-based trading platform called BSE
On-line trading (BOLT) currently has a capacity of 8 million orders per day. The BSE has also
introduced the world's first centralized exchange-based internet trading system, BSEWEBx.co.in
to enable investors anywhere in the world to trade on the BSE platform.[5] The BSE is currently
housed in Phiroze Jeejeebhoy Towers at Dalal Street, Fort area.
NATIONAL STOCK EXCHANGE:The National Stock Exchange (NSE) is a stock exchange located at Mumbai, India. It is the 9th
largest stock exchange in the world by market capitalization and largest in India by daily
turnover and number of trades, for both equities and derivative trading. NSE has a market
capitalization of around US$1.59 trillion and over 1,552 listings as of December 2010. Though a
number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most
significant stock exchanges in India, and between them are responsible for the vast majority of
share transactions. The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY
(National Stock Exchange Fifty), an index of fifty major stocks weighted by market
capitalization.
NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies
and other financial intermediaries in India but its ownership and management operate as separate
entities. There are at least 2 foreign investors NYSE Euronext and Goldman Sachs who have
taken a stake in the NSE. As of 2006, the NSE VSAT terminals, 2799 in total, cover more than
1500 cities across India. NSE is the third largest Stock Exchange in the world in terms of the
14

number of trades in equities. It is the second fastest growing stock exchange in the world with a
recorded growth of 16.6%.
Origin:The National Stock Exchange of India was promoted by leading Financial institutions at the
behest of the Government of India, and was incorporated in November 1992 as a tax-paying
company. In April 1993, it was recognized as a stock exchange under the Securities Contracts
(Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital market (Equities) segment of the NSE commenced operations
in November 1994, while operations in the Derivatives segment commenced in June 2000.
Innovations:NSE pioneering efforts include:

Being the first national, anonymous, electronic limit order book (LOB) exchange to trade
securities in India. Since the success of the NSE, existent market and new market
structures have followed the "NSE" model.

Setting up the first clearing corporation "National Securities Clearing Corporation Ltd."
in India. NSCCL was a landmark in providing innovation on all spot equity market (and
later, derivatives market) trades in India.

Co-promoting and setting up of National Securities Depository Limited, first depository

in India [9]

Setting up of S&P CNX Nifty.

NSE pioneered commencement of Internet Trading in February 2000, which led to the
wide popularization of the NSE in the broker community.

Being the first exchange that, in 1996, proposed exchange traded derivatives, particularly
on an equity index, in India. After four years of policy and regulatory debate and
formulation, the NSE was permitted to start trading equity derivatives

Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in
India.

15

NSE has also launched the NSE-CNBC-TV18 media centre in association with CNBCTV18.

NSE.IT Limited, setup in 1999 , is a 100% subsidiary of the National Stock Exchange of
India. A Vertical Specialist Enterprise, NSE.IT offers end-to-end Information
Technology (IT) products, solutions and services.

NSE (National Stock Exchange) was the first exchange in the world to use satellite
communication technology for trading, using a client server based system called National
Exchange for Automated Trading (NEAT). For all trades entered into NEAT system,
there is uniform response time of less than one second.

Markets:Currently, NSE has the following major segments of the capital market:

Equity

Futures and Options

Retail Debt Market

Wholesale Debt Market

Currency futures

MUTUAL FUND

STOCKS LENDING & BORROWING

August 2008 Currency derivatives were introduced in India with the launch of Currency Futures
in USD INR by NSE. Currently it has also launched currency futures in EURO, POUND &
YEN. Interest Rate Futures was introduced for the first time in India by NSE on 31 August 2009,
exactly after one year of the launch of Currency Futures.
NSE became the first stock exchange to get approval for Interest rate futures as recommended by
SEBI-RBI committee, on 31 August 2009, a futures contract based on 7% 10 Year GOI bond
(NOTIONAL) was launched with quarterly maturities.

16

1.3 COMPANY PROFILE

A leading retail financial services player
Unicon Investment Solutions

UNICON is a financial services company which has emerged as a one-stop investment

solutions provider. It was founded in 2004 by two visionary and hard working
entrepreneurs, Mr. Gajendra Nagpal and Mr. Ram M. Gupta, who possess expertise in the
field of Finance. The company is headquartered in New Delhi, and has its Corporate office
in Mumbai with regional offices in Kolkata, Chennai, Hyderabad and Noida
UNICON is a professionally managed company led by a team with outstanding managerial
acumen and cumulative experience of more than 400 man years in the financial markets The
Company is supported by more than 4500 Uniconians and has an extensive network of over
323 business offices in 152 cities across India.
With a customer base of over 200,000 the Unicon Group has an eye for the intricate financial
needs of its clients and caters to both their short term and long term financial needs
through a comprehensive bouquet of investment services. It has been founded with the aim of
providing world class investing experience to the investing community. These services range
from offline & online trading in equity, commodities and currency derivatives to debt markets
to corporate finance and portfolio management services. The company has a sizable presence
in the distribution of 3rd party financial products like mutual funds, insurance products and
property broking. It also provides expert Advisory on Life Insurance, General Insurance,
Mutual Funds and IPOs. The distribution network is backed by in-house back office support
to provide prompt and efficient customer service
The Equity broking arm UNICON Securities Pvt. Ltd offers personalized premium services
on the NSE, BSE & Derivatives market. The Commodity broking arm Unicon Commodities
Pvt. Ltd offers services in Commodity trading on NCDEX and MCX. The UNICON group
also has a PCG division providing investments solutions for High Net Worth Individuals. The
Corporate Advisory Services arm Unicon Capital Services (P) Ltd offers entire gamut of
Investment Banking services to corporate.

17

VISION OF THE COMPANY

To be a leading financial and commodities markets intermediary for individual and
institutional clients from India and Overseas.
The company will continually strive to raise their products and service standards by
intelligent application of Technology and process.

VALUES AND BELIEFS OF THE COMPANY

Understands and respect customer needs to consistently deliver total quality solutions
through constant skills up gradation.
Believes that the culture of the company helps to attract and retain the best talent.
Upholds uncompromising ethical standards and strives to maintain a distinctive identity
in public mind share through innovation and quality.
Committed to achieve profitable progress, consistently.
Freely share the investment experience of Unicon across all ages and strata of society to
encourage wise investments for a better future.
GUIDING POLICIES OF THE COMPANY
No proprietary trading.
Give only Research-based investment/trading advices.
Employees not permitted to trade.
No volume-based compensation to employees and hence no pressure sales.
Equal-opportunities employer.
PRODUCT AND SERVICES
Equities:
Unicon

a member of NSE and BSE, has a network of over 300 branches in India

and abroad, rendering quality equity trading services. Unicon not only has a strong off line
presence but also provides automated online trading services. Unicon retail spread caters to the
need of individual investors. Trading in equities is made simple, safe and interesting with smart
advice from there search desk through daily alerts, market pointers, periodical research reports,
stock recommendations and customer meets organized frequently. The online trading system
18

allows customers to track the markets by setting up their own market watch, receiving research
tips, stock a lerts, real time charts and news and many m ore features enable the customer to
take informed decisions. The brokerage structure makes Unicon online trading all the more
attractive
0.03% for day trading (applicable on both sides)
0.30% for delivery

Futures and options:

The national stock exchange and the stock exchange, Mumbai have commenced trading
in derivatives market with index futures being the first instruments. Now both the
exchanges provide trading in index futures and options and stock futures and options. A
derivative in financial contract, between two or more ore parties, which is derived from the
future value of an underlying asset. At any point of time there always will be available near
three months contract periods .For e.g.in the month of Jan.2006 one can enter into Jan, Feb
or Mar contracts. The last Thursday of each month is the expiry day for that months
contract. When one Contract expires, a new contract is introduced. For instance, on expiry of
Jan 2006 Contract, April contract shall get activated. Currently, settlements of all derivatives
trades are in cash. There is daily as well as final settlement. As long as the position is open, the
same will be mar ked to market at the daily settlement price, the difference will be credited
or debited accordingly the position and shall be brought forward to the next day at the
daily settlement price. Any position which remains open at the end of the final settlement
day (i.e., last Thursday) shall be closed out by the exchange at the final settlement price, which
will be the closing spot value of the underlying. There are four types of Members in the Futures
and Options Segment:
Trading members
Trading cum clearing members
Professional Clearing Member
Self Clearing Members

19

Depository:
A depository can be compared to a bank. It holds securities such as shares, debentures,
bonds, government securities, and units etc. of investors in electronic form. There are two
depositories in India, The National Securities Depository Limited (NSDL) and Central
Depository Services Limited (CDSL). An individual who decides to avail the depository
services can approach a Depository Participant (DP).Banks, Financial institutions, custodians,
brokers or any other entity eligible as per SEBI (Depositories and Participants) Regulations,
1996

can

apply to

the

Depository to

Become

Depositor

Participant. As

on

31st December2005 there were 221Depository Participants in India.

Commodity:
Unicon Commodities, a subsidiary of Unicon Financial Services Limited is mainly
engaged in the business of Commodities Futures Trading. Unicon Commodities is a member of:
National Multi Commodity Exchange of India limited (NMCE)
National Commodity and Derivative Exchange Limited (NCDEX)
Multi-Commodity Exchange (MCE)
India Pepper and Spice Trade Association (IPSTA)
Singapore Commodity Exchange (SICOM)
Dubai Gold Commodity Exchange (DGCX).

Portfolio management services

Unicon,a SEBI registered Portfolio Manager Offers discretionary portfolio Management
services. Unicon a team of experts who carefully take investment decisions based on the clients
objectives. The Portfolio Management team has a successful track record of more than10yearsin
the capital market. The team has

access

to

Fundamental and Technical Analysis.

20

Unicons

strong Equity Research, and

Personal Investment planning:

Trained Investment Planners at branches evaluate, investment needs of clients and offer
appropriate solutions

Online Trading:

Unicon as a SEBI registered Trading Member of NSE and BSE offers Internet trading.
To trade online the customer is provided with a user id, password and also a security token which
flashes a dynamic password number. This security token displays a new 6 digit number every 36
seconds.

To facilitate trading the following frontend screens have been made available:
Easy Trade
Insta Trade
Fast Trade
Super Trade
Insta Plus
The trading CV

system is totally secured and is SSL (Secure Socket Layer) enabled. All

interactions on the trading system are encrypted using industry standard encryption algorithms.

Call & Trade:

Apart from Internet trading, the customers are also provided with the option of trading
through the Call & Trade facility. When the customer calls the Call & Trade number to transact,
he needs to authenticate his identity by providing the user id, and the dynamic password number
from his security token. Password is not required for Call & Trade transactions.

21

AMO:
Our customers can also place After Market Orders (AMO) on NSE & BSE from 7:30 PM
onwards on a Trading till 8:00 AM on the next Trading day. The accumulated orders will be
released to the Exchange for execution after the market opens on the next trading session. Market
orders cannot be placed in AMO. F&O orders are currently not accepted by us under AMO.
AMO provides the convenience to the customer to place limit orders without having to wait for
the market to open.

CHOOSE YOUR PLATFORM

You can choose trading platform that suits you best. Unicon offers three versions to meet
customer needs:

Silver
Gold and silver platforms are quite similar as they are both web based. In silver version the feeds
are updated every minute and not real-time as in the Gold platform. However one can click the
refresh button as many times to view the latest stock prices. There are no minimum brokerage
charges for this platform. A normal investor who does not engage in speculative transactions
may find the silver version most suited to his needs.

Gold
This platform is a web-based solution and the customer can login to the trading platform from
anywhere in the world. During market hours the stock prices are refreshed seamlessly and the
delay transmission would be a few seconds, which is mostly dependant on the bandwidth
connectivity used by the customer. In this, the trader will receive live quotes as the rates are
refreshed every second.
A minimum brokerage of Rs.300/- per month is required to be generated to avail this platform.
Those who are generally on the move and may not able to use their own computer for trading
generally use this platform. Since it is a web-based system, one can login from any where in the
world and take advantages of the price movement.

22

Platinum
The platinum version acts as a virtual dealers terminal providing live updates and confirmation.
The executable program is downloaded on the customers computer so that he can trade from the
comfort of his home/office. Stock prices are real-time and continuous system. This is generally
used by those who trade heavily intra-day and take very little delivery. Therefore the need fortime prices orders entry like that of a dealer terminal coe handy to customers.

23

1.4 PRODUCT PROFILE

CEMENT INDUSTRY IN INDIA

India, being the second largest cement producer in the world after China with a total
capacity of 151.2 Million Tonnes (MT), has got a huge cement industry. With the government of
India giving boost to various infrastructure projects, housing facilities and road networks, the
cement industry in India is currently growing at an enviable pace. More growth in the Indian
cement industry is expected in the coming years. It is also predicted that the cement production
in India would rise to 236.16 MT in FY11. It's also expected to rise to 262.61 MT in FY12.

The cement industry in India is dominated by around 20 companies, which account for
almost 70% of the total cement production in India. In the present year, the Indian cement
companies have produced 11 MT cement during April-September 2009. It took the total cement
production in FY09 to 231 MT.

INDUSTRY BACKGROUND
The history of the cement industry in India dates back to the 1889 when a Kolkata-based
company started manufacturing cement from Argillaceous. But the industry started getting the
organized shape in the early 1900s. In 1914, India Cement Company Ltd was established in
Porbandar with a capacity of 10,000 tons and production of 1000 installed. The World War I
gave the first initial thrust to the cement industry in India and the industry started growing at a
fast rate in terms of production, manufacturing units, and installed capacity. 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.

The cement industry in India saw the price and distribution control system in the year
1956, established to ensure fair price model for consumers as well as manufacturers. Later in
1977, government authorized new manufacturing units (as well as existing units going for
24

capacity enhancement) to put a higher price tag for their products. A couple of years later;
government introduced a three-tier pricing system with different pricing on cement produced in
high, medium and low cost plants.
Cement industry, in any country, plays a major role in the growth of the nation. Cement
industry in India was under full control and supervision of the government. However, it got relief
at a large extent after the economic reform. But government interference, especially in the
pricing, is still evident in India. In spite of being the second largest cement producer in the world,
India falls in the list of lowest per capita consumption of cement with 125 kg. The reason behind
this is the poor rural people who mostly live in mud huts and cannot afford to have the
commodity. Despite the fact, the demand and supply of cement in India has grown up. In a fast
developing economy like India, there is always large possibility of expansion of cement industry.
NEW INVESTMENTS
Cement and gypsum products have received cumulative foreign direct investment (FDI) of US$
1,971.79 million between April 2000 and September 2010, according to the Department of
Industrial Policy and Promotion (DIPP).

Dalmia Bharat Enterprises plans to invest US$ 554.32 million to set up two greenfield
cement plants in Karnataka and Meghalaya.

Bharathi Cement plans to double its production capacity by the end of the current
financial year by expanding its plant in Andhra Pradesh, with an investment of US$
149.97 million.

Madras Cements Ltd is planning to invest US$ 178.4 million to increase the
manufacturing capacity of its Ariyalur plant in Tamil Nadu to 4.5 MT from 2 MT by
April 2011.

My Home Industries Limited (MHI), a 50:50 joint venture (JV) between the Hyderabadbased My Home Group and Ireland's building material major CRH Plc, plans to scale up
its cement production capacity from the existing 5 million tonne per annum (mtpa) to 15
mtpa by 2016. The company would undertake this capacity expansion at a cost of US$ 1
billion.

25

Shree Cement, plans to invest US$ 97.13 million this year to set up a 1.5 million MT
clinker and grinding unit in Rajasthan. Moreover, in June 2010, Shree Cement signed a
memorandum of understanding (MoU) with the Karnataka government to invest US$
423.6 million for setting up a cement unit and a power plant. US$ 317.7 million will be
used to set up a cement manufacturing unit with an annual capacity of 3 mtpa while the
balance will be for the 100 mega watt power plant.

Jaiprakash Associates plans to invest US$ 640 million to increase its cement capacity.

Swiss cement company Holcim plans to invest US$ 1 billion in setting up 2-3 greenfield
manufacturing plants in the country in the next five years to serve the rising domestic
demand. Holcim is present in the country through ACC and Ambuja Cements and holds
around 46 per cent stake in each company. While ACC operates 16 cement plants,
Ambuja Cements controls five plants in India. The Aditya Birla group is the largest
cement-making group by capacity in the country and controls Grasim Industries and
Ultratech Cement.

GOVERNMENT INITIATIVES
The cement industry is pushing for increased use of cement in highway and road
construction. The Ministry of Road Transport and Highways has planned to invest US$ 354
billion in road infrastructure by 2012. Housing, infrastructure projects and the nascent trend of
concrete roads would continue to accelerate the consumption of cement.
Increased infrastructure spending has been a key focus area. In the Union Budget 201011, US$ 37.4 billion has been provided for infrastructure development.
The government has also increased budgetary allocation for roads by 13 per cent to US$
4.3 billion.
Gujarat plans to treble its cement production capacity in 3-5 years. Proposals have been
invited from cement companies such as ACC, ABG, Ambuja Cement, Emami, Indiabulls, Adani
group, Ultratech and L&T and the state hopes to raise its capacity from 20 million tonnes per
annum to 70 million tonne. The state will host the biennial Vibrant Gujarat Global Summit in

26

January 2011 and expects to witness investment proposals worth US$ 13.2 billion in the cement
sector.

MAJOR PLAYERS IN THE CEMENT INDUSTRY:

ACC.
AMBUJA CEMENTS.
GRASIM CEMENTS.
ULTRATECH CEMENTS.

ACC LTD:
ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's
operations are spread throughout the country with 16 modern cement factories, more than 40
Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a workforce of
about 9,000 persons and a countrywide distribution network of over 9,000 dealers.
Since inception in 1936, the company has been a trendsetter and important benchmark for
the cement industry in many areas of cement and concrete technology. ACC has a unique track
record of innovative research, product development and specialized consultancy services. The
company's various manufacturing units are backed by a central technology support services
centre - the only one of its kind in the Indian cement industry.
ACC has rich experience in mining, being the largest user of limestone. As the largest
cement producer in India, it is one of the biggest customers of the domestic coal industry, of
Indian Railways, and a considerable user of the countrys road transport network services for
inward and outward movement of materials and products.
Among the first companies in India to include commitment to environmental protection
as one of its corporate objectives, the company installed sophisticated pollution control

27

equipment as far back as 1966, long before pollution control laws came into existence. Today
each of its cement plants has state-of-the art pollution control equipment and devices.
ACC plants, mines and townships visibly demonstrate successful endeavors in quarry
rehabilitation, water management techniques and greening activities. The company actively
promotes the use of alternative fuels and raw materials and offers total solutions for waste
management including testing, suggestions for reuse, recycling and co-processing.
ACC has taken purposeful steps in knowledge building. We run two institutes that offer
professional technical courses for engineering graduates and diploma holders which are relevant
to manufacturing sectors such as cement. The main beneficiaries are youth from remote and
backward areas of the country.
ACC has made significant contributions to the nation building process by way of quality
products, services and sharing expertise. Its commitment to sustainable development, its high
ethical standards in business dealings and its on-going efforts in community welfare programmes
have won it acclaim as a responsible corporate citizen. ACCs brand name is synonymous with
cement and enjoys a high level of equity in the Indian market. It is the only cement company that
figures in the list of Consumer Super Brands of India
CORPORATE SOCIAL RESPONSIBILITY :
off

Today we define Corporate Social Responsibility as the way a company

balances its economic, social and environmental objectives while addressing stakeholder
expectations and enhancing shareholder value.
But ACC has undertaken social volunteering practices almost from its inception, long
before the term corporate social responsibility was coined. The companys earliest initiatives in
community development date back to the 1940's in a village on the outskirts of Mumbai while
the first formal Village Welfare Scheme was launched in 1952. The community living around
many of our factories comprises the weakest sections of rural and tribal India with no access to
basic amenities.

28

FEATURES OF ACC LTD:

All the cement plants of the company are equipped with advanced technological
facilities which make them completely environment friendly. The plants use some of the
sophisticated pollution control devices in various parts such as raw mills, power plants, cement
kilns, coolers and other equipments. In addition, the mining technologies that have been
implemented in the cement plants of ACC Ltd are also based on environment safeguard norms.

In its endeavor towards greenery, the company has also started various types of
afforestation, horticulture and tree planting programs near its cement plants. It not only reduces
pollution but also helps conserve the mineral resources. The vacant spaces in the mines and the
cement plans are being utilized for the purpose of planting of trees. In some of the ACC Ltd.
Cement Plants in places like Chaibasa, Kymore, Jamul and Gagal, greenery has been added to
around 40% of the total area which is around 10% more than the normal norms that has been set.
The management of these plants has given stress on the green belt development programs.

Due to the high production as well as the dedicated effort towards maintaining ecological
balance and nature conservation, the company and its cement plans have been the recipient of a
number of prestigious awards like:

Indo German Greentech Environment Excellence Award

Vishwakarma Rashtriya Puraskar trophy for safety in mining

National Award for outstanding performance in rural and agricultural development

Indira Priyadarshini Vrikshamitra Award for extraordinary work in environment

protection

FICCI Award for pollution control

The ACC Ltd. Cement Plants consist of high quality Zero Water Discharge facilities which

help in proper water management. The water that is used in the plant for the process of industrial
cooling is recycled by the use of tanks, water ponds and cooling towers. Through this process,
the company has successful in water harvesting.

29

AMBUJA CEMENT:
Ambuja Cements was set up in 1986. In the last decade the company has grown tenfold.
The total cement capacity of the company is 18.5 million tonnes.
Its plants are some of the most efficient in the world. With environment protection
measures that are on par with the finest in the developed world.
The company's most distinctive attribute, however, is its approach to the business.
Ambuja follows a unique homegrown philosophy of giving people the authority to set their own
targets, and the freedom to achieve their goals. This simple vision has created an environment
where there are no limits to excellence, no limits to efficiency. And has proved to be a powerful
engine of growth for the company.
As a result, Ambuja is the most profitable cement company in India, and one of the
lowest cost producer of cement in the world.
ENVIRONMENTAL POLICY:
Our environment policy is built around two simple truths. One, no cement plant can
flourish at the cost of the environment. As one of the countries largest producers of cement, with
a large presence around the country, we have an obligation to protect the environment we
function in.
Also, as we discovered, being environmentally conscious, almost never interfered with
running a profitable business. In fact its quite the contrary.
Our efforts to achieve world standards in environment protection, for instance, have had
the happy outcome of substantially improving efficiency and profitability. The fact is, a cleaner
environment isnt just better for the people, it reduces wear and tear on plants and machinery as
well. Thus directly contributing to the bottom line. Besides dust in cement plants is nothing but
cement itself, which we capture and bag.

30

Our approach has made us the one of the worlds most environment friendly cement
companies. And the most profitable.
Awards won by Gujarat Ambuja Cements:

National Award by the Prime Minister of India for outstanding pollution control

National Award by the Prime Minister of India for commitment to quality

Award by CAPEXIL for highest exports

Certification of ISO 9002 for quality

Certification of ISO 14000 for environmental systems

Award for corporate excellence from Harvard Business School Association.

GRASIM CEMENTS
Grasim Industries Limited, a flagship company of the Aditya Birla Group, ranks among
India's largest private sector companies, with consolidated net revenue of Rs.202 billion and a
consolidated net

profit

(before

extraordinary items)

of Rs.27.6

billion (FY2010).

Starting as a textiles manufacturer in 1948, today Grasim's businesses comprise viscose

staple fibre (VSF), cement, chemicals and textiles. Its core businesses are VSF and cement,
which contribute to over 90 per cent of its revenues and operating profits.
The Aditya Birla Group is the worlds largest producer of VSF, commanding a 21 per cent
global market share. Grasim, with an aggregate capacity of 333,975 tpa has a global market share
of 10 per cent. It is also the second largest producer of caustic soda (which is used in the
production of VSF) in India.
In cement, Grasim through its subsidiary UltraTech Cement Limited ("UltraTech") has a
capacity of 52 million tpa and is a leading player in India. In July 2004, Grasim acquired a
majority stake and management control in UltraTech. One of the largest of its kind in the cement
sector, this acquisition catapulted the Aditya Birla Group to the top of the league in India.
31

The amalgamation of Samruddhi Cement Limited (SCL) with UltraTech w.e.f. 1 July 2010
completed the restructuring of the cement business. Earlier, Grasim's cement business was
demerged into SCL.The merger has created the largest cement company in India, providing a
platform that will help in pursuing aggressive growth going forward.
Awards won by GRASIM Cements:
:: Forbesmagazine ranks Grasim at 1,380 in its listing of the 'Forbes 2000 Best Companies'.

:: Forbes magazine ranks Grasim among the fabulous 50 companies in Asia.

:: Ranked 2nd for Best Corporate Governance Practices in Asia-Pacific by IR Global Rankings.
Also ranked best company in corporate governance practices in basic materials industry,
globally.
:: Ranked as the Best Investor Relations Company - Building Materials in Asia by Institutional
Investors Magazine.
:: Global Cement Award for the lowest injury incidence rate presented to Grasim South,
Reddipalayam.
:: National Award for Quality Excellence in Indian Cement Industry presented to Grasim
Cement, Raipur.

ULTRATECH CEMENT:
UltraTech Cement Limited has an annual capacity of 52 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).
The company has 11 integrated plants, one white cement plant, one clinkerisation plant in
UAE, 15 grinding units 11 in India, 2 in UAE, one in Bahrain and Bangladesh each and and
five terminals four in India and one in Sri Lanka.

32

UltraTech Cement is the countrys largest exporter of cement clinker. The export markets span
countries

around

the

Indian

Ocean,

Africa,

Europe

and

the

Middle

East.

UltraTech's subsidiaries are Dakshin Cements Limited, Harish Cements Limited, UltraTech
Ceylinco (P) Limited and UltraTech Cement Middle East Investments Limited.

UltraTech's subsidiaries are Dakshin Cements Limited, Harish Cements Limited, UltraTech
Ceylinco (P) Limited and UltraTech Cement Middle East Investments Limited.

UltraTech takes its responsibility to conserve the environment very seriously, and its ecofriendly approach is evident across all spheres of its operations. Its major thrust has been to
identify alternatives to achieve set objectives and thereby reduce its carbon footprint. These are
done through:

33

2. REVIEW OF LITERATURE
Calendar Effects In The IndianStockMarket Jayen B. Patel, Adelphi University
We find two distinct calendar effects in returns for the Indian stock market. More specifically,
we find a November-December effect in which we document that mean returns for November
and December are significantly greater than those of the other ten months. We also identify a
March-to-May effect in which mean returns for the months March to May are significantly less
than those during the other nine months. We further demonstrate that these are two distinct
effects that are independent of each other.
Keywords: Indian stock market, calendar effects, efficient market hypothesis, emerging markets.

Comparative Performance of Volatility Forecasting Models in IndianMarkets S.S.S. Kumar

Volatility forecasting is an important area of research to financial markets and lot of effort has
been expended in improving volatility models since better forecasts translates into better pricing
of options and better risk management. In this direction, this paper attempts to evaluate the
ability of ten different statistical and econometric volatility forecasting models to the context of
Indian stock and forexmarkets. These competing models are evaluated on the basis of two
categories of evaluation measures symmetric and asymmetric error statistics. Based on an out of - sample forecasts and using a majority of evaluation measures Ire find that G.-I RCH 11. I,
and EW.1 L4methods will lead to Netter volatility forecasts in the Indian stock market and
G.4RCH (5, I) will achieve the same in the forex market the same models perform better on the
basis of ' asymmetric error statistics also.

Measuring Performance of Indian Mutual Fund Deepak Agrawal , September 15, 2007
Since the development of the Indian capital Market and deregulations of the economy in 1992 it
has came a long way with lots of ups and downs. There have been structural changes in both
primary and secondary markets since 1992 scandal where the no seduce to the bottom and was
bravely survived in ICU. Mutual funds are key contributors to the globalization of financial
markets and one of the main sources of capital flows to emerging economies. Despite their
importance in emerging markets, little is known about their investment allocation and strategies.
34

This article provides an overview of mutual fund activity in emerging markets. It describes their
size, asset allocation. This paper is a process to analyze the Indian Mutual Fund Industry pricing
mechanism with empirical studies on its valuation. It also analyzes data at both the fund-manager
and fund-investor levels. The study reveled that the performance is affected saving and
investment habits of the people at the second side the confidence and loyalty of the fund
Manager and rewards affects the performance of the MF industry in India.
THE NEXUS BETWEEN STOCK MARKET ANDECONOMIC ACTIVITIES P C Padhan
The recent development in time series techniques permits us to examine the Granger noncausality test between time series variables using augmented levelsVAR model with integrated
and co integrated process developed by Toda and Yamamota (1995) and Dolado and Ltkepohl
(1996) (popularly known as TYDLmodel). The paper examines the causal nexus between stock
market and economic activity during post liberalization period in the context of India. The paper
applied TYDL model using monthly data from 1991:04 to 2005:03. Empirical findings support
the evidence of bi-directional Granger Causality between stock market and economic activity.
The implications are that a well-developed stock market could enhance economic activity and
vice-versa.
Analysis of the fundamental factors affecting the market price of shares constituting the
Indian index: a study of SENSEX Niladri Das, J.K. Pattanayak
This paper examines the various research studies undertaken in the Indian and international
context highlighting the effect of various fundamental factors on the behavior of the stock
market. This paper tries to identify the critical variables which have a significant effect on stock
price movements and influence the entire market's movement. The 30 shares constituting the
Bombay Stock Exchange-Sensitivity Index (BSE-SENSEX or SENSEX) are used as proxies to
capture the entire stock market's movement. Appropriate statistical techniques have been used to
establish a meaningful relationship among various explanatory variables identified through the
empirical analysis considering the available research studies. The explanatory variables, which
act as major determinants of stock price movements, are condensed into a few critical factors by
factor analysis and the relevance of these factors in influencing stock market movements is
explained in detail. The analysis shows that higher earning power, Returns on Investment
35

(ROIs), growth possibility and favorable valuation have a positive impact on the share price and
stock market movement, while higher risk and volatility have a negative impact. These factors
can be used as major analytical tools by investors, corporations and brokers to make rational and
intelligent investment decisions.

The relationship between the Indian stock market and the stock markets of the U.S
Chatrath, Ramchander
This Paper examines the relationship between the Indian stock market and the stock markets of
the U.S. and other developed countries using daily data for the period 1992 to 2008. They used
the Bombay Stock Exchange National Index (BSENI) and the Dow Jones Industrial Average
(DJIA) as representative indexes for the Indian and U.S. markets, respectively. The authors
identify two major concerns in portfolio diversification studies. First, return comparisons
between countries are exposed to currency risk. Second, correlations between stock returns for
various countries must be stable over time in order to be able to employ past correlations as a
proxy in creating optimal portfolios. They find that the Indian stock market had low correlations
with the markets of the developed countries. Therefore, the Indian market offered diversification
benefits for investors in the developed countries for the period.

Diversification in an Emerging Market: A Closer Look at the Indian Stock

Market Jayen B. Patel
We find that the Indian stock market generated returns comparable to those of the U.S. stock
market during the period January 1991 to July 2005. We also find that the Indian stock market
produced returns substantially higher than U.S. equity returns during various sub-periods when
the U.S. market declined. We demonstrate that the Indian stock market presents important return
and diversification benefits to U.S. investors.
With the satellite system, trading that had previously been restricted to the exchange floor was
replaced by electronic systems linking traders throughout the country. Further, according to
Echeverri-Gent, the satellite system led to the result that Indias two largest stock exchanges
generated, respectively, the third and fifth largest trading volume in the world by the year 2010.
Additionally, since the early 1990s, the Indian economy has become increasingly more
integrated with the world economy.

36

How Sensex Index Affects Market Sourav Sharma

The BSE sensex, several times, especially when the figures went remarkably down affecting the
stock market exceptionally badly, drew scorn creating panic amongst investors and companies
alike. The revival phenomenon is still on, and unlike other nations, India is fast coping up with
the great recession; thanks to the innovative measures taken up by the RBI and the Government
of India. Sensex has always been one of the frenzied themes of discussion for the investors and
financial community. The fluctuations of the Indian stock market are depicted on the chart of
Sensex India. The sensex nifty comprise the calculations, price, and performance of 30 live stock
companies and 50 stock US companies respectively. Sensex index hems in some of the honchos
of different industrial segments right from telecommunication to banking and from real estate to
automobiles. Companies worth mentioning, which are listed in the BSE index, are ICICI Bank,
Infosys, DLF, Grasim Industries, HDFC, Hindalco Industries, Mahindra Limited, ONGC, Bharti
Airtel, Reliance Industries, Tata Group, Ranbaxy, to name a few.

Integration level of equity markets in APECs emerging countries: Are

emerging markets regionally or globally integrated? Cynthia Ho Szee Yah; Anh Thi
Quynh Dinh; 2010
Supported by the investment barriers removal, financial deregulation and improved
macroeconomic policies during the last three decades, the process of financial integration in
those markets, emerging markets in general and emerging markets within Asia Pacific Economic
Cooperation (APEC) in particular, has been pro-actively accessed these days. Moreover, recent
trend in globalization in many APEC countries and especially in the emerging markets has
triggered a stronger financial integration progress across countries.

The relationship between Credit Ratings and Beta: -A quantitative study on

the Nordic market Andreas stlund; Mikael Hyleen; 2009
This study aims to investigate the relationship between systematic risk and credit ratings. The
systematic risk, frequently measured by beta, is an important consideration for both investors and
corporations.

37

Demutualization of stock exchanges: A case study: London Stock Exchange

and Hong Kong Stock Exchange Saadia Altaf; Ghenadie Cospormac; 2009
The focus of this study is to evaluate the impact of corporate ownership structure on the overall
performance of stock exchanges. This study distinguishes in particular mutual versus
demutualized ownership.

Stock Market Anomalies: A Literature Review and Estimation of Calendar

affects on the S&P 500 index Marcus Davidsson; 2006
This thesis investigates the Day-of-the-week, Month-of-the-year and Quarter-of-the-year effects.
Historical data from the S&P 500 index between 1970- 2005 is analyzed. The purpose is to
investigate if there is any evidence of increased returns (ROR) pattern related to seasonality
during this period.

Corporate Governance Effects on Firm Value and Stock Market

Performance: An Empirical Nicolette C. Prugsamatz1
The little literature there is on Corporate Governance in emerging markets provides supporting
Evidence straddling short periods whilst addressing some areas of firm-level Corporate
Governance adherence. This paper seeks to study the effects of Corporate Governance adoption
on Firm Value and Stock Market Performance of 57 SET-Listed Thai Companies, drawing on
data from 2000 to2009. A mixed method approach was adopted which included the use
secondary data, an Index (Thai Gov-Index), and Text Content Analysis to measure firm-level
Corporate Governance of the selected companies. That firm-level Corporate Governance can
serve as a value driver, for both the firm and its shareholders, is to a certain extent justified by
what the study findings infer, even though findings of all positive associations appeared to be
weak.

38

Value-based management, EVA and stock price performance in Canada

George Athanassakos Richard
The study finds that value-based management methods are widely used in Canada, with the
likelihood of usage being higher for larger companies with younger and more educated
executives with an accounting/finance background. The statistical analysis that follows the
tabulation of survey results indicates companies that used EVA had a better stock price
performance than those not using EVA. Moreover, our legit regression analysis shows that
companies with better stock market performance exhibited higher likelihood of using EVA.

The determinants of stock market development in the Middle-Eastern and

North African region Samy Ben Naceur, Samir Ghazouani
It is found that saving rate, financial intermediary, stock market liquidity and the
Stabilization variable are the important determinants of stock market development. In addition, it
is found that financial intermediaries and stock markets are complements rather than substitutes
in the growth process.

The impact of M&A transactions from private equity and hedge funds
Empirical evidence from Austria and Switzerland Gerhard Wortche
Considering the wealth effects of the different types of investors, the findings of this Paper
support the necessity of special regulations for FIs such as private equity and hedge funds. This
is due to the fact that lower performance is linked to the disgraceful business conduct of an FI
who is oriented toward short-term profit at the cost of the target company and their stakeholders.

39

CHAPTER III
DATA
ANALYSICS
AND
INTERPRETATION

40

DATA ANALYSIS AND INTREPRETATION

3.1 GROWTH ANALYSIS
Table No. 3.1

SALES FIGURE
Rupees in corers
COMPANY
ACC
AMBUJA
GRASIM
ULTRATECH

FY 07
5950.37
6326.43
6756.11
3363.16

FY 08
FY 09
FY 10
FY 11
7271.07 7483.14 8187.73 7874.34
6695.22 6712.89 7214.18 7640.38
8880.54 10629.76 11132.6 8833.77
4939.7 5634.52 6547.19 7170.12

SALES
12000
10000
FY 07

8000

FY 08
6000

FY 09
FY 10

4000

FY 11

2000
0
ACC

AMBUJA

GRASIME

ULTRATECH

Fig No. 3.1

INTERPRETATION:
From the above table, Ultratech and Ambuja sales increased consistently from 2007 to 2011.
Acc and Grasim sales increased till 2010 and it declined in 2011.

41

3.2 PROFITABILITY ANALYSIS

TABLE NO. 3.2.1

EBIT
Rupees in crores
COMPANY
ACC
AMBUJA
GRASIM
ULTRATECH

FY 07
FY 08
1937.97 2311.15
2272.23 3018.17
1577.79 2635.04
586.2 1485.05

FY 09
2036.12
2252.32
3631.14
1826.17

FY 10
2703.75
2104.38
2798.59
1818.55

FY 11
1847.06
2074.7
3280.55
2100.35

EBIT
4000
3500
3000
2500
2000
1500
1000
500
0

FY 07
FY 08
FY 09
FY 10
FY 11
ACC

AMBUJA

GRASIM

ULTRATECH

Fig. No. 3.2.1

INTERPRETATION
From the above table, Ultratech has stable growth in EBIT from the year 2007 to 2011. Grasim
has highest EBIT Rs 3634(rs in crores) in the year 2009.

42

Table No. 3.2.2

PROFIT AFTER TAX

Rupees in crores

COMPANY

FY 07

FY 08

FY 09

FY 10

FY 11

ACC

1247.38 1438.44 1212.77 1609.97

1159.31

AMBUJA

1503.25

1266.88

1769.1 1402.27 1224.77

GRASIM

863.21 1535.81

ULTRATECH

229.76

2232.6 1647.96

782.28 1007.61

977.02

2092.1
1093.24

PAT
2500
FY 07

2000

FY 08

1500

FY 09

1000

FY 10

500

FY 11

0
ACC

AMBUJA

GRASIM

ULTRATECH

Fig. No. 3.2.2

INTERPRETATION:
From the above table, Ultratech PAT had stable improvement from 2007 to 2011, in the year
2007 it was 229 and in the year 2011 it was 1093. Acc & Ambuja are decline when compare in
the year 2007 & 2011.

43

Table No. 3.2.3

RETURN ON TOTAL ASSETS

Return On Total Asserts = Net Profit +Interest+Tax / Average Capital Employed *100
COMPANY

FY 07

FY 08

FY 09

FY 10

FY 11

ACC

0.315

0.323

0.224

0.244

0.160

AMBUJA

0.345

0.354

0.235

0.183

0.171

GRASIM

0.124

0.167

0.181

0.128

0.256

ULTRATECH

0.092

0.234

0.227

0.170

0.142

RETURN ON TOTAL ASSETS

0.4
FY 07
0.3

FY 08

0.2

FY 09

0.1

FY 10
FY 11

0
ACC

AMBUJA

GRASIM

ULTRATECH

Fig No. 3.2.3

INTERPRETATION:
From the above table, Acc & Ambuja is having highest return on total asset so it utilizes
maximum its available resource.

44

Table No. 3.2.4

EARNINGS PER SHARE (EPS)

Earning Per Share = Net profit/Number of shares *100
COMPANY

FY 07

FY 08

FY 09

FY 10

FY 11

65.78

76.67

64.62

85.58

56.66

AMBUJA

9.91

11.62

9.21

8.26

GRASIM

94.16

167.53

223.35

179.96

228.19

ULTRATECH

18.47

62.84

80.94

78.48

87.82

ACC

EPS
250
200

FY 07

150

FY 08
FY 09

100

FY 10

50

FY 11

0
ACC

AMBUJA

GRASIM

ULTRATECH

Fig No. 3.2.4

INTERPRETATION:
From the above table, it is clear that Grasim is having the highest earning per share and the
Ambuja is having the lowest EPS. Ultratech having stable growth.

45

Table No. 3.2.5

PRICE EARNING RATIO

Price Earning Ratio = Market Value Per Share / Earnings Per Share
COMPANY

FY 07

FY 08

FY 09

FY 10

FY 11

ACC

14.1814

11.4702

9.9591

12.9594 14.2262

AMBUJA

13.1228

16.4036

10.1411

20.4819 12.5289

GRASIM

9.3821

16.1214

9.4121

12.5747 24.7883

ULTRATECH

8.3349

11.8351

7.7157

10.5549 52.9643

PRICE EARNING RATIO

60
50

FY 07

40

FY 08

30

FY 09

20

FY 10

10

FY 11

0
ACC

AMBUJA

GRASIM

ULTRATECH

Fig No.3.2.5
INTERPRETATION:
From the above table, Ultratech in the year 2007 PE ratio is 8.33 and in the year 2011 it was
52.96. Ultratech has maximum PE ratio it is fallow by Acc, Ambuja, and Grasim. Which means
Ultratech is the costliest share to hold and Acc is the cheapest stock.

46

Table No.3.2.6

GROSS PROFIT RATIO

Gross Profit Ratio = Gross Profit / Sales * 100
COMPANY

FY 07

FY 08

FY 09

FY 10

FY 11

ACC

27.1296

26.016

24.3593 30.9069

22.1961

AMBUJA

31.9932

46.7494

27.5509 27.3408

24.996

GRASIM

20.8421

27.1491

29.5492 23.4704

33.3403

7.7949

10.7811

23.5319 25.4162

23.4175

ULTRATECH

GROSS PROFIT RATIO

50
40

FY 07

30

FY 08
FY 09

20

FY 10

10

FY 11

0
ACC

AMBUJA

GRASIM

ULTRATECH

Fig No.3.2.6

INTERPRETATION:
From the above table, Ambuja and Grasim is having the highest GP ratio high and shows that
both company having good management. Ultratech has continuous improvement from 2007 to
2011.

47

Table No.3.2.7

NET PROFIT RATIO

Net Profit Ratio = Net Profit / Sales * 100
COMPANY

FY 07

ACC

19.0456 18.2908

14.6116 18.2517 13.0098

AMBUJA

21.4059 27.3445

19.7784 15.6927 15.2496

GRASIM

11.3091 15.9155

17.668 13.5859 23.4662

6.0698 14.2639

16.0288 13.6447 14.1444

ULTRATECH

FY 08

FY 09

FY 10

FY 11

NET PROFIT RATIO

30
25

FY 07

20

FY 08

15

FY 09

10

FY 10

FY 11

0
ACC

AMBUJA

GRASIM

ULTRATECH

Fig No.3.2.7

INTERPRETATION:
From the above table, Ambuja NP ratio was 27.34 in the year 2008. Ultratech is having stability
PE ratio. Grasim highest PE ratio in the 2011.

48

Table No.3.2.8

OPERATING PROFIT RATIO

Operating Profit Ratio = Cost Of Goods Sold + Operating Profit / Sales * 100
COMPANY

FY 07

FY 08

FY 09

FY 10

FY 11

ACC

26.1338

24.6888

21.4848

29.1526

19.4791

AMBUJA

30.7744

31.7346

25.1645

24.7809

22.4484

GRASIM

18.6615

24.6683

26.6129

31.1116

30.0747

ULTRATECH

14.8366

25.9582

27.4806

24.3449

25.5868

OPERATING PROFIT RATIO

35
30
25
20
15
10
5
0

FY 07
FY 08
FY 09
FY 10
FY 11
ACC

AMBUJA

GRASIM

ULTRATECH

Fig No.3.2.8

INTERPRETATION:
From the above table, Grasim has highest Operating profit ratio 30 in the year 2011.it is followed
by Grasim, Acc and Ambuja.

49

Table No.3.2.9
DIVIDEND PAYOUT RATIO
Dividend Payout Ratio = Dividend Per share / Earnings Per Share
COMPANY

FY 07
22.8032

ACC
AMBUJA
GRASIM
ULTRATECH

FY 08
26.0859

FY 09

FY 10

30.9502 26.8754

166.4984 150.6024 119.4354

21.2404

16.4149

9.4748

6.3654

51.123

150 157.3849

13.4318 16.6889
6.1774

FY 11

6.371

13.1469
6.8322

DIVIDEND PAYOUT RATIO

180
160
140
120
100
80
60
40
20
0

FY 07
FY 08
FY 09
FY 10
FY 11
ACC

AMBUJA

GRASIM

ULTRATECH

Fig No.3.2.9

INTERPRETATION:
From the above table, Ambuja cements had the maximum Dividend Payout ratio for past five
financial years. Ultratech, Grasim and Acc has lowest Dividend Payout ratio.

50

3.3 SOLVENCY ANALYSIS

Table No. 3.3.1
CURRENT RATIO
Current Ratio = Current Asserts / Current Liabilities
COMPANY

FY 07

FY 08

FY 09

FY 10

FY 11

ACC

0.95

0.87

0.89

0.67

0.68

AMBUJA

1.08

1.03

1.26

0.89

1.07

GRASIM

1.09

1.16

1.08

0.99

1.03

ULTRATECH

0.68

0.73

0.72

0.69

0.69

CURRENT RATIO
1.4
1.2
1
0.8
0.6
0.4
0.2
0

FY 07
FY 08
FY 09
FY 10
FY 11
ACC

AMBUJA

GRASIM

ULTRATECH

.Fig No. 3.3.1

INTERPRETATION:
From the above table, Ambuja and Grasim have Current ratio above 1% except in the year 2010.
Acc and Ultratech having below 1% Current ratio which shows liabilities are higher than current
asset.
51

Table No.3.3.2
PROPRIETORY RATIO
Proprietory Ratio = Total Assert / Share Holders Fund
COMPANY
FY 07
FY 08
FY 09
FY 10

FY 11

ACC

1.245364 1.073786 1.097816 1.094232 1.080968

AMBUJA

1.247838 1.070889 1.050886 1.025607 1.008872

GRASIM

1.397358 1.473762 1.393316 1.358209 1.145216

ULTRATECH

2.398316 1.895027 1.645349

1.59455 1.348154

PROPRIETORY RATIO
2.5
2

FY 07

1.5

FY 08
FY 09

FY 10
FY 11

0.5
0
ACC

AMBUJA

GRASIM

ULTRATECH

Fig No.3.3.2

INTERPRETATION:
From the above table, Ultratech haves highest Proprietory ratio followed by Grasim. Higher
Propritory ratio indicates less danger & risk to creditors in the event of winding up.

52

Table No.3.3.3
FIXED ASSERT TURNOVER RATIO

Fixed Assert Turnover Ratio = Sales Turnover / Fixed Assert * 100

COMPANY

FY 07

FY 08

FY 09

FY 10

FY 11

ACC

63.467

67.936

62.529

55.685

48.594

AMBUJA

72.249

57.978

53.064

51.204

44.818

GRASIM

60.957

65.471

63.666

52.036

142.703

ULTRATECH

40.477

53.421

57.227

46.258

47.8713

FIXED ASSERT TURNOVER RATIO

150
FY 07
100

FY 08
FY 09

50

FY 10
FY 11

0
ACC

AMBUJA

GRASIM

ULTRATECH

Fig No.2.3.3

INTERPRETATION:
From the above table, Grasim Fixed Asset Turnover ratio is 142 higher in the year 2011. Acc &
Ambuja are decreasing last three year.

53

Table No. 3.4.

BETA VALUE OF STOCK
COMPANY

Beta Value

ACC

0.8907

AMBUJA

0.9285

GRASIM

0.7445

ULTRATECH

0.9107

Beta Value
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

Beta Value

ACC

AMBUJA

GRASIM

ULTRATECH

Fig No.2.4.5

Interpretation:
The table indicates that Grasim was having a lowest Beta Value 0.74, which means Grasim is
the most stable scrip.

54

CHAPTER IV
FINDINGS
SUGGESTION
&
CONCLUSION

55

4.1 FINDINGS AND SUGGESTIONS

1. Compare to others GRAIM is showing consistent growth on the part five years.

2. Based on net profit and return on total assets Grasim is the market leader among the
industry.

3. Ultratech is trading at the highest PE ratio of 53 which shows investors are expecting
better performance from the company in the future.

4. Ambuja is traded at 13 PE which means the investors are not very optimistic about the
company though it is cheap.

5. Gross profit ratio is around 23 for all except Grasim which has 33%.

6. Grasim & Ambuja are liquid company based on current ratio.

7. All cement stock are traded at less than beta value 1. Grasim has a beta value of 0.75
which means it is a relatively stable & secured stock.

56

4.2 CONCLUSION
In the current scenario, investing in stock market is a major challenge even for professionals. So
the investors must understand the liberalization, globalization lead to phenomenal growth in
International trade and changes in the cement price rate, interest rate, exchange rate and stock
price which lead to financial risk to corporate world.

Through the stock market is subject to high risk by using the fundamental analysis of the
companies help the investors to know the performance of the company.

From the findings found that educating the investors about the share market by conducting
awareness campaign gain much more importance if it is done. Investors can understand the
movements of the market and invest accordingly. This will stop downfall of market during the
rough phase.

57

BIBLIOGRAPHY

58

BIBLIOGRAPHY
Reference Books:
I.M.PANDEY, FINANCIAL MANAGEMENT, Eighth Editon, Vikas Publishing House
Pvt. Ltd.
M.Y. KHAN and P.K. JAIN, FINANCIAL MANAGEMENT, Text, Problems and cases,
Fourth Edition, Tata McGraw Hill Publishing co-Ltd.
R.S.N. PILLAI, BAGAVATHI, MANAGEMENT ACCOUNTING, S. CHAND
PUBLICATIONS.

S.N. MAHESHWARI, FINANCIAL MANAGEMENT, S. CHAND PUBLICATIONS.

Websites:
www.moneycontrol.com
www.nseindia.com
www.bseindia.com
www.emeraldinsight.com
www.docstoc.com
www.yahoofinance.com

59

ANNEXURE

60

Balance Sheet of ACC

Dec '07
Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Deffered Credit
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Miscellaneous Expenses
Total Assets
Contingent Liabilities
Book Value (Rs)

------------------- in Rs. Cr. ------------------Dec '08

Dec '09
Dec '10

Dec '11

187.48
187.48
0.28
0.00
2,955.16
0.00
3,142.92
720.96
50.20
771.16
3,914.08
Dec '06

187.83
187.83
0.10
0.00
3,964.78
0.00
4,152.71
266.03
40.38
306.41
4,459.12
Dec '07

187.88
187.88
0.00
0.00
4,739.85
0.00
4,927.73
450.00
32.03
482.03
5,409.76
Dec '08

187.94
187.94
0.08
0.00
5,828.20
0.00
6,016.22
559.74
7.18
566.92
6,583.14
Dec '09

187.95
187.95
0.00
0.00
6,281.54
0.00
6,469.49
518.05
5.77
523.82
6,993.31
Dec '10

4,816.25
1,893.76
2,922.49
558.42
543.09
624.13
213.96
152.98
991.07
569.21
467.19
2,027.47
0.00
1,596.50
541.83
2,138.33
-110.86
0.94
3,914.08
341.56
167.81

5,464.07
2,149.35
3,314.72
649.19
844.81
730.86
289.29
78.87
1,099.02
544.31
664.61
2,307.94
0.00
1,991.27
666.27
2,657.54
-349.60
0.00
4,459.12
890.62
221.33

5,835.67
2,365.97
3,469.70
1,602.86
679.08
793.27
310.17
87.57
1,191.01
779.76
896.67
2,867.44
0.00
2,245.39
963.93
3,209.32
-341.88
0.00
5,409.76
1,734.21
262.56

6,826.27
2,667.98
4,158.29
2,156.21
1,475.64
778.98
203.70
95.64
1,078.32
714.55
650.74
2,443.61
0.00
2,558.73
1,091.88
3,650.61
-1,207.00
0.00
6,583.14
840.52
320.45

8,076.95
2,994.51
5,082.44
1,562.80
1,702.67
914.98
178.28
94.96
1,188.22
752.41
985.07
2,925.70
0.00
2,627.84
1,652.46
4,280.30
-1,354.60
0.00
6,993.31
474.18
344.59

61

Profit & Loss account

Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing
Expenses
Selling and Admin
Expenses
Miscellaneous Expenses
Preoperative Exp
Capitalised
Total Expenses
Operating Profit
PBDIT
Interest
PBDT
Depreciation
Other Written Off
Profit Before Tax
Extra-ordinary items
PBT (Post Extra-ord
Items)
Tax

------------------- in Rs. Cr. ------------------Dec '07

Dec '08
Dec '09
Dec '10
Dec '11
6,467.84
736.09
5,731.75
247.87
-29.25
5,950.37

7,865.11
970.32
6,894.79
369.35
6.93
7,271.07

8,300.18
1,070.21
7,229.97
252.84
0.33
7,483.14

8,803.17
781.58
8,021.59
137.40
28.74
8,187.73

8,609.29
961.52
7,647.77
169.99
56.58
7,874.34

1,513.55
430.98
318.02

1,843.65
517.56
352.73

1,180.48
1,598.96
413.04

1,233.42
1,539.65
367.71

1,520.68
1,598.67
461.89

262.45

344.17

362.90

421.69

538.24

1,298.32

1,547.30

1,620.65

1,658.79

1,594.53

189.08

354.51

270.99

262.72

313.33

0.00

0.00

0.00

0.00

0.00

4,012.40

4,959.92

5,447.02

5,483.98

6,027.34

1,690.10
1,937.97
75.19
1,862.78
254.61
6.24
1,601.93
14.55

1,941.80
2,311.15
73.87
2,237.28
305.43
1.55
1,930.30
-0.16

1,783.28
2,036.12
39.96
1,996.16
294.18
0.00
1,701.98
35.39

2,566.35
2,703.75
84.30
2,619.45
342.09
0.00
2,277.36
21.54

1,677.01
1,847.00
56.78
1,790.22
392.68
0.00
1,397.54
185.92

1,616.48

1,930.14

1,737.37

2,298.90

1,583.46

369.10

491.70

524.60

688.93

424.15

62

Reported Net Profit

1,231.84
Total Value Addition
2,498.85
Preference Dividend
0.00
Equity Dividend
280.92
Corporate Dividend Tax
39.40
Per share data (annualised)
Shares in issue (lakhs)
1,872.78
Earning Per Share (Rs)
65.78
Equity Dividend (%)
150.00
Book Value (Rs)
167.81

1,438.59
3,116.27
0.00
375.02
63.74

1,212.79
4,266.54
0.00
375.33
63.79

1,606.73
4,250.56
0.00
431.76
73.38

1,120.01
4,506.66
0.00
572.63
95.10

1,876.24
76.67
200.00
221.33

1,876.82
64.62
200.00
262.56

1,877.40
85.58
230.00
320.45

1,877.45
59.66
305.00
344.59

63

64