FinaFinal Post Evaluation of Capital Budgetingl Post Evaluation of Capital Budgeting

7/27/2019 FinaFinal Post Evaluation of Capital Budgetingl Post Evaluation of Capital Budgeting

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A

Project Report

On

CAPITAL BUDGETING

AT

ULTRATECH CEMENT(In partial fulfilment of the requirement for the award of the degree of)

MASTER OF BUSINESS ADMINISTRATION

BY

R.BALAMANI

HT.NO:226912672026

Unde !"e G#$d%n&e '(

M$)) P* +IRTHANA

P*RR PG COLLEGE

,A--'ed / AICTE A(($$%!ed !' O)3%n$% Un$e)$!4

U--%$5#d%,4 I/%"$3-%!n%3,M4R%n5% edd D$)!0106

,201220184


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DECLARATION

I here by declare that the project titled CAPITAL

BUDGETING submitted by me to the epartment of !usiness

"anagement# O$%$# &yderabad# is a bonfire wor' underta'en by me and it

is not submitted to any other %niersity or Institution for the award of any

degree diploma certificate or published any time before$

ame of the *tudent *ignature of the *tudent

R.BALAMANI

(&T$o+,,-./,-0,1,-)


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AC+NO;LEDGEMENT

I ta'e this opportunity to e2press my sincere and heartfelt gratitudetowards Principal "r$ $*RII3A*# who granted me permission to do

Project$

I cordially offer my bounds less and profound sense of gratitude to

"r$ RA"A4RI*&A(IT5R*&IP 6%I5)$ 7ithout whose the

8ompletion of the project$

I would also li'e to than' "I**$P3 4IRT&AA internal guide#

and other faculty member for the aluable suggestions and prudent

encouragement$

9inally I place on record my sincere to my staff# "!A department

of P3RR P6 8O::565# and my friends for co;operation in my project a

success$


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A/)!%&!

8apital !udgeting is a fundamental decision$ If the projectis accepted$ The firm inests in it if the proposal is rejected then the firm

does not inest in it$ India is the world


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CONTENTS

CHAPTERI

INTRODUCTION (/ TO >)

Introduction (/ TO ,)

Object of the study ?

*cope of the study @

"ethodology >

:imitations -

CHAPTERII (0 TO ,1)

R53I57 O9 :IT5RAT%R5

CHAPTERIII (,/TO @0)

8O"PA PRO9I:5

CHAPTERI* (@B TO >B)

ATA AA:A*I* C IT5RPR5TATIO

CHAPTER* (>. TO -,)

9II6* >.

*%665*TIO* -1

8O8:%*IO -/

!I!:IO6RAP& -,


6/72

8&APT5R;I


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INTRODUCTION+

Among the arious business decisions capital budgeting decisions

are critical and crucial decisions$ Therefore special care must be ta'en while

ta'ing these decisions$

An efficient allocation of capital is the most important finance

function in the modern times$ It inoles decisions to commit the firm


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A capital e2penditure is an outlay of cash for a project that is

e2pected to produce a cash inflow oer a period of time e2ceeding one year$ 52amples

of projects include inestments in property# plant# and equipment# research and

deelopment projects# large adertising campaigns# or any other project that requires a

capital e2penditure and generates a future cash flow$

!ecause capital e2penditures can be ery large and hae a significant impact on the

financial performance of the firm# great importance is placed on project selection$ This

process is called &%-$!% /#d5e!$n5$

The inestment decisions of a firm are generally 'nown as the capital budgeting# or

capital e2penditure decisions$ A capital budgeting decision may be defined as the firm


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OB


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?SCOPE OF THE STUDY:

The efficient allocation of capital is the most important financial function in

the modern times$ It inoles decision to commit the firm


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@METHODOLOGY

Research design or research methodology is the procedure of collecting#analy=ing and interpreting the data to diagnose the problem and react to the opportunity

in such a way where the cost can be minimi=ed and the desired leel of accuracy can be

achieed to arrie at a particular conclusion$

DATA COLLECTION+

The data has been collected through the following sources$

P$3% d%!%:

Primary data is the information collected directly without any references$

In this study it was mainly through interiews with concerned officers and staffs either

indiidually or collectiely some of the information had been erified or supplemented

with personal obserations$

T"e d%!% $nde):

8onducting personal interiews with the officers of the financials department

6uidelines and necessary information ta'en from my guide!y using primary methods

collected the primary information or data$

;Obseration

; *urey method

; Interiew method$Se&'nd% d%!%:

*econdary data has been collected from arious sources such as+

Publications of the company

!usiness maga=ines

Dournals# te2t boo's

7ebsites


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Annual reports

>

LIMITATIONS OF THE STUDY

The data mostly consists of secondary information$

*tudy is concentrated only on financial aspects of the company$

*tudy is limited only to micro leel$

There was a constraint with regard to the time allocation for the research study i$e$ for

a period of @> days$


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-

CHAPTER II

REVIEW OF LITARATURE


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C%-$!% B#d5e!$n5 %nd F$n%n&$% M%n%5e3en!:

!usinesses loo' for opportunities that increase their share holders< alue$ In

capital budgeting# the managers try to figure out inestment opportunities that are worth

more to the business than they cost to acquire$ Ideally# firms should peruse all such

projects that hae good potential to increase the business worth$ *ince the aailable

amount of capital at any gien time is limitedE therefore# it restricts the management to

pic' out only certain projects by using capital budgeting techniques in order to

determine which project has potential to yield the most return oer an applicable period

of time$

8apital budgeting is the process which enables the management to decide which#

when and where to ma'e long;term inestments$ 7ith the help of 8apital !udgeting

Techniques# management decide whether to accept or reject a particular project by

ma'ing analysis of the cash flows generated by the project oer a period of time and its

cost$ "anagement decides in faor of project if the alue of cash flows generated by the

project e2ceeds the cost of underta'ing that project$

Methods of Capital Budgeting:

(/) T%d$!$'n% 3e!"'d)+

Pay bac' period

Aerage rate return method

D$)&'#n! &%)" ('= 3e!"'d

et present alue method

Initial rate return method

Profitability inde2 method

D%!% &'e&!$'n:


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P$3% d%!%: T"eprimary data is the data which is collected# by interiewing

directly with the organi=ations concerned e2ecuties$ This is the direct information

gathered from the organi=ation$ 0

Se&'nd% d%!%: ; The secondary data is the data which is gathered from

publications and websites$

CAPITAL BUDGETING:

A capital e2penditure is an outlay of cash for a project that is

e2pected to produce a cash inflow oer a period of time e2ceeding one year$ 52amples

of projects include inestments in property# plant# and equipment# research and

deelopment projects# large adertising campaigns# or any other project that requires a

capital e2penditure and generates a future cash flow$

!ecause capital e2penditures can be ery large and hae a significant impact on the

financial performance of the firm# great importance is placed on project selection$ This

process is called &%-$!% /#d5e!$n5$

+INDS OF CB DECISIONS:

8apital !udgeting refers to the total process of generating# ealuating# selecting and

following up on capital e2penditure alternaties basicallyE the firm may be confronted

with three types of capital budgeting decisions

A&&e-! e>e&! de&$)$'n)

This is a fundamental decision in capital budgeting$ If the project is accepted# the

firm inests in itE if the proposal is rejected# the firm does not inest in it$ In general# all

those proposals# which yield rate of return greater than a certain required rate of return

or cost of capital# are accreted and rest are rejected$ !y applying this criterion# all

independent projects all accepted$ Independent projects are the projects which do notcompete with one another in such a way that the acceptance of one project under the

possibility of acceptance of another$ %nder the accept;reject decision# the entire

independent project that satisfies the minimum inestment criterion should be

implemented$


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B

M#!#% e?)$e -'>e&! de&$)$'n

"utually e2clusie projects are projects which compete with other projects in

such a way that the acceptance of one which e2clude the acceptance of other

projects$ The alternaties are mutually e2clusie and only one may be chosen$

C%-$!% R%!$'n$n5 De&$)$'n

8apital rationing is a situation where a firm has more inestment proposals than it can

finance$ It may be defined as a situation where a constraint in placed on the total si=e of

capital inestment during a particular period$ In such a eent the firm has to select

combination of inestment proposals which proides the highest net present alue subject

to the budget constraint for the period$ *electing or rejecting the projects for this purpose

will require the ta'ing of the following steps+

Ran'ing of projects according to profitability inde2 (PI) or Initial rate of return (IRR)$

*electing of rejects depends upon the profitability subject to the budget limitations

'eeping in iew the objecties of ma2imi=ing the alue of firms$

NATURE OF IN*ESTMENT DECISSIONS:

The inestment decisions of a firm are generally 'nown as the

capital budgeting# or capital e2penditure decisions$ A capital budgeting decision may be

defined as the firm


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.

Fe%!#e) '( Ine)!3en! De&$)$'n):

The following are the features of inestment decisions+

The e2change of current funds for future benefits$

The funds are inested in long;term assets$

The future benefits will occur to the firm oer a series of year$

I3-'!%n&e '( Ine)!3en! De&$)$'n):

Inestment decisions require special attention because of the following reasons$

They influence the firms growth in the long run

They affect the ris' of the firm

They inole commitment of large amount of funds

They are irreersible# or reersible at substantial loss

They are among the most difficult decisions to ma'e$

G'=!"

The effects of inestment decisions e2tend in to the future and hae to be

endured for a long period than the consequences of the current operating e2penditure$ A

firm


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its earnings# the firm will become more ris'y$ Thus# inestment decisions shape the

basic character of a firm$

/1

F#nd$n5

Inestment decisions generally inole large amount of funds# which ma'e it

imperatie for the firm to plan its inestment programmers ery carefully and ma'e an

adance arrangements for procuring finances internally or e2ternally$

Iee)$/$$!

"ost inestment decisions are irreersible$ It is difficult to find a mar'et forsuch capital items once they hae been acquired$ The firm will incur heay losses if

such assets are scrapped$

C'3-e?$!

Inestment decisions are among the firm


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plant capacity to manufacture more urea$ It is an e2ample of related diersification$ A

firm may e2pand its actiities in a new business$ 52pansions of a new business require

inestment in new products and a new 'ind of production actiity with in the firm$

//

Re-%&e3en! %nd M'den$%!$'n

The main objectie of moderni=ation and replacement is to improe operating

efficiency and reduces costs$ 8ost saings will reflect in the increased profits# but the

firm


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/,

Inde-enden! Ine)!3en!):

Independent inestments sere different purposes and do not

compete with each other$ 9or e2ample# a heay engineering company may be

considering e2pansion of its plant capacity to manufacture additional e2caators and

addition of new production facilities to manufacture a new product ; light commercial

ehicles$ epending on their profitability and aailability of funds# the company can

underta'e both inestments$

C'n!$n5en! Ine)!3en!):

8ontingent inestments are dependent projectsE the choice of one inestment

necessitates underta'ing one or more other inestments$ 9or e2ample# if a company

decides to build a factory in a remote# bac'ward area# if may hae to inest in houses#

roads# hospitals# schools etc$ for employees to attract the wor' force$ Thus# building of

factory also requires inestments in facilities for employees$ The total e2penditure will

be treated as one single inestment$

Ine)!3en! E'#!$'n C$!e$%:

T"ee )!e-) %e $n'ed $n !"e e%#%!$'n '( %n $ne)!3en!:

5stimation of cash flows$

5stimation of the required rate of return (the opportunity cost of capital)

Application of a decision rule of ma'ing the choice$

The first two steps# discussed in the subsequent chapters# are assumed as gien$

Thus# our discussion in this chapter is confined to the third step$ *pecifically# we focus

on the merits and demerits of arious decision rules$


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/?

Ine)!3en! de&$)$'n #e:

The inestment decision rules may be referred to as capital budgeting

techniques# or inestment criteria$ A sound appraisal technique should be used to

measure the economic worth of an inestment project$ The essential property of a sound

technique is that it should ma2imi=e the share holder


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Paybac' period(P!)

iscounted paybac' period

Accounting rate of return(ARR)

/@

NET PRESENT *ALUE:

The et Present 3alue technique inoles discounting net cash flows for

a project# then subtracting net inestment from the discounted net cash flows$ The result

is called the et Present 3alue (P3)$ If the net present alue is positie# adopting the

project would add to the alue of the company$ 7hether the company chooses to do that

will depend on their selection strategies$ If they pic' all projects that add to the alue of

the company they would choose all projects with positie net present alues# een if that

alue is just F/$ On the other hand# if they hae limited resources# they will ran' the

projects and pic' those with the highest P3Gs$

The discount rate used most frequently is the companyGs cost of capital$

et present alue (P3) or net present worth (P7)H is defined as the total present

alue (P3) of a time series of cash flows$ It is a standard method for using the time

alue of money to appraise long;term projects$ %sed for capital budgeting# and widely

throughout economics# it measures the e2cess or shortfall of cash flows# in present alue

terms# once financing charges are met$

The rate used to discount future cash flows to their present alues is a 'ey

ariable of this process$ A firmGs weighted aerage cost of capital (after ta2) is often

used# but many people beliee that it is appropriate to use higher discount rates to adjust

for ris' for ris'ier projects or other factors$ A ariable discount rate with higher rates

applied to cash flows occurring further along the time span might be used to reflect the

yield cure premium for long;term debt$

INTERNAL RATE OF RETURN:


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The internal rate of return (IRR) is a 8apital budgeting metric used by firms to

decide whether they should ma'e Inestments$It is also called discounted cash flow

rate of return (89ROR) or rate of return (ROR)$

It is an indicator of the efficiency or quality of an inestment# as opposed to etpresent alue (P3)# which indicates alue or magnitude$

/>

The IRR is the annuali=ed effectie compounded return rate which can be earned

on the inested capital# i$e$# the yieldon the inestment$ Put another way# the internal

rate of return for an inestment is the discount rate that ma'es the net present alue of

the inestmentGs income stream total to =ero$

Another definition of IRR is the interest rate receied for an inestment consisting

of payments and income that occur at regular periods$

A project is a good inestment proposition if its IRR is greater than the rate of

return that could be earned by alternate inestments of equal ris' (inesting in other

projects# buying bonds# een putting the money in a ban' account)$ Thus# the IRR

should be compared to any alternate costs of capital including an appropriate ris'

premium$

In general# if the IRR is greater than the projectGs cost of capital# or hurdle rate,

the project will add alue for the company$

In the conte2t of saings and loans the IRR is also called effectie interest rate$

In cases where one project has a higher initial inestment than a second mutually

e2clusie project# the first project may hae a lower IRR (e2pected return)# but a higher

P3 (increase in shareholdersG wealth) and should thus be accepted oer the second

project (assuming no capital constraints)$

IRR assumes reinestment of positie cash flows during the project at the same

calculated IRR$ 7hen positie cash flows cannot be reinested bac' into the project#

IRR oerstates returns$ IRR is best used for projects with singular positie cash flows at

the end of the project period$

PROFITABILITY INDE:
http://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Yield_(finance)http://en.wikipedia.org/wiki/Yield_(finance)http://en.wikipedia.org/wiki/Investment


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et another time adjusted method of ealuating the inestment proposals is the

benefit;cost (!8) ratio or profitability inde2$ Profitability inde2 is the ratio of the

present alue of cash inflows at the required rate of return# to the initial cash out flow of

the inestment$

/-

E%#%!$'n '( PI 3e!"'d:

:i'e the P3 and IRR rules# PI is a conceptually sound method of arising

inestment projects$ It is a ariation of the P3 method and requires the same

computations as the P3 method$

T$3e %#eit recogni=es the time alue of money$

*%#e 3%?$3$%!$'n it is consistent with the share holder alue ma2imi=ation

principle$ A project with PI greater than one will hae positie P3 and if accepted it

will increase share holders wealth$

Re%!$e -'($!%/$$!in the PI method since the present alue of cash in flows is

diided by the initial cash out flow # it is a relatie measure of project


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the ma2imum or standard pay bac' period set by management as a ran'ing method$ It

gies highest ran'ing to the project# which has the shortest paybac' period and lowest

ran'ing to the project with highest paybac' period$ Thus if the firm has to choose

between two mutually e2clusie projects# the project with shorter pay bac' period will

be selected$

/0

E'#!$'n '( -%/%&@ -e$'d:Pay bac' is a popular inestment criterion in

practice$ It is considered to hae certain irtues$

S$3-$&$!

The significant merit of paybac' is that it is simple to understand and easy to

calculate$ The business e2ecuties consider the simplicity of method as a irtue$ This is

eident from their heay reliance on it for appraising inestment proposals in practice$

C')! e((e&!$e

Paybac' method costs less than most of the sophisticated techniques that

require a lot of the analyst


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The ris' of the project can be tac'led by haing a shorter standard paybac'

period$ As it may be in a ensured guaranty against its loss$ A company has to inest in

many projects where the cash inflows and life e2pectancies are highly uncertain$ %nder

such circumstances# pay bac' may become important# not so much as a measure of

profitability but# as a means of establishing an upper bound on the acceptable degree of

ris'$

/B

DISCOUNTED PAYBAC+ PERIOD:

One of the serious objections to the paybac' method is that it does not discount

the cash flows for calculating the paybac' period$ 7e can discount cash flows and then

calculate the paybac'$

The discounted pay bac' period is the no$ of$ Periods ta'en in recoering the

inestment outlay on the present alue basis$ The discounted paybac' period still fails

to consider the cash flows occurring after the paybac' period$

ACCOUNTING RATE OF RETURN:

The %&&'#n!$n5 %!e '( e!#n(ARR) also 'nown as the e!#n 'n$ne)!3en!

(ROI) uses accounting information as reealed by financial statements# to measure the

profitability of an inestment$ The accounting rate of return is the ratio of the aerage

after ta2 profit diided by the aerage inestment$ The aerage inestment would be

equal to half of the original inestment if it were depreciated constantly$ Alternatiely#

it can be found out by diiding the total if the inestment


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A&&'#n!$n5 d%!%:The ARR can be readily calculated from the accounting data#

unli'e in the P3 and IRR methods# no adjustments are required to arrie at cash flows

of the project$

A&&'#n!$n5 -'($!%/$$!:The ARR rule incorporates the entire stream of income in

calculating the project


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analysis$ &ence firms normally classify projects into different categories$ 5ach category

is then analy=ed somewhat differently$

7hile the system of classification may ary from one firm to another# the

following categories are found in cost classification$

M%nd%!' $ne)!3en!)+

These are e2penditures required to comply with statutory requirements$

52amples of such inestments are pollution control equipment# medical dispensary# fire

fitting equipment# crJche in factory premises and so on$

,1

CHAPTER III

PROFILE OF ULTRATEC

CEME!T LT"


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INTRODUCTION TO CEMENT:

In the most general sense of the word# cement is a binder# a substance

which sets and hardens independently# and can bind other materials together$ The word

KcementK traces to the Romans#who used the term Kopus caementiciumK to describe

masonry which resembled concrete and was made from crushed roc' with burnt limeas

binder$ The olcanic ash and puleri=ed bric' addities which were added to the burnt

lime to obtain a hydraulic binder were later referred to as cementum# cimentum# cLment

and cement$ 8ements used in construction are characteri=ed as "d%#$& or n'n

"d%#$&$

The most important use of cement is the production of mortarand concreteMthe

bonding of natural or artificial aggregates to form a strong building material which is

durable in the face of normal enironmental effects$

8oncreteshould not be confused with cement because the term cementrefers only to the

dry powder substance used to bind the aggregate materials of concrete$ %pon the

addition of water andor addities the cement mi2ture is referred to as concrete#

especially if aggregates hae been added$

It is uncertain where it was first discoered that a combination of hydrated non;

hydraulic lime and a po==olan produces a hydraulic mi2ture (see also+ Po==olanic
http://en.wikipedia.org/wiki/Ancient_Romehttp://en.wikipedia.org/wiki/Ancient_Romehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Slaked_limehttp://en.wikipedia.org/wiki/Slaked_limehttp://en.wikipedia.org/wiki/Pozzolanhttp://en.wikipedia.org/wiki/Pozzolanic_reactionhttp://en.wikipedia.org/wiki/Ancient_Romehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Slaked_limehttp://en.wikipedia.org/wiki/Slaked_limehttp://en.wikipedia.org/wiki/Pozzolanhttp://en.wikipedia.org/wiki/Pozzolanic_reaction


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reaction)# but concrete made from such mi2tures was first used on a large scale by

engineers$ They used both natural po==olans (trass orpumice) and artificial po==olans

(ground bric' or pottery) in these concretes$ "any e2cellent e2amples of structures

made from these concretes are still standing# notably the huge monolithic dome of the

Pantheon in Rome and the massie !aths of 8aracalla$ The ast system of Roman

aqueductsalso made e2tensie use of hydraulic cement$ The use of structural concrete

disappeared in medieal 5urope# although wea' po==olanic concretes continued to be

used as a core fill in stone walls and columns$

,/

"odern cement"odern hydraulic cements began to be deeloped from the start of

the Industrial Reolution(around /B11)# drien by three main needs+

&ydraulic rendersfor finishing bric' buildings in wet climates&ydraulic mortars for

masonry construction of harbor wor's etc$# in contact with sea water$

eelopment of strong concretes$In !ritainparticularly# good quality building stone

became eer more e2pensie during a period of rapid growth# and it became a common

practice to construct prestige buildings from the new industrial bric's# and to finish

them with a stuccoto imitate stone$ &ydraulic lines were faored for this# but the need

for a fast set time encouraged the deelopment of new cements$ "ost famous was

Par'erGs KRoman cement$K This was deeloped by Dames Par'er in the /0B1s# and

finally patented in /0.-$ It was# in fact# nothing li'e any material used by the Romans#

but was a Katural cementK made by burning sectarian ; nodules that are found in

certain clay deposits# and that contain both clay minerals and calcium carbonate$ The

burnt nodules were ground to a fine powder$ This product# made into a mortar with

sand# set in >N/> minutes$ The success of KRoman 8ementK led other manufacturers to

deelop rial products by burning artificial mi2tures of clay and chal'$

Dohn *meaton made an important contribution to the deelopment of cements

when he was planning the construction of the third 5ddy stone :ighthouse (/0>>;.) in

the 5nglish 8hannel$ &e needed a hydraulic mortar that would set and deelop some

strength in the twele hour period between successie high tides$ &e performed an

e2haustie mar'et research on the aailable hydraulic limes# isiting their production

sites# and noted that the KhydraulicityK of the lime was directly related to the clay
http://en.wikipedia.org/wiki/Pozzolanic_reactionhttp://en.wikipedia.org/wiki/Pumicehttp://en.wikipedia.org/wiki/Pantheon,_Romehttp://en.wikipedia.org/wiki/Romehttp://en.wikipedia.org/wiki/Baths_of_Caracallahttp://en.wikipedia.org/wiki/Roman_aqueducthttp://en.wikipedia.org/wiki/Roman_aqueducthttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Kingdom_of_Great_Britainhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Roman_cementhttp://en.wikipedia.org/wiki/James_Parker_(cement_maker)http://en.wikipedia.org/wiki/Concretionhttp://en.wikipedia.org/wiki/Concretionhttp://en.wikipedia.org/wiki/John_Smeatonhttp://en.wikipedia.org/wiki/Eddystone_Lighthousehttp://en.wikipedia.org/wiki/Pozzolanic_reactionhttp://en.wikipedia.org/wiki/Pumicehttp://en.wikipedia.org/wiki/Pantheon,_Romehttp://en.wikipedia.org/wiki/Romehttp://en.wikipedia.org/wiki/Baths_of_Caracallahttp://en.wikipedia.org/wiki/Roman_aqueducthttp://en.wikipedia.org/wiki/Roman_aqueducthttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Kingdom_of_Great_Britainhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Roman_cementhttp://en.wikipedia.org/wiki/James_Parker_(cement_maker)http://en.wikipedia.org/wiki/Concretionhttp://en.wikipedia.org/wiki/John_Smeatonhttp://en.wikipedia.org/wiki/Eddystone_Lighthouse


31/72

content of the limestone from which it was made$ *meaton was a ciil engineer by

profession# and too' the idea no further$ Apparently unaware of *meatonGs wor'# the

same principle was identified by :ouis 3icat in the first decade of the nineteenth

century$ 3icat went on to deise a method of combining chal' and clay into an intimate

mi2ture# and# burning this# produced artificial cementK in /B/0$ Dames 9rost#or'ing in

!ritain# produced what he called K!ritish cementK in a similar manner around the same

time# but did not obtain a patent until /B,,$ In /B,@# Doseph Aspdin patented a similar

material# which he called Portland cement# because the render made from it was in color

similar to the prestigious Portland stone$ ,,

All the aboe products could not compete with limepo==olan concretes because

of fast;setting (giing insufficient time for placement) and low early strengths (requiring

a delay of many wee's before formwor' could be remoed)$ &ydraulic limes# KnaturalK

cements and KartificialK cements all rely upon their belite content for strength

deelopment$ !elite deelops strength slowly$ !ecause they were burned at

temperatures below /,>1 8# they contained no alite# which is responsible for early

strength in modern cements$ The first cement to consistently contain alite was made by

Doseph AspdinGs son 7illiamin the early /B@1s$ This was what we call today KmodernK

Portland cement$ !ecause of the air of mystery with which 7illiam Aspdin surrounded

his product# others (e$g$ 3icat and I 8 Dohnson) hae claimed precedence in this

inention# but recent analysis of both his concrete and raw cement hae shown that

7illiam AspdinGs product made at orth fleet# 4ent was a true alite;based cement$

&oweer# AspdinGs methods were Krule;of;thumbK+ 3icat is responsible for establishing

the chemical basis of these cements# and Dohnson established the importance of

sintering the mi2 in the 'iln$7illiam AspdinGs innoation was counter;intuitie for

manufacturers of Kartificial cementsK# because they required more lime in the mi2 (a

problem for his father)# because they required a much higher 'iln temperature (and

therefore more fuel) and because the resulting clin'erwas ery hard and rapidly wore

down the millstones which were the only aailable grinding technology of the time$

"anufacturing costs were therefore considerably higher# but the product set reasonably

slowly and deeloped strength quic'ly# thus opening up a mar'et for use in concrete$

The use of concrete in construction grew rapidly from /B>1 onwards# and was soon the
http://en.wikipedia.org/wiki/Civil_engineerhttp://en.wikipedia.org/wiki/Louis_Vicathttp://en.wikipedia.org/wiki/James_Frost_(cement_maker)http://en.wikipedia.org/wiki/James_Frost_(cement_maker)http://en.wikipedia.org/wiki/Joseph_Aspdinhttp://en.wikipedia.org/wiki/Portland_stonehttp://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Alitehttp://en.wikipedia.org/wiki/William_Aspdinhttp://en.wikipedia.org/wiki/Isaac_Charles_Johnsonhttp://en.wikipedia.org/wiki/Northfleethttp://en.wikipedia.org/wiki/Kenthttp://en.wikipedia.org/wiki/Clinker_(cement)http://en.wikipedia.org/wiki/Clinker_(cement)http://en.wikipedia.org/wiki/Civil_engineerhttp://en.wikipedia.org/wiki/Louis_Vicathttp://en.wikipedia.org/wiki/James_Frost_(cement_maker)http://en.wikipedia.org/wiki/Joseph_Aspdinhttp://en.wikipedia.org/wiki/Portland_stonehttp://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Alitehttp://en.wikipedia.org/wiki/William_Aspdinhttp://en.wikipedia.org/wiki/Isaac_Charles_Johnsonhttp://en.wikipedia.org/wiki/Northfleethttp://en.wikipedia.org/wiki/Kenthttp://en.wikipedia.org/wiki/Clinker_(cement)


32/72

dominant use for cements$ Thus Portland cement began its predominant role$ it is made

from water and sandTypes of modern cementPortland cement8ement is made by

heating limestone(calcium carbonate)# with small quantities of other materials (such as

clay) to /@>18 in a 'iln# in a process 'nown as calcination# whereby a molecule of

carbon dio2ideis liberated from the calcium carbonate to form calcium o2ide# or lime#

which is then blended with the other materials that hae been included in the mi2 $ The

resulting hard substance# called Gclin'erG# is then ground with a small amount of gypsum

into a powder to ma'e GOrdinary Portland 8ementG# the most commonly used type of

cement (often referred to as OP8)$ ,?

Portland cement is a basic ingredient of concrete# mortar and most non;

specialtygrout$ The most common use for Portland cement is in the production of

concrete$ 8oncrete is a composite material consisting of aggregate(grael and sand)#

cement# and water$ As a construction material# concrete can be cast in almost any shape

desired# and once hardened# can become a structural (load bearing) element$ Portland

cement may be gray or white$Portland cement blendsThese are often aailable as inter;

ground mi2tures from cement manufacturers# but similar formulations are often also

mi2ed from the ground components at the concrete mi2ing plant$

P'!%nd /%)! (#n%&e &e3en! contains up to 01Q ground granulated blast

furnace slag# with the rest Portland clin'er and a little gypsum$ All compositions

produce high ultimate strength# but as slag content is increased# early strength is

reduced# while sulfate resistance increases and heat eolution diminishes$ %sed as an

economic alternatie to Portland sulfate;resisting and low;heat cements$

P'!%nd (%)" &e3en!contains up to ?1Q fly ash$ The fly ash ispo==olanic# so

that ultimate strength is maintained$ !ecause fly ash addition allows a lower concrete

water content# early strength can also be maintained$ 7here good quality cheap fly ash

is aailable# this can be an economic alternatie to ordinary Portland cement$

P'!%nd -''%n &e3en!includes fly ash cement# since fly ash is a po==olan#

but also includes cements made from other natural or artificial po==olans$ In countries

where olcanic ashes are aailable (e$g$ Italy# 8hile# "e2ico# thePhilippines) these

cements are often the most common form in use$
http://en.wikipedia.org/wiki/Limestonehttp://en.wikipedia.org/wiki/Clayhttp://en.wikipedia.org/wiki/Kilnhttp://en.wikipedia.org/wiki/Calcinationhttp://en.wikipedia.org/wiki/Carbon_dioxidehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Gypsumhttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Grouthttp://en.wikipedia.org/wiki/Construction_aggregatehttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Pozzolanichttp://en.wikipedia.org/wiki/Pozzolanhttp://en.wikipedia.org/wiki/Limestonehttp://en.wikipedia.org/wiki/Clayhttp://en.wikipedia.org/wiki/Kilnhttp://en.wikipedia.org/wiki/Calcinationhttp://en.wikipedia.org/wiki/Carbon_dioxidehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Gypsumhttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Grouthttp://en.wikipedia.org/wiki/Construction_aggregatehttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Pozzolanichttp://en.wikipedia.org/wiki/Pozzolan


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P'!%nd )$$&% (#3e) &e3en!$ Addition of silica fumecan yield e2ceptionally

high strengths# and cements containing >;,1Q silica fume are occasionally produced$

&oweer# silica fume is more usually added to Portland cement at the concrete mi2er$

M%)'n &e3en!)are used for preparing bric'laying mortars and stuccos# and

must not be used in concrete$ They are usually comple2 proprietary formulations

containing Portland clin'er and a number of other ingredients that may include

limestone# hydrated lime# air containers# retarders# water proofers and coloring agents$

They are formulated to yield wor'able mortars that allow rapid and consistent masonry

wor'$ *ubtle ariations of "asonry cement in the %* are Plastic 8ements and *tucco

8ements$ These are designed to produce controlled bond with masonry bloc's$ ,@

E?-%n)$e &e3en!)contain# in addition to Portland clin'er# e2pansie clin'ers

(usually sulfoaluminate clin'ers)# and are designed to offset the effects of drying

shrin'age that is normally encountered with hydraulic cements$ This allows large floor

slabs (up to -1 m square) to be prepared without contraction joints$

;"$!e /ended &e3en!) may be made using white clin'er and white

supplementary materials such as high;purity met 'aolin$

C''ed &e3en!) are used for decoratie purposes$ In some standards# the

addition of pigments to produce Kcolored Portland cementK is allowed$ In other

standards (e$g$ A*T")# pigments are not allowed constituents of Portland cement# and

colored cements are sold as Kblended hydraulic cementsK$

*e ($ne 5'#nd &e3en!) are made from mi2tures of cement with sand or

with slag or other po==olan type minerals which are e2tremely finely ground together$

*uch cements can hae the same physical characteristics as normal cement but with

>1Q less cement particularly due to their increased surface area for the chemical

reaction$ 5en with intensie grinding they can use up to >1Q less energy to fabricate

than ordinary Portland cements$

N'nP'!%nd "d%#$& &e3en!)

P''%n$3e &e3en!)."i2tures of groundpo==olanand lime are the cements

used by the Romans# and are to be found in Roman structures still standing (e$g$ the

Pantheon in Rome)$ They deelop strength slowly# but their ultimate strength can be
http://en.wikipedia.org/wiki/Silica_fumehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Stuccoshttp://en.wikipedia.org/wiki/Stuccoshttp://en.wikipedia.org/wiki/Metakaolinhttp://en.wikipedia.org/wiki/Pozzolanic_ashhttp://en.wikipedia.org/wiki/Silica_fumehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Stuccoshttp://en.wikipedia.org/wiki/Metakaolinhttp://en.wikipedia.org/wiki/Pozzolanic_ash


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ery high$ The hydration products that produce strength are essentially the same as

those produced by Portland cement$

S%5$3e &e3en!).6round granulated blast furnace slag is not hydraulic on its

own# but is KactiatedK by addition of al'alis# most economically using lime$ They are

similar to po==olan lime cements in their properties$ Only granulated slag (i$e$ water;

quenched# glassy slag) is effectie as a cement component$

,>

S#-e )#(%!ed &e3en!). These contain about B1Q ground granulated blast

furnace slag# />Q gypsum or anhydrite and a little Portland clin'er or lime as an

actiator$ They produce strength by formation of ettringite# with strength growth similar

to a slow Portland cement$ They e2hibit good resistance to aggressie agents# including

sulfate$

C%&$#3 %#3$n%!e &e3en!) are hydraulic cements made primarily from

limestone and bau2ite$ The actie ingredients are monocalcium aluminate 8aAl,O@

(8aO Al,O?or 8A in 8ement chemist notation#88) and mayenite8a/,Al/@O?? (/,

8aO 0 Al,O?# or 8/,A0in 88)$ *trength forms by hydration to calcium aluminate

hydrates$ They are well;adapted for use in refractory (high;temperature resistant)

concretes# e$g$ for furnace linings$

C%&$#3 )#('%#3$n%!e &e3en!)are made from clin'ers that include yeGelimite

(8a@(AlO,)-*O@or 8@A? in 8ement chemistGs notation) as a primary phase$ They are

used in e2pansie cements# in ultra;high early strength cements# and in Klow;energyK

cements$ &ydration produces ettringite# and speciali=ed physical properties (such as

e2pansion or rapid reaction) are obtained by adjustment of the aailability of calcium

and sulfate ions$

Their use as a low;energy alternatie to Portland cement has been pioneered in

8hina# where seeral million tons per year are produced$ 5nergy requirements are lower

because of the lower 'iln temperatures required for reaction and the lower amount of

limestone (which must be endothermicallydecarboni=ed) in the mi2$ In addition# the

lower limestone content and lower fuel consumption leads to a 8O , emission around
http://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Ettringitehttp://en.wikipedia.org/wiki/Calcium_aluminate_cementshttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Mayenitehttp://en.wikipedia.org/wiki/Ye'elimitehttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Ettringitehttp://en.wikipedia.org/wiki/Calcium_aluminate_cementshttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Mayenitehttp://en.wikipedia.org/wiki/Ye'elimitehttp://en.wikipedia.org/wiki/Cement_chemist_notation


35/72

half that associated with Portland clin'er$ &oweer# *O, emissions are usually

significantly higher$

N%!#% Ce3en!) correspond to certain cements of the pre;Portland era#

produced by burning argillaceous limestones at moderate temperatures$ The leel of

clay components in the limestone (around ?1;?>Q) is such that large amounts of belite

(the low;early strength# high;late strength mineral in Portland cement) are formed

without the formation of e2cessie amounts of free lime$ As with any natural material#

such cements hae highly ariable properties$

,-

Ge'-'3e &e3en!) are made from mi2tures of water;soluble al'ali metal

silicates and aluminosilicate mineral powders such as fly ashand met 'aolin

CEMENT INDUSTRY IN INDIA:

India is the worldGs second largest producer of cement according to the 8ement

"anufacturers< Association$

uring *eptember ,1/1# the cement production touched /,$>@ million tons ("T)#

while the cement dispatches quantity was /,$>- "T during the month$ The total cement

production during April;*eptember ,1/1;// reached B/$>@ "T as compared to 00$,,"T oer the corresponding period last fiscal$ 9urther# cement despatchers also

witnessed an upsurge from 0-$>1 "T during April;*eptember ,11.;/1 to B/$/1 "T

during April;*eptember ,1/1;//$

"oreoer# the goernmentGs continued thrust on infrastructure will help the 'ey

building material to maintain an annual growth of .;/1 per cent in ,1/1# according to

IndiaGs largest cement company# A88$

In Danuary ,1/1# rating agency 9itch predicted that the country will add about >1

million tonne cement capacity in ,1/1# ta'ing the total to around ?11 million tonne$

9urther# spea'ing at the 6reen 8ementech ,1/1# a seminar jointly organi=ed by

the 8onfederation of Indian Industry (8II) and the 8ement "anufacturerGs Association

in &yderabad in "ay ,1/1# 6 Dayaraman# 52ecutie President# !irla 8orporation :td#
http://en.wikipedia.org/wiki/Argillaceous_mineralshttp://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Geopolymershttp://en.wikipedia.org/wiki/Geopolymershttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Metakaolinhttp://en.wikipedia.org/wiki/Argillaceous_mineralshttp://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Geopolymershttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Metakaolin


36/72

said that in ,11.# @1 "T of capacity was added and he e2pects a similar trend to follow

this year$

Ne= Ine)!3en!):

8ement and gypsum products hae receied cumulatie foreign direct inestment

(9I) of %*F /#.0/$0. million between April ,111 and *eptember ,1/1# according to

the epartment of Industrial Policy and Promotion (IPP)$

almia !harat 5nterprises plans to inest %*F >>@$?, million to set up two

6reenfield cement plants in 4arnata'a and "eghalaya$

,0

!harathi 8ement plans to double its production capacity by the end of the current

financial year by e2panding its plant in Andhra Pradesh# with an inestment of %*F

/@.$.0 million$

"adras 8ements :td is planning to inest %*F /0B$@ million to increase the

manufacturing capacity of its Ariyalur plant in Tamil adu to @$> "T from , "T by

April ,1//$

"y &ome Industries :imited ("&I)# a >1+>1 joint enture (D3) between the

&yderabad;based "y &ome 6roup and IrelandGs building material major 8R& Plc$#

plans to scale up its cement production capacity from the e2isting > million tonne per

annum (mtpa) to ing ("o%) with the 4arnata'a goernment to inest %*F @,?$-

million for setting up a cement unit and a power plant$ %*F ?/0$0 million will be used

to set up a cement manufacturing unit with an annual capacity of ? mtpa while the

balance will be for the /11 megawatt power plant$

Daipra'ash Associates plans to inest %*F -@1 million to increase its cement capacity$

*wiss cement company &olmic plans to inest %*F / billion in setting up ,;?

greenfield manufacturing plants in the country in the ne2t fie years to sere the rising

domestic demand$ &olmic is present in the country through A88 and Ambuja 8ements

and holds around @- per cent sta'e in each company$ 7hile A88 operates /- cement

plants# Ambuja 8ements controls fie plants in India$ The Aditya !irla group is the


37/72

largest cement;ma'ing group by capacity in the country and controls 6rasim Industries

and %ltratech 8ement$

G'en3en! In$!$%!$e):

The cement industry is pushing for increased use of cement in highway and road

construction$ The "inistry of Road Transport and &ighways has planned to inest %*F

?>@ billion in road infrastructure by ,1/,$ &ousing# infrastructure projects and the

nascent trend of concrete roads would continue to accelerate the consumption of

cement$

Increased infrastructure spending has been a 'ey focus area$ In the %nion !udget

,1/1;//# %*F ?0$@ billion has been proided for infrastructure deelopment$ ,B

The goernment has also increased budgetary allocation for roads by /? per cent

to %*F @$? billion$

6ujarat plans to treble its cement production capacity in ?;> years$ Proposals hae

been inited from cement companies such as A88# A!6# Ambuja 8ement# 5mami#

Indiabulls# Adani group# %ltratech and :CT and the state hopes to raise its capacity

from ,1 million tonnes per annum to 01 million tonne$ The state will host the biennial

3ibrant 6ujarat 6lobal *ummit in Danuary ,1// and e2pects to witness inestment

proposals worth %*F /?$, billion in the cement sector$

52change rate used+ / %* S @>$@, IR (as of ecember ,1/1)

The cement industry is one of the ital industries for economic deelopment in

a country$ The total utili=ation of cement in a year is used as an indicator of economic

growth $8ement is a necessary constituent of infrastructure deelopment and a 'ey raw

material for the construction industry# especially in the goernment


38/72

*outh India Industries :imited began manufacture of Portland cement in /.1@$!ut

the effort did not succeed and the company had to halt production$

9inally it was in /./@ that the first licensed cement manufacturing unit was set up by

India 8ement 8ompany :td at Porbandar# 6ujarat with an aailable capacity of

/1#111 tons and production of /111 installed$ The 9irst 7orld 7ar gae the impetus

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

also referred to as the ascent *tage of Indian 8ement Industry$ ,.

uring the earlier years# production of cement e2ceeded the demand$*ociety had a

biased opinion against the cement manufactured in India# which further led to

reduction in demand$ The goernment interened by giing protection to the Industry

and by encouraging cooperation among the manufacturers$

In /.,0# the 8oncrete Association of India was formed with the twin goals of

creating a positie awareness among the public of the utility of cement and to propagate

cement consumption$

A(!e Inde-enden&e:

The growth rate of cement was slow around the period after independence due to

arious factors li'e low prices# slow growth in additional capacity and rising cost$ The

goernment interened seeral times to boost the industry# by increasing prices and

proiding financial incenties$ !ut it had little impact on the industry$

In /.>-# 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$

Pe$'d O( Re)!$&!$'n ,19691924


39/72

The cement industry in India was seerely restrained by the goernment

during this period$ 6oernment hold oer the industry was through both direct and

indirect means$ 6oernment interened directly by e2ercising authority oer

production# capacity and distribution of cement and it interened indirectly through

price control$

In /.00 the goernment authori=ed higher prices for cement manufactured by new

units or through capacity increase in e2isting units$!ut still the growth rate was below$

In /.0. the goernment introduced a three tier price system$ Prices were different for

cement produced in low# medium and high cost plants$

?1

&oweer the price control did not hae the desired effect$ Rise in input cost#

reduced profit margins meant the manufacturers could not allocate funds for increase in

capacity$

P%!$% C'n!' ,1921994+

To gie impetus to the cement industry# the 6oernment of India

introduced a quota system in /.B,$A quota of --$-1Q was imposed for sales to

6oernment and small real estate deelopers$ 9or new units and sic' units a lowerquota at >1Q was effected$ The remaining ??$@1Q was allowed to be sold in the open

mar'et$

These changes had the desired effect on the industry $ Profitability of the

manufacturers increased substantially# but the rising input cost was a cause for concern$

A(!e L$/e%$%!$'n+

In /.B. the cement industry was gien complete freedom# to gear it up to meet the

challenges of free mar'et competition due to the impending policy of liberali=ation$In

/../ the industry was de licensed$

This resulted in an accelerated growth for the industry and aailability of state

of the art technology for moderni=ation$ "ost of the major players inested heaily

for capacity


40/72

To ma2imi=e the opportunity aailable in the form of global mar'ets# the

industry laid greater focus on e2ports$ The role of the goernment has been e2tremely

crucial in the growth of the industry$

F#!#e Tend):

The cement industry is e2pected to grow steadily in ,11.;,1/1 and increase capacity

by another >1 million tons in spite of the recession and decrease in demand from the

housing sector$

The industry e2perts project the sector to grow by . to /1Q for the current financial

year proided IndiaGs 6P grows at 0Q$

India ran's second in cement production after 8hina$ ?/

The major Indian cement companies are Associated 8ement 8ompany :td (A88)#

6rasim Industries :td# Ambuja 8ements :td# D$4 8ement :td and "adras 8ement :td$

The major players hae all made inestments to increase the production capacity in

the past few months# heralding a positie outloo' for the industry$

The housing sector accounts for >1Q of the demand for cement and this trend is

e2pected to continue in the near future$

An increased outflow in infrastructure sector# by the goernment as well as

priate builders# has raised a significant demand of cement in India$ It is the 'ey raw

material in construction industry$ Also# it has highly influenced those bigger companies

to participate in the growing sector$ At least /,> plants set up by the big companies in

India with about ?11 other small scale cement manufacturers# to fulfill the growing

demand of cement$ !eing one of the ital industries# the cement industry contributes to

the nationGs socioeconomic deelopment$ The sum total utili=ation of cement in a yearindicates the countryGs economic growth$

8ement plant was first set up in 8alcutta# in /BB.$ At that time# the cement used

to manufacture from Argillaceous$ In /.1@# the first organi=ed set up to manufacture

cement was commenced in "adras# which was named *outh India Industries :imited$


41/72

Again in /./@# another cement manufacturing unit was set up in Porbandar# 6ujarat# but

this time it was licensed$ In the early years of that era# the demand for the cement

tremendously e2ceeded but only after few years# the industry faced a seere downfall$

To oercome from this the worsening situation# the 8oncrete Association of India was

founded in /.,0$ The organi=ation has two prime goals# one was to create awareness

about utility of cement and another was to encourage cement utili=ation$

5en after the independence# the growth of the cement industry was too gradual$

In the year /.>-# a istribution 8ontrol *ystem was established with an objectie to

proide Indian manufacturers and consumers self sufficiency$ Indian goernment then

introduced a quota system to proide an impetus to this industry# in which --Q of the

sales was imposed to goernment or small real estate deelopers$ After the

implementation of quota# the cement industry tasted a sudden growth and profitability in

India$ In /../# the goernment de;licensed the cement industry$ ?,

The growth of the industry accelerated forthwith and majority of the industrialists

inested heaily in the industry with the awarded freedom$ The industry started

focusing on e2port also to double the opportunity aailable for it in global mar'ets$

Today# the cement manufacturers in India hae transformed into leading Indian

e2porters of cement across the world$

The demand of cement in year ,11.;,1/1 is e2pected to increase by >1 million

tons despite of the recession and decline in demand of housing sector$ Against IndiaGs

6P growth of 0Q# the e2perts hae estimated the cement sector to grow by . to /1 Q

in the current financial year$ "ajor Indian cement manufacturers and e2porters hae all

made huge inestments in the last few months to increase their production capability$

This heralds an optimistic outloo' for cement industry$ The housing sector in India

accounts for >1 Q of the cementGs demand$ And the demand is e2pected to continue$

7ith the constant effort made by cement manufacturers and e2porters# India has

become the second largest cement producer in the world$ "adras 8ement :td$#

Associated 8ement 8ompany :td (A88)# Ambuja 8ements :td# 6rasim Industries :td#

and D$4 8ement :td$ are among few renowned names of the major Indian cement

companies


42/72

ULTRATECH CEMENT:

%ltraTech 8ement :imited has an annual capacity of /B$, million tonnes$ It

manufactures and mar'ets Ordinary Portland 8ement# Portland !last 9urnace *lag

8ement and Portland Po==alana 8ement$ It also manufactures ready mi2 concrete

(R"8)$

%ltraTech 8ement :imited has fie integrated plants# si2 grinding units and three

terminals M two in India and one in *ri :an'a$

%ltraTech 8ement is the country


43/72

up a global business empire at the age of ,@$ &e was the first to put Indian business on

the world map# as far bac' as /.-.# long before globali=ation became a bu==word in

India$

In the then ibrant and free mar'et *outh 5ast Asian countries# he entured to setup world;class production bases$ &e had foreseen the winds of change and sta'ed the

future of his business on a competitie# free mar'et drien economy order$ &e put

Indian business on the globe# ,, years before economic liberali=ation was formally

introduced by the former Prime "inister# "r$ arasimhaRao and the former %nion

9inance "inister# r$ "anmohan *ingh$ &e set up /. companies outside India# in

Thailand# "alaysia# Indonesia# the Philippines and 5gypt$

Interestingly# for "r$ Aditya !irla# globali=ation meant more than just geographic

reach$ &e belieed that a business could be global een whilst being based in India$

Therefore# bac' in his home;territory# he droe single;mindedly to put together the

building bloc's to ma'e our Indian business a global force$

?@ %nder his stewardship# his companies rose to be the worldGs largest

producer of iscose staple fiber# the largest refiner of palm oil# the third largest

producer of insulators and the si2th largest producer of carbon blac'$ In India#

they attained the status of the largest single producer of iscose filament yarn#

apart from being a producer of cement# grey cement and rayon grade pulp$ The

6roup is also the largest producer of aluminum in the priate sector# the lowest first

cost producers in the world and the only producer of linen in the te2tile industry in

India$

At the time of his untimely demise# the 6roupGs reenues crossed Rs$B#111 crore

globally# with assets of oer Rs$.#111 crore# comprising of >> benchmar' quality plants#

an employee strength of 0>#111 and a shareholder community of -11#111$

"ost importantly# his companies earned respect and admiration of the people# as one of

IndiaGs finest business houses# and the first Indian International 6roup globally$

Through this outstanding record of enterprise# he helped create enormous wealth for the

nation# and respect for Indian entrepreneurship in *outh 5ast Asia$ In his time# his

success was unmatched by any other industrialist in India$


44/72

That India attains respectable ran' among the deeloped nations# was a dream he

foreer cherished$ &e was proud of India and too' equal pride in being an Indian$

%nder the leadership of our 8hairman# "r$ 4umar "angalam !irla# the 6roup has

sustained and established a leadership position in its 'ey businesses through continuousalue;creation$ *pearheaded by 6rasim# &indalco# Aditya !irla uo# Indo 6ulf

9ertili=ers and companies in Thailand# "alaysia# Indonesia# the Philippines and 5gypt#

the Aditya !irla 6roup is a leader in a swathe of products M iscose staple fibre#

aluminum# cement# copper# carbon blac'# palm oil# insulators# garments$ And with

successful forays into financial serices# telecom# software and !PO# the 6roup is today

one of AsiaGs most diersified business groups$

B'%d '( D$e&!')

:: "r$ 4umar "angalam !irla# 8hairman:: "rs$ Rajashree !irla:: "r$ R$ 8$ !hargaa ?>:: "r$ 6$ "$ ae:: "r$ $ D$ Dhaeri:: "r$ *$ !$ "athur:: "r$ 3$ T$ "oorthy:: "r$ O$ P$ Puranmal'a:: "r$ *$ Rajgopal:: "r$ $ $ Rathi

:: "r$ *$ "isra# "anaging irector

E?e!$e Pe)$den! C"$e( F$n%n&$% O(($&e

:: "r$ 4$ 8$ !irlaC"$e( M%n#(%&!#$n5 O(($&e

:: R$4$ *hahC"$e( M%@e!$n5 O(($&e

:: "r$ O$ P$ Puranmal'aC'3-%n Se&e!%

:: "r$ *$ 4$ 8hatterjee

O#$)$'n

T' %&!$e &'n!$/#!e !' !"e )'&$% %nd e&'n'3$& dee'-3en! '( !"e

&'33#n$!$e) $n ="$&" =e '-e%!e. In )' d'$n5 /#$d % /e!!e )#)!%$n%/e =% '(


45/72

$(e (' !"e =e%@e )e&!$'n) '( )'&$e! %nd %$)e !"e &'#n!) "#3%n dee'-3en!

$nde?.

Mrs. Rajashree Birla# 8hairperson#

The Aditya !irla 8entre for 8ommunity Initiaties and Rural eelopment$

?-

A=%d) ='n:

Ye% A=%d

,1/1;,1// *ubh 4aran *arawagi 5nironment Award,1/1;,1// !usiness 7orld 9I88I;*59 8*R Award,1/1 6reentech 5nironment 52cellence 6old Award,1/1 I"8 Ram'rishna !ajaj ational uality Award,1/1 Asian 8*R Award,11.;,1/1 ational Award for Preention of Pollution,11.;,1/1 Raji 6andhi 5nironment Award for 8lean Technology,11.;,1/1 *tate :eel 5nironment Award (Plant)

M%@$n5 % d$((een&e:

!efore 8orporate *ocial Responsibility found a place in corporate le2ion# it was

already te2tured into our 6roupGs alue systems$ As early as the /.@1s# our founding

father *hri 6$ !irla espoused the trusteeship concept of management$ *imply stated#

this entails that the wealth that one generates and holds is to be held as in a trust for

our multiple sta'eholders$ 7ith regard to 8*R# this means inesting part of our profits

beyond business# for the larger good of society$

7hile carrying forward this philosophy# his grandson# Aditya !irla weaed in

the concept of Gsustainable lielihoodG# which transcended cheque boo' philanthropy$In

his iew# it was unwise to 'eep on giing endlessly$ Instead# he felt that

channeli=ing resources to ensure that people hae the wherewithal to ma'e both ends

meet would be more productie$ &e would say# K6ie a hungry man fish for a day# he


46/72

will eat it and the ne2t day# he would be hungry again$ Instead if you taught him how to

fish#he would be able to feed himself and his family for a lifetime$K

Ta'ing these practices forward# our chairman "r$ 4umar "angalam !irla

institutionali=ed the concept of triple bottom line accountability represented byeconomic success# enironmental responsibility and social commitment

?0

The footprint of our social wor' today straddles oer ?#011 illages# reaching out

to more than 0 million people annually$ Our community wor' is a way of telling the

people among whom we operate that 7e 8are$

O#)!%!e5+

Our projects are carried out under the aegis of the KAditya !irla 8entre for

8ommunity Initiaties and Rural eelopmentK# led by "rs$ Rajashree !irla$ The 8entre

proides the strategic direction# and the thrust areas for our wor' ensuring

performancemanagementaswell$

Our focus is on the all;round deelopment of the communities around our plants

located mostly in distant rural areas and tribal belts$ All our 6roup companies M;

6rasim# &indalco# Aditya !irla uo# Indo6ulf and %ltraTech hae Rural eelopment

8ells which are the implementation bodie Projects are planned after a participatory need assessment of the communities

around the plants$ 5ach project has a one;year and a three;year rolling plan# with

milestones and measurable targets$ The objectie is to phase out our presence oer a

period of time and hand oer the reins of further deelopment to the people$ This also

enables us to widen our reach$ Along with internal performance assessment echanisms#

our projects are audited by reputed e2ternal agencies# who measure it on qualitatie and

quantitatie parameters# helping us gauge the effectieness and proiding e2cellent

inputs$

Our partners in deelopment are goernment bodies# district authorities# illage

panchayats and the end beneficiaries ;; the illagers$ The 6oernment has# in their >;year

plans# special funds earmar'ed for human deelopment and we recourse to many of

these$ At the same time# we networ' and collaborate with li'e;minded bilateral and


47/72

unilateral agencies to share ideas# draw from each otherGs e2periences# and ensure that

efforts are not duplicated$ At another leel# this proides a platform for adocacy$ *ome

of the agencies we hae collaborated with are %9PA# *I9*A# 8AR5 India# &abitat for

&umanity International# %nicef and the 7orld !an'$

?B

O# (') %e%)+

Our rural deelopment actiities span fie 'ey areas and our single;minded goal

here is to help build model illages that can stand on their own feet$ Our focus areas are

healthcare# education# sustainable lielihood# infrastructure and espousing social causes$

The name UAditya !irla eo'es all that is positie in business and in life$ It

e2emplifies integrity# quality# performance# perfection and aboe all character$

Our logo is the symbolic reflection of these traits$ It is the cornerstone of our

corporate identity$ It helps us leerage the unique Aditya !irla brand and endows us

with a distinctie isual image$

epicted in ibrant# earthy colors


48/72

spanning ,> countries and ?1 nationalities across the globe$ Our logo is our best calling

card that opens the gateway to the world$

?.

GROUP OF COMPANIES:

G'#- &'3-%n$e)

:: 6rasim Industries :td$:: &indalco Industries :td$:: Aditya !irla uo :td$:: %ltraTech 8ement :td$

Ind$%n &'3-%n$e):: Aditya !irla "inacs IT *erices :td$:: Aditya !irla "inacs 7orldwide :imited:: 5ssel "ining C Industries :td:: Idea 8ellular :td$:: Aditya !irla Insulators:: Aditya !irla Retail :imited:: Aditya !irla 8hemicals (India) :imited

International companies

T"%$%nd:: Thai Rayon:: Indo Thai *ynthetics:: Thai Acrylic 9ibre:: Thai 8arbon !lac':: Aditya !irla 8hemicals (Thailand) :td$:: Thai Pero2ide

@1

P"$$--$ne)

:: Indo Phil 6roup of companies:: Pan 8entury *urfactants Inc$

Ind'ne)$%
http://www.grasim.com/index.htmhttp://www.hindalco.com/http://www.hindalco.com/http://www.adityabirlanuvo.com/http://www.adityabirlanuvo.com/http://www.adityabirla.com/our_companies/indian_companies/adityabirla_minacs_it_services.htmhttp://www.adityabirla.com/our_companies/indian_companies/adityabirla_minacs_it_services.htmhttp://www.adityabirla.com/our_companies/indian_companies/aditya_birla_minacs.htmhttp://www.adityabirla.com/our_companies/indian_companies/essel_mining.htmhttp://www.adityabirla.com/our_companies/indian_companies/idea.htmhttp://htpp//www.adityabirlainsulators.com/http://www.adityabirla.com/our_companies/indian_companies/retail.htmhttp://www.adityabirla.com/our_companies/indian_companies/bihar_caustic.htmhttp://www.adityabirla.com/our_companies/international_companies/thairayon_thailand.htmhttp://www.adityabirla.com/our_companies/international_companies/indo_thai_synthetics_company.htmhttp://www.adityabirla.com/our_companies/international_companies/thai_acrylic_fibre.htmhttp://www.adityabirla.com/our_companies/international_companies/thai_carbon_black.htmhttp://www.adityabirlachemicals.com/http://www.adityabirlachemicals.com/http://www.adityabirla.com/our_companies/international_companies/thai_peroxide.htmhttp://www.adityabirla.com/our_companies/international_companies/indo_phil_group_of_companies.htmhttp://www.adityabirla.com/our_companies/international_companies/pan_century_surfactants.htmhttp://www.grasim.com/index.htmhttp://www.hindalco.com/http://www.adityabirlanuvo.com/http://www.adityabirla.com/our_companies/indian_companies/adityabirla_minacs_it_services.htmhttp://www.adityabirla.com/our_companies/indian_companies/aditya_birla_minacs.htmhttp://www.adityabirla.com/our_companies/indian_companies/essel_mining.htmhttp://www.adityabirla.com/our_companies/indian_companies/idea.htmhttp://htpp//www.adityabirlainsulators.com/http://www.adityabirla.com/our_companies/indian_companies/retail.htmhttp://www.adityabirla.com/our_companies/indian_companies/bihar_caustic.htmhttp://www.adityabirla.com/our_companies/international_companies/thairayon_thailand.htmhttp://www.adityabirla.com/our_companies/international_companies/indo_thai_synthetics_company.htmhttp://www.adityabirla.com/our_companies/international_companies/thai_acrylic_fibre.htmhttp://www.adityabirla.com/our_companies/international_companies/thai_carbon_black.htmhttp://www.adityabirlachemicals.com/http://www.adityabirla.com/our_companies/international_companies/thai_peroxide.htmhttp://www.adityabirla.com/our_companies/international_companies/indo_phil_group_of_companies.htmhttp://www.adityabirla.com/our_companies/international_companies/pan_century_surfactants.htm


49/72

:: PT Indo !harat Rayon:: PT 5legant Te2tile Industry:: PT *unrise !umi Te2tiles:: PT Indo :iberty Te2tiles

:: PT Indo Raya 4imia

E5-!:: Ale2andria 8arbon !lac' 8ompany *$A$5:: Ale2andria 9iber 8ompany *$A$5

C"$n% :: :iaoning !irla 8arbon

:: !irla Dingwei9ibres 8ompany :imited:: Aditya !irla 6rasun 8hemicals ( 9angchenggang ) :td$

C%n%d%:: A$3$ 6roup

A#)!%$%:: Aditya !irla "inerals :td$

L%') :: !irla :aos Pulp C Plantations 8ompany :imited

@/

N'!" %nd S'#!" A3e$&% E#'-e %nd A)$%:: oelis Inc$

S$n5%-'e:: *wiss *ingapore Oerseas 5nterprises Pte :td$ (**O5)


50/72

and one in *ri :an'a$ "ost of the plants hae I*O .11/# I*O /@11/ and O&*A* /B11/

certification$ In addition# two plants hae receied I*O ,011/ certification and four

hae receied *A B111 certification$ The process is currently underway for the

remaining plants$ The company e2ports oer ,$> million tonnes per annum# which is

about ?1 per cent of the countryGs total e2ports$ The e2port mar'et comprises of

countries around the Indian Ocean# Africa# 5urope and the "iddle 5ast$ 52port is a

thrust area in the companyGs strategy for growth$

%ltraTechGs products include Ordinary Portland cement# Portland Po==olana cement and

Portland blast furnace slag cement$

Ordinary Portland cement

Portland blast furnace slag cement

Portland Po==olana cement

8ement to 5uropean and *ri :an'an norms

@,

Od$n% P'!%nd &e3en!:

Ordinary portland cement is the most commonly used cement for a wide range of

applications$ These applications coer dry;lean mi2es # general;purpose ready;mi2es#

and een high strength pre;cast and pre;stressed concrete$

P'!%nd /%)! (#n%&e )%5 &e3en!+

Portland blast;furnace slag cement contains up to 01 per cent of finely

ground# granulated blast;furnace slag# a nonmetallic product consisting essentially of

silicates and alumino;silicates of calcium$ *lag brings with it the adantage of the

energy inested in the slag ma'ing$ 6rinding slag for cement replacement ta'es only

,> per cent of the energy needed to manufacture portland cement$%sing slag cement to

replace a portion of portland cement in a concrete mi2ture is a useful method to ma'e

concrete better and more consistent$ Portland blast;furnace slag cement has a lighter
http://www.ultratechcement.com/products/index.htmhttp://www.ultratechcement.com/products/index.htmhttp://www.ultratechcement.com/products/index.htmhttp://www.ultratechcement.com/products/index.htmhttp://www.ultratechcement.com/products/index.htmhttp://www.ultratechcement.com/products/index.htm


51/72

colour# better concrete wor'ability # easier finishability# higher compressie and the

fle2ural strength# lower permeability# improed resistance to aggressie chemicals and

more consistent plastic and hardened consistency$

P'!%ndP''%n%&e3en!:

Portland po==olana cement is ordinary portland cement blended with po==olanic

materials (power;station fly ash# burnt clays# ash from burnt plant material or siliceous

earths)# either together or separately$ Portland clin'er is ground with gypsum and

po==olanic materials which# though they do not hae cementing properties in

themseles# combine chemically with Portland cement in the presence of water to form

e2tra strong cementing material which resists wet crac'ing# thermal crac'ing and has a

high degree of cohesion and wor'ability in concrete and mortar$

"As a Group we have always operated and continue to operate our businesses as

Trustees with a deep rooted obliation to syneri!e rowth with responsibility."

Mr. umar Manalam Birla, #hairman, Aditya Birla Group

@?

The cement industry relies heaily on natural resources to fuel its operations$ As these

dwindle# the imperatie is clear M alternatie sources of energy hae to be sought out

and the use of e2isting resources has to be reduced# or eliminated altogether$ Only then

can sustainable business be carried out# and a corporate can truly say it is contributing to

the preseration of the enironment$

%ltraTech ta'es its responsibility to consere the enironment ery seriously# and its

eco;friendly approach is eident across all spheres of its operations$ Its major thrust has

been to identify alternaties to achiee set objecties and thereby reduce its carbonfootprint$ These are done through+

:: 7aste management:: 5nergy management:: 7ater conseration:: !iodiersity management


52/72

:: Afforestation:: Reduction in emissions

Importantly# %ltraTech has set a target of ,$.- per cent reduction in 8O ,emission

intensity# at a rate of 1$> per cent annually# up to ,1/>;/-# with ,11.;/1 as the baseline

year$ This will also include 8O,emissions from the recently acquired 5TA *tar 8ement

and upcoming projects$

O# )!%!e5

Our projects are carried out under the aegis of the KAditya !irla 8entre

for 8ommunity Initiaties and Rural eelopmentK# led by "rs$ Rajashree !irla$

The 8entre proides the strategic direction# and the thrust areas for our wor'ensuring performance management as well$

@@

Our focus is on the all;round deelopment of the communities around our plants located

mostly in distant rural areas and tribal belts$ All our 6roup companies ;; 6rasim#

&indalco# Aditya !irla uo and %ltraTech hae Rural eelopment 8ells which are

the implementation bodies$

Projects are planned after a participatory need assessment of the communities

around the plants$ 5ach project has a one;year and a three;year rolling plan# with

milestones and measurable targets$ The objectie is to phase out our presence oer a

period of time and hand oer the reins of further deelopment to the people$ This

also enables us to widen our reach$ Along with internal performance assessment

mechanisms#our projects are audited by reputed e2ternal agencies# who measure it on

qualitatie and quantitatie parameters# helping us the gauge the effectieness and

proiding e2cellent inputs$


53/72

Our partners in deelopment are goernment bodies# district authorities# illage

panchayats and the end beneficiaries M the illagers$ The 6oernment has# in their >;

year plans# special funds earmar'ed for human deelopment and we recourse to many

of these$ At the same time# we networ' and collaborate with li'e;minded bilateral and

unilateral agencies to share ideas# draw from each otherGs e2periences# and ensure that

efforts are not duplicated$ At another leel#this proides a platform for adocacy$*ome

of the agencies we hae collaborated with are %9PA#*I9*A#8AR5 India# &abitat for

&umanity International# %nicef and the 7orld !an'$

O#$)$'n

T' %&!$e &'n!$/#!e !' !"e )'&$% %nd e&'n'3$& dee'-3en! '( !"e

&'33#n$!$e) $n ="$&" =e '-e%!e. In )' d'$n5 /#$d % /e!!e )#)!%$n%/e =% '(

$(e (' !"e =e%@e )e&!$'n) '( )'&$e! %nd %$)e !"e &'#n!) "#3%n dee'-3en!

$nde?.

Mrs. Rajashree Birla# 8hairperson#

The Aditya !irla 8entre for 8ommunity Initiaties and Rural eelopment

@>

M%@$n5 % d$((een&e

!efore 8orporate *ocial Responsibility found a place in corporate le2icon# it wasalready te2tured into our 6roupGs alue systems$ As early as the /.@1s# our founding

father *hri 6$ !irla espoused the trusteeship concept of management$ *imply stated#

this entails that the wealth that one generates and holds is to be held as in a trust for our

multiple sta'eholders$ 7ith regard to 8*R# this means inesting part of our profits

beyond business# for the larger good of society$

7hile carrying forward this philosophy# our legendary leader# "r$ Aditya !irla#

weaed in the concept of Gsustainable lielihoodG# which transcended cheque boo'

philanthropy$ In his iew# it was unwise to 'eep on giing endlessly$ Instead# he felt that

channeli=ing resources to ensure that people hae the wherewithal to ma'e both ends

meet would be more productie$ &e would say# K6ie a hungry man fish for a day# he


54/72

will eat it and the ne2t day# he would be hungry again$ Instead if you taught him how to

fish# he would be able to feed himself and his family for a lifetime$K

Ta'ing these practices forward# our chairman$"r$ 4umar "angalam !irla

institutionali=ed the concept of triple bottom line accountability represented by

economic success# enironmental responsibility and commitment$ In a holistic way thus#

the interests of all the sta'eholders hae been te2tured into our 6roupGs fabric$

The footprint of our social wor' today spans ,#>11 illages in India# reaching

out to seen million people annually$ Our community wor' is a way of telling the people

among whom we operate that 7e 8are$

PRODUCT PROFILE:

ULTRA TECH CEMENTSmanufactures and distributes its own main product

lines of cement $7e aim to optimi=e production across all of our mar'ets# proiding a

complete solution for customerGs needs at the lowest possible cost# an approach we call

strategic integration of actiities$

@-

8ement is made from a mi2ture of B1 percent limestone and ,1 percent clay$

These are crushed and ground to proide the Kraw meal# a pale# flour;li'e powder$

&eated to around /@>1 8 (,-@, 9) in rotating 'ilns# the Umeal undergoes comple2

chemical changes and is transformed into clin'er$ 9ine;grinding the clin'er together

with a small quantity of gypsum produces cement$ Adding other constituents at this

stage produces cements for speciali=ed uses$

UALITY :

S$? )!'n5 /ene($!)that ma'e 8J J G%de S#-e ($ne Pe3$#3 %nd S"%@!$

the $de% &e3en!

&igher compressie strength$


55/72

!etter soundness$

:esser consumption of cement for ";,1 8oncrete 6rade and aboe$

9aster de shuttering of formwor'$

Reduced construction time with a superior and wide range of cement catering to

eery conceiable building need# %:TRA T58& 85"5T* is a formidable player in

the cement mar'et$

&ere just a few reasons why %:TRA T58& 85"5T* chosen by millions of India$

Ideal raw material

:ow lime and magnesia content and high proportion of silicates$

6reater fineness$

@0


56/72

CHAPTER I*

$ATA A%A&'()( * )%T+RR+TAT)-%

ULTRATECH CEMENTS CASHFLO; STATEMENT FOR THE

YEARS 2002009 TO 2012201J(Rs$ In crorers)

*I$O PARTI8%:AR* ,11B;,11.

,11.;,1/1

,1/1;,1//

,1//;,1/,

,1/,;,1/?

8ash inflow+

/$ *ales turnoer (reenue) ?>-,$>1 ?-,.$/1 ?0.1$>> @@..$-0 >>11$?.

,$ Other income ,B>$-B ??1$?B ?/-$?0 ?B@$@B @01$..

Total+ ?B@B$/B

?.>.$@B @/1-$., @BB@$/> >.0/$?B


57/72

?$ Add+ 8losingstoc'

.0$-1 //1$>- B,$,> /?$// /@$,>

Total+ ?.@>$0B

@101$1@ @/B.$/0 @B.0$,- >.B>$-?

@$ :ess+ operatingstoc'

@.$?> @.$.@ //1$>- B,$,> /?$//

Other income+ ?B.-$@?

@1,1$/1

@10B$-/ @B/>$1/ >.0,$>,

>$ :ess+ operatinge2penses

->$B@ >B$>/ B?$?- B0$/B B1$-?

8ash flow beforeta2+

?B?1$>.

?.-/$>.

?..>$,> @0,0$B? >B./$B.

-$ :ess+depreciation

,/@$?. ,/,$-1

,/0$0> ,@@$00 ,@.$/.

Ta2able income+ ?-/-$,1

?0@B$.. ?000$> @@B?$1- >-@,$01

0$ :ess+ ta2 .$B0 //$?/ 0$,. ,$1? ?$,B

5arnings afterta2+

?-1-$??

?0?0$-B

?001$,/ @@B/$1? >-?.$@,

B$ Add+

depreciation

,.-$@1 ,/,$-

1

,/0$0> ,@@$00 ,@.$/.

8ash flow afterta2+

?.1,$0?

?.>1$,B

?.B0$.- @0,>$B >BBB$-/

OT5+ (8ash flows after ta2 has been ta'en as an initial inestment or cash out flows forthe calculation of capital budgeting techniques)

TRADITIONAL CAPITAL BUDGETING APPRISAL METHODS

RELATED :

PAY BAC+ PERIOD METHOD:

Paybac' period method is a traditional method of ealuation of capital budgeting

decision$ The term paybac' or pay out or payoff refers to the period in which the project

will generate the necessary cash and recoup the initial inestment or the cash out flows$


58/72

To calculate the pay period# the cumulatie cash flows will be calculated and by using

interpolation the e2act period may be calculated$

The He$!%5e F''d) ,Ind$%4 L$3$!edhas Rs$ 0-B?$01B lac's of initial inestment

and the annual cash flows for the years ,

Documents

FinaFinal Post Evaluation of Capital Budgetingl Post Evaluation of Capital Budgeting