INTERNSHIP REPORT manish

8/7/2019 INTERNSHIP REPORT manish

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A STUDY ON THE COMPARISION OF COST RATIO OF SHREE CEMENTS LTD WITH AMBUJA CEMENTS, RAJASTHAN

INTRODUCTION TO FINANCE

Due to ongoing advancements in technology, new legislation, and other innovation, the

field of finance is rapidly changing. Developments in financial markets and investments

necessitate that students be exposed to these topics as well as to financial management,

the traditional focus of the introductory finance course. Introduction to finance develops

the three components of finance in an interactive framework that is consistent with the

responsibilities of all-financial professionals, managers, intermediaries, and investors in

today's economy. To show the interrelationships between the areas of finance, the text

emphasizes how investor activities monitor firms and focuses on the role of financial

markets in channeling funds from investors to firm.

In the last decade, the academic study of finance has experienced an infusion of new

concept and quantitative methodologies that pace it among the most sophisticated and

growing areas of business and economics.

New developments in the traditional areas of finance theory of rational investor portfolio

choice and determination of security prices, efficient corporate decision making has been

approached from the perspective of a single integrating paradigm derived from economic

theory. This has led to intensive joint teaching and research between the finance, applied

economics, and accounting faculties. In our present day economy finance is defined as

provision of money at a time when it is required. Every enterprise whether it is big,

medium or small needs finance to carry out its operation and to achieve its target. Infact

finance is so indispensable today that it is rightly said to be lifeblood of enterprise.

Without adequate finance no enterprise can possibly accomplish it objectives.

The importance of corporation finance has arisen because of the fact that present day

business activities are predominantly on a company or corporate form of organization.

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The advent of corporate enterprises has resulted into:

1. the increase in size and influence of the business enterprise

2. wide distribution of corporate ownership

3. separation of ownership and management

These factors have increased the importance of finance.

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BUSINESS FINANCE

Business finance is the activity, which is concern with the acquisition and conservation

of capital funds in meeting the financial requirements and overall objectives of the firm.

Business finance deals primarily with raising, administering and disbursing funds by

private own business units operating in non- financial fields of industry. To sum up in

simple words we can say that financial management as practiced by business firms can

be called corporation finance or business finance.

AIMS OF FINANCE

Acquiring sufficient funds

Proper utilization of funds

Increasing profitability Maximizing firms value

Estimating financial requirements

Deciding capital structure

Selecting a source of finance

Selecting a pattern of investment

Proper cash management

Implementing financial control

proper use of surplus

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COST RATIOS

The balance sheet and the statement of income are essential, but they are only the starting

point of successful financial management. One should apply ratio analysis to financial

statements to analyze the success, failure, and progress of your business. Ratio analyze

enables the business owner / manager to spot trends in a business and to compare its

performance and condition with the average performance of similar business in the same

industry. Ratio analysis may provide the all-important early warning that allow you to

solve your business problems before they destroy your business. When you pick up the

published accounts of a company for the first time it can be an intimidating experience as

we are faced by page after page of numbers. Financial ratios provide you with he tools

you need to interpret and understand such accounts. They are essential if you want to

look in detail at a company's performance. As a financial report of business contain a

wealth of financial information, it is important to consider why we are analyzing and

interpreting the financial reports. The users of financial reports are wide ranging and

include a wide variety of stakeholder; investors, creditors, customers and employees.

One of the ways in which financial statements can be put to work is through ratio

analysis. Ratio are simply one number divided by another; as such they may or may notbe meaningful. In finance ratios are usually two financial statement item that may be

related to one another and may provide the prudent user a good deal of information of the

myriad of ratios that could be generated, some will more meaningful that others generally

ratios are divided into four areas of classification that provide different kind of

information; liquidity, turnover profitability and debt.

Ratio analysis shouldnt be taken in association of other aspects of a business. What type

of business is it? A companys debtor day indicator ( how long on average it takes

debtors to settle bill) may be 29 days. This seems fines but not to fast food business.

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Ratio must be seen against:

Norms/Benchmarks for the industry

Performance overtime (previous years)

Prospects for the future

Expectation of significant stakeholders

As principal, accounting policies should be applied consistently changes must be

highlighted and the impact of changes from an original policy disclosed. This applied

when calculating and interpreting ratios. Trend in a companys performance cannot be

determined if published accounting data is dressed up so as to produce more favorable

outcomes as an example of such flexibility , under SSAP 13 , research and development ,

companies may within certain limits decides to capitalize development expenditure, as an

alternative to charging this expense to the P&L accounts.

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INTRODUCTION TO INDIAN CEMENT INDUSTRY

Cement Industry originated in India when the first plant commenced production in 1914

in Porbandar, Gujarat. The industry has since been growing at a steady pace, but in the

initial stage, particularly during the period before Independence, the growth had been

very slow. Since indigenous production was not sufficient to meet the entire domestic

demand, the Government had to control its price and distribution statutorily. Large

quantities of cement had to be imported for meeting the deficit.

Encouraged by the positive response of the industry to the policy liberalization in the

cement industry, Government decontrolled the industry fully on 1st March 1989. With the

Industrial Policy Statement made by the Government on 24 th July 1991, the cement

industry stands delicensed. It has also been listed as a priority industry in Schedule III of

the Industry Policy Statement making it eligible for automatic approval for foreign

investment upto 51 per cent and also for technical collaboration on normal terms of

payment of royalty and lumpsum know-how fee.

Indian cement industry has thus been one of the pioneering industries in introducing

policy reforms. After the liberalisation measures and globalisation of Indian economy,the cement industry has been growing rapidly at an average rate of 8 per cent except for a

short period in 1991-92 when the industry faced demand recession. The country is now

the second largest producer of cement in the world. India has also started exporting large

quantities of cement and clinker.

For India, the world's second largest producer of cement, the recent boom in

infrastructure and the housing market has only boosted its cement industry. Add to that

an increasing global demand and a flurry of activity in infrastructure projects highways

roads, bridges, ports and houses has sparked off a spate of mergers and acquisitions in

the sector. Furthermore, the countrys finance minister, P. Chidambaram, has stated that

India would double spending on infrastructure over the next five years to sustain its

record economic growth and modernise its infrastructure.

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Cement companies are fast developing plants to provide for a rapidly expanding

economy. The cement industry is therefore poised to add 111 million tonnes (mt) of

annual capacity by the end of 2009-10 (FY 2010), riding on the back of approximately

141 outstanding cement projects.

According to a report by the ICRA Industry Monitor, the installed capacity is expected to

increase to 186 mt per annum (mtpa) by the end of FY 2008, and 219 mtpa by end of FY

2009, and further up to 241 mtpa by FY 2010-end. As a result, India's cement industry

will record an annual growth at 10 per cent in the coming years with higher domestic

demand resulting in increased capacity utilisation.

Domestic Players

While the Cement Corporation of India, a Central public sector undertaking, comprises

10 units; the various State governments own 10 large cement plants. Among the leading

domestic players in terms of cement manufacturing are: Ambuja Cement, Aditya Birla

Group (which owns UltraTech Cement), ACC Ltd., Binani Cement, India Cements and J

K Cement. They are not only the foremost producers of cement but also enjoy a high

level of equity in the market.

Industrial production

The cement industry is enhancing its production levels as new homes and offices are

being built, and in keeping with the economys annual growth rate. According to the

Cement Manufacturers Association, the overall cement production rose by 8.11 per cent

during 2007-08 to 168.29 million tonnes (mt) as against 155.66 mt in 2006-07.

In fact, the 16.37 mt produced by the domestic cement industry in March 2008 has been

the highest ever by the industry in a single month.

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Cement production of ACC increased 5.58 per cent to 1.89 mt in March against 1.79 mt

in the same period last year. Dispatches rose 4.91 per cent to 1.92 mt (1.83 mt). Ambuja

Cements, another Holcim group company, reported 23 per cent rise in production to 1.77

mt (1.43 mt) in March, while dispatches were up 16 per cent to 1.72 mt (1.47 mt).

The Aditya Birla groups production went up 4.8 per cent during 2007-08 to 30.6 mt

(29.24 mt), while dispatches increased 4.5 per cent to 30.55 mt (29.2 mt). India Cements

recorded a 46 per cent growth in sales and posted a 99 per cent growth profit in the nine

months ending December 2007.

The growth in cement production has continued on the back of robust demand levels in

200809. According to the Cement Manufacturers Association of India, cement

production grew by 15.02 mt in April 2008, registering a growth of 7.13 per cent as

compared to 14.02 mt in April 2007.

Installed capacity

With almost every player in the industry going for capacity addition, ranging from 0.2 mt

to 3 mt, the year 2007-08 saw a record addition of 22 mt. Consequently, the totalproduction capacity of the Indian cement industry has increased to 190 mt at the end of

2007-08, against 167 mt at the end of 2006-07, a growth rate of 13-14 per cent.

Further, with a capacity addition of 0.45 mt by Vasvadatta Cement in April 2008, the

installed capacity of the cement industry (large plants) has increased to 196.22 mt as on

April 30, 2008.

Simultaneously, with almost total capacity utilization levels in the industry, cement

dispatches continued to maintain its 10 per cent growth rate. Total despatches grew to

170 mt during 2007-08, as against 155 mt in 2006-07. Region-wise, western region grew

fastest with a growth rate of 15 per cent, followed by northern region (12 per cent) and

southern region (10 percent).

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Global Players

Rapid urbanisation and the booming infrastructure have lead to an increase in

construction and development across India, attracting even the global players. The recent

years have witnessed a surge of foreign direct investment in the cement sector.

International players like France's Lafarge, Holcim from Switzerland, Italy's Italcementi

and Germany's Heidelberg Cements hold more than a quarter pie of the total capacity.

Holcim, one of the world's leading suppliers of cement, has 24 plants in the country and

enjoys a market share of about 23-25 per cent. It will further invest about US$ 2.49

billion in the next five years to set up plants and raise capacity by 25 mt in the country.

Holcim has a global sale worth about US$ 20 billion, where India contributes US$ 22.5

billion.

Italcementi Group, the fifth largest producer of cement in the world acquired full stake in

the K.K. Birla promoted Zuari Industries' cement, to strengthen its presence in India

lining up US$ 300 million investment to increase the capacity of Zuari Industries from

1.7 mtpa to about 6-7 mtpa. Moreover, it plans to invest US$ 174 million over the next

two years in various greenfield and acquisition projects.

The French cement major, Lafarge, acquired the cement plants of Raymond and Tisco

with an installed capacity of 6 mtpa. It plans to double its capacity to 12 mt over the next

five years by adopting the greenfield expansion route.

Heidelberg Cement has entered into an equal joint-venture agreement with S P Lohia

Group controlled Indo-Rama Cement. It aims at a 50 per cent controlling stake in Indo-

Rama's grinding plant of 0.75 mtpa at Raigad in Maharashtra. Heidelberg is also taking

over Mysore Cement of S K Birla group at a consideration of US$ 93 million.

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Mergers and Acquistions (M&As)

A growing and robust economy was noteworthy in terms of the total number of mergers

and acquisitions (M&A) in India 2007, with the cement sector contributing to 7 per cent

to the total deal value. Increased activity in infrastructure and a booming real estate

market have seen foreign firms vying to acquire a share of the pie.

Holcim strengthened its position in India by increasing its holding in Ambuja Cement

form 22 per cent to 56 per cent through various open market transactions with an open

offer for a total investment of US$ 1.8 billion. Moreover it also increased its stake in

ACC Cement with US $ 486 million, being the single largest acquirer in the cement

sector.

Leading foreign funds like Fidelity, ABN Amro, HSBC, Nomura Asset Management

Fund and Emerging Market Fund have together bought around 7.5 per cent in Indias

third-largest cement firm India Cements (ICL) for US$ 148.19 million.

Cimpor the Portugese cement maker paid US$ 75.76 million for Grasim Industries 53.63

per cent stake in Shree Digvijay Cement.

Some of the other major mergers and acquisitions in the recent past include CRH

acquiring My Home Industries for US$ 462 million, Lafarge buying L&T Concretes

ready-mix concrete (RMC) business for US$ 349 million and Heidelberg consolidating

its business with Mysore Cement and Indorama, and Italcementi acquiring 100 per cent

stake in Zuari Cement and 95 per cent stake in Shree Vishnu among others.

Government Initiatives

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Government initiatives in the infrastructure sector, coupled with the housing sector boom

and urban development, will continue being the main drivers of growth for the Indian

cement industry. Moreover, the Union Budget for 2008-09 has sought measures to

increase availability and reduce prices.

Increased infrastructure spending has been a key focus area over the last five years

indicating good times ahead for cement manufacturers.

The government has increased budgetary allocation for roads under NHDP. This coupled

with government's initiatives on the infrastructure and housing sector fronts would

continue to remain the key drivers.

Appointing a coal regulator is looked upon as a positive move as it will facilitate timely

and proper allocation of coal (a key raw material) blocks to the core sectors, cement

being one of them.

Other budget measures such as cut in import duty from 12.5 per cent to nil, removal of 16

per cent countervailing duty, 4 per cent additional customs duty on portland cement anddifferential excise duty are all intended to cut costs and boost availability.

STATE OF TECHNOLOGY, ENERGY CONSERVATION AND

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ENVIRONMENTAL POLLUTION

TECHNOLOGY

Cement Industry has been in existence in India for over eight decades. From the initiallyavailable wet process technology the industry has travelled through semi-dry and the

latest energy efficient dry process technology. Recent plants have been erected with state-

of-art technology comparable to those available in the world. The earlier cement plants

that came into existence were mostly of small kiln capacities of 300 to 600 tpd based

either on wet or dry process, however, the new plants set up later were of the order of

3000 tpd or more exclusively of dry process. Kilns of the capacities 5000 to 7000tpd are

also in operation now. At present 91% of the total kiln capacity comprise dry process, 7%

wet rocess and the remaining 2% on semi-dry process based technologies. The average

kiln capacities under each of these categories are 2358 tpd, 421 tpd and 609 tpd

respectively. About 72% of the industrys capacity comes from the plant with a total

capacity of one million tonne and above at a single location.

Indian cement industry has been actively pursuing various avenues to improve its

productivity and energy efficiency. There has been all-around upgradation of technology

in all sections of the plant like mining, process, equipment and machinery, packaging and

transportation. Adoption of modern techniques like photogrammetry and remote sensing

has enabled the industry to discover virgin limestone. Advanced equipment like hydraulic

excavators, surface miners, large wheel loaders and mobile crushers have helped the

industry in increasing its productivity considerably. The modern raw material evaluation

and management system starts from computerised mine planning through on-line bulk

material analysis to automated X-ray analysis and process computers to control the weigh

feeders. Expert systems based on fuzzy logic are used to control the operation of kilns

and mills to ensure that the process systems operate at optimum levels of energy

efficiency all the time. Energy efficient technologies are being adopted for a new as well

as for retrofits, modernisation and expansion of existing plants. A number of cement

plants in the country are now equipped with double string preheater towers with

precalciners, vertical roller mills, roller presses, high efficiency fans and motors with slip

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power recovery systems. Besides this, the software approach involving detailed process

diagnostic studies and energy audits are used successfully by almost every large and

medium sized cement plant in the country.

ENERGY CONSERVATION

The cement industry is an energy intensive industry by virtue of high temperature

reactions and various physical operations involved in its manufacture. The industry uses

both coal and power as energy inputs. The cost of energy accounts for about 45% of the

total production cost. Energy management in modern cement plants in India meets the

standards comparable with the best in the world. Energy studies of cement plants are

being carried out in a large number of plants on a continuing basis by the National

Council for Cement & Building Materials (NCB). NCB has a mobile energy diagnostic

unit (Energy Bus) equipped with necessary instrumentation and on-board computer with

relevant software for conducting the energy studies on systematic and accurate manner.

NCB has been giving National Awards for Energy Efficiency in Indian Cement Industry

to the best performing cement plants on annual basis since 1986. Based on the recent data

of 51 participating plants, the weighted average energy consumption is: -

Thermal Energy

Consumption

(Kcal/kg Clinker)

Electrical Energy

Consumption (kWh/t

Cement)

Dry Process Plants 763 96.88

Overall (Combined for all

Processes)

769 96.86

In recent years there has been significant improvement in energy performance of

cement plants. These improvements have been largely due to: -

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Better efforts for operational control and optimisation

Upgradation of technology and process control

Better energy management including energy monitoring; minimisation of energy losses

Retro-fitting and adoption of energy efficient equipment like variable speed drives for

fans, high efficiency fans, high efficiency separators, 5/6 stage low pressure drop

preheaters, high efficiency burners, mechanical conveying in place of pneumatic

conveying etc.

Although cogeneration of power utilising waste heat from preheater and cooler exhaust

has been well established in cement plants in Japan and China, the Indian cement

industry is yet to make a beginning in that direction. The cement techno-economic studies

indicate attractive financial results for implementation of the cogeneration projects in

large size cement plants. Moreover, various international and national agencies are also

providing funds/financial support for installation of cogeneration power plants. Efforts

are being made to secure funds from agencies like Global Environment Facility (GEF)

etc. for setting up cogeneration power plants in cement plants.

The analysis of 43 dry process cement plants data showed that the weighted avragethermal energy consumption in 1995-96 was 807 kcal/kg clinker and it has reduced by

5.5% to 763 kcal/kg clinker in 1998-99.

Similarly, power consumption of dry process plants has reduced by 11% from 109 kwh/t

cement in 1995-96 to 97 kwh/t cement in 1998-99.

Modern plants being set up in the country are most energy efficient. The existing plants

have also been taking measures for bringing down their level of energy consumption.

POLLUTION CONTROL

The main source of pollution in cement industry is dust emission. The industrys

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achievement in controlling particulate emission has been quite satisfactory. Considerable

progress has been made in installing Electrostatic Precipitators (ESPs) and bag

houses/fabric filters in various sections of cement plants, especially after the

promulgation of the environment legislation in 1981 and 1986. The Central Pollution

Control Board has fixed standards for particulate emissions from stacks as under: -

Particulate Emission Standards from Stacks

Capacity Protected Area Other Area

200 tpd & less 250 mg/Nm3 400 mg/Nm3

Above 200 tpd 150 mg/Nm3 250 mg/Nm3

However, the State Pollution Control Board have authority to make the limits more

stringent, if required and accordingly the following States have formulated particulate

emission for general area as under :-

StatesPermissible particulate emission levels for general

area

Madhya Pradesh 150 mg/Nm3

Gujarat 150 mg/Nm3

Andhra Pradesh 115 mg/Nm3

Himachal Pradesh 150 mg/Nm3

Rajasthan (some parts) 150 mg/Nm3

Some of the State Pollution Control Boards have also prescribed limits for gas

emission from kiln stack as under: -

State Pollutant Stack Emission Limits

(mg/Nm3)

Protected Other Area

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Area

Gujarat NOx

SO2

100

300

100

300

Meghalaya NOx

SO2

100

100

500

500

The ambient air quality standards as stipulated by Central Pollution Control Board

are as tabulated below: -

Area Category Unit Concentration

SPM SO2 CO NOx

Industrial & mixed use Mg/Nm3 500 120 5000 120

Residential & rural Mg/Nm3 200 80 2000 80

Sensitive Mg/Nm3 100 30 1000 30

The pollution control norms in India for kilns exitgases compare favourably with

those practised in most developed countries, as shown below:

International emission level limits for selected countries, mg/Nm3

Country SO2 NOx

France 500 1200

Germany 400 500

Italy 400 700

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India 100-500 100-500

Japan 250 510

Netherlands 400 1300

Sweden 500 800

Switzerland 500 800

UK (1996) 200 900

For efficient environmental pollution control, Indian cement industry is adopting on-line

monitoring by opacity monitors, ESP management systems. Environmental Management

Systems (EMS) and ISO-14000, etc. Three cement plants are already accredited with

ISO-14000 and a large number are in the process of getting the accreditation.

QUALITY CONTROL AND ASSURANCE

In order to ensure quality, effective control has to be exercised throughout the process of

production. The control procedures cover all aspects of cement manufacture from quarry

operation, handling, mixing and grinding to packing. In order to achieve quality

assurance, most of the cement plants have established facilities for sophisticated controls.

Some of the important controls introduced in the cement industry as follows: -

Computerised mine planning and deposit evaluation to enable optimum use of raw

material.

Online X-ray fluorescence spectrometer for raw material control and raw mix design.

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Better aided instrumentation and process measurements using X-ray analysis, gas

anaysers, temperature and pressure measuring devices, etc.

Centralised kiln control system in conjunction with expert control systems for process

and operation control. Continuous monitoring of quality in production by plants as well

as by the certifying agency, namely, Bureau of Indian Standards (BIS) under compulsory

Certification Scheme.

BIS certification is compulsory for all varieties and grades of cement under the Cement

(Quality Control) Order, 1962 issued under the Essential Commodities Act, 1955. Since

the Indian cement industry recognises that ISO-9000 quality system is extremely

important for quality assurance, reliability and competitiveness, about 45 cement plants

have already secured ISO-9000 Certification. The Total Quality Management (TQM)

concept has also been adopted by more than 70 cement plants. Besides, some leading

companies have acquired TPM (Total Productive Maintenance) accreditation. Some

manufacturers are going ahead for world class rating, e.g. WCM (World Class

Manufacturing) or ERP (Enterprise Resource Planning) to be at par with Best Practices

anywhere in the world.

India produces different varieties and grades of cement, namely, Ordinary Portland

Cement (OPC) (33,43,53 grades), Portland Pozzolana Cement (PPC), Portland Blast

Furnace Slag Cement (PBFSC) and many other varieties. Some of these varieties are used

for special applications, e.g. blended cement helps in resisting certain chemical agents,

sulphate resisting cement can be used in places where concentration of sulphate is more,

a low heat cement is used for mass concreting work like dams, barrages and deep

foundations. All these varieties of cement have been covered by Indian Standard

Specifications. These are given below: -

Indian Standard Specifications

Ordinary Portland Cement (OPC) 33 Grade IS:269

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Portland Cements 43 Grade

53 Grade

IS:8112

IS:12269

Portland Pozzolana Cement (PPC) IS:1489

Portland Blast Furnace Slag Cement (PBFS) IS:455

High Alumina Cement for Structural Use IS:6452

Rapid Hardening Portland Cement

High Strength Ordinary Oil Well Cement IS:8229

Sulphate Resistant Portland Cement IS:12330

Low Heat Portland Cement IS:12600

White Portland Cement IS:8042

Hydrophobic Cement IS:8043

Masonary Cement IS:3466

Super Sulphate Cement IS:6909

Foreign specifications to which cement can be supplied BS-12

ASTM-150, 595

ISO-9002

Importers

Specifications

Railway Concrete Sleepers IRST-40

To summarise in the words of an industry analyst, 'The allocation of US$ 3.23

billion for the National Highway Development Project will keep the demand for

cement alive.'

POSITION OF RAW MATERIAL AND INPUTS

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LIMESTONE RESERVES

Limestone is the main raw material for manufacture of cement. For manufacture of one

tonne of cement, a quantity of 1.5 tonne of limestone is required. India is endowed with

large deposits of limestone. The estimated total reserves of cement-grade limestone are

95.623 billion tonnes. However, the limestone deposits are not uniformly distributed in

all the States. There is a concentration of about 73 per cent of the total reserves in five

States, namely, Andhra Pradesh, Karnataka, Gujarat, Rajasthan and Madhya Pradesh.

This concentration is about 48 per cent in South Zone, 23 per cent in North Zone, 21 per

cent in West Zone and the remaining 8 per cent in East Zone. A statement indicating the

zone-wise/State-wise limestone reserves in India at present is given as under: -

Zonewise/Statewise Status of Limestone Reserves in India

Zone States Reserves in Million tonnes

Measured Indicated Inferred Total Per

cent

Haryana 31.22 1.93 2.42 35.57 0.04

Himachal 1,311.44 1.490.10 2,703.07 5,504.61 5.75

Jammu &

Kashmir

123.22 524.37 4,858.53 5,506.12 5.75

Rajasthan 563.80 3,201.29 3,748.77 7,513.86 7.86

Uttar Pradesh 516.10 1,639.21 585.68 2,740.99 2.86

Total 2,545.78 6,856.90 11,898.47 21,301.15 22.27

Assam 338.83 244.00 306.20 1,489.03 1.55

Manipur 11.02 2.68 7.85 21.55 0.02

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Meghalaya 547.42 980.41 4,779.90 6,307.73 6.59

Nagaland 10.48 111.07 18.00 139.55 0.14

Arunachal

Pradesh

0.00 108.00 275.50 383.50 0.40

Orissa 87.36 95.83 410.55 593.74 0.62

Bihar 174.80 122.79 772.90 1,070.49 1.12

West Bengal 6.40 3.20 0.00 9.60 0.01

Total 1,176.31 1,667.98 7,170.90 10,015.19 10.47

Gujarat 3,709.96 6,707.99 0.00 10,417.95 10.89

Madhya

Pradesh

4,132.98 1,049.40 1,914.66 7,097.04 7.42

Maharashtra 890.78 111.02 812.33 1,814.13 1.90

Goa, Diu &

Daman

48.84 0.04 0.00 48.84 0.05

Total 8,782.56 7,868.41 2,726.99 19,377.96 20.36

Andhra

Pradesh

959.41 1,442.11 28,032.60 30,434.12 31.83

Karnataka 7,718.37 2,270.53 2,820.12 12,809.02 13.37

Kerala 44.58 9.35 40.37 94.30 0.10

Tamil Nadu 751.40 283.35 465.75 1,500.50 1.57

Andaman &

Nicobar

0.00 0.32 0.51 0.83 -

Lakshdweep 0.00 0.00 90.00 90.00 0.10

Total 9,473.76 4,005.66 31,449.35 44,928.77 47.00

Grand Total 21,978.41 20,398.95 53,245.71 95,623.07 100

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Percentage 22.98 21.34 55.68 100.00

COAL SUPPLY AND CONSUMPTION PATTERN

Coal is an important input in the manufacture of cement both as a fuel and as a feed-

stock. Coal for large cement plants is being supplied on the basis of targets of movement

approved by the Linkage Committee constituted in the Ministry of Coal. At the present

level of production, the annual requirement for large plants is about 20.00 million tonnes.

Some of the cement plants located in the southern region and in the States of Rajasthan

and Gujarat are also using some quantity of lignite as a fuel. Some cement plants

particularly those located in the coastal region, use imported coal.

GYPSUM

Gypsum is another raw materials ground alongwith clinker during the manufacture of

cement. Consumption of gypsum varies from 2 to 6 per cent in different plants dependingupon the quality of clinker. At the present level of production, the annual requirement of

gypsum is estimated at about 5.0 million tonnes. India has good reserves of natural

gypsum, which are mainly concentrated in three States, namely, Rajasthan, Gujarat and

Tamil Nadu. A number of chemical industries manufacturing phosphoric acid and

hydrochloric acid generate large quantities of chemical gypsum as by product in the form

of phosphogypsum. The chemical gypsum can be utilised as a whole or part substitute to

natural gypsum. Many cement plants, which are located near the source of

phosphogypsum are using this substitute product

.

CEMENT MACHINERY

Keeping pace with the growth of the cement industry, the Indian cement machinery

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industry has also grown substantially during the last few years. The Indian cement

industry machinery manufacturer are now capable of manufacturing and supplying

complete plant for cement based on dry process and pre-calcination technology for

capacities upto 7500 TPD.

At present, there are eighteen units in the organised sector manufacturing either complete

plants or components of cement machinery. The major producers are M/s. L&T, M/s.

Krupp Industries, M/s. Fuller India Ltd. And M/s. CIMMCO. All these manufacturers

have technical collaboration with world leaders in cement machinery. Many of the Indian

manufactures have adopted the latest technology in the machinery produced by them.

Leading world manufacturers have introduced advanced technologies like vertical roller

mill for grinding of raw materials and coal instead of ball mills, pyro-processing systems

with 5-6 stage cyclones, pre-heater and pre-calcinator, high efficient fans and separators,

etc. The Industry has also adopted further automation and process control systems in the

cement plants manufactured by them in order to upgrade the capability at par with other

world leaders in cement industry.

BULK TRANSPORTATION

In all the advanced countries and even in many developing countries bulk transportation

of cement is very popular. In advanced countries, transportation of bulk and Ready-

Mixed Concrete accounts for about 90% of the total production. In India a beginning has

been made by setting up a pilot project for bulk transportation and distribution of cement

at Kalamboli, Bombay. The project is being established with the assistance of the World

Bank. This has been commissioned in November 1997. A technical study has been

conducted for similar projects in large consumption centres like Calcutta and Delhi to

cater to the plants located in Bilaspur cluster of Madhya Pradesh for Calcutta and

Rajasthan plants for Delhi. There is also very good scope for bulk transportation for

coastal shipping in the Western and Eastern Regions. One cement plant located in Gujarat

has already been engaged in bulk transportation through bulk carriers acquired by them

for supply in the Western Region. Other cement plants are also proposing to enter bulk

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transportation for both exports as well as for distribution within the country. There is

good scope for foreign investment in the country for development of bulk transportation.

RESEARCH AND DEVELOPMENT

The importance of research and development on growth of the cement industry cannot be

over emphasised. Since cement industry is using non-renewable resources for production,

optimum utilisation aqnd conversation of these materials is extremely important. In the

past, expenditure on R&D in India had not been to the extent required. It constituted only

about 0.7% of the Gross Natioinal Product (GNP) as against upto 3% in the developed

countries. However, in the 1990s, number of large cement manufacturers have developed

their in-house R&D units have been recognised and registered with the Ministry of

Science & Technology.

The National Council for Cement and Building Materials (NCB), an autonomous body

under the administrative control of Ministry of Commerce & Industry, has been doing

excellent work in research and development. It has a well-developed R&D Centre at its

headquarters in Ballabgarh near Delhi and its regional unit at Hyderabad. Its R&D

activities cover a wide range of areas associated with cement and building materials. Itsactivities include cement and silicate research, standardisatioin, calibration, testing and

quality control, geological exploration, mine planning, system design and project

engineering for mini and major plants, productivity enhancement, environment pollution

control and management system including ISO-141001, construction development and

consumer protection, industrial information, marketing and publicity and human resource

and continuing education. NCB has extended its services even to overseas countries, both

developed and developing. Besides, the 9th International Congress on the Chemistry of

Cement organised by NCB in November 1992, it has been successfully conducting

international cement seminars biennially since 1987, in which large number of eminent

scientists and technocrats from all over the world participate and present research paper

and have useful interaction with their counterparts in India. These seminars have helped

the cement and construction industries immensely by way of exchange of views and

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gaining information on the state-of-art in relevant fields and also helped NCB in

enriching their expertise and R&D capability.

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COMPANY PROFILE

SHREE CEMENT LTD. is an energy conscious & environment friendly business

organization. Having Nine Directors on its board under the chairmanship of Shri.B.G.

Bangur, the policy decisions are taken under the guidance of Shri. H.M. Bangur,

Managing Director. Shri. M.K.Singhi, Executive Director of the Company, is looking

after all day-to-day affairs. The company is managed by qualified professionals with broad

vision who are committed to maintain high standards of quality & leadership to serve the

customers to their fullest satisfaction.The board consists of eminent persons with

considerable professional expertise in industry and field such as banking, law, marketing

& finance.

LOCATION

Shree Cement Unit I & II is located at Beawar, 185

Kms. from Jaipur off the Delhi-Ahmedabad

highway. Amongst the plants in the state it is nearest

from its marketing centers.

Bangur Cement Unit (III,IV,V & Vi) is lacated at

RAS,28 Km from Beawar in pali Dist.

Shree Cement Grinding Unit (KKGU) is located at

Khush Khera Dist. Alwar Nearest to Delhi

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location Map

Philosophy

Let noble thoughts come to us from all over the world. -Rigveda

Mission

To sustain its reputation as the most efficient cement manufacturer in the world.

To drive down costs through innovative plant practices.

To increase the awareness of superior product quality through a realistic and

convincing communication process with consumers.

To strengthen realisations through intelligent brand building.

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Business ethics

Enforce good corporate governance practices.

Inculcate integrity of conduct.

Ensure transparency and credibility in communication.

Remain accountable to all stakeholders.

Encourage socially responsible behaviour..

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VISION

Shri B.G. Bangur - Executive Chairman

BOARD OF DIRECTORS

Shri B.G. Bangur - Executive Chairman

Shri H.M. Bangur - Managing Director

Shri R.L.Gaggar

Shri O.P. Setia

Shri S.K.Somany

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Dr. Abid Hussain

Dr. Y.K. Alagh

Shri A. Ghosh

Shri M.K.Singhi - Executive Director

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LITERATURE REVIEW

The discretionary costs as a percent of sales and other ratios are key to understanding

financial statements. Our ratio calculation spreadsheets reduce time and effort in

calculating decision making ratios. They reduce risk for lenders and investors and enable

owners, managers and consultants to increase productivity and business profits. These

spreadsheets are bargain priced to provide a huge return on investment.

Fixed costs that arise form periodic appropriation decisions. it is difficult to establish a

best relationship between inputs and outputs in relation to discretionary costs and the

value and quality of the outputs may be difficult to ascertain. An obvious example is

advertising of which one managing director is supposed to have said: Half these costs arewaste of money, but I am not sure which half. An example form the public sector is the

costs of travel grants to university researchers. As the latter are painfully aware,

discretionary costs can be cut quite sharply and quickly in times of acute financial stress.

Control of discretionary costs is difficult and has to be done through negotiated static

budgets. The feedback time is longer than for engineered costs. A favourable

discretionary cost variance, unlike a favourable engineered cost variance, may indicate

not less costly performance but less output or output of a lower quality. Not all cost are

innately engineered or discretionary and discretionary cost have sometimes been

successfully transformed into engineered costs.A discretionary cost may behave as if it

were variable is managers are allowed to incur costs in accordance with a formula

arbitrarily linked to output. Discretionary cost may be fixed for decision making purposes

but variable for control purposes. The Accounting Standards Broad has proposed that the

amount of discretionary costs or expenses incurred should be disclosed by way of note to

the profit and loss account.

discretionary costs = advertising + research and development + training +

repairs and maintenance costs

discretionary costs as a percent of sales = (discretionary costs / sales) x 100%

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A decreasing trends indicate profit may have come from reductions in discretionary costs

which may negatively affect future profits.

The ratio of discretionary costs as a percent of sales is included in the financial statement

ratio analysis spreadsheets highlighted in the left column, which provide formulas,

definitions, calculation, charts and explanations of each ratio.

Fixed costs to total assets = fixed costs / total assets

An increase in the fixed costs to total assets ratio may indicate higher fixed charges,

possibly resulting in greater instability in operations and earnings.

The fixed costs to total assets ratio is included in the financial statement ratio analysis

spreadsheets highlighted in the left column, which provide formulas, definitions,

calculation, charts and explanations of each ratio.

Fixed Charge Coverage Ratio = (Net Income Before Interest and Taxes + interest

+ fixed costs) / fixed costs.

The fixed charge coverage ratio indicates the risk involved in ability to pay fixed costs

when business activity falls.

The fixed charge coverage ratio is included in the financial statement ratio analysis

spreadsheets highlighted in the left column, which provide formulas, definitions,

calculation, charts and explanations of each ratio.

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Article No. 1

Shortfalls of Cost Cutting Efforts in Economically Difficult Times

Friedrich Blase

Review No. 1

It is important to note that budgetary restraints first and foremost kill innovation

potential and thus perpetuate ineffective processes within the business services. A

classic example is a firm that recently purchased business intelligence software, but

now realizes that it is unable to deploy it across the firm without further expertise on

the right approach to that. However, budget restraints force the business managers to

keep implementing without help, rendering the staff employed to run the software

ineffective until the restraint is lifted.

Simple cost-cutting efforts can also lead to a reduction in service to the fee-earners

e.g. the reduction of secretarial support which, in culmination with other

budgetary cuts, may have an adverse effect on attrition. A number of firms faced

serious cash-flow shortages as low collections (due to depleted work-in-progress

from increased efforts to achieve a record-breaking previous year) combined with

double-digit underutilization. With credit line extensions becoming politically or

financially untenable, one solution was to cut any discretionary expense, often

resulting in a deterioration of the firms relationship with outside vendors and

service providers. Such practices may well leave the firm in limbo when the

economic outlook turns positive while the bottom line effect is negligent.

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Article No. 2

Workers' Compensation Rate Regulation: How Price Controls

Increase Costs

Patricia M. Danzon, University of Pennsylvania

Scott E. Harrington, University of South Carolina

Review No. 2

Description

This ratio is extremely important when reviewing the companies that are locked into tight

cash flow situations, because an analyst can use it to determine what costs can be

dispensed within a short term to bring a company back to a neutral or positive cash flow

situation. A high ratio of discretionary costs to sales means that there are considerable

opportunities for expense reduction.

Formula

Divide all the discretionary costs by sales. Discretionary costs can include marketing,research and development, training, and repairs and maintenance costs, as well as any

other costs that do not directly contribute to ongoing sales or production activities.

Discretionary costs/sales

Caution

This ratio is only useful for short term measures, since discretionary costs cannot be

delayed forever. For example, the complete elimination of all marketing costs will

eventually destroy a companys market share, while delayed repairs costs will cut into

the useful productive capacity of the manufacturing department and may take some

equipment completely out of action. Consequently, this ratio should only be used for

short term corporate turnarounds where funds are expected to be available at a later date.

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Article No. 3

Asset Turnover

Review No. 3

There are several general rules that should be kept in mind when calculating asset

turnover. First, asset turnover is meant to measure a companys efficiency in using its

assets. The higher the number, the better [although investors must be sure compare a

business to its industry. It is fallacy to compare completely unrelated businesses.] The

higher a company's asset turnover, the lower its profit margin tends to be and visa versa.

Article No. 4

Stop or Starve Ineffective Service Activities

Review No. 4

Cutting costs requires tough decisions, but it also requires making the right decisions.

Rather than asking for cuts across the departments, cuts at the individual

activity level have lasting effects, while saving money and in some cases

improving the value derived by their absence, which is nothing short of a pre-

existing negative value perception. Professional services firms have traditionally

been poor at making those decisions, since the partners involved are often

unwilling or unable to assess the effectiveness of activities, to make the

subsequent personnel decisions and to actively communicate these changes in a

positive light to the rest of the firm. However, a rigorous approach to this review

can have a significant bottom-line impact.

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Article No. 5

Multiplying the Value-Cost Ratio of Business Services

Friedrich Blase

Review No. 5

In professional services firms, the term business services is generally defined

negatively. It encompasses almost all activities that do not generate revenue

directly, i.e. are not fee earning. Positively described, business services include

secretarial and personal assistance, marketing, technology, human resources, legal

& risk as well as other functions. In professions where so called non-

professionals or para-professionals are part of the fee-earning side of the

business, their work is sometimes also included in business services. Overall,

these services account for the large majority of the firms overhead and thus

consume anywhere between 20 and 30% of revenue

Article No. 6

Analyzing an Income Statement, Interest Coverage Ratio

Review No. 6

As a general rule of thumb, investors should not own a stock that has an interest coverage

ratio under 1.5. An interest coverage ratio below 1.0 indicates the business is having

difficulties generating the cash necessary to pay its interest obligations. The history and

consistency of earnings is tremendously important. The more consistent a companys

earnings, the lower the interest coverage ratio can be.

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EBIT has its short fallings; companies do pay taxes, therefore it is misleading to act as if

they didnt. A wise and conservative investor would simply take the companys earnings

before interest and divide it by the interest expense. This would provide a more accurate

picture of safety.

Article No. 7

Working Capital

Joshua Kennon

Review No. 7

One of the main advantages of looking at the working capital position is being able toforesee any financial difficulties that may arise. Even a business that has billions of

dollars in fixed assets will quickly find itself in bankruptcy court if it can't pay its

monthly bills. Under the best circumstances, poor working capital leads to financial

pressure on a company, increased borrowing, and late payments to creditor - all of which

result in a lower credit rating. A lower credit rating means banks charge a higher interest

rate, which can cost a corporation a lot of money over time.

Companies that have high inventory turns and do business on a cash basis (such as a

grocery store) need very little working capital. These types of businesses raise money

every time they open their doors, then turn around and plow that money back into

inventory to increase sales. Since cash is generated so quickly, managements can simply

stock pile the proceeds from their daily sales for a short period of time if a financial crisis

arises. Since cash can be raised so quickly, there is no need to have a large amount of

working capital available.

A company that makes heavy machinery is a completely different story. Because these

types of businesses are selling expensive items on a long-term payment basis, they can't

raise cash as quickly. Since the inventory on their balance sheet is normally ordered

months in advance, it can rarely be sold fast enough to raise money for short-term

financial crises (by the time it is sold, it may be too late). It's easy to see why companies

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such as this must keep enough working capital on hand to get through any unforeseen

difficulties.

Article No. 8

Benchmark Survey: Technical Support Cost Ratios

Soft-Letter

Review No. 8

Clearly, there's no magic bullet for the support cost problem. Better product design may

reduce the total demand for support, call center automation can probably improve

efficiency and delivery, and more attractive Web support options are bound to lure many

users away from the telephone. In the meantime, though, the biggest payback in support

process improvement is likely to come from hard work on classic issues of productivity

and cost management.

Article No. 9

Analyzing Microsoft's Balance Sheet

Review No. 9

Microsoft has $31.6 billion in cash and short term investments. Microsoft has $28.5

billion in working capital. The company has a current ratio of 3.56.Microsoft carries

no inventory. It is absolutely efficient. Microsoft is debt free. It has no long or short

term debt. This means that 0% of the company's equity consists of debt; the

shareholders own it all.

All of the calculations have shown one thing; the company has virtually no risk of

bankruptcy. Microsoft has 3x the cash it needs to survive, no long term debt, no

inventory to worry about, and extremely strong current and quick ratios. Its working

capital per dollar of sales is 112%, excessive by any standard (especially compared to its

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competitors. Adobe Software had a ratio of 36%, while Oracle Systems came in at

46.5%). The main question an investor should ask when looking at the balance sheet is,

"why so much cash?". None of the company's top management has given any clues as to

the plans for the growing pile of greenbacks.

Article No. 10

Risk Management

By Richard H. Wood, Aviation Safety Consultant

Review No. 10

Cost-benefit probably works in situations where the benefit is that something good will

happen and it is measurable. In safety, the benefit is always a negative benefit - that

something bad will NOT happen. There is no accurate way to measure that and the

number-fudgers can make it come out any way they like.

There is a simpler method which is not quite so vulnerable to manipulation. It's called

risk-benefit analysis and it can be done either objectively or subjectively. Here, we

calculate the probability of something bad happening (risk) and compare that to the

benefits of taking that risk. If we consider the risk too high, we look for ways to reduce it

by either reducing the probability of an event occurring or reducing its severity if it does

occur. In classical safety literature there is a hierarchy of techniques that can be applied

to either of these.

In risk-benefit analysis, the assessment of risk is independent of the size of the benefit or

the existence of any other risk at some other location. It is entirely possible that the size

of the benefit may make a particular risk acceptable, but that doesn't make the risk

smaller. Absent some action to reduce it, the risk is exactly the same size it always was.

Let us hope that the final resolution of the stadium problem is based on a careful

consideration of the magnitude of the risk and the options available for reducing it. That's

called "risk management" and it is one of the most useful techniques we have in this

safety business.

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CONCEPTUAL DEFINITION

Financial Statement : A statement prepared on a certain date for giving an

accounting picture of the firms operations and financial position. It provide

information regarding the financial activities and position of a firm. E.g. Balance

Sheet, Profit and Loss Account.

Balance Sheet : It is a statement showing the financial position of a concern

on any date . It is a statement of the assets and liabilities of the concern on any

given date.

It indicates the financial condition of a firm at a specific point of time. It containsinformation about the firms assets, liability and equity.

Assets : Assets are the economic resource or properties owned by the firm. They

may be current or a fixed nature.

Current assets : Current assets (liquid assets)are those are convertible in to

cash within a year in the normal course of business .they include cash and bankbalance, debtors(i.e. fund due from the firms consumer), inventories ( including

raw materials work in progress and finished goods), advances to suppliers, pre

paid expenses etc.

Fixed assets : Fixed assets are long term assets they help in generating firm

revenues. Tangible fixed assets are physical fixed assets like plant and machinery,

and intangible fixed assets represent the firm rights and claim such as patent,

copy rights etc .

Liability : Liability is a firms obligation to pay cash or provide goods or

services in the future. There are two types of liabilities; current liability and long

term liabilities.

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Current liabilities : Current liabilities are payable within a year in the normal

course of business they include creditors(i.e. fund due to firms suppliers),

outstanding expense, advances from customers, provision for tax and dividend

etc.

Long term liabilities : Long term liabilities are payable after a year. They

include borrowing from financial institution or the public in form of bonds and

debenture. A bond or debenture is an acknowledgement of debt granted by an

individual or an organization to the firm. Owners of the bonds or debentures are

called bonds or debentures holders.

Share capital : Share capital is the capital contributed by owners through the

purchase a firm's shares .A share is a certificate acknowledging the amount of

capital contributed by the owner. Owners of a firm are called its shareholder.

Reserve and surplus : Reserve and surplus, also called retained earning

respectively the undistributed profit of a firm. They belong to share holders.

Net worth : Net worth or equity is the sum of share capital & reserve and

surplus. It represents the shareholders' funds.

Capital employed : Capital employed is the sum of net worth (shareholders'

fund) and borrowings (loan funds including both short and long-term loans).

Net assets : Net assets equal the net fixed assets plus net current assets. Net

assets are also equals to capital employed.

Profits : Profits are the difference between revenues and expenses. Four

important variations of profits are: gross profit (GP), profit before interest and tax

(PBIT), profit before tax (PBT), profit after tax (Pat) or net profit(NP).

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Cost of goods sold : is the sum of raw material consumed and manufacturing

expenses for the goods sold. Some companies define gross profit as profit before

depreciation, interest and tax (PBDIT).

Profit before interest and tax : Profit before interest and tax is revenue

minus all expenses except interest and tax. If interest is deducted from PBIT, we

obtain the figure of profit before tax(PBT),PBT minus tax is profit after tax (P A

T)or net profit(NP).

Dividends : Dividends are payments to shareholders, out of profit after tax

(PAT).The remaining amount is retained in the business.

Ratio Analysis : Ratio Analysis is the excess of current assets over current

liabilities.

Depreciation : Depreciation is the decrease in the value of a fixed assets such

as machinery due to wear and tear caused by its constant use.

Accounting Ratio : Accounting Ratio is the relationship between two

accounting figures expressed mathematically , either as a ratio, percentage or a

rate.

Activity Ratio : They are employed to evaluate the efficiency with which the

firm manages and utilizes its assets.

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DESIGN OF STUDY

STATEMENT OF THE PROBLEM

A STUDY ON THE COMPARISION OF COST RATIO OF SHREE

CEMENTS LTD WITH AMBUJA CEMENTS, RAJASTHAN

OBJECTIVES OF STUDY

The study was undertaken with the following objectives:

To measure the performance of Shree Cements Ltd with Ambuja Cements in

terms of cost.

To understand the procedures and techniques involved in cost aspects of the

concerns

To analyze the major heads under which both the companies are incurring cost.

To compare the importance of each cost centers of both company

To study profitability of the company for the FY 2006-07.

To observe the ways by which cost could be controlled for Shree cements.

To study the liquidity and solvency position of the companies.

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SCOPE OF STUDY

The current study undertaken for the purpose of SHREE CEMENTS LTD. Detail of the

cost heads of the company has been obtained from the records of the company and the

annual reports that are published and issued to the public every year.

A study covering performance of the business in terms of cost will definitely give a better

result with respect to the financial performance of the business. Also, if the financial

performance of the company is compared with few other reputed firm in the industry,

will give the clear picture about the position of SHREE CEMENTS.

METHODOLOGY OF STUDY

The type of research adopted is Descriptive research. Descriptive research studies are

those which are concerned with describing the characteristics of a particular individual or

group. The main characteristics of this method are that a researcher has no control over

the variables. The researcher can only report what has happened or is happening. The

methods of research used in descriptive type of research are survey methods of all kinds

including comparative methods. It includes fact finding of all kinds. Studies concernedwith specific predictions with narration of facts and characteristics concerning individual,

group or situation are all examples of descriptive research.

Researchers may use observational, survey, and interview techniques to collect data.

Survey research uses questionnaires and interviews to collect information about peoples

attitudes, beliefs, feelings, behaviours, and lifestyles. Cross-sectional survey designs

survey a single group of respondents, whereas a successive independent samples survey

design surveys different samples at two or more points in time. A panel or longitudinal

survey design surveys a single sample of respondents on more than one occasion.

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DATA COLLECTION

The requisite data for the study is collected from secondary sources of information. The

secondary data has been collected from the financial statement of the company in theform of the balance sheet and Profit and Loss Accounts. The analysis and interpretation

has been thus derived with the help of secondary data available.

TIME BUDGET FOR THE STUDY

The project was undertaken for a period of 45 days from 1st 21 April, 2008 to 6th June,

2008 at the office of Shree Cements Ltd, Beawar, in the state of Rajasthan, India.

LIMITATIONS

The project was based on secondary data, as there was no survey

conducted .

a) The information provided by the personnel may be biased or inaccurate.

b) The analysis is based on only ratio and percentages.

c) Assumption has been made while deriving the various figures in the calculations.

d) The company personnel could not spare time due to busy schedule and hence the

project proceeds at a very slow pace.

e) Not much information was revealed by the company, as the executive personnel

wanted to keep certain information secret.

f) Only monetary aspects as projected by the financial statement have been taken

into account.

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DATA ANALYSIS AND INTERPRETATION

RAW MATERIAL TO TOTAL TURNOVER RATIO

Raw material cost is the cost incurred in procuring raw materials from various sources

including the source of the company itself. The company which procures its required

material at the cheaper cost would have higher returns or profit.

FOR SHREE CEMENT

Raw Materials = Rs. 16416.58

Total Turnover = Rs. 160548.97

Raw Materials 100 = 16416.58 100

Total Turnover 160548.97

= 10.22 %

FOR AMBUJA CEMENTRaw Materials Consumed :-

Clinker Purchased - 138.28

Others - 344.85

__________

- 483.13

Raw Materials Cost / T.T - 483.13 X 100

____________

6556.92

= 7.36 %

Table 1: showing raw material to total turnover ratio

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Chart 1: showing raw material to total turnover ratio

RAW MATERIAL COST TO TOTAL TURNOVER

10.22%

7.36%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

SHREE CEMENT AMBUJA CEMENT

COMPANIES

PERCENT

INTERPRETATION

From the above chart we observe that Shree Cement spends more on the getting its raw

material. The percentage of raw material to total turnover is higher in term of Shree

cement as compared to Ambuja.


10.22% 7.36%

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Even though Shree has a self- sufficient power plants and has limestone mines located

near- by the cement plants but still its raw material procurement cost is high. Shree

should take necessary measures to reduce the cost.

POWER & FUEL COST TO TOTAL TURNOVER

FOR SHREE CEMENT

Powel Cost = Rs. 23451.16


Ratio

Power cost 100 = 23451.16 100


= 14.61%

FOR AMBUJA CEMENT

Power & Fuel = 1004.66

Power cost & Total Turnover = 1004.66 X 100

_______________

6556.92

= 15.32 %

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Table 2: showing power & fuel cost to total turnover

Chart2: showing power & fuel cost to total turnover

14.20%

14.40%

14.60%

14.80%

15.00%

15.20%

15.40%

PERCENTA

GE

SHREE CEMENT AMBUJA

CEMENT

COMPANIES

POWER AND FUEL TO TOTAL TURNOVER RATIO

INTERPRETATION


14.61% 15.32%

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Fron the above chart we can observe that the power and fuel cost from Ambuja cements

is higher than Shree cements primarily because Shree Cements has self- sufficient power

generation plants located near to the factory at Bewaer.

This has given an edge to the company over others because through this power plant they

also get subsidies from the govt which also results in lesser power cost.

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MANPOWER COST TO TOTAL TURNOVER RATIO

FOR SHREE CEMENT

Manpower cost Salaries, wages, Bonus & Allowance+ Contribution to Provident

Superannuation and Gratuity Final+ Employees welfare Expences.

= Rs (3694.91 + 1577.66 528.40)

= Rs 5800.97

Turnover cost = RS. 160548.97

Manpower cost 100 = 5800.97 100

Total Tournover 16548.97

= 3.60%

FOR AMBUJA CEMENTS

Salaries, Wages, Bonus Etc - 171.79

Contribution to Prodimint F. - 23.61

Welfare Exp. - 9.52

Employee Exp. Exp. only ESOP - -

Commercial to Director - 5.88

___________

210.80

RATIO = 210.80 X 100

___________ = 3.21 %

6586.92

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Table 3: showing manpower cost to total turnover ratio


3.60% 3.21%

Chart 3: showing manpower cost to total turnover ratio

MANPOWER COST TO TOTAL TURNOVER RATIO

3.60%

3.21%

3.00% 3.20% 3.40% 3.60% 3.80%

SHREE

CEMENT

AMBUJA

CEMENT

COMPANI

PERCENTAGE

INTERPRETATION

Manpower cost includes various expenses paid by the company towards acquiring

manpower i.e. employees namely salary, training, gratituty, bonus, allowances etc. Fromthe above chart we come to the observation that both the companies SHREE and

AMBUJA are incuuring almost the same cost on manpower. But we know that Ambuja

has a higher employee base than Shree cements. So we conclude that the manpower cost

for Shree cements is still on a higher side.

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LOGISTICS COST TO TOTAL TURNOVER RATIO

FOR SHREE CEMENT

Logistics cost = Rs. 15562.76


Ratio

Logistics Cost 100 = 15562.76 100


= 9.67%

FOR AMBUJA CEMENT

Total Fright = 162.69

Ratio =162.69 100 = 2.48%

6556.92

54


55/108


Table 4: showing logistics cost to total turnover ratio


9.67% 2.48%

Chart 4: showing logistics cost to total turnover ratio

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

PERCENTAG

E

SHREE CEMENT AMBUJA

CEMENT

COMPANIES

LOGISTICS COST TO TOTAL TURNOVER RATIO

INTERPRETATION

Logistic cost includes cost of transportation of raw material, finished goods and also cost

incurred in maintaining a healthy distribution channel.

From the above diagram we come to a conclusion that although Shree has its own rawmaterial sources but still its logistics cost is much higher because of its location. Shree is

located in a very remote area of Rajasthan which beomes a major disadvantage in terms

of logistics. But as this area has more of advantages in other terms like raw material

avalaibility and subsidies, the company has to bear this cost even though its on a very

high side.

55


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ADMNISTRATION COST TO TOTAL TURNOVER RATIO

FOR SHREE CEMENT

Admins Overheads

Real - 151.26

Rates & Taxes - 350.41

Insulance - 137.44

Travelling - 456.41

Commision to Directors - 30.00

Director Fees 4.80

Misc - 1123.18

Bank and financial charges- 172.58

Publicity and Selling Exp. - 3110.79

5536.87

Total Turnover = Rs 160548.97

Ratio

Total Administrative Overheads 100

Total turnover

= 5536.87 100

160548.97

= 3.44 %

56


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FOR AMBUJA CEMENT

Rent 9.54

Rate and Taxes 2.66

Insurance 13.07

Advertisement and Publicity 41.84

Freight and far working charges includingRs. 10.11 Crores on Export (Previous year Rs. - 1001.39

9.17 Crores)

Commission on Sale 10.48

Discount On Sale 71.06

Selling and Distribution 102.27

Turnover Tax Additional Tax

And Purchase Tax- 9.08

Miscellaneous Expenses

162.02

Directories Fees ands Expenses 0.22

Commission to Directions 0.84

Loss on Assets Sold Scrapped on

Discarded and writ tend

57


58/108


6.91

Aleondoned capital Project

2.54

Donations

14.45

Bad Debts Sundry Debtor Balances

And Claims Written off 1.89

Provision for doubtful advances 2.44

Provision For diminution IN

Value of Investment- 1.00

Part of Debarred Revenue Expenditure

Written of 0.47

Expenses relating to Previous Years

Wealth Tax- 0.24

1438.41

Ratio= 1438.41 100

6556.92

= 21.94%

58


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Table 5: showing administration cost to total turnover ratio


3.44% 21.94%

Chart 5: showing administration cost to total turnover ratio

ADMINISTRATIVE COST TO TOTAL TURNOV

RATIO

3.44%

21.9

SHREE

CEMENT

AMBUJA

CEMENT

COMPANIES

PERCENTAG

INTERPRETATION

Administration cost includes cost which are accumulated on various non- manufacturing

cost incurred on getting the company going namely director fees, rents, misc expenses,

loss on sale of assets, selling expenses. These cost are majorly a part of the general office

expenses.

This is one area where Shree has bettered Ambuja. We can observe that the percentage

on turnover for shree is only 3.44% while for Ambuja its way too more at 21.94% .

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INTEREST CHARGES TO TOTAL TURNOVER

FOR SHREE CEMENT

Interest Rs.

On Fixed Loans 629.76

On Dissenters 155.60

On Others 252.01

1037.37

Total turnover = Rs. 160548.97

Interest 100 = 1037.37 100

Total turnover 160548.97

= 0.64%

FOR AMBUJA CEMENT

Interest:-

On debenture and Bond 7.45

On Fixed Loan 18.24

Others 53.74

79.73

Un Expired Premium on Pre Payment of

Tern loans amortized 0.49

Faience Charges 1.69

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81.91

Less:- Capitalized during the year ( 4.82 )

77.09

Interest/ Total Turnover (%) = 77.09 x 100

6556.92

= 1.18%

61


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Table 6: showing interest charges to total turnover


0.64% 1.18%

Chart 6: showing interest charges to total turnover

0.64%

1.18%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%1.20%

PERCENTAG

ES

SHREE CEMENT AMBUJA

CEMENT

COMPANIES

INTEREST CHARGES TO TOTAL TURNOVER RATIO

INTERPRETATION

This ratio tells us how much is the fixed obligation in terms of interest to outsider for the

company.

In this ratio too shree has got away by a large margine primarily because Ambuja has

more of outsider fund in its capital structure than owners equity. The company has large

amount of loans outstanding, which has resulted in more interest payment for Ambuja.

The ratio stands at 0.64% for Shree and at 1.18% for Ambuja cements.

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PRE- INTEREST PROFIT TO TOTAL TURNOVER

FOR SHREE CEMENT

Pre Interest Profit

Profit before Depreciation and tax preoperative expenses - 62249.89

+ Interest - 1037.37

63287.26

Total turnover = Rs. 160548.97

Pre- Interest + Profit 100 = 63287.26


= 39.41%

FOR AMBUJA CEMENT

Profit before tax but offer interest = 2789.36Add Interest and Finance Charges 77.09

Profit before interest % Tax 2866.45

Prep interest Profit / Turnover Rates

Pre -Interest Profit 100 = 2866.45 100


= 43.72%

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Table 7: showing pre-interest profit to total turnover


39.41% 43.72%

Chart 7: showing pre-interest profit to total turnover

37.00%

38.00%

39.00%

40.00%

41.00%

42.00%

43.00%

44.00%

PERCENTAGE

1

COMPANIES

PRE- INTEREST PROFIT TO TOTAL TURNOVER

RATIO

SHREE CEMEN

AMBUJA CEME

INTERPRETATION

This ratio tells what is the percentage of profit in in terms of total turnover. In other

words we are trying to find out what is the financial position of the company before

paying its interest obligations. This ratio also tells us what is the companys liquidity

position before paying the interest.

After studying the ratio we come across to the fact that there is not much difference

between the pre- interest profits of both the companies. Ambuja stands at 43.72% while

Shree stands at 39.41% .

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POST- INTEREST PROFIT TO TOTAL TURNOVER

FOR SHREE CEMENT

Post Interest Profit = Rs. 62,249.89


Post Interest Profit 100 = 62249.89 x 100


=38.77%

FOR AMBUJA CEMENT

Profit before tax but offer interest = 2789.36

Post interest profit / Total Turnover 100

= 2789.36 100

6556.92

= 42.54%

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Table 8: showing post-interest profit to total turnover

Chart 8: showing post-interest profit to total turnover

POST- INTEREST PROFIT TO TURNOVER RATIO

38.77%

42.54%

36.00%

37.00%

38.00%

39.00%

40.00%

41.00%

42.00%

43.00%


COMPANIES

PERCENT

INTERPRETATION

This ratio tells us how much the liquidity as well as the profitability is affected by

payment of interest.


38.77% 42.54%

66

8/7/2019 INTERNSHI

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INTERNSHIP REPORT manish