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The Aditya Birla Group is the 11th largest cement producer in the world and the seventh largest

in Asia.

Incorporated on 24 August 2000 as L&T Cement Limited.


Cement business of Larsen & Toubro Limited demerged and vested in company in 2004. Grasim acquired management control in July 2004. Together with Grasim, one of the largest cement producers in India. Name changed to UltraTech Cement Limited with effect from 14 October 2004. Narmada Cement Company Limited amalgamated with UltraTech in May 2006.

To

deliver superior value to our customers, shareholders, employees and society at large.

Ordinary Portland cement Clinker 90.50% Gypsum 4.00% Fly ash 5.50% Portland blast furnace slag cement Clinker 70% Gypsum 6% Slag (Blast Furnace) 24%

Portland Pozzolana cement Clinker 66% Gypsum 4% Fly ash 30%

To

be a premium global conglomerate with a clear focus on each business. Customerization Quality consistency Product range Cost competitiveness Employee empowerment

STRATEGIES

Cost efficiency Customer retention Business redefinition Innovation strategies Financial strategy

ORGANISATIONAL
STRUCTURE

Finance

Department Marketing Department Human Resource Department Research & Development Department Supply Chain Department

2009
Profit After Tax Gross Profit Net Sales EPS Current Assets Current Liability Equity Debt

2010 1093.24
1588.16 7049.68 87.82 1513.43 1138.08 124.49 1607.07

Change (%) 11.90


16.65 10.44 11.90 8.08 1.53 0.00 -25.00

977.02
1361.49 6383.08 78.48 1400.35 1120.92 124.49 2142.87

1] To identify aspects of a businesses performance to aid decision making 2] Quantitative process may need to be supplemented by qualitative Factors to get a complete picture. 5 main areas:

Liquidity the ability of the firm to pay its way Investment/shareholders information to enable decisions to be made on the extent of the risk and the earning potential of a business investment Gearing information on the relationship between the exposure of the business to loans as opposed to share capital Profitability how effective the firm is at generating profits given sales and or its capital assets Financial the rate at which the company sells its stock and the efficiency with which it uses its assets

Classification of Ratio
Profitability Liqudity Ratio Leverage Ratio
Debt Equity Ratio

Activity Ratio

Coverage Ratio

Gross Profit Rattio

Current ratio

Stock Turn Over Ratio

Debentures Service Coverage Ratio

Net Profit Ratio

Liquid Ratio

Profitability Ratio

Total Assets Turn Over Ratio

Interest Coverage Ratio

Return on Capital Employed Ratio

Capital Gearing Ratio

Debtors Ratio

Return on Shareholders Fund

Long Term Funds to Fixed Assets

Creditors Ratio

Return on Equity Ratio

Book Value Per Share Working Capital Turn Over Ratio

Operating Ratio

Expenses Ratio

Earning Per Share Ratio

Dividend Per Ratio

Prise Earning Ratio

Debt Equity Ratio


Total Debt Total Equity Ratio Ultratech Cement 1607.070 4619.530 0.348 JK Cement 1073.720 1351.266 0.795 Binani Cement 1687.649 703.807 2.398

Debt Assets Ratio


Total Debt Total Assets Ratio
Ultratech Cement 1607.070 7069.690 0.227 JK Cement 1073.720 2610.787 0.411 Binani Cement 1687.649 2639.761 0.639

Interest Coverage Ratio


EBIT Total Interest Ratio Ultratech Cement 1597.810 117.520 13.596 JK Cement 309.812 61.632 5.027 Binani Cement 419.558 118.143 3.551

Both the companies on a whole have sound debt equity ratio but this shows both companies are moving at moderate risk and are not aggressive in raising capital.

Reason behind low debt-equity ratio might be very small amount of long term loans taken by firm from outside sources. Because of lower rational, benefit of trading on equity is not availed of and the rate of equity dividend might be comparatively lower in the future.

Current Ratio
Ultratech Cement 1472.00 1299.00 1.13 JK Cement 684.79 357.69 1.91 Binani Cement 721.35 569.89 1.27

Current Assets Current Liab. Ratio

Quick Ratio
Ultratech Cement 650.69 1299.00 0.50 JK Cement 447.17 357.69 1.25 Binani Cement 551.37 569.89 0.97

Quick Assets Current Liab. Ratio

Ultratech has its current ratio to 1.13:1 to maintain adequate liquidity. As compared to the ideal ratio (2:1), The current ratios computed above are lower than the ideal ratio. It shows that the company is not sufficient to meet its short term obligations / creditors. It shows that the firm is very risky for the creditors. One reason for lower ratio method of accounting inventories, but they are using average costing method which give higher value of inventory than LIFO. So they are really poor at their current ratio. Though it may be because the industry average is such due to government interference in this industry.

It

is a very good sign to have liquid ratio near to one in case of any emergency the company will have liquid funds to finance the expenses. Though Ultratech cements have quick ratio of 0.50:1 which is less than ideal ratio which proves Ultratech is in not so better position to fund any contingency expense as they dont have enough liquidity.

INVENTORY TURNOVER RATIO


Ultratech Cement JK Cement Binani Cement COGS (Crs. Rs.) AVG INVENTORY (Crs. Rs.) RATIO (Times) 5199 253 20.54 1432 42 34.09 1359 73 18.61

DEBTORS TURNOVER RATIO


Ultratech Cement JK Cement Binani cement NET SALES (Crs. Rs.) DEBTORS + B/R'S (Crs. Rs.) RATIO (Times) 7175 215.83 33.24 1827 81.87 22.31 1872 104.76 17.86

TOTAL ASSETS TURNOVER RATIO


Ultratech Cement JK Cement Binani cement NET SALES (Crs. Rs.) TOTAL ASSETS (Crs. Rs.) RATIO (Times) 7175 7044 1.01 1827 2970.96 0.61 1872 1873.73 0.99

FIXED ASSET TURNOVER RATIO


Ultratech Cement JK Cement Binani cement NET SALES (Crs. Rs.) FIXED ASSETS (Crs. Rs.) RATIO (Times) 7175 4942 1.45 1827 2044.88 0.89 1872 1347.69 1.38

All the Companies are showing more or less stable performance with almost a subtle change in the figures of ultratech cement and binani(20.5& 18 respectively). But the turnover ratio of JK cement is almost 2 times that of Binani Cements making it a better performer. The Fixed Asset Turnover ratio of all the companies is low with JK having very low figures showing that the investments in fixed assets is more than that is actually required. However the performance for other two is quite constant with a marginal difference in the numbers. The above ratios are desirable by any firm. Higher values of debtors turnover indicate more efficient management of credit. But sometimes higher ratio would result into higher working capital requirement and also high risk of bad debts. In this ratio clearly Binani & JK cements has amazing debtors turnover but they may be lagging behind in building strong customer relations as they offer less credit period and hence inventory cycle is very quick. Ultratech has Debtors turnover of 33.24 days which is not at all bad sign

Gross Profit Ratio


Gross profit Net Sales Ratio Ultratech Cement 3963.96 7175.07 0.55 JK Cement 1085.61 1826.78 0.59 Binani Cement 1738.28 2259.78 0.77

Net Profit Ratio


Net profit Net Sales Ratio Ultratech Cement 1096.84 7175.07 0.153 JK Cement 226.00 1826.78 0.124 Binani Cement 281.92 2259.78 0.125

ROA
Profit after Tax Avg. Total Assets Ratio Ultratech Cement 1096.84 6779.10 0.162 JK Cement 226.00 2232.16 0.101 Binani Cement 281.92 2406.49 0.117

Earning Power
PBIT Avg. Total Assets Ratio Ultratech Cement 1597.81 6779.10 0.236 JK Cement 458.40 2232.16 0.205 Binani Cement 591.78 2406.49 0.246

Return On Capital Employed


PBIT(1-Tax rate) Avg. Total Assets Ratio
Ultratech Cement 1118.467 6779.10 0.165 JK Cement 320.88014 2232.16 0.144 Binani Cement 414.246 2406.49 0.172

As

it can be seen from the other profitability ratios also Ultratech is better even in the Return on Capital employed ratio with lower rate of decrease as compared with the figures of JK and Binani Cements. Thus Ultratech is better in the profitability.

Price-Earning Ratio
Market Price EPS Ratio Ultratech Cement 920.550 87.820 10.482 JK Cement 156.800 32.110 4.883 Binani Cement 77.600 13.880 5.591

The ratio computed above of Ultratech is which shows that the EPS of the company is covered 10.48 times by the market price of the share of the company. The ratio in 2010 by all the companies which shows efficient work and good performance of the company to generate profit.
Investors look at the P/E ratio as future market expectations of a companys growth prospects in terms of profitability. If the P/E of a company is on the higher side when compared to its industry averages, it means the market is expecting some positive events from the company as far as earnings are concerned. In both companies case is the same; it is attracting more investors by increasing their P/E ratio.

STRENGTHS: Double digit growth rate Cement demand has grown in tandem with strong economic growth; derived from: -Growth in housing sector (over 30%) key demand driver; -Infrastructure projects like ports, airports, power projects, dam and irrigation projects -National Highway Development Program -Bharat Nirman Yojana for rural infrastructure -Rise in industrial projects -Export potential also demand driver Capacity utilization over 90%

WEAKNESS: Low value commodity Cement Industry is highly fragmented Industry is also highly regionalized Low value commodity makes transportation over long distances un-economical

OPPORTUNITIES: Demandsupply gap Substantially lower per capita cement consumption as compared to developing countries (1/3 rd of world average) Per capita cement consumption in India is 82 kgs against a global average of 255 kgs and Asian average of 200 kgs. Additional capacity of 20 million tons per annum will be required to match the demand Limited green field capacity addition in pipeline for next two years, leading to favorable demand supply scenario THREATS: Rising input costs Government intervention to adjust cement prices Possibility of over bunching of capacities in the long term as some of the players have already announced new capacities Transportation cost is scaling high; bottleneck due to loading restrictions Coal prices climbing up; industry players say current shortage of coal in the country is estimated to be over 10 million tones.

Ultratech Cements holds a larger market value in terms of sales, PBDIT, PAT and is clearly way ahead of India cements

Ultratech does not have very good debt equity ratio which proves that the company is not using the ability to trade on debt
The overall financial position of Ultratech is very good and prospects are seen for it to be improved in 2010.

In Ultratech cements the bifurcation of inventory is not given it is added to current assets so it is studied from the management report in order to calculate Debtors turnover Ratio
P/E ratio has increased in 2010 to 13.49 proving the efficient work and good performance of the company to generate profit. Investors look at the P/E ratio as future market expectations of a companys growth prospects in terms of profitability. If the P/E of a company is on the higher side when compared to its industry averages, it means the market is expecting some positive events from the company as far as earnings are concerned. In both companies case is the same; it is attracting more investors by increasing their P/E ratio.

Sources

of Information

www.moneypore.com www.moneycontrol.com wwwUltratech.com www.indiacements.com