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Fundamental Analysis of ACC
Fundamental Analysis of ACC
Fundamental Analysis of ACC
SECTION. Q1806
COMPANY INFORMATION
FUNDAMENTAL ANALYSIS
• ECONOMIC ANALYSIS
• INDUSTRIAL ANALYSIS
CONCLUSION
BIBLIOGRAPHY
COMPANY INFORMATION:
The house of TATA was intimately associated with ACC up to 1999, after which
the Tata Group sold all 14.45% of its shareholding in ACC in three stages to subsidiary
companies of Gujarat Ambuja Cements Limited (GACL).
In January 2005, the Holcim Group of Switzerland announced its plans to enter
into a long-term strategic alliance with the Ambuja Group by acquiring a majority stake in
Ambuja Cements India Ltd. (ACIL), which at the time held 13.8% of the total equity shares
in ACC. Holcim simultaneously announced its bid to make an open offer to ACC
shareholders, through Holdcem Cement Pvt Limited and ACIL, to acquire a majority
shareholding in ACC. An open offer was made by Holdcem Cement Pvt. Limited along with
Ambuja Cements India Ltd. (ACIL), following which the shareholding of ACIL increased to
34.69% of the Equity share capital of ACC.
ACC has 12 captive power generating plants across 7 locations, with a captive
power generating capacity of 241 MW. It also has wind power plants at Madukkarai and
Lakheri, which together generate 16.5 MW electricity from wind power ACC plans to invest
Rs. 30 billion as capital expenditure over the next two years. This would result in enhancing
the total cement manufacturing capacity to 30.58 MTPA and the captive power generation
capacity to 351 MW by the end of 2010.
ACC has also extended its services overseas to the Middle East, Africa &
South America, where it has provided technical and managerial consultancy to a variety of
consumers, and also helps in the operation and maintenance of cement plants abroad. The
overseas contract with YANBU Cement Company, Saudi Arabia for management and
operation of its cement plants, is an ongoing relationship for the last 29 years and has been
renewed up to February 28, 2011.
FUNDAMENTAL ANALSIS:
Fundamental analysis of a business involves analyzing its financial statements and
health, its management and competitive advantages, and its competitors and markets. When
applied to futures and forex, it focuses on the overall state of the economy, interest rates,
production, earnings, and management. When analyzing a stock, futures contract, or currency
using fundamental analysis there are two basic approaches one can use; bottom up analysis
and top down analysis.
11.00-
2006 782 4.20% 8.4 8.90% 5% 11.50%
12.55-
2007 734 5.30% 9.2 7.80% 6% 12.50%
13.25-
2008 825 6.40% 8.5 7.20% 9% 14.00%
11.00-
2009 N.A N.A N.A N.A 5% 12.00%
Analysis: In 2006, G.D.P was 8.4% and it has increased in 2007. That’s why R.B.I has also
increased C.R.R by 9% in 2008. C.R.R is lagging indicator which is used after economy has
changed. Similarly, when G.D.P has come down to 8.5% in 2008, C.R.R has been reduced to
5% in 2009. Reduction in cash reserve ratio in 2009 shows that it is an lagging indicator as it
has been used only after economy has taken change.
Similarly prime lending rates are lagging indicators. In the data given above, it is
clear that changes in PLR also have been brought only after changes in economic growth.
While with the growth of economy unemployment has also been reduced. Such
kinds of indicators are called co-incidental indicators. Co-incidental indicators are those
which tend to move in the same direction in which economy moves.
INDUSTRIAL ANALYSIS:
ACC is cement industry. Therefore it comes under the definition of cyclical
industries. It is cyclical industry because it is directly related to business cycles and it
performs best during expansions and worst during contractions.
From the above balance sheet, we can see earning per share (EPS) and net profit are reduced
by 2008. It is all because in 2008 there is increase in inflation rate and economy was going
through recession.
While there are some industries which are not much effected by economy or they use to move
opposite direction but not perfectly e.g. Pharmaceutical industry.
Life cycle:
Maturity stage: ACC is going through its maturity stage, as its sales are at peak.
Introductory stage: In 1936, when company was established it was its introductory
stage.
Growth stage: 2000-2008 was it growth period because its sales volume got growth
year by year.
Decline stage: It could in next 20-30 years if other alternative or technique has been
developed.
PORTER’S FIVE FORCE MODEL:
ACC has threat from new entrants like TATA; Reliance etc can enter into this industry.
Suppliers have very much impact on cement industry because of the following reasons:
• Raw materials used in cement are gypsum, fly ash and slag. There are few suppliers
of these materials.
• Quality of finished goods i.e. cement is very important for ACC ltd.
ACC ltd plays the role of buyer. It has following bargaining powers:
• ACC has major stake in cement industry i.e. 11% of the world.
THREAT OF SUBTITUES:
In spite of huge stake in cement industry, it is difficult to be on the top because of the other
competing companies i.e. Ambuja, Birla, and Binani etc.
Competitor analysis
ACC, with an installed capacity of 22.63 MTPA, enjoys an 11% market share in India, which
with its total installed capacity of 207 MTPA, is the second largest cement producing country
in the world. ACC’s nation-wide presence and brand image ensures a competitive edge and
helps it to withstand regional fluctuations in prices and also to adapt its distribution to market
place needs. Its key competitors are as follows:
Company Capacity (in MTPA)
ACC 22.63
Ambuja Cements 18.50
Binani Cements 6.50
Birla Corporation Limited 5.80
CCI 3.85
Century Textiles 6.80
Grasim 16.75
India Cements 8.94
Jaypee Group 13.50
Kesoram Industries 5.60
Lafarge 5.50
Madras Cements 10.00
Ultratech Cement 18.20
Zuari Cement 3.50
BIBLIOGRAPHY:
http://www.acclimited.com/newsite/finance.asp?tag=sp
http://www.acclimited.com/newsite/finance/profitloss05.asp
http://cmsdata.iucn.org/downloads/due_diligence_report_acc_india.pdf
http://www.indexmundi.com/g/g.aspx?v=74&c=in&l=en
http://www.rbi.org.in/scripts/WSSViewDetail.aspx?TYPE=Section&PARAM1=4%0A
http://www.moneycontrol.com/stocks/marketstats/economic_survey/display_grap
h.php