INTERNSHIP REPORT Manish

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 not
be 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 shouldn’t be taken in association of other aspects of a business. What type
of business is it? A company’s 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 company’s 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 24th 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 country’s 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 economy’s 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 group’s 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
2008–09. 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 total
production 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$ 2–2.5
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 India’s
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 Concrete’s
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 and
differential 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 initially
available 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 industry’s 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 Electrical Energy

Consumption Consumption (kWh/t
(Kcal/kg Clinker) Cement)
Dry Process Plants 763 96.88
Overall (Combined for all 769 96.86

Processes)
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 avrage
thermal 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 industry’s
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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 :-
Permissible particulate emission levels for general

States
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 100 100

SO2 300 300
Meghalaya NOx 100 500

SO2 100 500
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 IS:8112

53 Grade 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 & 123.22 524.37 4,858.53 5,506.12 5.75

Kashmir
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 0.00 108.00 275.50 383.50 0.40

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

Pradesh
Maharashtra 890.78 111.02 812.33 1,814.13 1.90
Goa, Diu & 48.84 0.04 0.00 48.84 0.05

Daman
Total 8,782.56 7,868.41 2,726.99 19,377.96 20.36
Andhra 959.41 1,442.11 28,032.60 30,434.12 31.83

Pradesh
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 & 0.00 0.32 0.51 0.83 -

Nicobar
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 depending
upon 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
23
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. Its
activities 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
24
gaining information on the state-of-art in relevant fields and also helped NCB in
enriching their expertise and R&D capability.
25
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
26
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.
27
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..
28
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
29
Dr. Abid Hussain

Dr. Y.K. Alagh
Shri A. Ghosh
Shri M.K.Singhi - Executive Director
30
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 are
waste 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%
31
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.
32
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 firm’s 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.
33
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 company’s 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.
34
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 company’s 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.
35
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 firm’s 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 company’s
earnings, the lower the interest coverage ratio can be.
36
EBIT has its short fallings; companies do pay taxes, therefore it is misleading to act as if
they didn’t. A wise and conservative investor would simply take the company’s 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 to
foresee 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
37
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
38
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.
39
40
CONCEPTUAL DEFINITION
• Financial Statement : A statement prepared on a certain date for giving an

accounting picture of the firm’s 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 contains

information about the firm’s 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 bank
balance, debtors(i.e. fund due from the firm’s 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 firm’s obligation to pay cash or provide goods or

services in the future. There are two types of liabilities; current liability and long
term liabilities.
41
• 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).
42
• 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.
43
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.
44
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 concerned
with 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 people’s
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.
45
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 the
form 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.
46
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 CEMENT

Raw 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
47
SHREE CEMENT AMBUJA CEMENT
10.22% 7.36%
Chart 1: showing raw material to total turnover ratio
RAWMATERIAL COST TOTOTAL TURNOVER
12.00%
10.22%
PERCENTAGE
10.00%
8.00% 7.36%
6.00%
4.00%
2.00%
0.00%
SHREECEMENT AMBUJA CEMENT
COMPANIES
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.
48
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 %
49
14.61% 15.32%
Table 2: showing power & fuel cost to total turnover
Chart2: showing power & fuel cost to total turnover
POWER AND FUEL TO TOTAL TURNOVER RATIO
15.40%
15.20%
15.00%
PERCENTA
14.80%
GE
14.60%
14.40%
14.20%
SHREECEMENT AMBUJA
CEMENT
COMPANIES
INTERPRETATION
50
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.
51
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
52
Table 3: showing manpower cost to total turnover ratio
3.60% 3.21%
Chart 3: showing manpower cost to total turnover ratio
MANPOWERCOST TO TOTAL TURNOVERRATIO
AMBUJA
3.21%
COMPANIES
CEMENT
SHREE
3.60%
CEMENT
3.00% 3.20% 3.40% 3.60% 3.80%

PERCENTAGE
INTERPRETATION
Manpower cost includes various expenses paid by the company towards acquiring
manpower i.e. employees namely salary, training, gratituty, bonus, allowances etc. From
the 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.
53
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
Table 4: showing logistics cost to total turnover ratio

9.67% 2.48%
Chart 4: showing logistics cost to total turnover ratio
LOGISTICS COST TO TOTAL TURNOVER RATIO
10.00%
9.00%
8.00%
7.00%
PERCENTAG 6.00%
5.00%
E 4.00%
3.00%
2.00%
1.00%
0.00%
SHREECEMENT AMBUJA
CEMENT
COMPANIES
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 raw
material 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
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
FOR AMBUJA CEMENT
Rent 9.54
Rate and Taxes 2.66
Insurance 13.07
Advertisement and Publicity 41.84
Freight and far working charges including

Rs. 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
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 Year’s

Wealth Tax- 0.24
1438.41
Ratio= 1438.41 × 100

6556.92
= 21.94%
58
Table 5: showing administration cost to total turnover ratio

3.44% 21.94%
Chart 5: showing administration cost to total turnover ratio
ADM INISTRATIVE COST TO TOTAL TURNOVER

RATIO
AM BUJA
21.94%
CEM ENT
COMPANIES
SHREE
3.44%
CEM ENT
PERCENTAGE
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% .
59
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
60
81.91
Less:- Capitalized during the year ( 4.82 )
77.09
Interest/ Total Turnover (%) = 77.09 x 100
6556.92
= 1.18%
61
Table 6: showing interest charges to total turnover

0.64% 1.18%
Chart 6: showing interest charges to total turnover
INTEREST CHARGES TO TOTAL TURNOVER RATIO
1.18%
1.20%
1.00%
0.80% 0.64%
PERCENTAG
0.60%
ES
0.40%
0.20%
0.00%
SHREE CEMENT AMBUJA
CEMENT
COMPANIES
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 owner’s 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.
62
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
Pre- Interest + Profit × 100 = 63287.26

= 39.41%
FOR AMBUJA CEMENT
Profit before tax but offer interest = 2789.36

Add 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%
63
Table 7: showing pre-interest profit to total turnover

39.41% 43.72%
Chart 7: showing pre-interest profit to total turnover
PRE- INTEREST PROFIT TO TOTAL TURNOVER

RATIO
44.00%
43.00%
42.00%
41.00%
PERCENTAGE SHREE CEMENT
40.00%
39.00% AMBUJA CEMENT
38.00%
37.00%
1
COMPANIES
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 company’s 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% .
64
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%
65
Table 8: showing post-interest profit to total turnover

38.77% 42.54%
Chart 8: showing post-interest profit to total turnover
POST- INTEREST PROFIT TO TURNOVERRATIO
43.00%
42.54%
42.00%
PERCENTAGE
41.00%
40.00%
39.00% 38.77%
38.00%
37.00%
36.00%
COMPANIES
INTERPRETATION
This ratio tells us how much the liquidity as well as the profitability is affected by
payment of interest.
66
Reading through the facts we get to know that not much of the profitability is affected for
both the companies after they pay their interests. But here also Ambuja has over come
Shree where the former stands at 42.54% while the later stands at 38.77%
67
DEPRECIATION CHARGES TO TOTAL TURNOVER RATIO
FOR SHREE CEMENT
Depreciation = Rs. 43305.33

Depreciation × 100 = 26.97 %

Total Turnovers
FOR AMBUJA CEMENT
Depreciation = 237.18
Total Turnover = 6556.92
Depreciation / Total Turnover × 100
= 237.18 × 100
6556.92
= 3.62%
68
Table 9: showing depreciation charges to total turnover ratio

26.97% 3.62%
Chart 9: showing depreciation charges to total turnover ratio
DEPRECIATION CHARGES TO TOTAL TURNOVER

RATIO
30.00% 26.97%
25.00%
PERCENTAGES
20.00%
15.00%
10.00%
3.62%
5.00%
0.00%
COMPANIES
INTERPRETATION
This ratio depicts mainly what kind of depreciation policy is being followed by the
companies. The amount of depreciation charged also affects the profitability as well as
the amout of tax paid by the companies. Depreciation is also a source of funds for the
company.
The diagram above shows that shree cements has a very liberal depreciation policy
(26.9% to total turnover) as compared to ambuja cements (3.62%).
69
TAX CHARGES TO TOTAL TURNOVER RATIO
FOR SHREE CEMENT
TAX CHARGES
Provision for Tax - 8370.90
Mat credit Entitlement - -
Provision for Fringe Benefit Tax - -144.65
Provision for Differed Tax ( 7271.22 )
1244.33
Tax × 100 = 1244.33 × 100
= 0.77%
70
FOR AMBUJA CEMENT
PROVISION FOR TAXATION
Current Tax 737.00

Income Tax in respect of Earlier year 202.00
MAT Credit entitlement -
739.00
Add. Fringe benefit tax 5.15
744.15
Less Deferred tax (100.90)
743.20
Tax × 100 = 743.25 × 100

Total turnover 6556.92
= 11.33%
71
Table 10: showing tax charges to total turnover ratio
0.77% 11.33%
Table 10: showing tax charges to total turnover ratio
TAX CHARGES TO TOTAL TURNOVER RATIO
11.33%
12.00%
10.00%
8.00%
PERCENTAGE 6.00% SHREE CEMENT
4.00%
0.77% AMBUJA CEMENT
2.00%
0.00%
1
COMPANIES
72
INTERPRETATION
This ratio is basically to acertain the tax payment level of both the companies. This
helps us to know the amount of tax paid during the year as well as the provision they
have set aside during the year towards the tax obligation.
The chart shows that Shree cements has a very less percentage of 0.77% while for
Ambuja its 11.33%.
The difference is because of the fact that shree cements has a very liberal depreciation
policy which has resulted in the decrease in the profit levels, as a result their tax
obligations are also lesss.
73
NET PROFIT TO TOTAL TURNOVER
SHREE CEMENT
Net Profit = Rs. 17700.23

Net Profit x 100 = Rs. 17700.23 x 100

Total Turnover Rs. 160548.97
=11.02%
FOR AMBUJA CEMENTS
NET PROFIT / TOTAL TURNOVER
Net Profit = 1846.11
Turnover = 6556.36
Net Profit / Total Turnover × 100 = 1846.11 × 100

6556.36
= 28.15%
74
Table 11: showing net profit to total turnover ratio

11.02% 28.15%
Chart 11: showing net profit to total turnover ratio
NET PROFIT TO TOTAL TURNOVER RATIO
11.02%
SHREE CEMENT
AMBUJA CEMENT
28.15%
INTERPRETATION
This ratio enables us to acertain the levels of profitability as compared with the total
turnover of the companies. This empahizes on the fact that the financial position of an
entity always depends upon the level of profit it earns.
The cement gaint Ambuja cements is way ahead in profitability as compared with Shree
cements. Ambuja stands at 28.15% while Shree cements is at 11.02%.
The difference may also arise due to the fact that shree has a very liberal depreciation
policy which results in lesser amount of profits for the company.
75
TOTAL TURNOVER TO CAPITAL EMPLOYED RATIO
FOR SHREE CEMENT

Capital Employed = Fixed Assets + Current Assets – Current Liabilities
Fixed Assets =
Gross block - 165734.06
Less Deps. - 110915.52
Net Block - 54818.54
Capital work in Progress - 34375.25
89,193.79
Current – Assets Loans and Assets
Invention’s 15607.32
Sundry Debtors 2627.17
Cash and Bank Balances 35330.90
:Loans and Advances 23841.80
77407.19
Current Liablitio\es and Provision
Current Liabilities - 19629.06
Provision - 8831.61
28460.67
Capital Employed =
Fixed Assets - 89193.79
Current Assets - 77407.19
166600.98
Less:- Current Liabilities 28460.67
138140.31
76
Turnover × 100
Capital Employed
= 160548.97 × 100
138140.31
= 116.22%
FOR AMBUJA CEMENT
Capital Employed = Current Assets – Current Liability + Fixed Assets
Current Assets.
Inventories 586.586.27
Sundry Debtor 135.38
Cash & Bank Balance 651.58
Other CA 5.31
Loan & Advance 205.72
1583.72
Current Liabilities
Creditors 576.67
Investors 13.83
Provisions 490.04
Security Deposits 82.08
Occurred Interest 5.67
1168.29
77
Fixed Asset
Gross Block - 5251.83

Less Depreciation 2273.98
Net block 29774.858
Capital work in Progress 510.04
3487.89
Adv. Against cap Exp. 186.86
3674.75
Capital Employed = 4090.18
Ratio = 4090.18 × 100

655
= 6556.92 × 100 = 160.30%

4090.15
78
Table 12: showing total turnover to capital employed ratio

116.22% 160.30%
Chart 12: showing total turnover to capital employed ratio
T OTAL T URNOV ER T O CAPIT AL EM PL OYED RAT IO
116.22%
SHREE CEMENT
A MBUJA CEMENT
160.30%
79
INTERPRETATION
This ratio helps us to know what is the level of total sales as compared to the amount of
capital the company has employed in the business. The amount of money invested should
yield satisfactory sales and finally profit so that the company doesnot fall short of its
objective as well as does not go into losses. The level of sales should be atleast that much
whixh satisfactorily exceeds the capital employed.
The analysis show us that shree cements is catching up with ambuja in this ratio but is
still lesser. Shree stands at 116.22% while ambuja is at 160.30%.
Shree should try different promotional strtegies to speed up its sales.
80
NET PROFIT RATIO
FOR SHREE CEMENT
Net Profit Ratio = Net Profit × 100

Net Sales
= 17700.23 × 100
136797.52
= 12.93%
FOR AMBUJA CEMENTS
Net Profit Ratio = Net Profit × 100

Net Sales
= 1846.11 × 100
5792.08
= 31.87%
81
Table 13: showing net profit ratio
12.93% 31.87%
Chart 13: showing net profit ratio
NET PROFIT RATIO
31.87%
AMBUJA
CEMENT
COMPANIES
12.93%
SHREE CEMENT
0.00% 5.00% 10.00 15.00 20.00 25.00 30.00 35.00

% % % % % %
PERCENTAGE
INTERPRETATION
It establishes the relationship between net profit (after tax) and sales and indicates the
efficiency of the management in manufacturing, selling, administrative and other
activities of the firm. This ratio is used to measure the overall profitability.
This ratio indicates the firm’s capacity to face adverse economic conditions such as price
competition, low demand, etc., Higher the ratio, the better is the profitability.
Here we see that AMBUJA is way ahead in terms of profits as compared to SHREE.
82
CURRENT RATIO
Current ratio may be defined as the relationship between current assets and current
liabilities. This ratio, also know as working capital ratio. This ratio is most widely used
to make the analysis of a short-term financial position or liquidity of a firm. It is
calculated by dividing the total of current assets by current liabilities. Thus,
Current Assets
Current ratio =
Current liabilities
CURRENT ASSETS CURRENT LIABILITIES

1. CASH 1. BANK OVERDRAFT
2. BANK BALANCE 2.BILLS PAYABLE
3. SHORT TERM INVESTMENTS 3.TRADE CREDITORS
4. BILLS RECEIVABLE 4. PROVISION FOR TAXATION
5. TRADE DEBTORS 5.PROPOSED DIVIDENDS
6. LOANS AND ADVANCES 6.UNCLAIMED DIVIDENDS
7. INVENTORIES 7. ADVANCE PAYMENTS
8. PREPAID EXPENSES 8. ACCRUED INTEREST
9. OUTSTANDING EXPENSES
As a conventional rule a current ratio of 2:1 or more is considered satisfactory. The rule
is based on the logic that in a worse situation, even if the value of current assets become
half, the firm will be able to meet the obligations. The current ratio represents a margin
of safety, for creditors / bankers. The higher the current ratio, the greater is the margin of
safety and vice-versa.
FOR SHREE CEMENTS
Current Ratio = Current Assets
83
Current Liabilities
Current Assets =
Inventories - 15607.32
Sundry Debtors - 2627.17
Cash - 35330.90
Loans & advance - 25841.80
77407.19
Current Liab –
Current Liabilities - 19629.06
Provisions - 8831.16
24461.67
Ratio - 77407.19
24460.67
= 3.16%
FOR AMBUJA CEMENTS
Current Ratio = Current Asset × 100

Current Liability
= 1583.72 × 100
1168.29
= 135.55%
Table 14: showing current ratio
84
316.00% 135.55%
Chart 14: showing current ratio
CURRENT RATIO
316.00%
350.00%
300.00% 135.55%
250.00%
200.00%
PERCENTAGE
150.00%
100.00%
50.00%
0.00%
SHREE CEMENT A MBUJA CEMENT
COM PANIES
INTERPRETATION
We observe that the current ratio for shree cements is way high then ambuja. This
implies that the company has locked up its potential capital in current assets.
QUICK RATIO
85
Quick ratio is also known as liquid ratio or acid test ratio or near money ratio. It is the
ratio between quick or liquid assets and quick liabilities. The term quick asset refers to
current assets, which can be converted into cash immediately or at a short notice without
diminution of value. Liquid assets comprise all current assets minus stock and prepaid
expenses. Liquid assets liabilities comprise all current liabilities minus bank overdraft .
The quick ratio can be calculated by dividing the total of the quick assets by total current
liabilities. Thus,
Quick or liquid assets

Quick ratio =
Liquid or current liabilities
Sometimes bank overdraft is not included in current liabilities while calculating quick or
acid test ratio, on the argument that bank overdraft is generally a permanent way of
financing and is not subject to be called on demand. In such cases, the quick ratio is
found by dividing the total quick assets by quick liabilities (i.e., current liabilities – bank
overdraft).
FOR SHREE CEMENTS
Quick Ratio - Current Assets – Inventories
86
Current Liabilities
= 77407.19 – 15607.32
14460.67
= 61799.87
24460.67
= 2.52%
FOR AMBUJA CEMENTS
Quick Assets - Current Assets – Inventories
= 1583.72 – 586.27
= 997.45
Quick Ratio = Quick Assets

CL.
= 997.45 × 100
1168.29
= 85.37%
Table 15: showing quick ratio
87

252.00% 85.37%
Chart 15: showing quick ratio
QUICK RAT IO
300.00%
252.00%
250.00%
200.00% 85.37%
PERCENTAGE150.00%
100.00% A MBUJA CEMENT
50.00%
0.00% SHREE CEMENT
1
COM PANIES
INTERPRETATION
From our observation we find that Shree Cements has a very high current ratio which
means that the company has larger amount of liquid assets.
88
DEBT- EQUITY RATIO
FOR SHREE CEMENTS
Debt – Equity Ratio
Debt = Unsecured Loans + Secured Loans

= As (8309.83 + 84827.02)
= Rs 93136.85
Equity = Share Capital + Reserve and Suplies
= Rs (3483.72 + 46894.24)
= Rs. 50377.96
Debt × 100 = 9336.85 × 100

Equity 50377.96
= 184.87%
89
FOR AMBUJA CEMENTS
Debt
Secured Loan - 108.28

Unsecured Loan - 203.42
Debarred Tax Liability 378.08
717.08
Equity
Share Capital - 304.48
ESOP. 0.38
Reserve & Surphis 4554.40
Debt × 100 = 717 × 100 = 14.75%

Equity 4859.26
90
Table 16: showing debt quick ratio
184.87% 14.75% Chart 16:

showing debt quick ratio
DEBT EQUITY RATIO
200.00%
184.87%
150.00%
PERCENTAGE 100.00%
50.00%
0.00% 14.75%
S1
SHREE CEMENT
AMBUJA CEMENT
COM PANIES
INTERPRETATION
91
Debt- equity ratio refers to the mix of equity shares and borrowings of the company
in its capital structure. The rule of thumb for debt- equity ratio
A measure of a company's financial leverage calculated by dividing its total liabilities by

stockholders' equity. It indicates what proportion of equity and debt the company is using
to finance its assets.
Note: Sometimes only interest-bearing, long-term debt is used instead of total liabilities
in the calculation.
A high debt/equity ratio generally means that a company has been aggressive in
financing its growth with debt. This can result in volatile earnings as a result of the
additional interest expense. The debt/equity ratio also depends on the industry in which
the company operates.
From our observation we find that SHREE has a very high debt- equity ratio due to the
presence of large amount of external borrowing of the company.
92
TOTAL ASSETS TO DEBT RATIO
FOR SHREE CEMENT
Total Assets Debt

= Total Assets
Fixed Assets - 89193.79

Current Assets- 77407.19
Invt. 5000
Defferd tax 374.50
171975.48
Debt-
Second Loan - 84827.02
Unsecured Loan- 8309.85
93156.85
= 184%
FOR AMBUJA CEMENTS
Total Assets = Fixed Assets + (A+ Investment + Misc Exp.
= 3674.75+1583.72+1480.36+6.22
= 6745.05
Ratio = 6745.05 = 940.62%

717.08
93
Table 17: showing total asset to debt ratio

184.00% 940.62%
Chart 17: showing total asset to debt ratio
TOTAL ASSETS TO DEBT RATIO
1000.00%
900.00%
800.00%
700.00%
PERCNTAGE
600.00%
500.00% 940.62%
400.00%
300.00%
200.00%
100.00%
184.00%
0.00%
COM PANIES
94
INTERPRETATION
Any outside party namely banks, creditors, shareholders etc would like to know whether
the company has the capacity to repay its debt on time or not. To acertain its ability debt-
equity ratio is calculated. This ratio tells us the amout or the extent of the assets that
would be available at the time of winding up or may some other situation if the company
has to repay the maturing debt. This basically tries to find out if the company has the
capacity to repay its loan by selling of its assets.
We observe from the diagram that ambuja has a high value and volume of assets to back
up its debt outstanding. The ratio is very high at 940.62% while shree cemets is at 184%.
95
STOCK TURNOVER RATIO
This is also known as stock velocity. This ratio is calculated to consider the adequacy of
the quantum of capital and its justification for investing in inventory. A firm must have
reasonable stock in comparison to sales. It is the ratio of cost of sales and average
inventory. This ratio helps the financial manager to evaluate inventory policy. This ratio
reveals the number of times finished stock is turned over during a given accounting
period. This ratio is used for measuring the profitability.
The various ways in which stock turnover ratios may be calculated are as follows:
Cost of goods sold

Stock turnover ratio =
Average stock
Cost of goods sold may be calculated as under:
Cost of goods sold = Opening stock + purchases + Direct

Expenses – closing stock
Average Stock =Opening stock + Closing stock/2
96
FOR SHREE CEMENTS
COGS =Material consumed + Direct Exp.
Materials Consumed = 16416.58

8742.93
Stores, Spares and Packing Materials = 23451.16
Power, Fuel 1578.54
Repairs 50189.21
Average Stock = Opening + Closing Stock

2
= 4332.18 + 4780.94
2
= 4556.56
COGS = 50189.21
4556.56
= 11.01
Indays = 365
11.01
= 33.15 days
97
FOR AMBUJA CEMENTS
Cost of Good Sold × 100

Average Stock
CGS = Manufacturing EXP.
= Average Stock = Op. Block + Cl. Stocks

2
Op. Stock Closing Stock
Manual in Progress 45.85 85.94

W/P - -
Finished Goods 44.92 54.87
Limestone 18.22 23.74
108.99 164.55
:. Avg. = 108.99 + 164.55

2
= 136.77
: . Stock Turnover = 2168.85

136.77
= 15.88
= 23.02 DAYS
98
Table 18: showing stock turnover ratio (days)

33.15 23.02
Chart 18: showing stock turnover ratio (Days)
STOCK TURNOVER RATIO
35
33.15
30
25
23.02
20
DAYS
15
10
0
COM PANIES
99
INTERPRETATION
This ratio indicates whether investment is inventory is within proper limit or not. The
quantum of stock should be sufficient to meet the demands of the business but it should
not be too large to indicate unnecessary lock-up of capital in stock and danger of stock-
items obsolete and getting it wasted by passing of time. The inventory turnover ratio
measures how quickly inventory is sold. It is a test of efficient inventory management.
To judge whether the ratio of the firm is satisfactory or not, it should be compared over
time on the basis of trend analysis.
Cost Of Goods Sold Includes=Opening stock+Purchases+Manufacturing expenses-

Closing stock
Ambuja has lesser turnover period which means that the company is able to sell its
inventories and doesnot have a blockage of inveastment. Shree cements is taking a
excessive time to sell its production.
100
DEBTOR TURNOVER RATIO
FOR SHREE CEMENTS
Debtor Turnover Ratio = Credit Sales

Average Receivables
Creadit Sales - 160548.97
Average Receivables = Opening Debtors +

= Closing Debtors
2
= 1226.06 + 2627.17
2
= 4453.23
2
= 2226.62
= 160548.97
2226.62
= 72.10
In days - 365
72.10
= 5.06 DAYS
101
FOR AMBUJA CEMENTS
Opening Debtor = 135.38

Closing Debtor = 82.54
217.97
Avg. Receivables = 217.97

2
= 108.98
Ratio = 6556.92
108.98
= 6.06 Days
102
Table 19: showing debtor turnover ratio
5.06 6.06
Chart 19: showing debtor turnover ratio
DEBTOR TURNOVER RATIO
6.2 6.06
6
5.8
5.6
5.4
DAYS
5.2 5.06
5
4.8
4.6
4.4
COM PANIES
INTERPRETATION
Here in debtors turnover ration, the payment by debtors for Shree Cement is made every
5 days on an average and in comparision with Ambuja Cements where payment by
debtors is made every 6 days.
Therefore it means the Shree Cement has liquidity and collection is regular from Debtors
when compared to collection with Ambuja Cement. This also means that ambuja cements
have a very liberal credit policy as compared to shree cements which implies that the
company has a high risk of liquidity crisis.
103
FINDINGS
• SHREE CEMENTS has its own raw material sources but still its raw material
cost is on the higher side. It is because of the rising fuel charges in the country.
[TABLE NO & CHART NO.1]
• 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. [TABLE NO & CHART NO.2]
• Both the companies SHREE and AMBUJA are incurring almost the same cost on
manpower. [TABLE NO & CHART NO.3]
• Although Shree has its own raw material sources but still its logistics cost is much
higher because of its location. Shree is located in a very remote area of Rajasthan
which becomes a major disadvantage in terms of logistics. But as this area has
more of advantages in other terms like raw material availability and subsidies, the
company has to bear this cost even though its on a very high side. [TABLE NO &
CHART NO.4]
• Shree cements has bettered ambuja cements in terms of the administration cost
incurred. But it has to still reduce it so as to gain higher profits. [TABLE NO &
CHART NO.5]
• Ambuja has more of outsider fund in its capital structure than owner’s equity.
The company has large amount of loans outstanding, which has resulted in more
interest payment for Ambuja. [TABLE NO & CHART NO.6]
104
• 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% [TABLE NO
& CHART NO.7 ]
• Interest payment has not affected the profitability of both the companies to much
extent. [TABLE NO & CHART NO.8]
• Shree cements has a very liberal depreciation policy (26.9% to total turnover) as
compared to ambuja cements. [TABLE NO & CHART NO.9]
• That shree cements has a very liberal depreciation policy which has resulted in
the decrease in the profit levels, as a result their tax obligations are also less.
• The cement gaint Ambuja cements is way ahead in profitability as compared

with Shree cements. Ambuja stands at 28.15% while Shree cements is at 11.02%.
The difference may also arise due to the fact that shree has a very liberal
depreciation policy which results in lesser amount of profits for the company.
• Sales for Shree cements has to be increased to some extent in order to increase the
return on capital employed. [TABLE NO & CHART NO.12]
• Ambuja has a high value and volume of assets to back up its debt outstanding
which Shree cements does not have. They have employed their long term sources
of fund in funding the working capital requiremet. [TABLE NO & CHART
NO.14]
105
• We find that SHREE has a very high debt- equity ratio due to the presence of
large amount of external borrowing of the company. [TABLE NO & CHART
NO.16]
• Ambuja has lesser inventory turnover period which means that the company is
able to sell its inventories and doesnot have a blockage of inveastment. Shree
cements is taking a excessive time to sell its production. TABLE NO & CHART
NO.18]
• Shree Cement has liquidity and collection is regular from Debtors when
compared to collection with Ambuja Cement. This also means that ambuja
cements have a very liberal credit policy as compared to shree cements which
implies that the company has a high risk of liquidity crisis. TABLE NO &
CHART NO.19]
106
SUGGESTIONS
SHREE CEMENTS has its own raw material sources but still its raw material cost is on
the higher side. It should look into the fact and try to lower down cost further more in
order to sustain in the market.
• SHREE CEMENTS should provide a wider product range across a small number
of basic products, thereby leveraging development and other costs for a
presumably greater volume opportunity.
• SHREE CEMENTS should also increase the diversity and number of products
associated with a single platform thereby spreading the cost across different
variants/geographies/volumes.
• SHREE CEMENTS should also avoid future cost by enabling a reconfiguration

of production to different products, in the event of changing in demand.
• SHREE CEMENTS should also try to enter new markets that are different in their
preference for variants. This will help the company to tap a larger share of the
market and this will improve its profitability.
• SHREE CEMENTS should adopt the strategy of producing a large number of

units in one location in order to maximize economies of scale and also reduce
logistics cost.
• SHREE CEMENTS should also work for market outside the domestic market to
expand the volumes. This can expand the platform vertically and horizontally
(through different geographies).
107
• SHREE CEMENTS should also try to expand its margins through higher
utilization levels and by lowering interest expense. This will help the company in
increasing the earning per share with a huge growth rate. Thus it needs to
maximize for shareholders.
• SHREE CEMENTS should pay decent dividend to its shareholder. This will
therefore increase the dividend yield and attract investors.
• SHREE CEMENTS should try to reduce its costs and increase the gross profit
margin.
• One more important factor determine the profitability of the company is the net
profit margin. The company should maintain a good profit margin to earn a good
profits.
• The return on net worth serves the purpose of measuring the productivity of the
firm and it is a satisfactory measure of the profitability of the enterprise from the
point of view of all the shareholders. Therefore SHREE CEMENTS should try to
reduce its expense and interest, which will thus improve its return on net worth.
• A low debt/equity ratio for both the companies is positives quality which might
help the companies in taking bigger business risks in the future.
• SHREE CEMENTS should try to improve its return on long term funds by trying
to employ lesser capital on fixed assets curb the dilution of earning.
• The company should try to improve their profitability to increase their interest
charges ratio.
• SHREE CEMENTS should try to reduce its selling costs to improve it profit
margins thereby reducing its selling cost components.
108

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

The advent of corporate enterprises has resulted into:

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

These factors have increased the importance of finance.

• Acquiring sufficient funds

Ratio must be seen against:

• Norms/Benchmarks for the industry

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

INTRODUCTION TO INDIAN CEMENT INDUSTRY

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

Mergers and Acquistions (M&As)

STATE OF TECHNOLOGY, ENERGY CONSERVATION AND

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

Thermal Energy Electrical Energy

Dry Process Plants 763 96.88

Overall (Combined for all 769 96.86

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

• Better efforts for operational control and optimisation

Better energy management including energy monitoring; minimisation of energy losses

achievement in controlling particulate emission has been quite satisfactory. Considerable

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

Permissible particulate emission levels for general

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

State Pollutant Stack Emission Limits

Protected Other Area

Gujarat NOx 100 100

Meghalaya NOx 100 500

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

Country SO2 NOx

France 500 1200

Germany 400 500

Italy 400 700

India 100-500 100-500

Japan 250 510

Netherlands 400 1300

Sweden 500 800

Switzerland 500 800

UK (1996) 200 900

QUALITY CONTROL AND ASSURANCE

Indian Standard Specifications

Ordinary Portland Cement (OPC) – 33 Grade IS:269

Portland Cements – 43 Grade IS:8112

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