Professional Documents
Culture Documents
PROJECT REPORT
ON
ORGANIZATIONAL STUDY
AT
AMBUJA CEMENT
CHANDRAPUR
Masters of Business Administration
Registration :
1
ACKNOWLEDGEMENT
We thank IIBS College for giving us this opportunity for doing this
project report and we also would like to thank Professor Suchitra
mam for guiding us through the entire report formulation of IIBS for
the support as well as the faculties of IIBS.
2
DECLARATION
I hereby declare that this Project work titled “STUDY AT TAXATION AND
COSTING OF AMBUJA CEMENT, CHANDRAPUR” is a record of original work
done by me under the guidance of Prof Suchitra of IIBS College and that this
project work has not formed the basis for the award of any
Degree/Diploma/Associate ship/Fellowship or similar title to any candidate of
any university.
....................
Prajakta Gund
(Finance Student)
Date .......................
Countersigned
Prof Suchitra
3
4
Table of Contents
SL NO TITLE PAGE NO
1 Introduction
2 Industry Profile
3 Company Profile
4 Product Profile
5 Organization
Structure
6 Taxation of INDIA
7 Costing of Company
8 SWOT Analysis
9 Conclusion
10 Bibliography
5
Chapter 1
INTRODUCTION
6
AMBUJA CEMENTS LTD. (AMBUJACEM) - COMPANY HISTORY
9
10
Chapter 2
Industrial Profile
11
AMBUJA CEMENT
GRINDING STATIONS:
Roopnagar (Ropar), Punjab
Bathinda, Punjab
Sankrail, District Howrah, West Bengal
Roorkee, District Haridwar, Uttaranchal
Farakka, District Murshidabad, West Bengal
Dadri, District Gautam Budh Nagar, Uttar Pradesh
Nalagarh, District Solan, Himachal Pradesh
12
Magdalla, District Surat, Gujarat
HEAD/CORPORATE OFFICE:
Ambuja Cements Limited, ‘Elegant Business Park’, MIDC Cross Road – ‘B’,
Andheri – Kurla Road, Andheri (East), Mumbai – 400 059.
REGISTERED ADDRESS:
P.O. Ambujanagar, Taluka Kodinar, District Gir Somnath, Gujarat – 362 715.
LAFARGEHOLCIM LTD:
13
manufacturing locations. Today ACF is functional across 12 states covering 22
locations in India.
For Ambuja Cement, its people are its most important resource. The company
is committed to ensure the safety of all its employees, contractors and others
connected with its operations, through its Zero Harm policy.
The company has substantially reduced the number of onsite injuries with its
strong emphasis on improving health and safety parameters, reducing risks
through people engagement, capability building, and strengthening health
and safety management systems and processes. However, there is more to be
done to achieve the company's ultimate goal of achieving a Zero Harm
workplace.
14
15
We Care – an umbrella initiative which covers all stakeholders – has played a
seminal role in transforming Ambuja Cement's operations as well as attitudes
towards safety. The We Care initiative has led the way in training and
capability building, and has been spearheading the company's efforts to
achieve the goal of Zero Harm.
All plants of Ambuja Cement are certified as per OHSAS 18001 world
standard.
16
Chapter 3
Company Profile
17
AMBUJA CEMENT
Ambuja Cements Ltd is India’s foremost cement company known for its
hassle-free, home-building solutions. Unique products tailor-made for Indian
climatic conditions, sustainable operations and initiatives that advance the
company’s philosophy of contributing to the larger good of the society, have
made it the most trusted cement brand in India
The company has many firsts to its credit – a captive port with four terminals
that has facilitated timely, cost-effective, cleaner shipments of bulk cement to
its customers. To further add value to our customers, the company has
launched innovative products like Ambuja Plus Roof Special, Ambuja Plus Cool
Walls and Ambuja Compocem. The new products not only fulfil important
customer needs but also help in significantly reducing carbon footprints.
The company also works closely with communities that live around its plants,
through its CSR arm, the Ambuja Cement Foundation (ACF). ACF implements
need-based and participatory programmes in the thematic areas of water
resource development, health and sanitation, women empowerment, rural
infrastructure, education and agro-based/skill-based livelihood creation.
The spirit of is the catalytic force behind the success of Ambuja Cement
and its people’s strength in pushing boundaries and achieving the seemingly
impossible.
19
The spirit encapsulates the management philosophy at Ambuja Cement
Ltd. It signifies that every individual contributes to the best of his potential to
achieve the collective goal of many. This process of
tapping individual initiative for team synergy is at the heart of the culture
nurtured over the years. It emboldens employees to have an equal voice in
the functioning of any system that they are a part of, enabling them to
achieve goals more efficiently as a team.
Ambuja Cement entered the cement business with the driving conviction that
challenges are there to be met and opportunities are meant to be seized. As
the David among the established Goliaths, it saw a way to put the competition
at a disadvantage, and that was to achieve maximum efficiency and
productivity at the lowest cost do it faster
The norms said you needed three years to build a cement plant. We built it in
two!
Three years is the time required for a cement plant to become operational! At
least that was the norm until Ambuja Cement engineers built a greenfield
plant at Ambujanagar in Gujarat.
One of the reasons for the delay in construction of plants was the time taken
for approvals. To cut red tape and reduce delays, Ambuja engineers were
empowered to take decisions on the spot which helped in ensuring timely
completion of tasks. The response time for approvals was dramatically
reduced by 90 percent.
The freedom from red tape ensured that plant engineers placed orders for
machinery even before the site was chosen, as a result of which the
equipment was ready for installation by the time land was acquired. Result:
The plant was on-stream almost a year ahead of schedule and ensured
tremendous savings in inflationary costs for the company.
20
The norms said you can't build a cement plant in three years. We
built it in two.
do it more economically
do it better
make history
stop wastage
make a difference
sow an idea
overcome limitations
outperform myself
lead by example
2018 Awards
21
Industry leadership
Ambuja cement’s industry leadership status is built on its world-class
products, pioneering initiatives and sustainable business growth
Water Positive
Ambuja cement is the only company to be certified over five times water
positive. A company is water positive when it gives back to the community
more water than it consumes, that means Ambuja cement gives back over
five times the water it consumes. Along with its efforts to conserve water at
its plants, villages in and around its plants, staff colonies, and mines, the
company also increased efficiencies and managed to reduce consumption and
wastage.
True Value
Ambuja Cement is the first company to institutionalise True Value, the triple
bottom-line accounting method to reflect the three pillars of sustainability –
People, Planet, and Profit. A qualitative measurement of the company's
interaction with the environment and society, True Value has helped the
company identify a portfolio of cost-effective projects, reduce costs, increase
earnings and most importantly, increase its True Value.
22
Ambuja Knowledge Centre
A pioneering initiative by Ambuja cement, Ambuja Knowledge Centres (AKC)
serve as a knowledge sharing platform for construction professionals and is
aimed at increasing awareness about cement and concrete. AKCs help in
advancing the knowledge of professionals through practical workshops and
also function as an experience centre to promote and offer solutions for
cement and concrete applications. The AKCs also help the company build
long-term relationships with the AEC community. Currently, over 30 AKCs are
operational in various parts of the country.
The company has entered into a strategic partnership with Holcim, the second
largest cement manufacturer in the world from 2006. Holcim had, in January,
bought a 14.8 per cent promoters' stake in the GACL for INR 21.4 billion.
23
Privacy Policy
Purpose
Information we collect :
From you
You may visit and use this website of Ambuja Cement Foundation
(www.ambujacementfoundation.org) at anytime that the web site is
operational. The submission of personal information is not required to use the
general features of the web site. Personal information, which you provide to
us on a voluntary basis, we request your name, city, state and country of
residence, Pin code, email address, telephone number, gender, date of birth
and limited personal details.
(i) You can chose not to provide some or all of the personal information
initially requested from you.
(ii) Another means of limiting our use to information is by rejecting cookies.
Most browsers are set up to accept cookies automatically, unless you indicate
otherwise. If you choose to reject the cookie you may do so and still use the
web site, but your access to and use of certain areas of the web site may be
limited.
6. Security:
Ambuja Cement Foundation may amend this privacy policy at any time. If we
do so, we will post the changes on this page, with the change, and the word
"Amended" prominently displayed, so that you are always aware of the type
of information we collect, how we use it, whether we share it with or disclose
it to others, what you can do to limit our use of it and how you can correct the
information or have it deleted.
26
8. Copyright Protection
All content on this Site including graphics, text, icons, interfaces, audio clips,
logos, images and software is the property of ACF and/or its content suppliers
and is protected by Indian and international copyright laws. The arrangement
and compilation of all content on this Site is the exclusive property of ACF and
protected by Indian and international copyright laws. Permission is given to
use the resources of this Site only for the purposes of making enquiries,
making a donation or placing an order for the purchase of ACF products. Any
other use, including the reproduction, modification, distribution,
transmission, republication, display or performance, of the content on this
Site can only be made with the express permission of ACF. All other
trademarks, brands and copyrights other than those belonging to ACF belong
to their respective owners and are their property.
9. No Guarantees
While this Privacy Policy states our standards for maintenance of Data and we
will make efforts to meet them, we are not in a position to guarantee these
standards. There may be factors beyond our control that may result in
disclosure of data. As a consequence, we disclaim any warranties or
representations relating to maintenance or nondisclosure of Data.
27
Chapter 4
Product Profile
28
Product of Ambuja Cement
Ambuja Cement
Known for its high strength, high performance cement caters to each of its
three customer segments – Individual Home Builders (IHBs), Masons and
Contractors, and Professionals
An established brand in India, Ambuja Cement is known for its high strength,
high performance Ordinary Portland Cement (OPC) and Pozzolana Portland
Cement (PPC). OPC & PPC both are high quality active hydraulic binders & are
preferred brands in the market for all the construction applications. The
company currently has a manufacturing capacity of 29.65 million tonnes.
Innovation – the hallmark of Ambuja Cement since its inception – has helped
it develop technology to produce cement of consistent quality from diverse
raw materials. About 25 per cent of the company’s production of high
strength Portland Pozzolana Cement (PPC) uses fly ash – a waste produced in
thermal power plants – as raw material. PPC currently constitutes 93 percent
of the company’s product portfolio.
29
Through use of state-of-the-art technology and strong thrust on research and
development, Ambuja Cement has developed products to cater to its three
customer segments – Individual House Builders, Masons and Contractors, and
Professionals’ FOR YOUR ROOF!
Cement
We are a leading Manufacturer of Ambuja Cement and Ambuja PLUS from
Mumbai, India.
Ambuja Cement
Ambuja PLUS
Cement Product
Pioneers in the industry, we offer Ambuja Cement, Portland Pozzolana
Cement (PPC) and Ambuja PLUS from India.
Ambuja Cement
Ambuja PLUS
SPE technology. It extracts 100% of silicate gel from cement that helps in
making the concrete stronger, denser and leak proof, resulting in
strengthening of the roof.
30
`
Chapter 5
Organization Structure
31
ORGANIZATION:
32
The need for order, rationality, structure, etc. have been modified to highlight
the importance ofrelaxing the rigid and impersonal structure consider each
person as an individual with feelings and social influenced that effect
performance on the job. Modern theory of organization and management has
been developed since 1930’s. Chester I Barnard considered the individual,
organizations, suppliers and consumer as a part of the environment.
33
Changing pattern of Organisational structure of cement industry needed to be
assessed to maintain organization viability so that the system accommodate it
self to changes. Its compulsory for the manager to anticipate changes and
accommodates it for survival and stability in the environment. Indian Cement
Corporation incorporated changes in structure to become more competitive.
Change is the only constant in organization structure. Many of the
organizational changes in Indian Cement Industry companies refer that they
reflect a shift in one or two function, or a change in several reporting
relationships, on the other hand, a sizable portion ofthe changes are major in
that they reflect large-scale regroupings of activities or basic changes in the
authority structure of the company.
The study, broadly speaking, emanating only the minor shift in Indian Cement
Industry. The Cement Industry also made notice of regrouping of some
activities. Among the different companies whose charts make up the back
ofthis report, such a pattern is discernible. The Indian Cement Industry's
pattern reflects the attempts of companies to build organization structures
consonant with the requirements of longer and - importantly - far more
complex business. The increase in size and complexity which has confronted
many companies has come about through the new various types of cements
markets they are serving, the new products they are producing and the
resulting changed legal and economic climate they are operating in. In some
cement companies, the increased complexity has resulted from self-
guaranteed expansion; in other it has came about through mergers and
acquisition. Managing of large complex business is a problem in case of few
cement companies in 1980's. The most Indian Cement Corporations adopted
emulating techniques to get efficient. But more often today it seems to result
from the application of the principles of organization to a given set of
circumstances.
34
Ambuja and ACC Cement Growth Report
Ambuja Cement today reported a 6.21 per cent growth in its production at
1.84 million tonnes in January compared to the same month last year.
The cement major's output was 1.73 million tonnes in January 2010, a
company statement here.
In dispatch, the firm witnessed 5.32 per cent rise in January at 1.84 million
tonnes from 1.74 million tonnes in the corresponding month last year.
Another major player, ACC Cement reported 9.57 per cent increase in
production at 2.06 million tonnes compared to 1.88 million tonnes in January
last year.
The company said dispatch grew by 7.32 per cent at 2.05 million tonnes from
1.91 million tonnes in the same month last year.
35
Chapter 6
TAXATION IN INDIA
36
History
What is tax?The word tax is derived from the Latin word ‘taxare’ meaning to
estimate.A tax is not a voluntary payment or donation but an enforced
contribution,exacted pursuant to legislative authority and is any contribution
imposed by government whether under the name of toll,
tribute,impost,duty,custom,excise,subsidy,aid,supply,or any other name.
India has abolished multiple taxes with passage of time and imposed new
ones. Few of such taxes include inheritance tax, interest tax, gift tax, wealth
tax, etc. Wealth Tax Act, 1957 was repealed in the year 2015.
Direct Taxes in India were governed by two major legislations, Income Tax
Act, 1961 and Wealth Tax Act, 1957. A new legislation, Direct Taxes Code
(DTC), was proposed to replace the two acts. However, the Wealth Tax Act
was repealed in 2015 and the idea of DTC was dropped.
37
The tax structure in India is divided into direct and indirect taxes.
While direct taxes are levied on taxable income earned by individuals and
corporate entities, the burden to deposit taxes is on the assessees
themselves. On the other hand, indirect taxes are levied on the sale and
provision of goods and services respectively and the burden to collect and
deposit taxes is on the sellers instead of the assessees directly.Taxes in India
are levied by the Central Government and the State Governments. Some
minor taxes are also levied by the local authorities such as the Municipality
and the Local Governments.
Over the last few years, the Central and many State Governments have
undertaken various policy reforms and process simplification towards great
predictability, fairness and automation. This has consequently lead to India’s
meteoric rise to the top 100 in the World Bank’s Ease of Doing Business
(EoDB) ranking in 2017. The Goods & Services Tax (GST) reform is one such
reform to ease the complex multiple indirect tax regime in India.
>Income Tax
Income Tax is a tax imposed on individuals or entities (taxpayers) that varies
with respective income or profits (taxable income). Income tax generally is
computed as the product of a tax rate times taxable income. The tax collected
by Income Tax Department for central government.
38
>Customs Duty-
Custom Duty is a indirect tax for goods when import or export. When import
goods import from outside in the tax known as import custom duty. we goods
export to outside India is known as export custom duty. The tax collected by
Central Board of Indirect Taxes and Customs.
"Local Body Tax", popularly known by its abbreviation as "LBT", is the tax
imposed by the local civic bodies of India on the entry of goods into a local
area for consumption, use or sale therein. The tax is imposed based on the
Entry 52 of the State List from the Schedule VII of the Constitution of India
which reads; "Taxes on the entry of goods into a local area for consumption,
use or sale therein." The tax is to be paid by the trader to the civic bodies and
the rules and regulations of these vary amongst different States in India. The
LBT is now partially abolished as of 1 August 2015
GST
39
GST is one of the biggest indirect tax reforms in the Country.GST is a
comprehensive indirect tax levied on manufacture, sale and consumption of
goods as well as services at the national level. It has replaced all indirect taxes
levied on goods and services by the Central and State Governments.
GST regime was implemented from 1st July 2017, and India has adopted the
dual GST model in which both the Centre and States levy taxes:
BENEFITS OF GST
40
>Minimal physical interface
41
42
43
44
45
46
TAXABILITY IN INDIA
>Individual
Tax incidence of an individual depends upon his residential status, which is
defined on the basis of his physical presence in India as per the Income Tax
Act.
47
>Company
48
>Firm/LLP
Tax incidence of a Limited Liability Partnership (LLP) depends on the
residential status of the LLP,i.e.,whether the control and management of its
affairs are situated wholly or partially in India.
49
TAXATION ON FOREIGN ENTITIES
>Liaison Office
A Liaison Office (LO) is generally not subject to Income Tax in India, as it
cannot conduct business activities and earn profits on account of Indian
exchange control regulations.
It is required to obtain a PAN and TAN, file an annual return of income and an
AAC.
50
>LLP
An LLP incorporated in India is treated as a tax resident of India and is taxed
@ 30% plus surcharge of its global income. It is required to obtain a PAN and
TAN, and file an annual return of income.
When LLP distributes its profits to partners, they are not taxed in the hands of
the LLP or its partners. Repatriation of capital contribution (say, upon
dissolution) is permissible without any thresholds and is not subject to any
additional taxes.
It is required to obtain a PAN and TAN, and file an annual return of income.
Profit repatriation by way of a dividend is subject to Dividend Distribution Tax
(DDT) in the hands of the company @ 20.36% of dividend declared.
51
Chapter 7
COSTING OF COMPANY
52
Costing Methods & Important Cost Terms
Costs can be simply defined as the money or resources associated with a
purchase / business transaction or any other activity. Different industries
adopt different methods of ascertaining costs of their products depending on
the nature of the production and the type of output.
Cost sheet is the statement that shows various components of total cost of a
product. It indicates per unit cost in addition to total cost. Cost sheet is
prepared on the basis of historical cost and estimated cost.
Variable Cost:
Variable cost changes proportionately to the level of output. For
manufacturers, the key variable cost is the cost of materials.
53
Total Cost:
It is defined as the sum of fixed, variable and semi variable costs.
Incremental cost:
It is mainly the extra cost associated with manufacturing one additional unit
of production. It is also referred to as differential cost.
Opportunity Cost:
It is defined as the cost of an alternative that is forgone (benefit, profit, value
given up) in order to pursue a certain action.
Sunk Cost:
It is the cost that is already incurred and cannot be recovered.
54
TYPES OF COSTING:
Marginal Costing:
Through this method only the variable cost is allocated i.e. direct materials,
direct expenses, direct labour and variable overheads to production. It does
not include the fixed cost of production.
Absorption Costing:
It is the technique to absorb the fixed and variable costs to production. In this
method, full costs i.e. fixed and variable costs are absorbed to the production.
Standard Costing:
When the costs are predetermined on certain standards in a given set of
operating conditions, it is called standard costing.
Historical Costing:
In this method the costs are determined in terms of actual costs and not
predetermined standard costs. Costs are determined only after it is incurred.
Almost all organizations adopt this method of costing.
Unit costing:
It is also called the single output costing. It is used in costing of products that
are expressed in identical units and suitable for products that are
manufactured by continuous activity.
Job costing:
Under this method, costs are ascertained for each work order separately as
each has its own specification and scope. Tailor made products also get
covered by this type of costing.
55
Example: Repair of buildings, Painting etc
Contract costing:
In this method costing is done for jobs that involve heavy expenditure and
stretches over long period and across different sites. It is also called as
terminal costing.
Through this method the costing is done for units that are produced in
batches that are uniform in nature and design.
Example: Pharmaceuticals
Process costing:
It is used for the products which go through different processes. Like in the
process of manufacturing cloth, different processes are involved namely
spinning, weaving and finished product. Each process gives an output that is a
finished product in itself and can be sold. That is why; process costing is used
to ascertain the cost of each stage of production.
Multiple costing:
When the output comprises different assembled parts like in televisions, cars
or electronic gadgets, cost has to be ascertained for the component as well as
the finished product. Such costing may involve different / multiple methods of
costing.
Product Costing:
Product costing methods are used to assign cost to a manufactured product.
The main costing methods available are process costing, job costing and direct
56
costing. Each of these methods apply to different production and decision
environments.
Process costing:
This is the accumulation of labor, material and overhead costs across
departments or entities, with the total production cost then being allocated
to individual units. Process costing is used when large quantities of the same
product are manufactured, usually in long production runs.
Inventory Costing:
Different inventory costing methods are best suited to different situations
and financial goals.
Under the First In, First Out (FIFO) method, the oldest costs are assigned to
inventory items sold, regardless of whether the sold items were actually
purchased at that cost. When the number of inventory items purchased at the
oldest cost is sold, the next oldest cost is assigned to sales.
The last in, first out method (LIFO) is the exact opposite of the FIFO method,
assigning the most recent inventory costs to items sold
57
Specific Identification Method
The second major costing method, job-order costing, involves costing based
on an individual product basis. This is useful where each unit of production is
customized or where there are very few units produced. Under this method,
the exact costs incurred in the production of a particular unit are calculated
and are not necessarily averaged with those of any other unit, since every unit
may be different.
ACTIVITY-BASED COSTING:
Activity-based costing (ABC) is a secondary / somewhat complementary
method to the two traditional costing techniques.
While traditional methods classify costs into categories like direct materials,
labor and other overheads, ABC considers all the costs associated with a
single manufacturing task, regardless of whether they fall under the headings
of labor or materials or something else.
The benefit of this method is that management can keep track of tasks that
cost the most versus which add the most value; indicating any
58
disproportionate amount of money being spent on low-value activities,
thereby indicating the need for process change.
Features of ABC:
59
60
Balance Sheet of Ambuja Cements Ltd.
AS ON 31-12-2005 TO 31-12-2017
61
Balance Sheet of Ambuja Cements Ltd.
AS ON 31-12-2005 TO 31-12-2017
3/31/2017 12 mths
1% Reserves
2%
EQ Capital Shareholdings
22% 18% Working Capital
0%
3%4%4% Shareholder's Funds
Total Debt
Current Liablities
Chart Title
30000
25000
20000
15000
10000
5000
0
-5000
62
Balance Sheet of UltraTech Cement LTD
AS ON-31-03-2008 TO 31-03-2018
Year 3/31/2017 3/31/2016 3/31/2015 3/31/2014
Sources Of Funds
Total Share Capital 274.51 274.43 274.4 274.24
Equity Share Capital 274.51 274.43 274.4 274.24
Reserves 24,117.38 21,671.20 18,766.78 16,907.66
Networth 24,391.89 21,945.63 19,041.18 17,181.90
Secured Loans 2,545.77 2,947.93 3,019.07 2,449.63
Unsecured Loans 4,904.25 4,424.45 4,537.52 4,555.69
Total Debt 7,450.02 7,372.38 7,556.59 7,005.32
Minority Interest 9.71 15.45 18.19 16.64
Total Liabilities 31,851.62 29,333.46 26,615.96 24,203.86
Application of Fund
Gross Block 28,428.88 26,575.40 34,797.31 27,763.69
Less: Accum.
Depreciation 2,525.13 1,265.99 11,454.46 9,663.99
Net Block 25,903.75 25,309.41 23,342.85 18,099.70
Capital Work in
Progress 921.48 1,469.09 2,250.01 2,177.89
Investments 6,690.51 5,095.18 4,500.02 4,861.85
Inventories 2,400.64 2,454.58 2,949.12 2,580.35
Sundry Debtors 1,757.09 1,928.21 1,658.82 1,632.06
Cash and Bank
Balance 2,248.78 2,266.96 392.58 348.49
Total Current Assets 6,406.51 6,649.75 5,000.52 4,560.90
Loans and Advances 2,296.65 2,679.87 2,969.65 2,492.45
Total CA, Loans &
Advances 8,703.16 9,329.62 7,970.17 7,053.35
Current Liabilities 9,909.42 11,431.09 10,123.67 6,994.69
Provisions 457.86 438.75 1,323.42 994.24
Total CL & Provisions 10,367.28 11,869.84 11,447.09 7,988.93
Net Current Assets -1,664.12 -2,540.22 -3,476.92 -935.58
Total Assets 31,851.62 29,333.46 26,615.96 24,203.86
63
Book Value (Rs) 888.57 799.68 693.91 626.52
Balance Sheet of UltraTech Cement LTD AS ON-31-
03-2008 TO 31-03-2018 3/31/2017 12 mths
Sources Of Funds
10%
13% 2%
0%
Total Share Capital
-1%
4% 10%
0%
4% 1%
2% Equity Share Capital
4% 3%
0%
1%
3% Reserves
1%
1%
1% 13%
3%
0% Networth
11% 1% 12%
Secured Loans
Unsecured Loans
Total Debt
Minority Interest
Chart Title
100%
80%
60%
40%
20%
0%
Cash and Bank…
Total CL &…
Less: Accum.…
Contingent…
Capital Work in…
Total Current…
Total Assets
Investments
Total Liabilities
Net Block
Sundry Debtors
Total Share Capital
Provisions
Gross Block
Networth
Total Debt
Inventories
Current Liabilities
Secured Loans
Minority Interest
-20%
-40%
-60%
-80%
-100%
64
Comparison of Ambuja Cement and Ultra Tech Cement:
Ambuja Cement
Ambuja Cements Ltd. (ACL) is one of the leading cement manufacturing
companies in India and commenced cement production in 1986. Initially
called Gujarat Ambuja Cements Ltd, the Company later became Ambuja
Cements Ltd. In 2006, global cement major Holcim, acquired management
control of the Company. Today, Holcim holds a little over 50% equity in ACL.
UltraTech Cement
UltraTech Cement was incorporated in 2000 as Larsen & Toubro Cement.
Later it was demerged and acquired by Grasim and was renamed as UltraTech
Cement in 2004. Today UltraTech Cement, an Aditya Birla Group Company
and a 60.3% subsidiary of Grasim, is the largest domestic cement player in the
country and the 8th largest in the world.
CURRENTVALUATIONS
ULTRATECH
ULTRATECH AMBUJA CEMENT/
CEMENT CEMENT
AMBUJA CEMENT
P/E (TTM) x 57.1 20.8 274.20%
P/BV x 4.1 2.1 198.90%
Dividend Yield % 0.3 1.7 15.90%
65
EQUITY SHARE DATA
AMBU
ULTRATE
JA ULTRATECH
CH
CEME CEMENT/
CEMENT
NT
AMBUJA
18-Mar 17-Dec
CEMENT
High Rs 4,594 291 1577.20%
Low Rs 3,774 209 1810.10%
Sales per share
Rs 1,143.80 118.8 962.60%
(Unadj.)
Earnings per share
Rs 81 9.8 827.20%
(Unadj.)
Cash flow per share
Rs 148.3 15.9 930.70%
(Unadj.)
Dividends per share
Rs 10.5 3.6 291.70%
(Unadj.)
Dividend yield (eoy) % 0.3 1.4 17.40%
Book value per share
Rs 960.7 104.1 922.90%
(Unadj.)
Shares outstanding 1,985.9
m 274.61 13.80%
(eoy) 7
Bonus/Rights/Conversi
- - -
ons
Price / Sales ratio x 3.7 2.1 173.90%
Avg P/E ratio x 51.7 25.5 202.40%
P/CF ratio (eoy) x 28.2 15.7 179.90%
Price / Book Value ratio x 4.4 2.4 181.40%
Dividend payout % 13 36.8 35.30%
Rs 496,29
Avg Mkt Cap m
1,149,009 231.50%
4
`00
No. of employees 0
19.7 NA -
Rs
Total wages/salary m
18,102 15,112 119.80%
Rs
Avg. sales/employee Th
15,960.00 NM -
66
Rs
Avg. wages/employee Th
919.8 NM -
Avg. net Rs
Th
1,130.30 NM -
profit/employee
INCOME DATA
Net Sales Rs m 314,108 235,984 133.10%
Other income Rs m 5,837 3,226 180.90%
Total revenues Rs m 319,945 239,211 133.80%
Gross profit Rs m 57,984 38,576 150.30%
Depreciation Rs m 18,479 12,195 151.50%
Interest Rs m 12,328 2,058 599.10%
Profit before tax Rs m 33,015 27,550 119.80%
Minority Interest Rs m 0 128 0.00%
Prior Period Items Rs m 0 0 -
Extraordinary Inc (Exp) Rs m 0 0 -
Tax Rs m 10,770 8,229 130.90%
Profit after tax Rs m 22,245 19,449 114.40%
Gross profit margin % 18.5 16.3 112.90%
Effective tax rate % 32.6 29.9 109.20%
Net profit margin % 7.1 8.2 85.90%
BALANCE SHEET DATA
Current assets Rs m 114,685 110,766 103.50%
Current liabilities Rs m 113,389 88,677 127.90%
Net working cap to sales % 0.4 9.4 4.40%
Current ratio x 1 1.2 81.00%
Inventory Days Days 38 38 99.90%
Debtors Days Days 26 14 179.70%
Net fixed assets Rs m 412,265 215,654 191.20%
Share capital Rs m 2,746 3,971 69.10%
"Free" reserves Rs m 261,066 202,751 128.80%
Net worth Rs m 263,812 206,722 127.60%
Long term debt Rs m 158,635 241 65768.90%
Total assets Rs m 571,577 355,004 161.00%
Interest coverage x 3.7 14.4 25.60%
Debt to equity ratio x 0.6 0 51536.40%
Sales to assets ratio x 0.5 0.7 82.70%
Return on assets % 6 6.1 99.80%
Return on equity % 8.4 9.4 89.60%
Return on capital % 10.7 14.4 74.70%
67
Exports to sales % 0 0 -
Imports to sales % 0 0 -
Exports (fob) Rs m NA NA -
Imports (cif) Rs m NA NA -
Fx inflow Rs m 5,273 46 11488.00%
Fx outflow Rs m 2,565 9,760 26.30%
Net fx Rs m 2,708 -9,714 -27.90%
CASH FLOW
From Operations Rs m 38,874 34,339 113.20%
From Investments Rs m 18,570 -7,788 -238.40%
From Financial Activity Rs m -57,302 -10,147 564.70%
Net Cashflow Rs m 184 16,635 1.10%
SHARE HOLDING
Indian Promoters % 61.7 0.8 7712.50%
Foreign collaborators % 0 50.5 -
Indian inst/Mut Fund % 5.2 9.4 55.30%
FIIs % 20.4 30.6 66.70%
ADR/GDR % 1.8 1.6 112.50%
Free float % 10.8 8 135.00%
Shareholders 293,227 179,823 163.10%
68
Chapter 8
SWOT ANALYSIS
69
Strength
Weaknesses
It exports cement to a limited number of countries, as compared to its
global competitors.
It deals primarily with cement and concrete while many global players
manufacture other construction materials along with cement to
provide greater portfolio to the customers.
Opportunities
Ambuja cements is planning to buy share from Holcim that would
strengthen the brand as a Indian Brand and It would help the brand to
grow in the country as Indian customers would psychologically relate
to the brand now.
It can increase its global exports business by mergers and acquisitions.
The government is promoting Manufacturing sector in India which is a
huge opportunity for Ambuja cements and other manufacturing
companies.
70
Threats
It is facing strong competition from Indian and Global players in
cement sector.
If it tries to increase its global operations, it would face tough
competition and moreover, each country has different policies that
might hamper its expansion.
Chapter 9
Conclusion
71
Conclusion:
With the increasing changes in the industries and complexities of businesses,
costing becomes important for managements to take appropriate decisions,
planning and control and having effective cost management measures in
place.
73
decisions have been taken on ad hoc basics. It seems from the analysis of data
of selected sample companies that in cement industry by and large there is no
proper working capital management. Every decision has been left out to
market forces without working out cost benefit analysis or applying various
formulas suggested by experts. This is very much evident from wide variations
in various ratios from company to company and in different years for the same
company.
The cash management is very faulty as a result of which cash ratio to total
current assets and to sales are very high for the cement industry. With the
above general observations one can draw number of conclusion about the
economic health of the industry and various aspects of working capital.
The industry at present is passing through buyers phase of the market. This
state of cement industry is expected to continue in near future too because
new capacity is being created faster than growth in demand. This has increased
competition and working capital management has become more difficult. On
the one side customers have to be accommodated to compete in the market
but at the same time all possible economies must be achieved in management
of cash, receivables and inventory to maintain and improve profitability.
74
Chapter 10
BIBLIOGRAPHY
75
www.google.co.in/=about+ambuja&oq=about+ambuja&aqs
www.google.co.in/=hestory+of+ambuja&oq=hestory+of+ambuja&aqs
www.google.co.in/=taxation+of+india
www.google.co.in/=Costing+of+company&oq=Costing+of+company&aqs
www.google.co.in/=industry+of+ambuja+cement&oq=industry+of+ambuja+ce
ment&aqs
76