OVERVIEW OF CEMENT INDUSTRY

Cement Industry has grown much in last ten years. This sector has recorded a CAGR of 8%, against the world cement industry average of 3.5% and Chinas cement industry growth rate of 7.2%. Today cement industry has become the second largest cement producer in the world after China. Domestic cement demand growth has surpassed the economic growth rate for the past three years. Cement demand in the country grows at roughly 1.5 times the GDP growth rate. The industry had a turnover of around US$ 7.8 billion in 2003-04 The key drivers for cement demand are real estate sector, infrastructure and industry expansion projects. Among these real estate sector is the key driver of cement demand. The demand for cement is closely related to the growth in the construction sector. Consequently, cement demand has been posting a healthy growth rate of around 8 per cent since 1997-98, Cement is bulky commodity and cannot be easily transported over long distances making it a regional market place, with the nation being divided into five regions. Each region is characterized by its own demand-supply dynamics. Over the past few years the cost of cement production has grown at a CAGR of 8.4%. The government has considered spending more than US $500 billion on infrastructure in the 11th five year plan. Apart from this railways, urban infrastructure, ports, airports, IT sector, organized retailing, malls and multiplexes will be the main sectors driving the demand of cement in the country.

Pre Independence The first endeavor to manufacture cement dates back to 1889 when a Calcutta based company endeavored to manufacture cement from Argillaceous (kankar). But the first endeavor to manufacture cement in an organized way commenced in
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Madras. South India Industries Limited began manufacture of Portland cement in 1904.But the effort did not succeed and the company had to halt production. In 1914 that the first licensed cement manufacturing unit was set up by India Cement Company Ltd at Porbandar, Gujarat with an available capacity of 10,000 tons and production of 1000 installed. The First World War gave the impetus to the cement industry still in its initial stages. The following decade saw tremendous progress in terms of manufacturing units, installed capacity and production. This phase is also referred to as the Nascent Stage of Indian Cement Industry.

Post-Independence The growth rate of cement was slow around the period after independence due to various factors like low prices, slow growth in additional capacity and rising cost. The government intervened several times to boost the industry, by increasing prices and providing financial incentives. In 1956, the price and distribution control system was set up to ensure fair prices for both the manufacturers and consumers across the country and to reduce regional imbalances and reach self-sufficiency.

Period of Restriction (1969-1982) The cement industry in India was severely restrained by the government during this period. Government hold over the industry was through both direct and indirect means. In 1977 the government authorized higher prices for cement manufactured by new units or through capacity increase in existing units. But still the growth rate was below par. In 1979 the government introduced a three tier price system. Prices were different for cement produced in low, medium and high cost plants. Rise in input cost, reduced profit margins meant the manufacturers could not allocate funds for increase in capacity.
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Partial Control (1982-1989) The Government of India introduced a quota system in 1982. A quota of 66.60% was imposed for sales to Government and small real estate developers. For new units and sick units a lower quota at 50% was affected. The remaining 33.40% was allowed to be sold in the open market. These changes had a desired effect on the industry. Profitability of the manufacturers increased substantially, but the rising input cost was a cause for concern.

Post Liberalization In 1989 the cement industry was given complete freedom, to gear it up to meet the challenges of free market competition due to the impending policy of liberalization. In 1991 the industry was de licensed. Cement is one of the core industries which plays a vital role in the growth and expansion of a nation. It is basically a mixture of compounds, consisting mainly of silicates and aluminates of calcium, formed out of calcium oxide, silica, aluminum oxide and iron oxide. The demand for cement depends primarily on the pace of activities in the business, financial, real estate and infrastructure sectors of the economy. Indian cement industry is globally competitive because the industry has witnessed healthy trends such as cost control and continuous technology up gradation.

Key Drivers of Cement Industry

Buoyant real estate market

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Increase in infrastructure spending Various governmental programs like National Rural Employment Guarantee Low-cost housing in urban and rural areas under schemes like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Indira Aawas Yojana

Consumption Growth during 2008-09 Even during the economic slowdown in 2008-09, growth in cement demand remained at a healthy 8.4%. In the current fiscal (2009-10) cement consumption has shot up, reporting, on an average, 12.5% growth in consumption during the first eight months with the growth being aided by strong infrastructure spending, especially from the govt sector. The trends in all-India consumption and the growth in consumption in the major cement-consuming States over the last five years are presented in below table: Growth in Cement Demand Figures in Million Tones
2008-09 Domestic Consumption Year-on-Year Growth (%) 178 8.4 Apr-Nov 09 100 12.5

PRODUCT PROFILE OF INDUSTRY

COMPOSITION OF CEMENT

Cement is a mixture of limestone, clay, silica and gypsum. It is a fine powder which when mixed with water sets to a hard mass as a result of hydration of the constituent compounds. It is the most commonly used construction material. DIFFERENT TYPES OF CEMENT There are different varieties of cement based on different compositions according to specific end uses namely Ordinary Portland Cement, Portland Pozolona Cement, Portland Blast Furnace Slag Cement, White Cement and Specialized Cement. The basic difference lies in the percentage of clinker used. Ordinary Portland Cement (OPC) OPC, popularly known as grey cement, has 95% clinker and 5% of gypsum and other materials. It accounts for 70% of the total consumption. White cement is a variation of OPC and is used for decorative purposes like rendering of walls, flooring etc. It contains a very low proportion of iron oxide. Portland Pozolona Cement (PPC) PPC has 80% clinker, 15% Pozolona and 5% gypsum and accounts for 18% of the total cement consumption. Pozolona has siliceous and aluminous materials that do not possess cementing properties but develop these properties in the presence of water. It is cheaply manufactured because it uses fly ash/burnt clay/coal waste as the main ingredient. It has a lower heat of hydration, which helps in preventing cracks where large volumes are being cast.

Portland Blast Furnace Slag Cement (PBFSC) PBFSC consists of 45% clinker, 50% blast furnace slag and 5% gypsum and accounts for 10% of the total cement consumed. It has a heat of hydration

even lower than PPC and is generally used in construction of dams and similar massive constructions. White Cement OPC: clinker using fuel oil (instead of coal) and with iron oxide content below 0.4% to ensure whiteness. Special cooling technique is used. It is used to enhance aesthetic value, in tiles and for flooring. White cement is much more expensive than grey cement. Specialized Cement Oil Well Cement: is made from clinker with special additives to prevent any porosity. Rapid Hardening Portland cement: It is similar to OPC, except that it is ground much finer, so that on casting, the compressible strength increases rapidly. Water Proof Cement: OPC, with small portion of calcium stearate or non-saponifibale oil to impart waterproofing properties.

MANUFACTURING PROCESSES
There are two general processes for producing clinker and cement in India: a dry process and a wet process. In general, the dry process is much more energy efficient than the wet process, and the semi wet somewhat more energy efficient than the semi-dry process. The semi-dry process has never played an important role in Indian cement production and accounts for less than 0.2% of total production. Over the last decade, increased preference is being given to the energy efficient dry process technology so as to obtain a cost advantage in a competitive market. In 1960 around 94% of the cement plants in India used wet process kilns. These kilns have been phased out over the past 46 years and at present 96.3% of the kilns are dry process, 3% are wet and only 1% are semidry process. Dry process kilns are typically larger with capacities in India ranging from 300- 8,000 tons per day or tpd

(average of 2,880 tpd). While capacities in semi-dry kilns range from 600-1,200 tpd and capacities in wet process kilns range from 200-750 tpd (average 425 tpd).

DRY PROCESS In dry process production, limestone is crushed to a uniform and usable size, blended with certain additives (such as iron ore and bauxite) and discharged on to a vertical roller mill where the raw materials are ground to fine powder. An electrostatic
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precipitator deducts the raw mill gases and collects the raw meal for a series of further stages of blending. The homogenized raw meal thus extracted is pumped to the top of a preheater by air lift pumps. In the preheaters the material is heated to 750C. Subsequently, the raw meal undergoes a process of 8 alcinations in a precalcinator. The remaining 8 alcinations and clinkerization reactions are completed in the kiln where the temperature is raised to 1,450-1,500C. The clinker formed is cooled and conveyed to the clinker silo from where it is extracted and transported to the cement mills for producing cement. For producing OPC, clinker and gypsum are used and for producing PPC, clinker, gypsum and fly ash are used. WET PROCESS The wet process differs mainly in the preparation of raw meal where water is added to raw materials to produce slurry. The chemical composition is corrected and the slurry is then pumped to the kiln where evaporation of moisture, preheating, calcinations and sintering reaction takes place. The clinker is cooled and transported, as in the case of other plants, with suitable conveyors to cement mills for grinding. The wet process is more energy intensive, and thus becomes expensive when power and energy prices are high.

DEMAND DETERMINATION OF CEMENT INDUSTRY

India has become the second largest cement producing country in the world, the gap between the largest producers. China and the second largest producer are quite
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wide. China produces 1400 million tonnes per year and India produces a mere 183 million tonnes. It is noted that there is an interlinking relation between cement consumption and the growth of economy. The country is on a high growth track and the focus now is on the development of the infrastructure facilities such as, highways, ports, canals, bridges, power-houses etc. The Committee has been given to understand that the performance of cement industry has been commendable even during the global economic slowdown. China besides being the largest producer of cement in the world is also the largest consumer of cement in the world. It manufactures and consumes around 50% of global output. The Commission also stated that the per capita consumption in China is around 1040 Kg, whereas in India it is 178 Kg. NCAER observed that in India, most of the infrastructure-related cement consumption falls under the category of departmental and non-departmental enterprises, which constituted about 21 per cent of total cement consumption during 2001-02. Government and defence account for another 18 per cent, and housing for about 42 per cent. As against this, according to the study, about 42 per cent of cement in Japan goes to make buildings and another 40 per cent towards infrastructure-related activities. Cement for making roads and bridges in Japan accounts for 10.5 per cent as compared to an almost minuscule share in India. This means about seven million tonnes of cement is used for making roads in Japan on an annual basis.

According to a study of the Tariff Commission, demand for cement can be categorized into Housing-64%, industrial-6%, Commercial & Institutional-13% and infrastructure-17%. 2.6 The annual domestic demand of cement, the annual production of cement and the export of cement during the last five years is as given below:-

(In Million Tonnes)

Year Demand of Cement 135.56 149.34 164.03 177.98 196.12 Production of Cement 141.81 155.64 168.31 168.61 201.00 Export of Cement 5.98 5.89 3.65 3.20 2.27

2005-06 2006-07 2007-08 2008-09 2009-10

It would be seen from the above table that the demand for cement has been constantly increasing and the demand projected by the Working Group is likely to touch 290 million tonnes by 2012-13.

INDUSTRY STRUCTURE AND NATURE OF COMPETITION

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INSTALLED CAPACITY India is the worlds second largest cement producing country after China. The industry is characterized by a high degree of fragmentation that has created intense competitive pressure on price realizations. Spread across the length and breadth of the country, there are approximately 130 large cement plants owned by around 52 companies and 365 mini-cement plants with an installed capacity of around 172.08mtpa as on June 2007. Large cement plants accounted for 94% of the total installed capacity in India. CAPACITY CLUSTERS Cement and its raw materials namely coal and limestone, are all bulky items that make transportation difficult and uneconomical. Given this, cement plants are located close to both, sources of raw materials and markets. Most of limestone deposits in India are located in Madhya Pradesh, Rajasthan, Andhra Pradesh, Maharashtra and Gujarat, leading to concentration of cement units in these states. This has resulted in clusters. There are eight such clusters in the country and account for 81% of the cement capacity. There is a trade-off between proximity to markets and proximity to raw materials due to which some cement plants have been set up near big markets despite lack of raw materials.

PLAYERS IN CEMENT INDUSTRY

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 MAJOR PLAYERS IN THE NORTH TOTAL SALES for the year 2009 = Rs. 33589.02 Cr Name of the Company ACC Ambuja Cem. Birla Corpn. J K Cements JK Lakshmi Cem. Shree Cement UltraTech Cem. Net Sales in Percentage Cr. (2009) 7,942.66 7,040.70 1,790.19 1,664.42 1,223.90 2,716.46 6,385.50 (%) 23.64659642 20.96131414 5.329688095 4.955250257 3.643750249 8.08734521 19.0106767

Mark S et hare
ACC others, 14.37 UltraTech Cem ., 19.01 ACC, 23.65 Am buja Cem . Birla Corpn. Am buja Cem ., 20.96 J K Cements JK Lakshmi Cem. Shree Cement Shree Cem ent, JK Lakshmi 8.09 ents, 4.96 Cem., 3.64 J K Cem UltraTech Cem . others Birla Corpn., 5.33

MAJOR PLAYERS IN SOUTH TOTAL SALES for the year 2009 = Rs. 11266.01 Cr Name of the Net in
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Sales Percentage (%)

company Andhra Cements Chettinad Cement Dalmia Cement India Cements Madras Cement Rain Commodities zuari Cements

Cr.(2009) 369.36 1,137.67 1,758.68 3,358.34 2,530.90 1,111.01 438.72 3.278534281 10.09825129 15.61049564 29.8094889 22.46491881 9.861610277 3.894191466

others, 4.98 zuari Cements, Rain 3.89 Commodities, 9.86

Market S hare
Andhra Cements, 3.28 Chettinad Cement, 10.09 Andhra Cements Dalmia Cement, 15.61 Chettinad Cement Dalmia Cement India Cements India Cements, 29.81 Madras Cement Rain Commodities zuari Cements others

Madras Cement, 22.46

DISTRIBUTION CHANNELS OF THE SECTOR

Companies invariably hire agents or transport cements to own or government warehouses either via roadway or railways. In case of exports, cement reaches the nearest port via roadways or railways and is then transferred to the importing country. Domestically, from agents or warehouses the cement is transported to the dealers/distributors and in turn to sub dealers who finally sell it to the end users. There may or may not be physical ownership of goods. In the second case, dealers
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and sub-dealers take order from buyers and place it to the companies, co ordinate and monitor the timely dispatch of said orders

KEY ISSUES AND CURRENT TRENDS IN CEMENT INDUSTRY

KEY ISSUES Residential segment - The main application areas are repair works, white cement based tiles and paints, white cement to bridge the gap between tiles and make floorings.

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Commercial segment The main application areas in this segment are the same as in the residential segment. Industrial segment The main application areas in this segment are white cement based tiles, floorings and pavers in the office/ factory premises. White cement based paints are also used extensively by this segment for the exteriors of the buildings. White cement based flooring is getting increasingly popular in industrial establishments as it gives the desired aesthetics while being less expensive than most tiles. Public buildings Extensive use of white cement is yet to be seen in public buildings. The main application areas are the same as those in the industrial segment. The Residential and Commercial segment is envisaged to consume around 70% of the total white cement consumption in India, followed by the Industrial and Public buildings segment. The main drivers for each of these segments are the need for aesthetics and lower price. The usage of white cement in pre-fabrication works and even architectural works is low. Thus, there are no RMC producers who supply white concrete.

Cement Types The IS standard only specifies that the compressive strength should not be less than 90% of that of 33 grade of OPC and the whiteness should be a minimum of 70%. Prices White cement is priced at around 3-4 times that of grey cement. Prices are in the range of Rs 350-425 per 50 kg bag.

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One of the major reasons for the higher price is attributed to the fact that the 2 main white cement players are located in Rajasthan and the transport costs to consuming centers located all over India, are quite high. Packaging White cement is sold in packed bags. These include packaging sizes of 1 kg, 2 kg, 5 kg, 10 kg, 25 kg and 50 kg bags. Reasons for lower usage in India The relatively low popularity of white cement in India is possibly due to the following reasons: The Indian market is very price conscious. In India, white cement costs 3-4 times more than grey cement. In most developed countries the price differential is around 2-2.5 times. The purchasing power of the end user is significantly lower as compared to the purchasing power of the same segment say in France, Italy or Spain. India has cheaper labor. In France, Italy and Spain, labour is very expensive. Thus pre-fabricated products are more popular there. In India, since labour is used extensively, the labor/ mason/ contractor has a strong role to play in deciding the material to be used.

CURRENT TRENDS The Indian cement industry is the second largest in the world. It comprises of 140 large and more than 365 mini cement plants. The industry's capacity at the beginning of the year 2009-10 was 217.80 million tonnes. During 2008-09, total cement consumption in India stood at 178 million tonnes while exports of cement and clinker amounted to around 3 million tonnes. The industry occupies an important place in the national economy because of its strong linkages to other sectors such as construction, transportation, coal and power. The cement

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industry is also one of the major contributors to the exchequer by way of indirect taxes. Cement production during April to January 2009-10 was 130.67 million tonnes as compared to 115.52 million tonnes during the same period for the year 2008-09. Dispatches were estimated at 129.97 million tonnes during April to January 200910 whereas during the same period for the year 2008-09, it stood at 115.07 million tonnes. Over the last few years, the Indian cement industry witnessed strong growth, with demand reporting a compounded annual growth rate (CAGR) of 9.3% and capacity addition a CAGR of 5.6% between 2004-05 and 2008-09. The main factors prompting this growth in demand include the real estate boom during 2004-08, increased investments in infrastructure by both the private sector and Government, and higher Governmental spending under various social programs. With demand growth being buoyant and capacity addition limited, the industry posted capacity utilization levels of around 93% during the last five years. Improved prices in conjunction with volume growth led to the domestic cement industry reporting robust growth in turnover and profitability during the period 2005-09.

LITERATURE REVIEWS

Literature Review shows the past data or analysis of the comparative analysis on the financial performance done by various other people or Institute or Government. Literature review shows the past and current trends evolving in the industry.

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 GHOSHS ARTICLE (1962)

In Ghoshs Article an attempt has been made perhaps for the first time to examine the relationship between employment, earning and productivity of labor in the industry.

Chandak (2008)

He establishes a strong correlation between GDP and cement industry growth, suggesting also that the Indian cement industry has contributed 8 percent to economic development in the country. He also underscore the point that companies must continue to emphasize on reduction of costs through enhanced productivity and cites the example of increased use of the sea route for transportation. Moreover he forecasts consolidation across a fragmented industry, as companies seek economies of scale and look to expand their foot print across regions. He also questioned the ability of the industry to weather the global economic recession and slowdown in the Indian housing market solely through increased infrastructure spending by the government.
Arora and Sarkar (2008)

The committee sought to analyze the good performance of the cement industry over the past few years for collusive behaviour. The research discussed characteristics of an ideal cartel detection policy and structural and behavioural cartel detection methods. Parameters that were studied included the firm concentration index, region-wise production & consumption, capacity utilization and cost to sales ratio amongst a few. Their analysis on these metrics appeared to demonstrate that the sudden surge in the price of the cement over the past few years was neither due to a demand-supply mismatch nor a sudden increment in the cost of producing cement. They
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contended that the cement industry likely engaged in illegitimate collusion and they suggested that the observed decline in cement price after the Government announcement to import cement was more evidence of a cartel in the industry.
Katja Schumacher and Jayant Sathaye (1999)

The committee contributes to the discussion on productivity growth and the role of technological change within the context of global environmental change. Furthermore, different economic and policy settings and efficiencies within the sector have been discussed. They have examined the ongoing changes in the cement industry structure. It compares world best technologies to Indian technologies and identifies potentials and barriers to the achievement of efficiency improvements. A scenario analysis highlights the energy efficiency and productivity improvements that could be achieved by employing more efficient technologies

OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE OF THE STUDY

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 The primary objective of the study is to make a comparative study for the financial performance of the cement industry of India, taking two cement companies:

AMBUJA CEMENT LTD. BINANI CEMENT LTD.

SECONDARY OBJECTIVES OF THE STUDY

To analyze the evolution of cement industry. To estimate the level and analyze the trends in the cement industry. To assess the profitability, liquidity and other financial ratios, efficiency ratios, leverage analysis of the firms when compared to the industry.

To find out the efficiency and economic size of cement manufacturing firms.

PESTEL ANALYSIS OF CEMENT INDUSTRY

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Pestel analysis is a useful tool for understanding the big picture of operating and takes advantage of opportunities. Pest analysis includes political, environmental, social and technological factors which affects both the companies as well as industry.
POLITICAL

The price of cement is primarily controlled by the coal rates, power tariffs, railway tariffs, freight, royalty and cess on limestone. Interestingly, government controls all of these prices. Government is also one of the biggest consumers of the cement in the country. Most state governments, in order to attract investments in their respective states, offer fiscal incentives in the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff for 5 years, while Gujarat offers exemption from electric duty.
ECONOMIC

The industry is on the boom, with a lot of government infrastructure and housing projects under construction. The export segment of the industry is expected to grow again on account of various infrastructure projects that are being taken up all over the world and numerous outstanding cement plants coming up in near future in the country.
SOCIAL

The cement industry in India consists of both the organized sector and the unorganized sector. Organized sector comprises of the well-known cement manufacturing companies while the main players of the unorganized sector are the regional and local cement-producing units in various states across the country. Indian consumers prefer buying branded cement like ULTRATECH, JAYPEE CEMENT, LAFARGE CEMENT etc. A population of more than 100 billion people, it is expected that cement industry will create another 25 lakhs jobs in the next 4-5 years.
TECHNOLOGY

The Government of India plans to study and possibly acquire new technologies from the cement industry of world. The government is discussing technology transfer in
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the field of energy conservation and environment protection to help improve efficiency of the Indian cement industry. Cement industry has made tremendous strides in technological up-gradation and assimilation of latest technology. At present 93% of the total capacity in the industry is based on modern and environmentfriendly dry process technology.

PORTERS FIVE FORCES MODEL FOR CEMENT INDUSTRY

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OVERVIEW OF THE COMPANIES

AMBUJA CEMENT LTD.

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 HISTORY

Ambuja Cements Ltd. (ACL) is one of the leading cement manufacturing companies in India. The Company, initially called Gujarat Ambuja Cements Ltd., was founded by Narotam Sekhsaria in 1983 with a partner, Suresh Neotia. Sekhsarias business acumen and leadership skills put the company on a fast track to growth. The Company commenced cement production in 1986. The global cement major Holcim acquired management control of ACL in 2006. Holcim today holds little over 46% equity in ACL. The Company is currently known as Ambuja Cements Ltd.

VISION AND MISSION

VISION STATEMENT- To be the most admired and competitive industry in our industry

MISSION STATEMENT- Delighted Customers Inspired Employees Enlightened Partners Enriched Society Loyal Shareholders Healthy Environment

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 Executive Management Team

Mr. Onne van der Weijde, Managing Director Mr. B.L. Taparia, Company Secretary & Corporate Sustainability Mr. Sanjeev Churiwala, CFO Mr. Ghassan Broummana, Head - Technical Support Services Mr. S.N. Toshniwal - Business Head (East) Mr. J.C. Toshniwal - Business Head (North) Mr. Ajay Kapur - Business Head (West & South) Ms. Meenakshi Narain - Joint President (HR) Mr. Shakti Arora, Head - Central Purchase Officer

Officer

Registered Offices

Corporate Office Elegant Business Park, MIDC Cross Road 'B', Off Andheri-Kurla Tel: 022 40667000

Road. Andheri (E), Mumbai 400059

West and South Po. Ambuja Nagar, Tal. Kodinar, Dist. Junagadh, Gujarat - 362715 Tel : 02795 - 237000 / 220214 / 221491 Behind Q1 Berth, Mattancherry Wharf, Willingdon Island, Cochin682003 Tel : 0484 - 2118510 / 6453237

North

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Malout Road, Near Guru Nanak Dev Thermal Plant, Bathinda 151002, Punjab Tel : 0164 - 2273487 / 2273850 / 51 East PO: Rawan, Tehsil: Baloda Bazar, Dist. Raipur 493 331, Chhattisgarh. Tel : 07727 - 220010 15

PRODUCTION AND MANUFACTURING Over 25-30% of the production cost of cement is power. It quickly became clear to us that if we were to run an iconic company, we needed to keep power costs to the minimum. So we focused our efforts on improving efficiency at our kilns to get more output for less power. Next we set up a captive power plant at a substantially lower cost than the national grid. We sourced higher quality coal from South Africa and better furnace oil from the Middle East.

At every step we found that new and innovative solutions could be found if we kept an open mind. Our sea-borne bulk cement transportation facilities have meanwhile brought many coastal markets (domestic as well as export markets) within easy reach. This has

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been a major factor in making Ambuja Cement India's largest exporter of cement consistently for the last fifteen years.

Cement Plants

Plant Capacity (MN tons)

Gujarat Himachal Pradesh/ Punjab Rajasthan Chhattisgarh/ West Bengal Maharashtra Uttar Pradesh 6.70 6.10 2.80 4.30 3.60 1.50

Port Terminal Muldwarka, Gujarat: All weather port, 8 kms from our Ambujanagar plant. Handles ships with 40,000 DWT. Is also equipped to export clinker and cement and import coal and furnace oil. A fleet of seven ships with a capacity of 20500 DWT ferries bulk cement to the packaging units. Bulk Cement Terminal Surat: Bulk Cement Terminal with a storage capacity of 15,000 tonnes has bulk cement unloading facility. A Grinding unit has also become fully operational at this location. Panvel: Strategically located near India's biggest cement market, has a storage capacity of 17,500 tonnes and a bulk cement unloading facility. Cochin: The latest addition to our configuration of Bulk Cement Terminal

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BINANI CEMENT LTD.

HISTORY Binani Cement Limited is the flagship subsidiary of Binani Industries Limited (BIL), representing the Braj Binani Group. The cement business started operations in 1997, in Sirohi District, Rajasthan with a 1.65 MTPA integrated cement facility and a 25 MW captive power plant with technological support from F. L. Smidth, Denmark and Larsen & Toubro Ltd. The capacity was raised to 2.25 MTPA in 2005 through advanced in-house R&D and de-bottlenecking and the Company was also certified to ISO 9001, ISO 14001 and OHSAS 18001 within a short span from commencement of operation. This is an achievement that clearly illustrates the management's commitment to quality, efficiency, environment, health and safety. In 2008, a split-grinding unit at Neem Ka Thana was commissioned, boosting the capacity in India to 6.25 MTPA. VISION AND MISSION

To achieve leadership status in the core sector, across the

world.

To employ frontline technologies to meet the highest global

standards in products and services.

To set benchmarks in manufacturing and environmental

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performance.

To be a customer-first, quality-obsessed, socially sensitive

corporate entity.

To achieve breakthroughs in manufacturing based on intensive

R&D.

To ensure well-being of all our stake-holders; upholding such

values as integrity, trust, concern, empathy and commitment

EXECUTIVE MANAGEMENT TEAM

Mr. Braj Binani -The Promoter and Chairman.

Ms. Nidhi Singhania - Additional Director. Mr. S. Padmakumar Board of Director. Dr. V.C.Shah - Independent Director. Mr. A. C. Chakrabortti - Independent Director. Mr. N. C. Singhal - Independent Director. Mr. Sunil Sethy - Additional Director.

Mr. Jitender Balakrishnan - Additional Director.

REGISTERED OFFICES Mumbai Corporate Office

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Mercantile Chambers, 12, J.N. Heredia Marg, Ballard Estate, Mumbai - 400001. Tel: +91 - 22 - 22690506-10 / 22640040-44 Fax: +91 - 22 - 22690003 / 22640045 Email: mumbai@binani.net Works (Factory) P. O. Binanigram, Tehsil Pindwara - 307031. Dist. Sirohi (Rajasthan). Tel: +91 - 2971 - 235005 / 12 Fax: +91 - 2971 - 235020 Email: bcl@binanicement.co.in

Marketing Offices Ahmedabad 705/706, Sakar-II, Ellis Bridge, Ahmedabad - 380 006. Tel: +91 - 79 - 26579027 / 26589025 / 26 Fax: +91 - 79 - 26576769 Email: binaniad1@sancharnet.in / binaniahd@eth.net New Delhi 231-233-235, Ansal Chamber-II, 6-Bhikaji Cama Place, New Delhi-110066. Tel: +91 - 11 - 26761111 / 26161020 Fax: +91 - 11 - 26761222 Email: bindelhi@vsnl.com /clnewdelhi@airtelmail.in Jaipur "Miracle",
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22, Shubham Enclave, Parivahan Marg, C-Scheme, Jaipur 302001 Tel: +91 - 141 - 4134300 / 4124300 Fax: +91 - 141 - 4134329 Email: binjpur@sancharnet.in / binanijpr@yahoo.co.in

PRODUCTION AND MANUFACTURING Production Binani Cement Ltd. has been using carbon neutral 'bio-fuels' in its production processes to reduce the impact on environment by way of substantial reduction in CO2 emissions. Similarly, continuous increase in utilization of fly ash also enables the Company to positively contribute its share in reversing the effects of climate change. The Company has a robust raw material consumption system in place ensuring that its limestone reserves at Amli and Thandiberi lasts for decades. Manufacturing Process Major plant & machinery consists of One Cement Mill (180 TPH capacity), One Electronic Packer (240 TPH capacity), Clinker, Fly Ash, Cement storage silos etc. The unit is licensed to manufacture Ordinary Portland Cement (OPC 43 and 53 Grades) and Portland Pozzolana Cement (PPC). Currently it is producing 100% PPC for which Clinker is supplied from the parent unit, i.e.; Binani Cement Limited, Binanigram while Fly Ash is sourced from the Thermal Power plants located at NTPC, Dadri (Haryana), Suratgarh (Rajasthan), Bhatinda etc.

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The unit, during the year 2009-10, produced 1.12 million tons of cement (PPC).

Cement Plants Sirohi Plant The Binani Cement plant was set up in April 1997 with an initial production capacity of 1.65 MTPA cement. Installed capacity of the Plant was increased to 4.85 MTPA through modifications and de-bottlenecking. Clinker manufacturing capacity was further increased to 2.7 Million.

Clinker Grinding Unit, Neem Ka Thana Clinker Grinding Unit, Neem Ka Thana is located at village Bhagega, Tehsil Neem Ka Thana, District Sikar (Rajasthan). The unit commenced its commercial production in March, 2008 with an installed capacity of 1.40 million TPA cement grinding.

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PRODUCT PROFILE OF THE COMPANIES

AMBUJA CEMENT LTD.

Portland Pozzolana cement (PPC) Ordinary Portland cement (OPC)

BINANI CEMENT LTD.

Grade 43 Grade 53 PPC (Portland Pozzolana Cement)

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FINANCIAL ANALYSIS

RATIO ANALYSIS
Ratio Analysis includes various ratios like Profitability Ratio, Liquidity Ratio and many more ratios.

1. PROFITABILITY RATIOS
Operating Profit Margin

The operating profit margin ratio is a measure of overall operating efficiency, incorporating all of the expenses of ordinary, daily business activity. The calculation is: EBIT/Net Sales= _____ Particulars Ambuja cement Ltd. Binani cement Ltd 2006 34.71 27.39 2007 36.20 34.48
34

2008 28.85 35.38

2009 27.07 21.43

2010 25.18 31.15

 Interpretation Thus, in the year 2008 Ambuja cement Ltd operating ratio was 28.85%. It decreased by the 25.18% in the year 2010. Similarly, Binani cement Ltd operating ratio also decreased from 35.58% in 2008 to 31.15% in 2010. This is because the demand for the cement has been gradually decreased by the year 2010.

Gross Profit Margin The ratio looks at how well a company controls the cost of its inventory and the manufacturing of its products. The larger the gross profit margin, the better for the company. The calculation is: Gross Profit/Net Sales = ____%. Particulars Ambuja cement Ltd. Binani cement Ltd 2006 33.74 21.58 2007 36.26 30.31 2008 24.65 29.60 2009 22.87 16.06 2010 19.93 26.22

Interpretation The Gross Profit Margin for Ambuja cement Ltd in the year 2009 was 23%. It decreased to 19.93% due to increasing cost of inventory by the company. Similarly, Binani cement ltd gross profit margin increased from 16.06% in the year 2009 to 26.22% in the year 2010 due to reduction in inventory cost. Net Profit Margin The net profit margin measures profitability after consideration of all expenses including taxes, interest, and depreciation. The calculation is: Net Income/Net Sales = _____%.
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Particulars Ambuja cement Ltd. Binani cement Ltd

2006 23.86 10.73

2007 30.53 14.03

2008 22.11 18.12

2009 16.78 7.22

2010 16.84 15.13

Interpretation The net profit margin of Ambuja cement in the year 2006 is 23.86% which increased to 30.53% in 2007 due to heavy amount of accumulated depreciation. While, the net profit margin of the Binani cement in continuously increasing. 2. LIQUIDITY RATIOS Current Ratio The current ratio show how many times over the firm can pay its current debt obligations based on its assets. The formula is: Current Ratio = Current Assets/Current Liabilities. Particulars Ambuja cement Ltd. Binani cement Ltd 2006 1.08 2.32 2007 1.03 0.85 2008 1.26 0.78 2009 0.89 0.62 2010 1.07 0.92

Interpretation The current ratio of the Ambuja cement in the year 2010 is 1.07 times which means company can pay its current obligations easily. While, Binani cement current ratio in the year 2006 was 2.32% which heavily decreased in 2007 by 0.85%. the reason is that company has invested heavy amount of money in the net current asset. Quick Ratio or Acid Test Ratio

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It looks at how well the company can meet its short-term debt obligations without selling their inventories. The formula is the following: Quick Ratio = Current Assets-Inventory/Current Liabilities. Particulars Ambuja cement Ltd. Binani cement Ltd 2006 0.70 2.61 2007 0.64 0.62 2008 0.74 0.49 2009 0.57 0.36 2010 0.75 0.68

Interpretation

The quick ratio of the Ambuja cement is high in the year 2010 as compared to the year 2009 i.e. 0.57 times. This is because company had reduced the inventory cost. While, Binani Cement quick ratio for the year 2006 was 2.61 times which was drastically reduced to 0.62 in the year 2007 due to high amount of current liabilities.

Debt Equity Ratio The debt equity ratio shows the extent to which long-term debt, like bonds and mortgages are used for the firm's permanent financing. The calculation for longterm debt to total capitalization is as follows: Long-term Debt/Long-term debt + Stockholder's Equity = ___% Particulars Ambuja cement Ltd. Binani cement Ltd 2006 0.25 2.06 2007 0.07 2.24 2008 0.05 1.77 2009 0.03 1.62 2010 0.01 1.46

Interpretation

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The above table shows that Ambuja Cement uses very little debt for financing their firm. While, Binani cement decreased their debt ratio form the year 2006-10 because they reduced the debt financing in their portfolio.

3. MANAGEMENT EFFICIENCY RATIO Inventory Turnover Ratio It is the number of times inventory is sold and restocked each year. If the number is high, you may be in danger of stockouts. If it is low, watch out for obsolete inventory. Inventory turnover is calculated as follows: Inventory turnover ratio = Net sales/Inventory = ____times. Particulars Ambuja cement Ltd. Binani cement Ltd
Interpretation

2006 15.41 14.71

2007 9.96 11.90

2008 7.54 15.86

2009 11.36 16.44

2010 9.19 34.25

The inventory turnover ratio for Ambuja cement in the year 2006 was 15.41 times which decreased to 9.96 times in the year 2007 due to high investment of new inventories. While, Binani cement inventory turnover ratio suddenly increased in the year 2010 due to increase in the sales revenue of the company. Debtors Turnover Ratio
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Debtors turnover looks at how fast we collect on our sales revenue or on average, how many times each year we clean up or totally collect our accounts receivable. The calculation is as follows: Debtors Turnover = Sales/Accounts Receivable = ____ times Particulars Ambuja Ltd. Binani cement Ltd
Interpretation

2006 91.70

2007 48.14

2008 33.39

2009 37.60

2010 52.58

cement

1,483.90 2,875.94 7,766.43 564,730.45

-----

The debtors turnover ratio of the Ambuja cement in the year 2006 was 91.70% which drastically decreased to 48.14% due more amounts of debtors or credit sales was done by the company. While, Binani cement debtors turnover ratio in the year 2007 was 2,875.94 which very drastically increased to 564,730.454 due to high sales revenue. But, after that in the year 2010 there is no amount of debtors recorded which is good for the company. Asset Turnover Ratio The total asset turnover ratio shows how efficiently your assets generate sales. The higher the total asset turnover ratio, the better and the more efficiently you use your asset base to generate your sales. The calculation is: Total Asset Turnover = Sales/Total Assets = _____ times Particulars Ambuja cement Ltd. Binani cement Ltd 2006 1.37 0.61 2007 1.09 0.81 2008 1.10 0.67 2009 1.15 0.94 2010 0.85 1.03

Interpretation

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The asset turnover ratio of the Ambuja cement is gradually decreasing since last five years because of continuous increase in the total assets of the company. While, the asset turnover of the Binani cement is continuously increasing since last five years due to constant increase in the net sales of the company.

AMBUJA CEMENT

PARTICULARS SALES EBIT NET ASEETS PAT NET WORTH

2010 7371.52 2074.70 6166.69 1263.61 7330.10

2009 7083.21 2104.38 5684.52 1218.37 6470.90

2008 6182.09 2252.32 4673.46 1402.27 5672.87

2007 5671.39 3018.17 4149.45 1769.10 4661.25

2006 6226.28 2272.23 3685.97 1503.25 3491.72

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DuPont Analysis (Ambuja cement) By doing DuPont Analysis one can evaluate power of a firm. It shows the combined effect of three aspects operating efficiency, financing efficiency and retention. It is a product of the PROFIT MARGIN assets turnover, gross profit margin and operating EBIT/SALES(in %) leverage. 2006 36.49 DuPont Analysis Figure
RONA=EBIT/NET ASSET 2006 2007 2008 2009 2010 0.62 0.73 0.48 0.37 0.34 2007 2008 2009 2010 53.22 36.43 29.71 28.14

ASSETS TURNOVER FINANCIAL LEVERAGE (INCOME STATEMENT) = PAT/EBIT (in %) 2006 2007 2008 ROE=PAT/NETWORTH (in%) 2006 2007 2008 2009 2010 43.05 37.95 24.72 18.83 16.87 FINANCIAL LEVERAGE (BALANCE SHEET) = NA/NW (IN TIMES) 2006 2007 2008 2009 2010 41 1.06 0.82 0.82 0.88 0.84 2009 2010 66 59 62 58 60 =SALES/NA (in times) 2006 2007 2008 2009 2010 1.69 1.37 1.32 1.25 1.20

BINANI CEMENT
PARTICULARS SALES EBIT NET ASEETS PAT NET WORTH 2010 1728.50 285.20 1515.47 90.51 579.02 2009 1857.88 597.99 1322.79 281.92 675.17 2008 1496.54 309.71 971.25 1086.67 476.40 2007 963.04 352.51 927.36 175.82 417.64 2006 678.44 236.73 907.21 95.61 301.22

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DuPont Analysis (Binani cement) By doing DuPont Analysis one can evaluate power of a firm. It shows the combined effect of three aspects operating efficiency, financing efficiency and retention. It is a product of the assets turnover, gross profit margin and operating leverage. DuPont Analysis Figure
PROFIT 2006 2007 2008 2009 2010 MARGIN 34.89 36.60 20.70 32.18 16.50 = EBIT/SALES (in %) RONA=EBIT/NET ASSET 2006 2007 2008 2009 2010 0.26 0.38 0.32 0.45 0.19

ASSETS TURNOVER FINANCIAL LEVERAGE (INCOME STATEMENT) = PAT/EBIT (in %) 2006 2007 2008 ROE=PAT/NETWORTH (In %) 2006 2007 2008 2009 2010 31.74 42.09 22.81 41.76 15.63 FINANCIAL LEVERAGE (BALANCE SHEET) = NA/NW (IN TIMES) 2006 2007 2008 2009 2010 43 3.01 2.22 2.04 1.96 2.62 2009 2010 40.39 49.88 35.09 47.14 31.74 =SALES/NA (in times) 2006 2007 2008 2009 2010 0.74 1.04 1.54 1.40 1.14

SWOT ANALYSIS OF AMBUJA CEMENT

Strength

Growth at approx. CAGR of 9% in last 5 years Growing Domestic cement consumption at approx. CAGR of 8% in last 3 years Highly Capital Incentive so difficult for small entrant Not much restriction by govt. Market consolidation taking place

Weakness

High Oil Prices, Cost of Power increase production cost Supply exceeds Production lead to competition in price Low Quality as compared to international standard but improving

Opportunity

High Mortgage Penetration -Low Interest Rates Easy loan availability for housing finance Increased investments in Infrastructure Increased govt. outlay on BHARATNIRMAN, GOLDEN QUADRILATERAL, and BRTS etc.

Threat Further Hike in Oil Prices Use of plastic engineering in construction Subprime market loss may affect

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SWOT ANALYSIS OF BINANI CEMENT

Strengths

It is having a good image and brand loyalty among consumers. Service is good. They have same price prevailing for wholesale at dealers/stockiest retailers end.

Weakness

The competitors are doing much promotional activity rather than Binani cement limited that why it facing more problems in selling of product in the market.

Lack of awareness program for consumers.

Opportunity Rapid growth is taking place in Bihar and Madhya Pradesh. People are opting for more stable structures and intensive use of cement is taking place, even government is spending heavily on infrastructure Projects. As Indian core industry is also growing at rate of nearly 10% per annum, it is having a good future. Foreign direct investment in infrastructure sector going to increase in coming years, which will increase the demand of cement. Roads are undergoing through the transformation process through which the traditional method of road building will be replaced by modern concrete roads.

Threats
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Large number of players in cement industry makes it more competitive for ACC to carefully price its product and at the same time satisfy its dealers and customers.

Players such as Jaypee Cement, Prism Cement, and Birla Samrat are eating up considerable market share. The emergence of small players in this market may increase the competition and start the malpractices, and heavy discounts to retailers. They can also influence many retailers by giving better profit margin, and other Benefits.

COMPARATIVE ANALYSIS
COMPARISION OF RETURN ON INVESTMENT
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 RETURN ON NET ASSETS PARTICULARS 2006 2007 2008 2009 2010 AMBUJA CEMENT 0.62 0.73 0.48 0.37 0.34 BINANI CEMENT 0.26 0.38 0.32 0.45 0.19

R T R O N T SE S E U N N E A ST
08 . 07 . 06 . 05 . 04 . 03 . 02 . 01 . 0 20 06 20 07 20 08 20 09 21 00 02 .6 01 .9 0 8 .3 0 2 .3 06 .2 0 8 .4 04 .5 03 .7 03 .4
A B JAC M N MU E ET B A I CM N IN N E E T

0 3 .7

Interpretation ROI in Ambuja cement in 2006 is 62% whereas in Binani cement it was 26%, in 2007, 2008, 2009 ROI of both the companies are reduces due to decreasing in the proportion of sales. But in the year 2010 the sales of the further decrease to a nominal value which is 34% and 19% respectively for the companies.

COMPARISION OF RETURN ON DuPont RETURN ON EQUITY

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PARTICULARS 2006 2007 2008 2009 2010

AMBUJA CEMENT 43.05 37.95 24.72 18.83 16.87

BINANI CEMENT 31.74 42.09 22.81 41.76 15.63

R T R O E UT EU N N Q I Y
5 0 4 5 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 0 20 06 20 07 20 08 20 09 21 00 3 .7 1 4 2 .7 4 2 2 .8 2 1 1 .8 8 3 1 .8 6 7 1 .6 5 3
A U C ME T MB JA E N B A I C ME T IN N E N

4 .0 3 5

4 .0 2 9 3 .9 7 5

4 .7 1 6

Interpretation The ROE of Ambuja cement in 2006 to 2008 is 43%, 38%, and 25% respectively which is more than Binani cement which is 32%, 42% and 23% respectively. Because the PAT of the Ambuja cement is Increases more as compare to Binani cement. While in 2009 and 2010 the ROE of Ambuja cement is 19% and 17% which is less than the Binani cement which is 42% and 16% because in this year the PAT is not that much increase as compare to previous years.

RETURN ON PROFIT MARGIN PARTICULARS AMBUJA CEMENT

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BINANI CEMENT

2006 2007 2008 2009 2010

36.49 53.22 36.43 29.71 28.14

34.89 36.60 20.70 32.18 16.50

R T R O P OI M R I E U N N R FT A GN
6 0 5 0 4 0 3 0 2 0 1 0 0 20 06 20 07 20 08 20 09 21 00 2 .7 0 1 .5 6 5 .2 3 2

3 .4 6 9 3 .8 4 9

3 .6 6

3 .4 6 3 3 .1 2 8 2 .7 9 1 2 .1 8 4
A U C ME T MB JA E N B A I C ME T IN N E N

Interpretation The Profit Margin Ratio of Ambuja cement in 2006 to 2010 is 36%, 53%, 36%, 30%, and 28% respectively which is higher than the Binani cement is 35%, 36%, 21%, 32% and17%. The reason behind this that the operating Expenses of Ambuja cement is higher as compare to Binani cement.

FINANCIAL LEVERAGE (INCOME STATEMENT) PARTICULARS AMBUJA CEMENT

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BINANI CEMENT

2006 2007 2008 2009 2010

66 59 62 58 60

40 50 35 47 32

F INANCIALL EVERAG E (INCOME S A T TEMENT)

70 60 50 40 30 20 10 0 2006 2007 2008 2009 2010 40 66 59 50 35 62 58 47
AMBUJA C EMENT

60

32

BINANI C EMENT

Interpretation The Financial leverage of Ambuja cement in 2006 to 2008 is 66%, 59% and 62% respectively which is more than the Binani cement which is 40%, 50%and 35%. This is because in this year the PAT of Ambuja cement is higher than the Binani cement. While in 2009 and 2010 the financial leverage of Ambuja is 58%, 70% which is higher than the Binani cement which is 47% and 32%.

FINANCIAL LEVERAGE (BALANCE SHEET) PARTICULARS 2006 AMBUJA CEMENT 1.06

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BINANI CEMENT 3.01

2007 2008 2009 2010

0.82 0.82 0.88 0.84

2.22 2.04 1.96 2.62

F A C LL V R G IN N IA E E A E ( AA C S E T B L N E HE )
3 .5 3 2 .5 2 1 .5 1 0 .5 0 20 6 0 20 7 0 20 8 0 2 9 00 21 00 1.06 0 2 .8 0 2 .8 0 8 .8 0 4 .8 2 2 .2 2 4 .0 1 6 .9 3.01 2 2 .6
A UJA C ME T MB E N B N C ME T INA I E N

Interpretation The financial leverage of the Ambuja cement in the year 2006 to 2010 is 1.06%, 0.82%, 0.82%, 0.88%, and 0.84% which is much low then Binani cement i.e. 3.01%, 2.22%, 2.04%, 1.96%, and 2.62%. Thus, we can say that the Binani cement is performing well than Ambuja cement.

1. COMPARISON OF PROFITABILITY RATIO

A. GROSS PROFIT MARGIN

PARTICULARS

AMBUJA CEMENT
51

BINANI CEMENT

2006 2007 2008 2009 2010

33.74 36.26 24.65 22.87 19.93

21.58 30.31 29.6 16.06 26.22

Interpretation The Gross profit margin of the Ambuja cement in the year 2007 was highest i.e. 36.26%, but it started gradually decreasing upto 19.93% last year due continuous decrease in the gross profit margin of the company. While, the Gross profit margin of Binani Cement is slowly rising from 21.58% in 2006 upto 26.22 last year. This indicates that Binani cement is working better than Ambuja cement.

B. OPERATING PROFIT MARGIN

PARTICULARS 2006 2007 2008

AMBUJA CEMENT 34.71 36.20 28.85

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BINANI CEMENT 27.39 34.48 35.38

2009 2010

27.07 25.18

21.43 31.15

OPERA TINGPROF MARGIN IT

40 35 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 34.71 27.39 36.2 34.48 35.38 28.85 31.15 27.07 21.43 25.18 AMBUJA CEMENT BINANI CEMENT

Interpretation

The Operating Profit Margin of the Ambuja cement in the year 2006 was 34.71% and that of Binani cement was 27.39%. In 2007 both the companies operating profit margin increased due to increase in profit before taxes. In last three years the operating margin of Ambuja cement decreased to 28.85%, 27.07% and 25.18% respectively due continuous increase in operating profit. In the year 2010 Ambuja cement operating profit margin is 25.18% and Binani cements operating margin is 31.15%, which shows that it is performing better than Ambuja Cement. C. NET PROFIT MARGIN PARTICULARS 2006 2007 2008 2009 2010 AMBUJA CEMENT 23.86 30.53 22.11 16.78 16.84
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BINANI CEMENT 10.73 14.03 18.12 7.22 15.13

 Interpretation The Net Profit Margin of Ambuja cement limited in the year 2006 was 23.86% which increased in the next year by 30.53% due to increase in net profit of the company. While, Binani cement net profit margin for the year 2006 was 10.72% which increased to 14.03% in next year due to increase in the sales of the company. During 2008 and 2009 both the companys net profit margin decreased to a great extent due increase in the operating expenses of the companies. In 2010 the net profit margin of Ambuja cement is 16.84% which higher than that of Binani cement i.e. 15.13%.

2. COMPARISON OF LIQUIDTY RATIOS A. CURRENT RATIO PARTICULARS 2006 2007 2008 2009 2010 AMBUJA CEMENT 1.08 1.03 1.26 0.89 1.07
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BINANI CEMENT 2.32 0.85 0.78 0.62 0.92

 Interpretation The Current Ratio of Ambuja cement and Binani cement for the year 2006 was 1.08 and 2.32 times. The Current ratio of the Binani cement decreased to much greater extent upto 0.85 times because the current liabilities of the company increased to a great level. In the year 2008 and 2009 there was a nominal reduction in the current ratio of both the companies. In the year 2010 the current ratio of the Ambuja cement is 1.07 times which is greater than that of Binani cement. So, we can say that Ambuja cement is performing well.

B. QUICK RATIO PARTICULARS 2006 2007 2008 2009 2010 AMBUJA CEMENT 0.70 0.64 0.74 0.57 0.75 BINANI CEMENT 2.61 0.62 0.49 0.36 0.68

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QUICKRA TIO
3 2.5 2 1.5 1 0.5 0 2006 2007 2008 2009 2010 0.7 0.64 0.62 0.74 0.49 0.57 0.36 0.75 0.68
AMBUJA C EMENT BINANI C EMENT

2.61

Interpretation The Quick Ratio of the Binani cement is 2.61 times in the year 2006 which is very high as compared to Ambuja cement which is 0.7 times. In the year 2007 the ratio of Binani cement reduced to a great level by 0.62 times because company had invested high amount of inventories and borrowed heavy loans and advances from the market. In the year 2010 the Ambuja cement ratio is 0.75 times which is greater than that of the Binani cement i.e. 0.68 times. So we can say that Ambuja cement is performing better than Binani cement.

C. DEBT EQUITY RATIO PARTICULARS 2006 2007 2008 2009 2010 AMBUJA CEMENT 0.25 0.07 0.05 0.03 0.01 BINANI CEMENT 2.06 2.24 1.77 1.62 1.46

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 Interpretation The Debt Equity Ratio of the Ambuja cement in the year 2006 was 0.25 and that of Binani cement was 2.06 times. Both the companies constantly reduced the debt financing option from their portfolio from the year 2007. The debt ratio in the year 2010 for Ambuja cement is 0.01 times against the Binani cement i.e. 1.46 times. This clearly shows that Ambuja cement more efficiently uses their internal sources of funds for their operational activities.

3. COMPARISON OF MANAGEMENT EFFICIENCY RATIO A. INVENTORY TURN OVER RATIO PARTICULARS 2006 2007 2008 2009 2010 AMBUJA CEMENT 15.41 9.96 7.54 11.36 9.19 BINANI CEMENT 14.71 11.90 15.86 16.44 34.25

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 Interpretation The Inventory Turnover Ratio of Ambuja cement for the year 2006 was 15.41 times and that of Binani cement was 14.71 times. In the year 2007, 2008 and 2009 the turnover ratio for Ambuja cement is gradually decreasing which good for the company. But Binani cements turnover ratio is constantly increasing due to continuous investment in inventories. In the 2010 the Binani cement turnover ratio increased to 34.25 times due to sudden decrease in inventories against the sales. It is clearly identified that Ambuja cement can handle their inventories more effectively than Binani cement. B. DEBTORS TURNOVER RATIO PARTICULARS 2006 2007 2008 2009 2010 AMBUJA CEMENT 91.70 48.14 33.39 37.60 52.58 BINANI CEMENT 1483.90 2875.94 7766.43 564730.45 --------

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 Interpretation The Debtors Turnover Ratio for the Ambuja cement in the year 2006 was 91.60 times which gradually decreased in the next three years by 37.60 times. This is because the credit sales of the company increased during the year. While, Binani cements debtors turnover ratio is constantly increasing during the year 2006, 2007, 2008 and 2009 which is 1483.90, 2875.94, 7766.43, 564730.45 respectively because they provide goods on cash basis. In the year 2010 the debtors turnover ratio of Ambuja cement is 52.28 times. While, Binani cements turnover ratio is nil as they provide goods on cash basis. Hence, Binani cement recovers their debt easily as compared to Ambuja cement. C. ASSETS TURNOVER RATIO PARTICULARS 2006 2007 2008 2009 2010 AMBUJA CEMENT 1.37 1.09 1.10 1.15 0.85 BINANI CEMENT 0.61 0.81 0.67 0.94 1.03

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 Interpretation The Assets Turnover Ratio for Ambuja cement for the year 2006 was 1.37 times which decreased to 1.09 times because the sales of the company were reduced. But, in the year 2007, 2008 and 2009 the turnover ratio were more or less similar. Binani cements assets turnover ratio are constantly increasing from the year 2006 i.e. 0.61 times to the year 2009 i.e. 0.94 times due constant increase in sales of the company. In the year 2010 the turnover ratio of Ambuja cement is 0.85 which is much lower than that of Binani cement i.e. 1.03 times. This indicates that the company can effectively use their assets to generate sales.

FINDINGS AND CONCLUSION

FINDINGS

The Gross Profit Margin of the Ambuja cement is decreasing in last as compared to the Binani cement i.e. 26.22% against 19.93 of Ambuja cement. The Operating Profit Margin of Ambuja cement is decreasing as compared to the Binani cement i.e. 31.15 against 25.18% of Ambuja cement. The Net Profit Margin of Ambuja cement is higher than the Binani cement i.e. 16.84 of Ambuja cement against 15.13% of Binani cement.
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 The Liquidity Ratios of the Ambuja cement is higher than the Binani cement

except the Debt Equity ratio i.e. 1.46% of the Binani cement against Ambuja cement i.e. 0.01. The Inventory Turnover Ratio of Ambuja cement is lower than the Binani cement i.e. 9.19 for Ambuja cement against the Binani cement i.e. 34.25%. The Debtors Turnover Ratio of the Ambuja cement is much higher than compared to that of Binani cement. The Asset Turnover Ratio of Ambuja cement is lower than that of Binani cement i.e. 0.85% for Ambuja cement against 1.03 times of Binani cement. The Return on Net Assets for Ambuja cement is higher than the Binani cement in the year 2010. The Return on Equity for the Ambuja cement is higher than that of Binani cement. The Return on Profit Margin for Ambuja cement is 28.14% which is much higher than that of Binani cement i.e.16.50%. The Financial Leverage of the Ambuja cement for the year 2010 is 0.84 times which is much lower than that of Binani cement is 2.62 times.

CONCLUSION

The Returns on Assets of the Ambuja cement has decreased from the year 2006 upto the year 2010. But it is better than the Binani cement. The Returns on Equity of the Ambuja cement for the year 2010 is good as compared to the Binani cement because of increase in the sales of the company. The Net Profit Margin of Ambuja cement is higher than that of Binani cement. Ambuja cement is more leveraged than Binani cement. This is good for the company.
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 The Profitability Ratios shows that Binani cement is performing well than that of Ambuja cement from since last 3 years. Ambuja cement is more liquid than that of Binani cement and uses very less amount of debt funds in their portfolio. Ambuja cement uses their inventory more efficiently than Binani cement for the purpose of production. Ambuja cements management is efficient in maintaining their debts and equity in comparison of Binani cement.

Thus, from the above data provided we can conclude that Ambuja cement Ltd. is working and performing better than the Binani cement Ltd. and their market share in the economy has also increased which is very beneficial to the Cement Industry. Cement Industry has progressed in India since last decade and the demand for the cement has increased due to infrastructure development, housing and commercial needs of the economy. In the analysis it has been seen that the Ambuja cement is over shadowing in terms of performance. During Financial year 2007 inflationary conditions enabled all to perform well and generate profits resulting in boom in share prices. In 2008 all companies underperformed comparatively due to economic downturn.

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