Final Project of 4th Sem

7/31/2019 Final Project of 4th Sem

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ACHARYA BANGALORE B SCHOOL Page 1

CHAPTER:1

INTRODUCTION


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Finance is the science of funds management. The general areas of finance are business finance,

personal finance and public finance. Finance includes saving money and often includes lending

money. The field of finance deals with the concepts of time, money, risk and hoe they are

interrelated. It also deals with how money is spent and budgeted. Finance is one of the most

important aspects of business management and includes decisions related to the use and

acquisition of funds for the enterprise.

Financial ratio analysis is the calculation and comparison of ratios which are derived from the

information in a companys financial statements. The level and historical trends of these ratios

can be used to make inferences about a companys financial condition, its operations and

attractiveness as an investment.

Ratio analysis mean, a tool used by individuals to conduct a quantitative analysis of information

in a companys financial statements. Ratios are calculated from current year numbers and are

then compared to previous years, other companies, the industry, or even the economy to judge

the performance of the company. Ratio analysis is predominately used by proponents of

fundamental analysis.

WHAT IS WORKING CAPITAL

Working capital refers to the investment by the company in short terms assets such as cash,

marketable securities. Net current assets or networking capital refers to the current assets less

current liabilities.

Symbolically, it means,

Net Current Assets = Current Assets Current Liabilities.

DEFINITIONS OF WORKING CAPITAL:

The following are the most important definitions of Working capital:

1) Working capital is the difference between the inflow and outflow of funds. In other words it is

the net cash inflow .


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2) Working capital represents the total of all current assets. In other words it is the Gross

working capital , it is also known as Circulating capital or Current capital for current assets are

rotating in their nature.

3) Working capital is defined as The excess of current assets over current liabilities and

provisions . In other words it is the Net Current Assets or Net Working Capital .

Important of working capital

Working capital may be regarded as the lifeblood of the business. Without insufficient working

capital, any business organization cannot run smoothly or successfully.

In the business the Working capital is comparable to the blood of the human body. Therefore thestudy of working capital is of major importance to the internal and external analysis because of

Working Capital Ratio Analysis

Values used in calculating financial ratios are taken from the balance sheet, income statement,

statement of cash flows or (sometimes) the statement of retained earnings. These comprise the

firm's "accounting statements" or financial statements. The statements' data is based on the

accounting method and accounting standards used by the organization

Uses and significance of ratio analysis:

Ratio analysis is one of the most powerful tools of the financial analysis. With the help of ratio

analysis we can know the financial health of a firm. Ratios act as an indicator of the efficiency of

the firm. Ratios have wide applications and are of immune use. The important advantages of

ratio analysis are;

1. Ratios are important tools, which will help in maximizing profits and minimizingcosts.

2. Ratio analysis helps to frame policies for future including capital expendituredecisions.
http://en.wikipedia.org/wiki/Balance_sheethttp://en.wikipedia.org/wiki/Income_statementhttp://en.wikipedia.org/wiki/Statement_of_cash_flowshttp://en.wikipedia.org/wiki/Statement_of_retained_earningshttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Statement_of_retained_earningshttp://en.wikipedia.org/wiki/Statement_of_cash_flowshttp://en.wikipedia.org/wiki/Income_statementhttp://en.wikipedia.org/wiki/Balance_sheet


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3. It helps the employees by providing them the information related to the profitabilityof the company, which becomes the basis for claiming their benefits.

4. It will be useful to the investor in taking decisions relating to investment bypresenting the information relating to the financial soundness of the concern.

5. Ratios allow comparisons within the firm and with other firms, so that healthycompetition prevails not only between the divisions of the firm but also between the

firms.

6. Ratios are helpful to the management in identifying the loopholes of the firm, so thatnecessary action can be taken in time.

7. The trend ratios enable to know whether the firm has improved its performance over aperiod of time.

8. Ratio analysis is very much useful to the management in carrying out their functionslike planning, forecasting, coordination, and control.

9. The utility of ratio analysis lies in the fact that it presents data on a comparative basisand enables drawing conclusions regarding the efficiency of a firm.

10.With help of ratio analysis one can measure the firms solvency both long term andshort term efficiency and earning power can be assessed.

11.CONCEPT OF WORKING CAPITAL:There are 2 concepts:

Gross Working Capital Net Working Capital

(Gross working capital: - It is referred as total current assets.)

Focuses on,

Optimum investment in current assets:

Excessive investments impairs firm s profitability, as idle investment earns nothing.

Inadequate working capital can threaten solvency of the firm because of its inability to


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meet its current obligations. Therefore there should be adequate investment incurrent

assets.

Financing of current assets Whenever the need for working capital funds arises,agreement should be made quickly. If surplus funds are available they should be invested

in short term securities.

Net working capital (NWC) defined by 2 ways,

Difference between current assets and current liabilities Net working capital is that

portion of current assets which is financed with long term funds.

Types of financial ratios:

Financial ratio analysis groups the ratios into categories which tell us about different facets of a

company's finances and operations. An overview of some of the categories of ratios is given

below.

Liquidity Ratios which give a picture of a company's short term financial situation orsolvency.

Leverage Ratios which show the extent that debt is used in a company's capital structure. Operational Ratios which use turnover measures to show how efficient a company is in

its operations and use of assets.

Profitability Ratios which use margin analysis and show the return on sales and capitalemployed.

Liquidity Ratios:

These ratios are also termed as working capital ratio or short term solvency ratio. These ratios

measure the short term solvency of the firm. Liquidity is the ability of a firm to meet its current

or short term obligations when they become due. The short term creditors like suppliers of

goods, banks which provide short term credit are primarily interested in the companys ability to

meet its short term obligations. The firm can meet its short term obligations only when it has

sufficient liquid funds. Some of the common liquidity ratios are:


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a. Current Ratiob. Liquidity Ratio

a. Current Ratio:This ratio will explain the relationship between the current assets and current liabilities.

The current ratio of a firm measures short term solvency of the firm. The higher the

current ratio, the larger is the amount of rupees available per rupee of current liability, the

more is the firms ability to meet current obligations and the greater is the safety of funds

of short term creditors. Thus current ratio in a way is a measure of margin of safety to the

creditors.

Current ratio = Current Assets

Current Liabilities

The standard norm for the current ratio is 2:1. If the ratio is more than 2 that funds are idle and

not been invested them properly. If it is less than 2 the business doesnt enjoy adequate liquidity.

b. Quick Ratio or Acid Test Ratio:This ratio measures the relationship between quick current assets and current liabilities.

Quick AssetsQuick Ratio =

Current Liabilities

Quick Assets = Current Assets(Stock + Prepaid expenses)

Generally, a quick ratio of 1:1 is considered to be ideal. Below 1 is an indicator of inadequate

liquidity and above 1 is not advisable. Usually high liquid ratios and indication that the firm is

liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a

low liquidity ratio represents that the firm's liquidity position is not good. As a convention,

generally, a quick ratio of "one to one" (1:1) is considered to be satisfactory.


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Leverage Ratios:

By using a combination of assets, debt, equity, and interest payments, leverage ratios are used to

understand a company's ability to meet it long term financial obligations. The mostly usedleverage ratios are

Debt Equity Ratio Interest Coverage Ratio Dividend Coverage Ratio Proprietary Ratio

a. Debt- Equity Ratio:This ratio is also called External equities to internal equities ratio. It shows the relationship

between borrowed funds and owners funds or external funds and internal funds.

Long Term LiabilitiesDebt Equity Ratio =

Shareholders Equity

The ratio of 2:1 is considered as ideal. A very high debt equity ratio is unfavorable and low rate

implies that the creditors are relatively at lower risk.

b. Interest Coverage Ratio:One of the approaches to test the solvency of the firm is interest coverage ratio. The Ratio is

calculated as under:

EBIDT (Earnings before Interest and Tax)Interest Coverage Ratio =

Fixed Interest C


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It is also called Debt service ratio. A ratio of normally 6 times is considered as ideal. Low ratioindicates excessive use of debt. Higher the ratio, better it is from the point of creditors.

c. Dividend Coverage Ratio:A coverage ratio measures a company's ability to pay off its required preferred dividend

payments. A healthy company will have a high coverage ratio, indicating that it has little

difficulty in paying off its preferred dividend requirements

Net Profit after Tax and InterestDividend Coverage Ratio =

Preference Dividend

This ratio indicates the safety margin available to the preference shareholder

d)Proprietary Ratio:

This ratio is also known as equity ratio or net worth to total assets ratio. It is calculated as:

Net WorthProprietary Ratio=

Total Assets

Net Worth= Equity Share Capital+ Preference Share Capital+ Reserves and Surplus Fictitious

Assets

This ratio throws light on the general financial strength of the company. It is also regarded as a

test of the soundness of the capital structure. Higher the ratio or the share of shareholders in the

total capital of the company better is the long-term solvency position of the company. A low

proprietary ratio will include greater risk to the creditors.

Operating Ratios:

These ratios are also called turnover ratios or activity ratios, because they indicate the speed with

which assets are being converted or turned over into sales. They are also known as efficiency


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ratios, because these ratios indicate the efficiency with which the firm manages and uses its

assets. Some of the important ratios are discussed below:

Capital Turnover Ratio Total Assets Turnover Ratio Fixed Assets Turnover Ratio Current Assets Turnover Ratio Stock (or) Inventory Turnover Ratio Debtors Turnover Ratio Creditors Turnover Ratio

Working Capital Turnover Ratio

a. Capital Turnover Ratio:It examines the efficiency of capital employed in the business. This ratio indicates the firms

ability to generate sales per rupee of the capital employed.

Net Sales

Capital Turnover Ratio=

Capital Employed

The higher the ratio, the more efficient is the firm in the utilization of owners and long term

creditors funds.

b. Total Assets Turnover Ratio:This ratio shows the firms ability in earning sales in relation to Total assets employed in the

business. The total asset turnover ratio measures the ability of a company to use its assets to

generate sales.

Net SalesTotal Assets Turnover Ratio=

Total Assets


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The standard norm for this ratio is 2 times. A higher ratio indicates overtrading and lower ratio

indicates that the assets are idle.

c. Fixed assets Turnover Ratio:This ratio indicates the firms efficiency in utilizing the fixed assets for generating sales and

earning profits. It is calculated by dividing net sales by fixed assets.

Net SalesFixed Assets Turnover Ratio=

Net Fixed AssetsIf the fixed asset turnover ratio is low as compared to the industry or past years of data for the

firm, it means that sales are low or the investment in plant and equipment is too much. Higher

the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilizationof fixed assets

d. Current Assets Turnover Ratio:It indicates the efficiency of the firms investments in current assets in relation to net sales. It is

calculated as

Net SalesCurrent Assets Turnover Ratio =

Current Asset

e. Stock (or) Inventory Turnover Ratio:This ratio is a relationship between the cost of goods sold during a particular period of time and

the cost of average inventory during a particular period. It is expressed in number of times. Stock

turnover ratio / Inventory turnover ratio indicates the number of time the stock has been turned

over during the period and evaluates the efficiency with which a firm is able to manage its

inventory. This ratio indicates whether investment in stock is within proper limit or not.

Cost of Goods SoldStock Turnover Ratio=

Average Inventory

Opening Stock + Closing StockAverage Stock =

2


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Usually a high inventory turnover/stock velocity indicates efficient management of inventory

because more frequently the stocks are sold; the lesser amount of money is required to finance

the inventory. A low inventory turnover ratio indicates an inefficient management of inventory.

f. Debtors Turnover Ratio:Debtors turnover ratio or accounts receivable turnover ratio indicates the velocity of debt

collection of a firm. In simple words it indicates the number of times average debtors

(receivable) are turned over during a year.

Net Credit SalesDebtors Turnover Ratio=

Average Trade Debtors

Net Credit Sales=Credit Sales-Sales Returns

Trade Debtors=Sundry Debtors+ Bills receivable +Accounts Receivable

The higher the value of debtors turnover the more efficient is the management of debtors or

more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient management

of debtors or less liquid debtors.

g. Creditors Turnover Ratio:It expresses the relationship between creditors and purchase. A high creditors turnover ratio

signifies that the creditors are being paid promptly. This situation enhances the credit worthiness

of the company. However a very favorable ratio to this effect also shows that the business is not

taking the full advantage of credit facilities allowed by the creditors.

Total SalesCreditors Turnover Ratio=

Average Creditors

h. Working Capital turnover ratio:This ratio indicates whether or not working capital has been effectively utilized in making sales.

It is calculated as under:


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Net Sales

Working Capital Turnover Ratio=

Net Working Capital

A high ratio indicates efficient utilization of working capital and a low ratio indicates otherwise.

But a very high working capital turnover ratio may also mean lack of sufficient working capital

which is not a good situation.

Profitability Ratios:

Profitability ratios are of utmost importance for a concern. These ratios are calculated toenlighten the end results of business activities which are sole criterion of the overall

efficiency of a business concern. The profitability ratios measure the operational efficiency or

the profitability of the concern. Accordingly, profitability ratios can be calculated under these

two heads;

Profitability ratios in relation to sales Profitability ratios in relation to investment

Profitability Ratios in relation to Sales:

Under this category, many ratios are calculated relating to different concepts of profits to sales.

Some of them are:-

i. Gross Profit Ratioii. Net Profit Ratio

Profitability ratios in relation to investment:

The ratios under this category are

i. Return on Assets Ratioii. Return on Net Worth Ratio

iii. Return on Fixed Assets Ratioiv. Return on Current Assets Ratiov. Return on Working Capital Ratio


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vi. Earnings per Sharevii. Dividend per Share

viii. Dividend yield Ratioix. Earnings yield Ratiox. Price Earnings Ratio

xi. Dividend Pay Out Ratioi. Gross Profit Ratio:

It is also called gross margin ratio or average markup ratio. It establishes relationship between

gross profit and net sales

Gross ProfitGross Profit Ratio = *100

Net SalesGross Profit= Net sales-Cost of Goods Sold

Net Sales=Total Sales- Sales Returns

Cost of Goods Sold=Opening Stock + Purchases + Direct Expenses - Closing Stock

ii. Net Profit Ratio:It is calculated by dividing net Profit by net sales. It indicates overall profitability of the firm.

The purpose of this ratio is to reveal the amount of profit left to shareholders after meeting all

costs and expenses of the business.

Net Profit after TaxNet Profit Ratio= *100

Net Sales

This ratio also indicates the firm's capacity to face adverse economic conditions such as price

competition, low demand, etc. Obviously, higher the ratio the better is the profitability

iii. Return on Assets Ratio:


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It is calculated to evaluate the profitability of the investment made in the assets of the firm. With

the help of this ratio the firm can know whether is assets are properly utilized or not. Higher the

ratio better it is for the company. A very low roa usually indicates inefficient management,

whereas a high ROA means efficient management

Net Profit after TaxesReturn on Assets = *100

Total Assets

iv. Return on Net worth Ratio:The ratio measures the relationship between the Net profit and shareholders funds. With the

help of this ratio the firm can know whether is assets are properly utilized or not. This ratio is

one of the most important ratios used for measuring the overall efficiency of a firm. As the

primary objective of business is to maximize its earnings, this ratio indicates the extent to which

this primary objective of businesses being achieved. This ratio is of great importance to the

present and prospective shareholders as well as the management of the company. As the ratio

reveals how well the resources of the firm are being used, higher the ratio, better are the results.

Net Profit after Tax

Return on Net Worth Ratio = *100Net Worth

Net Worth=Equity Share Capital + Preference Share Capital + Reserves and Surplus Fictitious

Assets.

v. Return on Fixed Assets Ratio:This ratio is calculated to measure the profit after tax earned against the investments made in

fixed assets to find out whether the assets are properly utilized or not.

Profit after TaxReturn on Fixed Assets Ratio=

Fixed Assetsvi. Earnings per Share(EPS):

The profitability of a firm can be measured in terms of number of equity shares. This ratio is

useful in investment analysis and also financial analysis. The higher the better is the performance
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of the company. EPS ratio calculated for a number of years indicates whether or not the earning

power of the company has increased.

Profit available To Equity Share HoldersEPS=Number of Equity Shareholders

vii. Dividend per share(DPS):This ratio establishes the relationship between the net profits distributed after interest and

preference dividend to equity shareholders and the number of equity shares. From the present

and potential investors point of view, a higher dividend per share is good sign.

Earnings distributed as dividend to equity shareholdersDividend per Share =

Number of Equity Shares

viii. Price Earnings Ratio:It establishes the relationship between market price of share of a company and EPS of the

company. The PE ratio indicates the expectations of the equity investors about the earnings of

the firm.

Market Price per SharePrice Earnings Ratio =

EPS

Price earnings ratio helps the investor in deciding whether to buy or not to buy the shares of a

particular company at a particular market price. Generally, higher the price earnings ratio the

better it is. If the P/E ratio falls, the management should look into the causes that have resulted

into the fall of this ratio

ix. Dividend Yield Ratio:The purpose of calculating dividend yield ratio is to know current rate of return to the

shareholders as a percentage of their investment. It is calculated as


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Dividend per ShareDividend Yield Ratio= *100

Market value per Share

x. Earnings Yield Ratio:

The purpose of calculating earnings yield ratio is to evaluate the rate of return of

shareholders in relation to the market value per share.

Earnings per Share

Earnings Yield Ratio=

Market value per Share

This ratio is used to evaluate the profitability of the firm in terms of market price of the share.

The higher the ratio, the better would be the return to the shareholders and vice versa.

xi. Dividend Payout Ratio:This ratio indicates as to what proportion of EPS is being declared as dividend and what

percentage is retained by the company in the business.

Dividend per ShareDividend Payout Ratio=

Earnings per Share

xii. Return on Current Assets Ratio:This ratio is calculated to measure the profit after tax earned against the investment made in

current assets.

Net Profit after TaxReturn on current assets ratio=

Current Asset


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xiii. Return on Working Capital Ratio:Working capital is the capital which is required to meet the day to day operations of the concern.

This ratio enables us to understand how the working capital was utilized in running the business

for earning the profits.

Net Profit after Interest and TaxReturn on working capital ratio=

Working Capital


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CHAPTER:2

Review of literature &

Research Design


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LITERATURE REVIEW

(Source:Steven A. Lifland, High Point University, North Carolina)

The existence and maintenance of working capital is the lifeblood of a corporation. It is the cash

flow that revitalizes operations or slows it down to inoperable levels. Regardless of the size of

the company, the management of working capital accounts should influence its financial health.

Kargar and Blumenthal (1994) found that small businesses were significantly impacted by

managements ability to successfully plan the cash requirements of the firm. Managers need to

monitor the ratio of total working capital to total company assets, as a relatively high figure can

signal future strains on the operational financial health of the firm. Filbeck and Krueger

(2002)report the ordinal rankings of industries across working capital management variables for

the period of 1996-1999 as reported by a CFO Magazine survey. The working capital measures

were not static but the specific ratios for different industries were stable over time.The majority

of the empirical studies on the management of working capital has centered on the possible link

to profitability. Jose et al. (1996) found evidence that U.S. firms following an aggressive

working capital policy saw their profits enhanced. There was a significant negative relationship

between the cash conversion cycle of a firm and its profitability. Looking at U.S. firms during

the period of 1974- 1994, Shin and Soenen (1998) found evidence that the reduction of net tradecredit increases profitability. When they focused on individual industries, that connection was

not that strong. Deloof (2003) studied a sample of large Belgian public firms between 1992-1996

and found their profits improved as they reduced their days of receivables and inventories. In a

sample of 58 small manufacturing firms in Mauritius, over the period of 1998-2003, Padachi

(2006) found that the companies with aggressive working capital policies were met with lower

profitability. Ganesan (2007) studied a sample of firms from the telecommunication equipment

industry and while he found a negative relationship between working capital efficiency and

profit margins, the results were not significant for that industry. In a more general study,

Raheman and Nasr (2007) analyzed 94 Pakistani public firms from 1999-2004 and found a

significant negative relationship between a high investment in liquid assets and profitability.

Ramachandran and Janakiraman (2007) found that the operating profit of the firm had a negative

relationship with the days of accounts payable. They felt it implied that the less profitable firms


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waited longer to pay their bills. In a current work, Mohamad and Saad (2010) obtained a sample

of 172 firms listed on the Bursa Malaysia exchange over the time period of 2003-2007 and found

significant negative associations between working capital variables and a firms return on assets

and return on invested capital. In a study of the aggregate cash conversion cycle, Moss and Stine

(1993) found that a negative relationship existed between the size of the firm and the length of

the cycle. Larger firms tend to have shorter conversion The Corporate Soap-Opera As the Cash

Turns: Management ofWorking Capital and Potential External Financing Needs cycles. Taking

a survey of 78 domestic firms and 58 foreign firms, Maxwell, Gitman, and Smith (1998) found

that the majority of the sample took advantage of float to control their disbursements and

collections but only the foreign firms had significant usage. Some firms took no advantage of

float in handling their working capital needs. Looking at a sample of merchandising and

manufacturing firms, Uyar (2009) found that the latter group had longer conversion cycles and

that there was a negative relationship between the size of the firm and the length of the cycle.

The determinants of working capital management were explored by Chiou and Cheng (2006)

where factors such as an industry effect, firm performance, and firm size did not provide

consistent conclusions. Two factors that did prove to be consistent were operating cash flow and

leverage. Padachi (2006) found that there was an increasing trend in the short term component

of working capital financing. In another test of the components of working capital management,

Nazir and Afza (2008) looked at the operating cycle, operating cash flow, size, ROA, and

leverage and found that the operating cycle, ROA, and leverage.


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STATEMENT OF THE PROBLEM

The study is focused on analysis and interpretation of working Capital and its management at

Rajashree Cement Works and to produce suitable remedies to improve the performance of the

company regarding working capital and its management.

SCOPE OF THE STUDY

The study was done in Ultratech cement Ltd (Unit: Rajashree Cement Works) in order to analyze

the working capital requirement of the company.The study helps to know the liquidity position

as well as to maintain the profitability of the company.This study is confined to only the

Rajashree cement works of Ultratech cementand it can be further extended to other centres.It is

limited to a period of ten weeks.

OBJECTIVES OF THE STUDY

1. To study the actual scenario of working capital management of Rajashree cement works.

2. To examine the techniques of analysis and interpretation of working capital management.

3 To evaluate current operations of Rajashree Cement Works.

4. To compare performance of Rajashree Cement with previous years.

5. To study and interpret the financial statement of Rajashree Cement Works.

6. To analyze asset utilization performance of the company.


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RESEARCH METHODOLOGY

The source of information was from both primary and secondary data. i.e., from Annual Report

of the company to learn more about companys financial condition, its operations and

attractiveness as an investment and other aspects. Discussions were also held with the officials

concerned whom were more helpful in analyzing the data collected from books, journals etc.,

and the same were reviewed for providing theoretical background of the study. The data

collected is of both primary and secondary which as follows.

Primary Data:

Primary data have been collected from the annual reports of the company, texts, journals which

were reviewed for providing theoretical background of the study. Based on the balance sheet

and profit & Loss account were reviewed in order to calculate various ratios and also collected

report from cost report. The data that are required for the calculation of different types of ratios

are gathered from the organization.

Secondary Data:

Secondary data has been collected through discussion & interaction with the concern executives.

To learn more about the ratio analysis techniques and other aspects discussion were held with

officials who helped a lot in analyzing the collected data. Most of the calculations are made on

the financial statements of the company provided statements Referring standard texts and

referred books collected some of the information regarding theoretical aspects. Method- to assess

the performance of the company method of observation of the work in finance department in

followed.


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LIMITATIONS OF THE STUDY

a. It is based on the data supplied & collected from the available records.b. The ratios are only indicators; they cannot be taken as final regarding the financial health

of the concern.

c. The standards of the ratios vary from industry to industry so they cannot be used asbenchmarking tool.

d. The ratios are calculated on the past data of the industry. So the past performance is onlyestimated.


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Chapter:3

Profile of the industry

&organization


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1. CEMENT INDUSTRY PROFILE

India, being the second largest cement producer in the world after China with a total capacity of

151.2 Million Tones (MT), has got a huge cement industry. With the government of India giving

boost to various infrastructure projects, housing facilities and road networks, the cement industry

in India is currently growing at an enviable pace. It is also predicted that the cement production

in India would rise to 236.16 Million Tones (MT) in FY11. It's also expected to rise to 262.61

Million Tones (MT) in FY12. The cement industry in India is dominated by around 20

companies, which account for almost 70% of the total cement production in India

The history of the cement industry in India dates back to the 1889 when a Kolkata-basedcompany started manufacturing cement from Argillaceous. But the industry started getting the

organized shape in the early 1900s.

Cement industry, in any country, plays a major role in the growth of the nation. Cement industry

in India was under full control and supervision of the government. However, it got relief at a

large extent after the economic reform. But government interference, especially in the pricing, is

still evident in India. The reason behind this is the poor rural people who mostly live in mud huts

and cannot afford to have the commodity. Despite the fact, the demand and supply of cement in

India has grown up. In a fast developing economy like India, there is always large possibility of

expansion of cement industry.

Domestic demand plays a major role in the fast growth of cement industry in India. Infact the

domestic demand of cement has surpassed the economic growth rate of India. The cement

consumption rose to 22% in 2009-10 comparing to 2007-08. In cement consumption, the state of

Maharashtra leads the table with 12.18% consumption, followed by Uttar Pradesh. In terms of

cement production, Andhra Pradesh leads the list with 14.72% of production, while Rajasthan

remains at second position.


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Cement industry in India is currently going through a technological change as a lot of up

gradation and assimilation is taking place. Currently, almost 93% of the total capacity is

based entirely on the modern dry process, which is considered as more environment-friendly.

Only the rest 7% uses old wet and semi-dry process technology. There is also a huge scope of

waste heat recovery in the cement plants, which lead to reduction in the emission level and hence

improves the environment.

The demand drivers for the cement sector continue to be housing, infrastructure

and commercial construction, etc., we expect the proportion of infrastructure in total

demand to improve further in future, as the thrust on infrastructure development is

on the rise. During April-November 2007, cement demand grew by 10 per cent year-

on-year (y-o-y) propelled by the growth witnessed in end user segments such as

housing, infrastructure etc., CRISIL Research expects demand to remain strong and

grow by over 12 per cent in the next 2 years. Cement demand is expected to

outstrip supply for the next year and a half as no major capacities are coming on-

stream, thus providing enough flexibility to cement manufacturers to further hike

the prices.

Today, cement from Andhra is going all over India, including Assam, Meghalaya,

Jharkhand, Orissa, West Bengal, Chattisgarh, Gujarat and Maharashtra. More cement

is likely to flow into Tamil Nadu from the state in view of cut in sales tax. Any further

increase in demand in the South India will benefit the cement industry here. Cement

movement from Gujarat to Mumbai is also coming down due to exports.


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A US$ 30 billion corporation, the Aditya Birla Group is in the League of Fortune 500. It is

anchored by an extraordinary force of over 130,600 employees, belonging to 40

differentnationalities. In the year 2009, the Group was ranked among the Top Six Great Places

for Leaders in the Asia Pacific region, in a study conducted by Hewitt Associates, RBL Group

andFortune magazine. The Group has also been adjudged The Best Employer in India and

among the top 20 in Asia by the Hewitt-Economic Times and Wall Street Journal Study

2007.Nearly 60 per cent of its revenue flows from its overseas operations. The Group operates in

27 countries - Australia, Bahrain, Bangladesh, Brazil, Canada, China, Egypt,France,

Germany,Hungary, India, Indonesia, Italy, Korea, Laos, Luxembourg, Malaysia, Myanmar,

Philippines,Singapore, Sri Lanka, Switzerland, Thailand, UAE, UK, USA and Vietnam.

Globally, the Aditya Birla Group is:

A metals powerhouse, among the world's most cost-efficient aluminium and copper producers.

Hindalco-Novelis is the largest aluminium rolling company. It is one of the 3 biggest producers

of primary aluminium in Asia, with the largest single location copper smelter

No. 1 in viscose staple fibre The 4th largest producer of carbon black The 4th largest producer of insulators The 5th largest producer of acrylic fibre The 8th largest cement producer Among the best energy efficient fertiliser plants
http://www.adityabirla.com/the_group/Aditya%20Birla%20Group%20profilehttp://www.adityabirla.com/the_group/Aditya%20Birla%20Group%20profilehttp://www.adityabirla.com/the_group/Aditya%20Birla%20Group%20profile


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Group Overview

No.1 in cement business The 2nd largest player in viscose filament yarn The largest in the chlor-alkali sector Among the top 3 mobile telephony companies Among the top 6 in life insurance and asset management Among the top 2 super-market chains in the retail business Among the top 7 BPO companies

Rock solid in fundamentals, the Aditya Birla Group nurtures a

culture where success does not come in the way of the need to

keep learning afresh, to keep experimenting.

Beyond Business

Works in 3000 villages Reaches out to 7 million people annually through the Aditya Birla Centre for Community

Initiatives and Rural Development, spearheaded by Mrs. Rajashree Birla

Focuses on: healthcare, education, sustainable livelihood, infrastructure and espousingsocial reform

Runs 42 schools which provide quality education to 45000 children. Of these, over 18000children receive free education

Our 18 hospitals tend to more than a million villagers In line with its commitment to sustainable development,has partnered the Columbia

University in establishing the Columbia Global Centres Earth Institute in Mumbai

To embed CSR as a way of life in organizations, has set up the FICCI - Aditya Birla CSRCentre for Excellence, in Delhi


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UltraTech Cement: The Engineers Choice

UltraTech Cement Limited has an annual capacity of 48.8 million tones. It manufactures and

markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzalana

Cement. It also manufactures ready mix concrete (RMC).

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

countries around the Indian Ocean, Africa, Europe and the Middle East.UltraTech's subsidiaries

are Dakshin Cements Limited, Harish Cements Limited, UltraTech Ceylinco (P) Limited and

UltraTech Cement Middle East Investments Limited.

UltraTech is India's largest exporter of cement clinker. The company's production facilities are

spread across eleven integrated plants, one white cement plant, twelve grinding units, and five

terminalsfour in India and one in Sri Lanka. Most of the plants have ISO 9001, ISO 14001

and OHSAS 18001 certification. In addition, two plants have received ISO 27001

certification and four have received SA 8000 certification. The process is currently underway for

the remaining plants. The company exports over 2.5 million tonnes per annum, which is about 30

per cent of the country's total exports. The export market comprises of countries around the

Indian Ocean, Africa, Europe and the Middle East. Export is a thrust area in the company's

strategy for growth.UltraTech's products include Ordinary Portland cement, Portland Pozzolana

cement and Portland blast furnace slag cement

Ordinary Portland cement Portland blast furnace slag cement Portland Pozzolana cement Cement to European and Sri Lankan norms
http://www.ultratechcement.com/products/index.htm#3http://www.ultratechcement.com/products/index.htm#4http://www.ultratechcement.com/products/index.htm#5http://www.ultratechcement.com/products/index.htm#5http://www.ultratechcement.com/products/index.htm#4http://www.ultratechcement.com/products/index.htm#3


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Following facilities are installed in the factory:

Captive power plant of 58.2MW capacity

Leased limestone mines

Limestone crusher, stacker and reclaimer

Coal mill with crusher and pulverization

Raw mill: Ball mill with roller press

Raw mill silos

Pre-heaters

Kiln & cooler

Clinker Stock Piles & Silo Cement mill: Ball mill with roller press Cement Silos Packing Machines(Rotary Packers) Bulk cement loading silo Fly- ash storage silo Mobile fire and foam tender Alarm system Well equipped hospital

The major raw materials are limestone, coal, Gypsum, Literate, Bauxite and Fly-ash. The lime

stone is available in-house through leased mines. The other materials are purchased from nearby

mines. The other suppliers are technology/spare parts suppliers who play a vital role in

producing quality cement.

In order to meet the growing customer demand for the products/services in the parts of western

and southern region, the following additional facilities have been established.

a. Cement split grinding unit at Hotgi, (Maharashtra) with capacity of 3500 TPD-1995b. Bulk loading terminal at Doddaballpur with a capacity of 180 TPD of packing -1999


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c. Read mix concrete plant at Hyderabad, Chennai, and Bangalore, with total capacity of 300M3/Hour9900

d. Facilities for bulk loading of clinker & cement at Rajashree.e. Owns 3 bulk rakes to transport cement to packing plant, Doddaballapur of catering Karnataka

and Kerala market.

Rajashree Cement is governed by relevant industry acts for Mining, water, pollution, safety, etc. The

company policy is to conduct its operations safely, protecting the health of its employees and all

others who may be affected by its operations with due regard to environmental Protection and

compliance to statute. In the interest of the organization ad employees with regard to Safety, Health

and Environment, we have excellent regulating & monitoring system, such as.

Identification of defects related to equipment/ environment / safety and audits of the sameby the Internal and External Parties.

10 Bedded Hospital with ECG, X-Ray facilities and extension of medical services tocontract laborers and villagers.

ISO-9001: 2000 Quality Management System. The Unit is also implementing OHSAS-18001 & SA8000 within 4 months of time.

Proactive measures are also being taken to avoid incidents/accidents in the plant in a structural

manner. For this detailed environmental impact and health & safety risk analysis have been done.

Regular health checkup of all employees is also being done to identify any adverse impact on the

health. To improve awareness regular training sessions are being organized for employees both

at HRD & work place.

The Company produces a variety of product range in the cement, viz., Rajashree Cement - 43

Grade, Birla Super Cement - 53 Grade, Birla Plus CementPPC. The deliverance of products to

the end user is made through a well established Dealer/ Retailer Network with sufficient stock

points/ god owns. The SAP R/3 System with sales and distribution module is used to book orders

with an assurance of delivery within 48 Hrs. from any of the nearest Depot/ Dealer.


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3)VISION, MISSION and QUALITY POLICY

Vision:

To be a premium global conglomerate with a clear focus on each business.

Mission:

To deliver superior value to our customers, Shareholders, employees and Society at large.

Values:

Integrity Commitment Passion Seamlessness Speed

Quality Policy:

Rajashree cement is committed to satisfy its customers

By supplying cement of various grades with consistent quality as per mutually agreedterms.

By providing timely services ,before and after sale, Through continuous quality improvement and optimisation of product costs and Through internal customer focus

Rajashree Cement ,in its Endeavour to fulfill the above tasks, also commits to meet the

safety ,social and environmental needs of the surrounding community.


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GROUP COMPANIES IN INDIA

Grasim Industries Limited Grasim Bhiwani Textiles Limited UltraTech Cement Limited Hindalco Industries Limited Aditya Birla Chemicals (India) Limited Aditya Birla Nuvo Limited Madura Garments Lifestyle Retail Company Limited Idea Cellular Limited Aditya Birla Minacs Worldwide Limited Aditya Birla Finance Limited Birla Insurance Advisory and Broking Services Limited Aditya Birla Capital Advisors Private Limited Aditya Birla Money Mart Limited Aditya Birla Money Limited Essel Mining and Industries Limited Aditya Birla Retail Limited

Joint Ventures

Birla Sun Life Insurance Company Limited Birla Sun Life Asset Management Company Limited Tanfac Industries Limited Hindalco Almex Aerospace Limited Mahan Coal Hydromine Aditya Birla Grasun Chemicals (Fangchenggang) Limited Thai Peroxide Company Limited


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MANAGEMENT

BOARD OF DIRECTORS

Mr. Kumar Mangalam Birla, Chairman Mrs. Rajashree Birla Mr. R.C. Bhargava Mr. G.M. Dave Mr. N.J. Jhaveri Mr. S.B. Mathur Mr. V.T. Moorthy Mr. S. Rajgopal

Mr. D.D. Rathi Mr. O.P. Puranmalka, Whole Time Director

EXECUTIVES:

Mr. R. K. SHAHGroup Executive President & CMO(Mfg. & Projects)

Mr. S. N. JAJOOChief Marketing Officer Mr. K. C. BIRLAChief Financial Officer Mr. C.B.TIWARIChief People Officer

UNIT HEADS:

Mr. R. M. GUPTAVikram Cement Works Mr. D. R. DHARIWALBirla White Mr. S. K. GUPTARajashree Cement Works Mr. S. NATARAJANReddipalayam Cement Works Mr. M. M. TIWARIRawan Cement Works Mr. B. B. JOSHIAditya Cement Works Mr. V. K. JAINKotputli Cement Works

Mr. K.Y.P.KULKARNIGujarat Cement Works Mr. S.KUMARHirmi Cement Works Mr. A.K.PILLAIA.P.Cement Works

COMPANY SECRETARY:

Mr. S.K CHATTERJE


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PRODUCT PROFILE:

1. Rajashree Cement:

Rajashree cement is 43 grade cement which has end strength 63 MTPA; it is positioned in the

middle market segment. The product has been used extensively for construction activities in the

southern Maharashtra and Karnataka. It enjoys a reputation of value for money

2. Birla Super:

Birla super is 53 grade cement in the companys up-market product. Birla super has 28 days

comprehensive strength of to 63MTPA. It can produce concrete up to M70 grade with ease.

3. Birla plus:

Birla plus is a premium composite cement in the companys up-market product. But it

takes a truly special one to breathe life into a construction. Birla plus not only comes with the

unique quality of strengthening your construction over time, it also has concrete answers to the

widest range of modern construction, ranging from row houses to skyscrapers and dams to

flyovers. Construction that stands tall.

4. IRST-40 Cement:-

IRST-40 cement is used for making railways sleepers, dams, and big projects it is a

special category of cement and has very high brains. It helps in producing most durable concrete

and is produced when there is an order for the project.


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CHAPTER:4

Results, analysis & Discussion


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CALCULATION OF RATIOS

LIQUIDITY RATIOS:

A. CURRENT RATIO: Current AssetsCurrent Ratio =

Current Liabilities

Standard norm of the ratio us 2:1

(In Crores)

YEAR CURRENT ASSETS CURRENT

LIABIALITIES

CURRENT RATIO

2007-08 2342.39 1450.06 1.62

2008-09 2959.08 2144.38 1.38

2009-10 3097.84 2277.81 1.36

2010-11 1716.03 1754.38 0.98

Sources: Annual report of Ultra Tech Cement Limited.

A. CURRENT RATIO:

12

34

5

0

1.62

1.381.36

0.98


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Analysis :- The graph shows that in 2008-09 the ratio was 1.62 and in 2009-10 is 1.36 and in

2010-11 is 0.98 .

Interpretation :- The above graph indicates that the current ratio if the company is satisfactorybecause as per the standard norms the current ratio should be 2:1 which the company has

maintained continuously. It is beneficial to the company. And the company is maintaining a

ratio 1.62,1.38,1.36,and 0.98 of its current assets to meet liabilities in 2007 -09, 08-09,09-

10,10,11 respectively the current assets and current liabilities is the two year average is good

and the last year is very low ratio ,last year 2010-11 is low ratio so its not reached the ratio.

LEVERAGE RATIO:

I. DEBT-EQUITY RATIO:Long Term Debt

Debt- equity Ratio =Shareholders Equity

Sources: Annual report of Ultra Tech limited.

YEAR LONG TERM DEBT SHAREHOLDERS

EQUITY

DEBT -EQUITY

RATIO

2007-08 2951.56 6230.04 0.47

2008-09 3201.87 8135.81 0.39

2009-10 3394.95 9467.13 0.36

2010-11 2542.82 4583.36 0.55


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Analysis

The graph shows that in 2010-11 the ratio was 0.55 and in 2007-08 was 0.47 and in 2008-09 was

0.39and 2009-10was 0.36.

Interpretation

The above graph indicates that the current ratio if the company is satisfactory, long term and

equity share holder is average is good and ratio also better last year.

The company has high ratio in the year 2010-11 of 0.55 because of the increase in the debt.

Other ratios are 0.47, 0.39 & 0.36 in the year 2009, 2010, 2011, is the debt equity ratio and long

term debt is 2007-08 is less then 2008-2009 is decrease and increase in the debt 2007-08 and

2010-2011 is increase of debt equity ratio.

I. INTEREST COVERAGE RATIO:PBIDT (Profit before Interest, Depreciation and Tax)

Interest Coverage Ratio =Fixed Interest Charges

(In Crores)

12

34

5

0

0.47

0.390.36

0.55


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Analysis

The graph shows that in 2008-09 the ratio was 32.00 and in 2007-08 was 23.42 and in 2009-10

was 20.02 and 2010-11 was 14.26.

Interpretation

The above graph indicates that the current ratio if the company is satisfactory position at less in

percent. Hence company can improve its cash position in better way

12

34

5

0

23.42

32

20.02

14.26

YEAR PBIDT FIXED INTEREST

CHARGES

INTEREST

COVERAGE

RATIO

2007-08 2619.09 111.84 23.42

2008-09 3424.49 107 32.00

2009-10 2846.95 142.14 20.02

2010-11 1242.17 87.06 14.26


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The unit has high ratio of 32 in the year 2009 when compared with the low ratio of 14.26 in the

year 2011. The other ratios are 23.42, 20.02 in the years 2008 and 2010 respectively in the less

then of 2007-08 and incensed by 2008-09 the ratio is 32.00 is high its interest coverage ratio is

32.00 ratio and 2009-10 is less its not equal then 2008-09 as well as 2010-11 also is not equal

the interest coverage ratio.

I. DIVIDEND COVERAGE RATIO:

Net profit after tax and interestDividend Coverage Ratio =

Preference Dividend

This ratio indicates the safety margin available to the preference shareholders.

(In Crores)


YEAR

NET PROFIT

AFTER TAX ANDINTEREST

PREFERENCE

DIVIDEND

DIVIDEND

COVERAGERATIO

2007-08 1535.81 252.10 6.09

2008-09 2232.60 275.02 8.11

2009-10 1647.96 275.02 5.99

2010-11 617.96 45.79 13.49


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Analysis


was 6.09 and 2009-210 was 5.99.

Interpretation

The ratio is found to be fluctuating year by year, the company is maintaining cash position at less

in percent. Hence company can improve its cash position in better way.

The company has high dividend coverage ratio in the year 2011 of 13.49 and has the low ratio in

the year 2010. The ratios are 6.09, 8.11 in the years 2008, 2009 respectively, the dividend

coverage ratio is high standard is 2010-2011 high of the ratio and more then 2009-2010 and as

well as 2008-09 is also little increase of the ratio and very low of ratio of 2009-10 is low and

little better then 2008-09.

12

3

4

6.09 8.11

5.99

13.49

DIVIDEND COVERAGE RATIO

DIVIDEND COVERAGE RATIO


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TOTAL ASSETS RATIO OR PROPRIETARY RATIO:

Net WorthTotal Assets Ratio =

Total Assets

Net Worth= Equity Share Capital+ Preference Share Capital+ Reserves and Surplus Fictitious

Assets

Total Assets= Fixed Assets+ Current Assets+ Investments

(In Crores)


YEAR NET WORTH TOTAL ASSETS PROPERIORITY

RATIO

2007-08 6230.04 11214.21 0.56

2008-09 8135.81 14093.83 0.58

2009-10 9467.13 16014.71 0.59

2010-11 4583.36 9805.21 0.47


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Analysis


0.56 and 2010-11 was 0.47

Interpretation


in percent. Hence company can improve its cash position in better way

The ratios are 0.56, 0.58, 0.59, and 0.47 in the years 2008, 2009, 2010, and 2011respectively,the

total assets or proreriority ratio is year of high ratio 2009-10 more then 2008-2009 is 0.58 and

high ratio of properiority is 0.59 and low of the ratio is 2010-2011 of 0.47 and less then 2007-

2008 is 0.56.

OPERATING RATIOS:

1) CAPITAL TURNOVER RATIO:Net Sales

Capital Turnover Ratio=Capital Employed

12

34

5

0

0.56 0.58 0.59

0.47


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Capital Employed = Equity Share Capital + Preference Share Capital + Reserves and Surplus +

Profit and Loss Account Balance + Long-Term Loans + DebenturesFictitious Assets

(In Crores)


1

2 34

0.880.85

0.79

0.53

CAPITAL TURNOVER RATIO

CAPITAL TURNOVER RATIO

YEAR NET SALES CAPITAL

EMPLOYED

CAPITAL

TURNOVER

RATIO

2007-08 8571.71 9764.15 0.88

2008-09 10215.05 11949.45 0.85

2009-10 10804.01 13736.90 0.79

2010-11 4290.63 8046.75 0.53


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Analysis


0.79and 2010-11was 0.53.

Interpretation



the ratios are of 0.88, 0.85, 0.79 and 0.53 in the year 2007, 2008, 2009, and 2010 respectively,

the ratio of high year ratio is 2007-2008 will be high ratio and the capital turnover ratio is high of

this year 2007-08 is high, and less then 2009-10 is low of ratio is turnover and 2010-11 is a very

low of the year ratio and net sales of the year, and very low ratio is 0.53 and year of more

turnover ratio is 2008 in 0.88 and middle year is low and less then 0.79.

2)TOTAL ASSETS TURNOVER RATIO:Net Sales

Total Assets Turnover Ratio=Total Assets

(In Crores)


YEAR NET SALES TOTAL ASSETS

TOTAL ASSETS

TURNOVER

RATIO

2007-08 8571.71 11214.21 0.76

2008-09 10215.05 14093.83 0.72

2009-10 10804.01 16014.71 0.67

2010-11 4290.63 9805.21 0.44


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Analysis


0.67and 2010-11 was 0.44

Interpretation


and the circumantance is low its not better way so improve the cash position and work.

The company is having the current assets turnover ratio in the ratios of 3.66, 3.42, 3.49 and 2.50

in the years 2008, 2009, 2010 and 2011 respectively, the total assets turnover ratio is high ratio

the year ratio 2009-10 in 19.29 and less then year of 2010-11 is low of ratio and 17.26 and

average trade debtors is low ratio 14.86 and 14.43 and 17.76 is low of the year 2007-08 and2008-09 and 2010-11

12

34

0.760.72

0.67

0.44

TOTAL ASSETS TURNOVER RATIO

TOTAL ASSETS TURNOVER RATIO


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3) STOCK or INVENTORY TURNOVER RATIO:Net Sales

Stock Turnover Ratio=Average Inventory

Opening Stock + Closing StockAverage Stock=

2(In Crores)


12

34

10.4410.44

7.83

5.55

STOCK TURNOVER RATIO

STOCK TURNOVER RATIO

YEAR NET SALES AVERAGE

INVENTORY

STOCK

TURNOVER

RATIO

2007-08 8571.71 824.14 10.44

2008-09 10215.05 978.44 10.44

2009-10 10804.01 1378.24 7.83

2010-11 4290.63 772.31 5.55


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Analysis


was 7.83 and 2010-11 was 5.55.

Interpretation



The company utilizes its inventory more effectively in the year 2008 and 2009 with ratio of

10.44 which was reduced to 7.83 and 5.55 in the years 2010 and 2011 respectively, stock

turnover ratio is equal of two year 2007-08 and 2008-09 is equal ratio, less then of two year

2009-10 and 2010-11.

4) DEBTORS TURNOVER RATIO:Net Credit Sales

Debtors Turnover Ratio=Average Trade Debtors

Net Credit Sales=Credit Sales-Sales Returns

Trade Debtors=Sundry Debtors+ Bills Receivable + Accounts Receivable (In Crores)


YEAR NET SALES AVERAGE TRADE

DEBTORS

DEBTORS TURNOVER

RATIO

2007-08 8571.71 576.48 14.86

2008-09 10215.05 711.98 14.34

2009-10 10804.01 559.93 19.29

2010-11 4290.63 241.52 17.76


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Analysis


was 14.86 and 2008-09 was 14.34.

Interpretation

The company has high ratio of 19.29 in the year 2010 compared with the ratios of 14.86, 14.34

and 17.16 in the years 2008, 2009 and 2011 respectively, the debtors turn over ratio is high ratio

of the year 2007-08 in 14.86 and less then 2008-09 in 14.34, the year 2009-10 in 19.29 and 2010-

11 in 17.76.

5) CREDITORS TURNOVER RATIO:Total Sales

Creditors Turnover Ratio = Average Creditors

12

34

5

0

14.8614.34

19.29

17.76


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Interpretation


in percent. Hence company can improve its cash position in better way.

The company has a high ratio of 9.49 in the year 2008 and following 8.61, 8.65 and 4.99 in the

years 2009, 2010 and 2011 respectively, the creditors turn over ratio is high ratio of the year

2007-08 in 9.49 and less then 2008-09 in 8.61, the year 2009-10 in 8.65 and 2010-11 in 4.99.

6) WORKING CAPITAL TURNOVER RATIO:Net Sales

Working Capital Turnover Ratio=

Net Working Capital

(In Crores)

Sources: Annual report of Ultra Tech limited

YEAR NET SALES NET WORKINGCAPITAL

WORKINGCAPITAL

TURNOVERRATIO

2007-08 8571.71 892.33 9.61

2008-09 10215.05 814.7 12.54

2009-10 10804.01 820.03 13.18

2010-11 4290.63 210.96 20.34


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Analysis


was 12.54and 2007-08 was 9.61.

Interpretation

The above graph indicates that the Working capital if the company is satisfactory because as per

the standard norms the working capital turnover ratio should be which the company hasmaintained continuously .The company has a high working capital of 20.34 in the year 2010 and

9.61, 12.54, 13.18 in the years 2008, 2009 and 2010 respectively, the working capital turnover

ratio is high ratio of the last year 2010-11 is more ratio of 20.34 and less then 2009-2010 is 13.18

and the year of and 2008-09 is 12.54 and low of ratio and 2007-2008 and is also in 9.61.

Profitability Ratios:

1) GROSS PROFIT RATIO:Gross Profit

Gross Profit Ratio= *100Net Sales

12

34

9.61 12.5413.18

20.34

WORKING CAPITAL TURNOVER RATIO

WORKING CAPITAL TURNOVER RATIO


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Gross Profit= Net sales-cost of goods sold

Net Sales=Total Sales- Sales Returns

Cost of Goods Sold=Opening Stock + Purchases + Direct Expenses - Closing Stock

(In Crores)


12

34

30.55 33.52

26.35 28.95

GROSS PROFIT RATIO

GROSS PROFIT RATIO

YEAR GROSS PROFIT NET SALES

GROSS PROFITRATIO

2007-08 2619.01 8571.71 30.55

2008-09 3424.49 10215.05 33.52

2009-10 2846.95 10804.01 26.35

2010-11 1242.17 4290.63 28.95


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Analysis


was 28.95.and 2009-10 was 26.35.

Interpretation

The above graph indicates that the gross profit ratio if the company is satisfactory because as per

the standard norms the net sales and gross profit should be which the company has maintained

continuously. The ratio is high in the year 2009 with ratio of 33.52 when compared with the

ratios of 30.55, 26.35 and 28.95 in the years 2008, 2010 and 2011 respectively, the gross profit

ratio is more of the year 2008-09 in 33.52 and the less then the year of 2007-08 in 30.55 and year

of 2009-10 is 26.35 and not more increased of ratio on 2010-11 is 28.95.

1) NET PROFIT RATIO:Net Profit after Tax

Net Profit Ratio= *100Net Sales

(In Crores)


YEAR NET PROFIT

AFTER TAX

NET SALES NET PROFIT

RATIO

2007-08 1535.81 8571.71 17.91

2008-09 2232.60 10215.05 21.85

2009-10 1647.96 10804.01 15.25

2010-11 617.96 4290.63 14.40


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Analysis

The graph shows that in 2008-09 the ratio was 21..85 and in 2007-08 was 17.91 and in 2009-10

was 15.25 and 2010-11was 14.4.

Interpretation



The ratio is high in the year 2009 with ratio of 21.85 when compared with the ratios of 17.91,

15.25 and 14.40 in the years 2008, 2010 and 2011 respectively, net profit ratio is the year of

2008-09 is more 15.84 and less then of year 2007-08 is low 13.69 and the near year of ratio is

2010-11 is low of the ratio 14.40.

1) RETURN ON ASSETS RATIO:

Net Profit after TaxesReturn on Assets = *100

Total Assets

1 2 3 4 5

0

17.91

21.85

15.2514.4


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(In Crores)


1 2 3 4 5

0

13.69

15.84

10.29

6.3

YEAR NET PROFIT

AFTER TAX

TOTAL ASSETS RETURN ON

ASSETS RATIO

2007-08 1535.81 11214.21 13.69

2008-09 2232.60 14093.83 15.84

2009-10 1647.96 16014.71 10.29

2010-11 617.96 9805.21 6.30


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Analysis

The graph shows that in 2008-09 the ratio was 15.84 and in 2007-08 was 13.69and in 2009-10

was 10.29and 2010-11 was 6.3

Interpretation



The ratios are 13.69, 15.84, 10.29 and 6.30 in the years 2008, 2009, 2010 and 2011 respectively,

the return assets ratio is more then 2008-09 and in 15.84 and less then 2007-08 is 13.69 and very

low of the year of ratio is very less 2009-10 and low of year ratio 2010-11 is 6.30

1) RETURN ON NETWORTH RATIO:Net Profit after Tax

Return on Net Worth Ratio= *100Net Worth

Net Worth=Equity Share Capital + Preference Share Capital + Reserves and surplus Fictitious

assets

(In Crores)

YEAR NET PROFIT

AFTER TAX

NET WORTH

RETURN ON

NETWORTH

RATIO

2007-08 1535.81 6230.04 24.65

2008-09 2232.60 8140.71 27.42

2009-10 1647.96 9477.58 17.38

2010-11 617.96 4585.92 13.47


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Analysis


was 17.38 and 2010-11 was 13.47.

Interpretation


in percent. Hence company can improve its cash position in better way.The ratios are 24.65,

27.42, 17.38 and 13.47 in the years 2008, 2009, 2010 an 2011respectively, the return on networth

ratio is the total high ratio of the year 2008-09 is 27.42 is more of the ratio less then last year is

low ratio networth ratio is 2007-08 in 24.65 and next year of the ratio is 2009-10 is very low and

decreased the ratio some ratio of networth of ratio 17.38 and other next year 2010-11 is return on

networth ratio is 13.47.

1) RETURN ON FIXED ASSETS RATIO:Net Profit after Tax

Return on Fixed Assets Ratio=Fixed Assets

1 2 3 4

24.6527.42

17.38

13.47

RETURN ON NETWORTH RATIO

RETURN ON NETWORTH RATIO


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61/71


Analysis


was 19.83 and 2010-11 was 9.02.

Interpretation



The ratios are 33.40, 31.65, 19.83 and 9.02 in the years 2008, 2009, 2010 and 2011 respectively,

the return of fixed asset is the total increased the year of high ratio33.40 is high ratio of the year

2007-08 and next year is decreased the ratio of year 2008-09 is 31.00 and other two years is very

low of the year 2009-10 and 2010-11 is 19.83 and 9.02.

1) EARNINGS PER SHARE(EPS):Profit available To Equity Share Holders

EPS=

Number of Equity Shareholders

(In Crores)

YEAR

NET PROFIT

AFTER TAX

NUMBER OF

ISSUED EQUITY

SHARES

EARNINGS PER

SHARE

2007-08 1535.81 9.167 167.5

2008-09 2232.60 9.167 223.31

2009-10 1647.96 9.167 179.73

2010-11 617.96 17.00 36.35


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Analysis


was 167.7 and 2010-11 was 36.35

Interpretation



The company has a high earnings per share of 223.31 in the year 2009.the other ratios are 167.5,

179.73 and 36.35 in the years 2008, 2010 and 2011 respectively, the earning per share the more

high year of the ratio 2008-09 is 223.31 and the less then last year of the ratio is to low and

compare to the year 2007-08 is 167.5 and better then other year 2009-10 is 179.73 is better and

next year is very low of the ratio 2010-11 is 36.35.

1 2 3 4

167.5

223.31

179.73

36.35

EARNINGS PER SHARE

EARNINGS PER SHARE


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Chapter:5

Summary of findings,

conclusions and

Recommendations


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OBSERVATIONS & SUGGESTIONS

OBSERVATIONS:

Current ratios indicate the extent of soundness of the current financial position of anundertaking and degree of safety provided to the creditors.

It was observed that the acid test ratio was lower than the standard. Set which was 1:1. In theyear 2008, 2009, 2010, & 2011 the ratios were 1.047, 0.923, 0.754, and 0.537 respectively.

The reduction in ratio is observed due to decrease or change in debtors.

It was observed that the company has debt-equity ratio of 0.473, 0.393, 0.358 and 0.554 in theyears 2008, 2009, 2010 and 2011 respectively. This indicates that the company is maintaining

steady ratio among the long term debt and shareholders equity.

The company is maintaining steady increase in its dividend coverage ratio which indicates thecompanys ability to pay off its required preference dividend payments.

The company is maintaining standard proprietary ratio of 0.55, 0.57, 0.59 and 0.46 in theyears 2008, 2009, 2010 and 2011 respectively. This indicates that the company is maintaining

sound capital structure.

The company maintains steady inventory turnover ratio of 10.44 in the years 2008, 2009 andis reduced by 7.83 and 5.55 in the coming years which shows the company is having moreinventory.

The debtors turnover ratio of the company is maintained increasing from 14.8 in the year2008 to 19.29 in the year2009 and decreases to 17.76 in the year 2011. These states that the

debtors are more liquid.

By the creditors turnover ratio of the company indicates that there is steady decrease as 9.49in the year 2008 to 4.99 in the year 2011 which is a good sign.

The working capital ratio of the company is maintained with steady increase every year from9.6 in 2008 to 20.33 in 2011. This indicates that working capital is utilizing more effectively

in generation of sales.

The gross profit ratio of the company is maintained in random movement as 30.55, 33.52,26.35 and 28.95 in the years 2008, 2009, 2010 and 2011 respectively. This is because of

increase in input cost and decrease in sales realization because of competitive market.


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The net profit ratio is high in 21.85 in the year 2008 and it is less in the years 17.91, 15.25 and14.40 in the years 2008, 2009 and 2011 respectively. The company is earning less profit.

The return on the assets of the company is in decreasing way which indicates inefficientmanagement.

The company maintains a high return on net worth of 27.42 in the year 2009 following 24.65,17.38 and 13.47 in the years 2008, 2009 and 2011 respectively. This means the company is

not utilizing its net worth in generation of profit.

The earnings per share is made high in 2009 in 223.31 following 179.73, 167.5 and 36.35 in2008, 2009 and 2011 respectively.

The dividend per share is also maintained steady as 27.50, 30.00 and 30.00 in the years 2008,2009, 2010 respectively but it is decreased in 2011 to 5.38.

The dividend yield ratio and price yield ratio are maintained steady in the years 2008, 2009,2010 but it has decreased highly during the year 2011. These means the rate of return to share

holders has decreased rapidly in the year 2011

SUGGESTIONS:

The company is maintaining steady debt source from the outsiders which is a soundperformance of the company.

The sales of the company are increasing year by year it is an indication of soundperformance of the company. So the company should maintain it in future also.

The company is not maintaining a steady inventory ratio which means the company isholding more inventories.

The company is maintaining steady working capital ratio in generation of sales which is agood sign. This is to be maintained in the future also.


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CONCLUSION

RAJASHREE CEMENT is first Cement Company to get Super brand name ULTRA.TECH

CEMENTS is going for major expansions and modernization of cement plants across the

country.

The company has increase its production to 2.96 millions tones in July 2010 compared to 4

millions tones in July 2011 and it is expected to increase in the coming years.

SAP TECHNOLOGY is in existence, by which all departments are working efficiently. This

technology will help in increasing the production and reduction in cost of operating.

The company has the opportunity to become market leader in cement industry throughout

globally. Ultra Tech Cements was the leader, is the leader and it will be the leader in India.

So, RAJASHREE CEMENT have huge opportunities in future. Now a days construction and

infrastructure industry are booming. I hope this occasion will make Ultra Tech Cements huge

profit.

At the last my opinion is Where is will, There is way. In this project, I learned a lot

Ultra Tech Cements and Cement sector with our management elements in practice or practical

world.


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18. BIBLIOGRAPHY

Financial management : I.M. Pandey

5th

Edition, Tata McGraw Hill

Publishing company, New Delhi

Financial management : M.Y. KHAN & P.K. JAIN

TATA Mc. GRAW HILL 2002,

NEW DELHI

Financial management : Prasanna Chandra

8th

Edition P.K. Madhavan

Publisher

ULTRATECH CEMENT LTDAnnual Report

WEBSITES:

www.ultratech.com

www.adityabirla.com

www.moneycontrol.com

www.ebscohost.com

http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=5b3a0644-d017-46d3-953e-

2e9878a1cc06%40sessionmgr104&vid=1&hid=125
http://www.ultratech.com/http://www.adityabirla.com/http://www.moneycontrol.com/http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=5b3a0644-d017-46d3-953e-2e9878a1cc06%40sessionmgr104&vid=1&hid=125http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=5b3a0644-d017-46d3-953e-2e9878a1cc06%40sessionmgr104&vid=1&hid=125http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=5b3a0644-d017-46d3-953e-2e9878a1cc06%40sessionmgr104&vid=1&hid=125http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=5b3a0644-d017-46d3-953e-2e9878a1cc06%40sessionmgr104&vid=1&hid=125http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=5b3a0644-d017-46d3-953e-2e9878a1cc06%40sessionmgr104&vid=1&hid=125http://www.moneycontrol.com/http://www.adityabirla.com/http://www.ultratech.com/


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Annexure


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BALANCE SHEET OF ULTRATECH CEMENT WORKS

PARTICULARS 2008 2009 2010 2011

SOURCES OF FUNDSSHARE CAPITAL 91.69 91.69 91.69 85

EMPLOYEE STOCK OUTSTANDING ----------- 4.9 10.45 2.52

SHARE CAPITAL SUSPENSE ----------- ----------- ------------ 45.84

RESERVES AND SURPLUS 6138.35 8044.12 9375.44 4452.56

LOAN FUNDS

SECURED LOANS 2291 2350.4 2205 1835.31

UNSECURED LOANS 660.56 851.47 1189.95 707.51

DEFERRED TAX LIABILITIES 582.56 606.87 864.37 918.01

TOTAL 9764.15 11949.45 13736.9 8046.75

APPLICATION OF FUNDS

FIXED ASSETS

GROSS BLOCK 6770.97 7588.4 11060.82 9038.7

LESS:DEPRECIATION/AMORTISATION 3380.53 3564.89 3972.54 2585.19

NET BLOCK 3390.44 4023.51 7088.28 645.51

CAPITAL WORK IN PROGRESS 1192.35 3026.31 1218.64 392.95

TOTAL 4582.79 7049.82 8306.92 6846.46

FIXED ASSETS HELD FOR DISPOSAL 14.33 4.14 0.85 --------------

INVESTMENTS 4274.7 4080.79 4690.1 1238.64

CURRENT ASSETS,LOANS&ADVANCES

INTEREST ACCURED ONINVESTMENTS

0.7 0.7 0.48

INVENYORIES 824.14 978.44 1378.24 772.31

SUNDRY DEBTORS 576.48 711.98 559.93 241.52

CASH & BANK BALANCES 116.38 127.47 113.38 90.95

LOANS AND ADVACES 824.69 1167.01 1045.81 611.25

TOTAL CURRENT ASSETS 2342.39 2985.6 3097.84 1716.03

LESS:-

CURRENT LIABILITIES ANDPROVISIONS

LIABILITIES 1266.86 1603.91 1686.93 1505.07

PROVISIONS 183.2 566.99 590.88 249.31

TOTAL CURRENT LIABILITIES 1450.06 2170.9 2277.81 1754.38


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NET ASSETS 892.33 814.7 820.03 38.35

TOTAL FUNDS UTILIZED 9764.15 11949.45 13736.9 8046.75

PROFIT & LOSS A/C OF ULTRATECH CEMENT

PARTICULARS 2008 2009 2010 2011

INCOME

GROSS SALES 9572.71 11551.56 12072.67 4745.7

LESS:- EXCISE DUTY 1001 1336.51 1268.66 455.07

NET SALES 8571.71 10215.05 10804.01 4290.63

INTEREST AND DIVIDEND INCOME 113.27 165.77 159.04 10.88

OTHER INCOME 168.49 212.07 191.38 39.07

INCREASE/DECREASE IN STOCKS -16.62 130.22 33.54 48.39

TOTAL 8836.85 10723.11 11187.97 4388.97

EXPENDITURE

RAW MATERIALS CONSUMED 2219.14 2828.25 3064.25 535.61

MANUFACTURING EXPENSES 1841.19 2202.47 2735.8 1245.18

PURCHASES OF FINISHED AND OTHERPRODUCTS

321.16 97.4 65.94 53.14

PAYMENTS TO AND PROVISIONS TO

EMPLOYEES

458.51 550.07 598.17 198.62

SELLING, DISTRIBUTION, ADMINISTRATIONAND OTHER EXPENSES

1414.37 1696.79 1920.29 1120.97

INTEREST 111.84 107 142.14 87.06

DEPRICIATION AND AMORTISATION 317.91 353.27 456.97 213.12

TOTAL 6684.12 7835.25 8983.56 3453.7

LESS:- SELF AND CAPATIVE CONSUMPTIONOF CEMENT

36.53 76.36 43.43 6.72

PROFIT BEFORE TAX AND EXCEPTIONALITEMS

2189.26 2964.22 2247.84 941.99

WRITE BACK OF PROVISION FORDIMIMUTION 37.1 45.68

PROFIT BEFORE TAX FROM ORDINARYACTIVITIES

2226.36 3009.9 2247.84 941.99

PROVISION FOR CURRENT TAX -682.15 -940.26 -329.4 -179.26

DEFERRED TAX 1.83 -9.62 -257.5 -144.77

FRINGE BENEFIT TAX -10.23 -12.45 -12.98

PROFIT AFTER TAX FROM ORDINARY 1535.81 2047.57 1647.96 617.96


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ACTIVITIES

EXTRAORDINARY ITEMS:

PROFIT ON TRANSFER OF TEXTILE UNITSAT BHIWANI

-------- 4.76 --------- ---------

PROFIT ON SALE OF SHARES OF ASUBSIDARY COMPANY

-------- 180.27 --------- ---------

PROFIT AFTER TAX 1535.8 2232.6 1647.96 617.96

DEBENTURE RESERVE NO LONGERREQUIRED

38.56 82.92 -------- --------

INVESTMENT ALLOWANCE RESERVE NOLONGER REQUIRED

0.05 --------- --------- --------

BALANCE BROUGHT FORWARD FROMPREVIOUS YEAR

878.37 965.33 1064.41 --------

PROFIT AVAILIABLE FOR APPROPRIATION 2452.79 3280.85 2712.37 617.96

APPROPRIATIONS

INTERIM DIVIDEND 252.1 --------- --------- ---------

PROPOSED DIVIDEND 275.02 275.02 45.79

CORPORATE DIVIVEND TAX 35.36 41.42 41.38 7.61

GENERAL RESERVE 1200 1900 200 200

BALANCE CARRIED TO BALANCE SHEET 965.33 1064.41 2180.97 352.06

DEBENTURE REDEMTION RESREVE -------- -------- 15 12.5

TOTAL 2452.7 3280.85 2712.37 617.96

Documents

Final Project of 4th Sem