FUNDAMENTAL ANALYSIS

FUNDAMENTAL ANALYSIS

 ECONOMY ANALYSIS

 INDUSTRY ANALYSIS

 COMPANY ANALYSIS
COUNTRY
ANALYSIS
  The Indian economy grew at 9.6 per cent in
2006-07 and 9 per cent in 2007-08,
emerging as the second fastest growing
major economy in the world

2006-07 2007-08
Foreign Exchange $247.76 309.72
Reserves

FII 10.3 16.1

FDI 15.7 24.57

 GDP
GDP

12

10 9.6
9.42 9.03
8.52
8
7.45
Growth %

6 GDP
4 3.84
2

0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Year
 INVESTMENT IN FIXED
ASSETS % OF GDP

Investment (GDP %)

35 31.8
28.1 29.2
30
23.1 23.8
25

20

15

10

0
2004 2005 2006 2007 2008
 INFLATION
% of change

14
12.64
12
10
8
inflation rate

% of change
6 5.5 5.4
4 4.3 4.4
3.8 3.8
2
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
year
 Industrial Production
Industrial production growth rate

12.00%

10.00% 10.00%

8.00% 7.90%
7.40% 7.50%
GROWTH %

6.50%
6.00% 6.00%

4.00%

2.00%

0.00%
2003 2004 2005 2006 2007 2008
YEAR

annual percentage increase in industrial production (includes

manufacturing, mining, and construction).
 POSITION OF INDIA
GDP (purchasing power parity) (Billion
Rank Country
$)
1 United States 13,860
2 China 7,043
3 Japan 4,417
4 India 2,965
5 Germany 2,833
6 United Kingdom 2,147
7 Russia 2,076
8 France 2,067
9 Brazil 1,838
10 Italy 1,800
 FUTURE OF INDIAN
ECONOMY
 Over 300 million Indians are expected to have a
household income of over US$ 6,000 by 2015.

 India is among the world's youngest nations

with a median age of 25 years

 India has the second largest area of arable land

in the world, making it one of the world's largest
food producers - over 200 million tonnes of
foodgrains are produced annually.

 With the largest number of listed companies -

10,000 across 23 stock exchanges,
 FUTURE OF INDIAN
ECONOMY
 India's healthy banking system with a
network of 70,000 branches is among the
largest in the world

 According to a study by the McKinsey

Global Institute (MGI), India's consumer
market will be the world's fifth largest
(from twelfth) in the world by 2025

 India's middle class will swell by over ten

times from its current size of 50 million to
583 million people by 2025

 The number of companies incorporated

has increased at an annual average of
55,000 companies in the last two years
INDUSTRY ANALYSIS

CEMENT INDUSTRY
 CEMENT INDUSTRY
 India is the world’s second largest
producer of cement after China
with industry capacity of over 200
million tonnes (MT)

 Total installed capacity was

204.29 MT as on August 31, 2008

 Total despatches has been 100.17

MT during April–October 2008–09
100.96 MT during April–October
2008–09.
 CEMENT INDUSTRY
ANALYSIS
 India’s cement consumption
grew 9.6% yoy.
 South market witnessed
strong demand supporting
firm pricing (up 4.7% yoy)
in the region.
 The key concern dip in
construction and
infrastructure activities in
the country.
 CEMENT INDUSTRY
ANALYSIS
Rebound in consumption growth;
Central and South region
outperform.
Region Growth
%
India 9.6
South 16.3
West 9.8
Central 14.3
North 3.7
East 2.1
 CEMENT INDUSTRY
ANALYSIS
 Contradictory pricing trend
emerge; realizations remained
robust in South
 Capacity utilization improves MoM
but remains lower yoy
 Key performers were players who
have recently added capacities

 Coal prices cool from peak; freight

index fell to the lowest levels since
2002.
 Consumption Growth &
Capacity Addition
 Consumption in Million Tonnes and
Capacity addition in Million Tonnes p a
Region Consumption Capacity
Sep 08 Sep 07 Aug Addition
08
South 4.43 3.8 4.49 27.6

North 2.85 2.75 2.41 15.0

West 2.4 2.35 2.4 11.3
East 1.91 1.74 1.86 7.5
 Mergers and Acquistions
 The cement sector contributing to 7 per
cent to the total deal value

 Holcim strengthened its position in India

by increasing its holding in Ambuja
Cement from 22 per cent to 56 per cent.

 Leading foreign funds have together

bought around 7.5 per cent in India’s
third-largest cement firm, India Cements
(ICL), for US$ 124.91 million
 Cimpor, the Portugese cement maker,
paid US$ 68.10 million for Grasim
Industries’ 53.63 per cent stake in Shree
Digvijay Cement
 Cement Industry
 Entry barriers:
 Economies of scale
 Capital requirement
 Avg gestation period of 2-3 years
 Access to distribution channels
 Threat of new entrants: low

 Bargaining power of suppliers: High

 Large and few sellers
 No substitutes
 Sellers’ product important input for buyer
 Cement Industry
 Bargaining power of buyers: low/medium
 Standard product
 No substitute

 Intensity of competition: Medium

 Equally balanced competitors
 Average industry growth
 High fixed costs
 Lack of switching cost
 Capacity augmentation in large increments
 High exit barriers

 Substitutes: None
 SWOT
STRENGTHS
 Second largest in the world in
terms of capacity
 Low cost of production
 SWOT
WEAKNESS

 Effect of global recession on

Real Estate and Infrastructure.
 Demand-Supply gap, Overcapacity
 Increasing Cost of Production
 High Interest rates
 SWOT
OPPORTUNITIES
 Strong growth of economy in
the long run.
 Increase in infrastructure
projects
 Growing middle class
 Technological Changes
 Increase in govt spending.
 SWOT
THREATS

 Imports from Pakistan

affecting markets in Northern
India.
 Excess over capacity can hurt
margins as well as prices.
 CHALLENGES
 Cement industry currently
has one of the highest
inventory levels in recent
times.
 Growth rates have slowed.
 Capacity additions putting
pressure on prices.
 As a result the cement
companies are looking for
cutting production
COMPANY
ANALYSIS
Corporate office

Cement House
121, Maharishi Karve Road
Mumbai - 400 020
India
Tel: 91-22-66654321
Fax: 91-22-66317440
 Overview
 Established in 1936, ACC has been a pioneer
and trend-setter in cement and concrete
technology.

 ACC's operations are spread throughout the

country with 14 modern cement factories,
more than 30 Ready mix concrete plants, 20
sales offices, and several zonal offices.

 It has a workforce of about 10,000 persons

and a countrywide distribution network of
over 9,000 dealers.

 It is the only cement company that figures

in the list of Consumer SuperBrands of India
 F. E. Dinshaw – the founder of ACC

ACC's First Board Meeting in 1936 at The Esplanade

BOARD OF DIRECTORS

Mr N. S. Sekhsaria
Chairman  

Mr Paul Hugentobler
Deputy Chairman 

Mr Sumit Banerjee
Managing Director 

Mr S M Palia
Mr Naresh Chandra
Mr Markus Akermann
Mr M L Narula
Mr D K Mehrotra
Mr R A Shah
Dr Nirmalya Kumar
Mr Shailesh Haribhakti
Ms Shikha Sharma
 Plant wise capacity
Units Capacity (MTPA)
Bargarh 0.96
Chaibasa 0.87
Chanda 1.00
Damodhar 0.53
Gagal 4.40
Jamul 1.58
Kymore 2.20
Lakheri 1.50
Madukkarai 0.96
Sindri 0.91
Wadi 2.59
New Wadi Plant 2.60
Tikaria 2.31
Total 22.41
 Subsidiaries
 Bulk Cement Corporation
(India) Ltd. (BCCI)
 ACC Concrete Limited
 Lucky Minmat
 Products & Services
 Ordinary Portland Cements
 OPC 43 Grade
 OPC 53 Grade
 Blended Cements
 Fly-ash based Portland Pozzolana
Cement
 Portland Slag Cement
 Ready Mix Concrete
 Consultancy Services
 Financial analysis
 Balance sheet
 Profit & loss Account
 Fund flow statement
 Financial highlight
All figures in Rs. Million or as indicated
2007 2006 2005 (9M) 2004-05 2003-04
Gross Revenue 79,771 65,860 38,151 46,405 40,388
Profit After Tax 14,386 12,318 5,442 3,784 2,002
Dividend 4,389 3,220 1,686 1,430 800
Net Worth 41,527 31,420 21,300 15,770 13,184
Capital
49,533 43,787 36,070 33,820 30,109
Employed
Borrowings 4,691 9,160 11,762 15,093 13,272
Debt-Equity
0.11 0.29 0.55 0.96 1.07
Ratio
Book Value per
221.33 167.77 115.00 88.00 74.41
Share (Rs)
Earning per
76.75 66.02 30.02 21.23 11.68
Share
Dividend per
20.00 15.00 8.00 7.00 4.00
Share
Employees
10,032 9,231 9,170 8,995 9,115
(Number)
Shareholders
1,27,476 1,10,455 97,219 1,05,165 1,20,803
(Number)
 Gross Revenue
Gross Revenue(in
Year
Rs. million)
2001-02 33338
2002-03 34654
2003-04 40388
2004-05 46405

2005 (9M) 38151

2006 65947
2007 79771
EBITDA
EBITDA(in Rs.
Year million)

2001-02 4923

2002-03 4036

2003-04 5339

2004-05 7200

2005
6337
(9M)

2006 17561

2007 20462
 PAT
Year PAT(in Rs. million)

2001-02 1304

2002-03 1039

2003-04 2002

2004-05 3784

2005 (9M) 5442

2006 12318

2007 14386
 Dividends
Year Dividends (%)

2001-02 30

2002-03 25

2003-04 40

2004-05 70

2005 (9M) 80

2006 150

2007 200
 Net Worth & Return on
the Net Worth

Year Net Worth(in Rs. million) Return on Net Worth (%)

2001-02 9459 14
2002-03 10242 10
2003-04 13184 15
2004-05 15770 24
2005(9M) 21300 33
2006 31420 39
2007 41530 35
Book Value Per Share
Book Value Per Share(in
Year
Rs.)

2001-02 55

2002-03 60

2003-04 74

2004-05 88

2005
115
(9M)

2006 168

2007 221
 EQUITY SHARE
Company's
2004- 2003-
Financial 2007 2006 2005
05 04
year
Earnings Per
Rs. 76.75 # 66.02# 30.02# 21.23# 11.68#
Share
Earning-price
13.74 16.44 17.74 17.25 21.62
Ratio
Yield % 1.90 1.38 1.50 1.91 1.58

Debt - Equity
0.11 0.29 0.55 0.96 1.09
Ratio

Current Ratio 1.07 1.26 1.16 1.25 1.22

a) High Rs. 1,315 1,192 569 385 283

b) Low Rs. 680 501 318 218 127

 Key Ratios
Ratio 2007 2008

Liquidity Ratios

Current ratio 1.58 1.87

Quick ratio 1.05 1.26

Leverage ratio

Debt-equity ratio 0.11 0.29

Total debt-equity 0.68 1.00

Proprietary ratio 0.60 0.53

Interest coverage 70.72 27.03

ratio
 Cont..
Ratio 2007 2008
Profitability ratios
Return on 20.5 20.85
assets
Return on 3.41 3.21
capital
employed
Return on 0.39 0.34
equity
EPS 76.75 Rs 66.02 Rs
Dividend pay 26.31% 22.72%
out ratio
Shareholding Pattern
Indian Bodies Corporate

shareholding
Foreign Bodies Corporate

Mutual Funds/ UTI

Financial Institutions/ Banks

Central Government/ State Government(s)

Foreign Institutional Investors

Bodies Corporate

Individuals -

i. Individual shareholders holding nominal

share capital upto Rs. 1 lakh.

ii. Individual shareholders

i.Shares held by Pakistani Citizens vested

 Expected Dividend (TA)

YEAR (X) DIVIDEND (y) x xy

2003-04 4 -2 -8

2004-05 7 -1 -7

2005 (9 M) 8 0 0

2006 15 1 15

2007 20 2 40

54 40
 Time series analysis
 A=10.8
 B=3

 Y=a+bX
 2008= 10.8+3(2008-2005)

= 19.8
 2009=10.8+3(2009-2005)

= 22.8
 Intrinsic value
 For 2008; ROR =7.5%
So= Div/(1+Ke)t+MV/(1+Ke)n

= 19.8/(1.075)1+ 403/(1.075)1
= 374.9

Here, So<MV so Sale Is Good for

investor

 2009

So will be 387.03
AS,So<MV seller should sell at current
 BIBLIOGRAPY
 www.indexmundi/India%20Invest
 www.indiainfoline.com
 www.business-standard.com
 www.bseindia.com
 www.moneycontrol.com
 www.rediff/money.com/myportfoli
www.rediff/money.com/myportfol
 BIBLIOGRAPY

 Portfolio Management by S.Kevin

 Security Analysis and portfolio
mgmt : Fischer Jordan
 Capital market nov 2 edition
 Business standard Nov 26