CEMENT

ACC is one of the largest cement manufacturers in the country and its registered office is located in Mumbai. This
company was formed in the year 1936 by Mr FE Dinshaw when 10 different existing companies came and formed a
single company named Associate Cement Companies Ltd. It operates under the parent company Lafarge Holcim. The
company boasts of more than 15 modern cement factories and about 75 mixed concrete plants. It enjoys a distribution
network of more than 50000 dealers and retailers. It is the biggest user of limestone in the country and also promotes
sustainable practices in its manufacturing process.

The company has given consistent positive fiscal performance in last 2 years and had 64% increase in the YoY net
profit and its YoY EPS also increased by 5.

Book Value of the share has continuously increased in the last 5 years and is now Rs. 561 in the market and the
company also has given positive dividend to all its stakeholders in the last 5 years.

The company also has continuously increased its net worth in the past 5 years and for the past year it crossed the Rs.
10000 crore mark
Net Revenue and Profit Margins

Profitability ratios indicate the profit making potential of their companies.

As can be seen from the graph that there has been an increase in the Net Revenue since the last 4 quarters and this
growth is a result of two new cement plants that started functioning in the beginning of January 2017. The company
suffered from decreased sales in the years 2015 and 2016 due to unseasonal rains and demonetisation. Unseasonal Rains
had a huge impact on the rural demand thus directly affecting the cement industry in India. Demonetisation also affected
the net revenue in the market and sales went down. But because of its strong fundamentals the company recovered.

EBITDA Margin has almost remained same for all the years indicating a fixed proportion of expenses from net revenues
for all 5 years.

Turnover Ratios

Turnover ratios are the financial ratios in which the net revenue amount is divided by an average asset amount for the
same year. Generally, the larger the turnover ratio the better for the company. The fall in Turnover Ratios occurred due
to demonetisation in 2016.
Dupont Five Point Analysis

This analysis indicates different sources of Return on Equity. It divides ROE in five different headers to give a proper
picture of the Returns. The 5 different points of Dupont Analysis are as follows-

1. Asset Turnover Ratio (Net Sales/Total Operating Assets)

2. Operating Profit Margin (EBIT/Net Sales)

3. Leverage (Total Operating Assets/Equity + Minority Interest)

4. Interest Factor (EBT/EBIT)

5. Tax Factor (NI/EBT)

The Table below gives the Dupont five-point analysis of ACC Cement-

2014 2015 2016 2017 2018

Operating Margin 7.91% 7.34% 7.16% 9.50% 9.74%
Total Asset Turnover 1.26 1.22 0.89 0.96 1.03
Ratio
Leverage Ratio 1.54 1.52 1.55 1.59 1.52
Interest Adjustment 91.08% 92.53% 91.38% 92.20% 93.91%
Tax Adjustment 68.72% 67.47% 83.49% 69.71% 66.22%
ROE 7.07% 6.41% 7.06% 8.67% 8.51%

Cash Conversion Cycle-

CCC for a company indicates the efficiency of a company and how quickly can it convert its services and products to
cash. Nowadays companies are moving more towards JIT and less inventory on hand. In the five year period ACC also
has significantly cutdown its cash conversion cycle from 28 days in 2014 to 15 days in 2018.

The below graph shows the CCC cycle for ACC Cement

ACC Cement- Cash Conversion Cycle

60.00
50.00
40.00
30.00
20.00
10.00
0.00
2014 2015 2016 2017 2018

Days Inventory Days Recievables Days Payables Cash Cycle