Group Assignment

On
Financial Reporting and Analysis
Submitted to

PROF. SANJAY DHAMIJA

ON
CEMENT INDUSTRY

Submitted by

PIYUSH SHARMA (19XPGDM11)

AKANSHA JAISWAL (19XPGDM02)
PRABHAKAR R(19XPGDM13)
NIVEDITA BAJPAI (19XPGDM09)
 Cement Industry Overview

 The Indian cement industry is the second largest market after China. It had a total cement production
capacity of about 455 million tonnes (MT) as of November 2018. Cement is a cyclical commodity
with a high correlation with GDP.
 The housing and real estate sector is the biggest demand driver of cement, accounting for about
65% of the total consumption in India. The other major consumers of cement include public
infrastructure at 20% and industrial development at 15%.
 Cement demand is expected to reach 550-600 Million Tonnes Per Annum (MTPA) by 2025
supported by pick-up in the housing segment and higher infrastructure spending. The industry is
currently producing 280 MT for meetings its domestic demand and 5 MT for exports requirement.
 Moreover, the per capita consumption of cement in India still remains substantially low at less than
200 kg when compared with the world average which stands at about 500 kg. In case of China, it is
over 1,000 kg per head. This underlines the tremendous scope for growth in the Indian cement
industry in the long term.
 Cement, being a bulk commodity, is a freight intensive industry and transporting it over long
distances can prove to be uneconomical. This has resulted in cement being largely a regional play
with the industry divided into five main regions viz. north, south, west, east and the central region.
The Southern region of India has the highest installed capacity, accounting for about one-third of
the country's total installed cement capacity.
 HOW TO RESEARCH THE CEMENT SECTOR (KEY POINTS)

 Supply

The demand-supply situation is highly skewed with the latter being significantly higher.

 Demand

Housing sector acts as the principal growth driver for cement. However, industrial and infrastructure
sectors have also emerged as demand drivers.

 Barriers to entry

High capital costs and long gestation periods. Access to limestone reserves (key input) also acts as a
significant entry barrier.

 Bargaining power of suppliers

Licensing of coal and limestone reserves, supply of power from the state grid, etc. are all controlled by
a single entity, which is the government. However, many producers are relying more on captive power.

 Bargaining power of customers

Cement is a commodity business and sales volumes mostly depend upon the distribution reach of the
company. Cement is sold in two segments – trade and non-trade. Trade cement is the one sold to the
dealers. Non-trade cement is sold directly to the consumers, mainly institutional buyers. Trade cement
sells higher compared to non-trade. As such, companies that have a strong distribution network and
retail presence tend to have better cement realisations.

 Competition

Intense competition with players expanding reach and achieving pan India-presence. The industry is a
lot more consolidated than a couple of decades ago with a few large players controlling substantial
market share.
 top ↑

FINANCIAL YEAR '18

 The production during the year was 305 million tonnes against the capacity of over 455 million
tonnes resulting in an average capacity utilization of around 67%. According to Department of
Industrial Policy and Promotion (DIPP) reports, the industry had shown a meagre growth of 06%
only in the first of the year in cement production but recovered in the second half with a double-
digit growth in production ending the year with a five-year high growth of 6.3%. This growth
compares against the contraction of 1.2% in cement output in the previous year.
 The growth in the second half was primarily on the on account of the support led by government
infrastructure projects and housing initiatives and flexible interstate movement of cement due to
implementation of GST.
 The cement industry had to face and overcome various hurdles in the year in the form of latent
effect of demonetisation, teething troubles arising out of GST roll out, Real Estate (Regulation and
Development) Act, 2016 (RERA) legislation impact, restrictions/ban on sand mining in several
states. The industry's woes multiplied with a ban on the cost-effective fuel petcoke by the Supreme
Court of India which was subsequently withdrawn. The industry also had to face substantial hike in
the prices of petroleum products, imported fuel and petcoke.
 On the cost front, there was a huge increase in input cost caused by the increase in prices of the fuel
imported coal & petcoke. The average petcoke price which was around US$60 delivered in the last
quarter of the previous year went upto a level of US$100 during the last quarter of the current year.
This was compounded by the increase in Customs Duty on petcoke to 11% from around 3% earlier.
 top ↑

PROSPECTS:

 Cement demand is closely linked to the overall economic growth, particularly the housing and
infrastructure sector. If the rate of growth of consumption remains low at 5-6%, the existing capacity
would be sufficient to meet the cement demand for the next few years.
 Higher government spending on infrastructure and housing, and rising per capita incomes will be
key growth drivers for the cement industry. There have also been positive moves on the policy front,
in areas related to ease of doing business, promoting start-ups, rationalising the tax structure and
administration, and opening up more areas for foreign investment through the automatic route. The
government is substantially stepping up infrastructure spending.
 From a long-term point of view, overall pick-up observed in the infrastructure spending by the
Government and downward trend in the interest rates is expected to revive the demand across
sectors. The 7th Pay Commission is expected to aid in housing demand. Government thrust on
affordable housing for realizing its vision of “Housing for All” by 2022 and Smart City program
should also help in demand growth for cement. The rate of new capacity additions has also slowed
down considerably. Therefore, the outlook for the cement sector looks better.
 On the back of series of reforms undertaken over the past year various agencies including IMF have
projected an economic growth of around 7.3% to 7.5% during the current fiscal better than the
trends of the previous years. The government has given a push through the budget for construction
of cement concrete roads, highways through its unique Bharatmala Project, construction of rural
roads under the Pradhan Mantri Gram Sadak Yozana, housing for all by 2022, metro rail networks
in several cities, bullet train, etc which augur well for the industry in the medium term.
Company Overview ACC Cements

Corporate Information
ACC Limited (“the Company”), is a public company domiciled in India and was incorporated on August
01, 1936 under the provisions of the Companies Act, 1913 applicable in India. Its shares are listed on
the National Stock Exchange of India (NSE) and the Bombay Stock Exchange Limited (BSE) of India.
The registered office of the Company is located at Cement House, 121, Maharshi Karve Road, Mumbai
– 400020, India.
The Company is principally engaged in the business of manufacturing and selling of Cement and
Ready-Mix Concrete. The Company has manufacturing facilities across India and caters mainly to
the domestic market.
1. Significant Accounting Policies
I. Statement of Compliance
These Financial Statementshave been prepared in accordance with the Indian Accounting
Standards (hereinafter referred to as the ‘Ind AS’) as notified under Section 133 of the
Companies Act, 2013 (‘the Act’) read with Rule 3 of the Companies (Indian Accounting
Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules,
2016.
These Financial Statementswere approved for issue in accordance with the resolution of the
Board of Directors on February 05, 2019.
II. Basis of Preparation
These Financial Statementshave been prepared on a historical cost basis, except for the
following material items in the Balance Sheet:
a) Certain financial assets and liabilities are measured at fair value (refer Note 1(X) for
accounting policy on Financial Instruments);
b) Non-current assets classified as held for sale are measured at lower of their carrying
amount and fair value less cost to sell; and
c) Employees Defined benefit plans are recognized at the net total of the fair value of plan
assets, and the present value of the defined benefit obligation as per actuarial valuation.
Historical cost is generally based on the fair value of the consideration given in
exchange for goods and services at the time of their acquisition.
Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date,
regardless of whether that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a liability, the Company
takes into account the characteristics of the asset or liability if market participants
would take those characteristics into account when pricing the asset or liability at the
measurement date.
All assets and liabilities, for which fair value is measured or disclosed in the financial
 statements, are categorized within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value measurement as a whole:
i. Level 1 — inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date;
ii. Level 2 — inputs other than quoted prices included within level 1, that are
observable for the asset or liability, either directly or indirectly; and
iii. Level 3 — inputs that are unobservable for the asset or liability.

III. Functional and Presentation Currency

These Financial Statementsare presented in Indian Rupees (`) which is the functional
currency of the Company.
Rounding of amounts
All amounts disclosed in the Financial Statementswhich also include the accompanying notes
have been rounded off to the nearest Crore as per the requirement of Schedule III to the
Companies Act 2013, unless otherwise stated.
IV. Classification of Current / Non-Current Assets and Liabilities
All the assets and liabilities have been classified as current or non-current as per the
Company’s normal operating cycle and other criteria set out in the Schedule III to the
Companies Act, 2013 and Ind AS 1 “Presentation of financial statements”.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’s
normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within twelve months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to
settle a liability for at least twelve months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within twelve months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability
for at least twelve months after the reporting date. Terms of a liability that could, at the
option of the counterparty, result in its settlement by the issue of equity instruments
do not affect its classification.
All other assets / liabilities are classified as non-current.
 Based on the nature of products and the time between the acquisition of assets for processing
and their realization in cash or cash equivalents, the Company has ascertained its normal
operating cycle as twelve months for the purpose of Current / Non-current classification of
assets and liabilities.
V. Property, Plant and Equipment
Recognition and measurement
a) Property, Plant and Equipment are stated at cost of acquisition / installation or
construction less accumulated depreciation and impairment losses, if any (except
freehold non-mining land which is carried at cost less impairment losses, if any).
b) Cost comprises the purchase price, including import duties and non-refundable
purchase taxes(net of taxes credit wherever applicable) and any directly attributable
cost of bringing the asset to its working condition for its intended use, including
relevant borrowing costs.
The present value of the expected cost for the decommissioning of an asset after its use,
is included in the cost of the respective asset if the recognition criteria for a provision
are met.
c) Subsequent expenditures are included in the asset’s carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of the item can be
measured reliably.
d) When a major inspection is performed, its cost is recognised in the carrying amount of
the Property, Plant and Equipment as a replacement if the recognition criteria are
satisfied. All other repairs and maintenance are charged to the Statement of Profit and
Loss during the reporting period in which they are incurred.
e) Spares which meet the definition of Property, Plant and Equipment are capitalised as
on the date of acquisition. The corresponding old spares are decapitalised on such
date with consequent impact in the Statement of Profit and Loss.
f) Property, Plant and Equipment not ready for the intended use on the date of Balance
Sheet are disclosed as “Capital work-in-progress”. Such items are classified to the
appropriate category of Property, Plant and Equipment when completed and ready for
intended use. Advances given towards acquisition / construction of Property, Plant and
Equipment outstanding at each Balance Sheet date are disclosed as Capital Advances
under “Other non-current assets”.
g) ) An item of Property, Plant and Equipment and any significant part
initially recognised is derecognised upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the Statement of Profit and Loss under “Other
Income / Other Expenses” when the asset is derecognised.
h) The Company had elected to continue with the carrying value of all its Property, Plant
and Equipment as recognised in the Financial Statementsas at transition date to Ind AS,
 measured as per the Previous GAAP and use that as the deemed cost as at transition
date pursuant to the exemption under Ind AS 101 “First-time Adoption of Indian
Accounting Standards”.
Depreciation and amortisation
a) Leasehold non-mining land held under finance lease is amortised over the period
of lease on a straight-line basis.
b) Cost of mineral reserves embedded in the cost of freehold mining land is
depreciated in the proportion of actual quantity of minerals extracted to the
estimated quantity of extractable mineral reserves. Freehold non-mining land is not
depreciated.
c) Depreciation on Property, Plant and Equipment, other than plant and equipment
assets related to Captive Power Plant (CPP assets), is provided using the straight-line
method and on CPP assets using the written down value method based on their
respective estimated useful lives.
The Company identifies and determines cost of each component / part of the asset and
depreciates separately, if the component / part have a cost which is significant to the
total cost of the asset and has a useful life that is materially different from that of the
remaining asset. of the asset, past history of replacement, anticipated technological
changes, manufacturers warranties and maintenance support, etc.
Company Overview Ultratech Cements

UltraTech Cement Ltd. is the largest manufacturer of grey cement Ready Mix Concrete (RMC) and white
cement in India. It is also one of the leading cement producers globally. The company has an installed
capacity of 93 Million Tonnes Per Annum (MTPA) of grey cement. UltraTech Cement has 18 integrated
plants 1 clinkerisation plant 25 grinding units and 7 bulk terminals. Its operations span across India UAE
Bahrain Bangladesh and Sri Lanka. UltraTech Cement is also India's largest exporter of cement reaching
out to meet the demand in countries around the Indian Ocean and the Middle East. UltraTech Cement is a
subsidiary of Grasim Industries Ltd. UltraTech's subsidiaries are Dakshin Cements Limited Harish Cement
Limited Gotan Limestone Khauj Udyog Private Limited Bhagwati Limestone Company Private Limited
UltraTech Cement Lanka (Pvt.) Ltd.

Significant Accounting Policies

1(A): company overview and significant accounting Policies: company overview UltraTech Cement
Limited (the Company) is a Public Limited Company incorporated in India having its registered office at
Mumbai, Maharashtra, India. The Company is engaged in the manufacturing and selling of Cement and
Cement related products. significant accounting Policies

(a) statement of compliance: These standalone financial statements (hereinafter referred to as "financial
statements†• in the standalone financial statements) are prepared in accordance with the Indian
Accounting Standards ("Ind AS†•) as per the Companies (Indian Accounting Standards) Rules, 2015
notified under Section 133 of Companies Act, 2013 ("the Act''''), other relevant provisions of the Act and
guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable. The financial
statements are authorized for issue by the Board of Directors of the Company at their meeting held on April
25, 2018.

(b) Basis of Preparation and Presentation: Basis of Preparation The financial statements have been prepared
on a historical cost basis, except for the following assets and liabilities
i) Derivative Financial Instruments measured at fair value
ii) Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial
instruments)
iii) Assets held for disposal - measured at the lower of its carrying amount and fair value less costs to sell
iv) Employee''s Defined Benefit Plan as per actuarial valuation; and
v) Assets and liabilities acquired under Business Combination measured at fair value. Fair value is the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date under current market conditions, regardless of whether that
price is directly observable or estimated using another valuation technique. In determining the fair value of
an asset or a liability the Company takes into account the characteristics of the asset or liability if market
participants would take those characteristics into account when pricing the asset or liability at the
measurement date. functional and Presentation currency
i) The financial statements are presented in Indian Rupees, which is the functional currency of the Company
and the currency of the primary economic environment in which the Company operates.
ii) Figures less than I 50,000 have been shown at actual, wherever statutorily required to be disclosed, all
other figures have been rounded off to the nearest I in lakhs, unless otherwise stated. classification of assets
and Liabilities into current/non-current The Company has ascertained its operating cycle as twelve months
for the purpose of Current / Non-Current classification of its Assets and Liabilities. For the purpose of
Balance Sheet, an asset is classified as current if:
It is expected to be realized, or is intended to be sold or consumed, in the normal
operating cycle; or
ii) It is held primarily for the purpose of trading; or
iii) It is expected to realize the asset within twelve months after the reporting period; or
iv) The asset is a cash or cash equivalent unless it is restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current. Similarly a liability is classified as current
if:
i) It is expected to be settled in the normal operating cycle; or
ii) It is held primarily for the purpose of trading; or
iii) It is due to be settled within twelve months after the reporting period; or
iv) The Company does not have an unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period. Terms of a liability that
could result in its settlement by the issue of equity instruments at the option of the
counterparty does not affect this classification.
All other liabilities are classified as non-current.
(c) Property, Plant and Equipment (PPE): The initial cost of PPE comprises its
purchase price, including import duties and non-refundable purchase taxes, and any
directly attributable costs of bringing an asset to working condition and location for its
intended use, including relevant borrowing costs and any expected costs of
decommissioning, less accumulated depreciation and accumulated impairment losses,
if any. Expenditure incurred after the PPE have been put into operation, such as repairs
and maintenance, are charged to the Statement of Profit and Loss in the period in which
the costs are incurred. If significant parts of an item of PPE have different useful lives,
then they are accounted for as separate items (major components) of PPE. Material
items such as spare parts, stand-by equipment and service equipment are classified as
PPE when they meet the definition of PPE as specified in Ind AS 16 - Property Plant
and Equipment. Any gain or loss on disposal of an item of property plant and
equipment is recognized in the Statement of Profit and Loss.
(d) Expenditure during construction period: Expenditure/ Income during construction
period (including financing cost related to borrowed funds for construction or
acquisition of qualifying PPE) is included under Capital Work-in-Progress, and the
same is allocated to the respective PPE on the completion of their construction.
Advances given towards acquisition or construction of PPE outstanding at each
reporting date are disclosed as Capital Advances under “Other non-current Assets".
(e) Depreciation: Depreciation is the systematic allocation of the depreciable amount
of PPE over its useful life and is provided on a straight-line basis over the useful lives
as prescribed in Schedule II to the Act or as per technical assessment. Freehold Land
with indefinite life is not depreciated. Depreciable amount for PPE is the cost of PPE
less its estimated residual value. The useful life of PPE is the period over which PPE
is expected to be available for use by the Company or the number of production or
similar units expected to be obtained from the asset by the Company. In case of certain
classes of PPE, the Company uses different useful lives than those prescribed in
Schedule II to the Act. The useful lives have been assessed based on technical advice,
taking into account the nature of the PPE and the estimated usage of the asset on the
basis of management''s best estimation of obtaining economic benefits from those
classes of assets.
(f) Intangible Assets and Amortization: - Internally generated Intangible Assets:
Expenditure pertaining to research is expensed out as and when incurred. Expenditure
incurred on development is capitalized if such expenditure leads to creation of an asset,
otherwise such expenditure is charged to the Statement of Profit and Loss. - Intangible
Assets acquired separately: Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated amortization and accumulated
impairment, if any. The Company determines the amortization period as the period
over which the future economic benefits will flow to the Company after taking into
account all relevant facts and circumstances. The estimated useful life and amortization
method are reviewed periodically with the effect of any changes in estimate being
accounted for on a prospective basis.
(g) non-current assets (or disposal groups) classified as held for disposal: Assets are
classified as held for disposal and stated at the lower of carrying amount and fair value
less costs to sell.
Mines Restoration Provision: An obligation for restoration, rehabilitation and
environmental costs arises when environmental disturbance is caused by the
development or ongoing extraction from mines. Costs arising from restoration at
closure of the mines and other site preparation work are provided for based on their
discounted net present value, with a corresponding amount being capitalized at the start
of each project. The amount provided for is recognized, as soon as the obligation to
incur such costs arises. These costs are charged to the Statement of Profit and Loss
over the life of the operation through the depreciation of the asset and the unwinding
of the discount on the provision. The costs are reviewed periodically and are adjusted
to reflect known developments which may have an impact on the cost or life of
operations. The cost of the related asset is adjusted for changes in the provision due to
factors such as updated cost estimates, new disturbance and revisions to discount rates.
The adjusted cost of the asset is depreciated prospectively over the lives of the assets
to which they relate. The unwinding of the discount is shown as a finance cost in the
Statement of Profit and Loss.
Revenue Recognition: Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the amount can be reliably measured.
- Revenue is measured at the fair value of consideration received or receivable taking
into account the amount of discounts, volume rebates, outgoing taxes on sales and are
recognized when all significant risks and rewards of ownership of the goods sold are
transferred. - Dividend income is accounted for when the right to receive the income
is established. - Difference between the sale price and carrying value of investment is
recognized as profit or loss on sale / redemption on investment on trade date of
transaction.
Lease: Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other leases are
classified as Operating Leases. Operating Lease: Lease rentals are charged or
recognized in the Statement of Profit and Loss on a straight-line basis over the lease
term, except where the payment are structured to increase in line with expected general
inflation to compensate for the expected inflationary cost increase. finance lease:
Assets held under finance leases are recognized as assets of the Company at their fair
value at the inception of the lease or, if lower, at the present value of the minimum
lease payments. The corresponding liability to the less or is included in the Balance
Sheet as a finance lease obligation. Lease payments are apportioned between finance
charges and reduction of the lease obligation so as to achieve a constant rate of interest
on the remaining balance of the liability. Finance charges are charged to the Statement
of Profit and Loss, unless they are directly attributable to qualifying assets, in which
case they are capitalized in accordance with the Company''s policy on borrowing costs.
employee benefits: Gratuity The gratuity, a defined benefit plan, payable to the
employees is based on the employees'' service and last drawn salary at the time of the
leasing of the services of the Company and is in accordance with the Rules of the
Company for payment of Gratuity. Liability with regards to gratuity plan is determined
using the projected unit credit method, with actuarial valuations being carried out by a
qualified independent actuary at the end of each annual reporting period.
Cash and cash equivalents: Cash and cash equivalents in the Balance Sheet comprise
cash at bank and in hand and short-term deposits with banks that are readily convertible
into cash which are subject to insignificant risk of changes in value and are held for
the purpose of meeting short-term cash commitments.
Financial liabilities and equity instruments: - Classification as debt or equity Debt and
equity instruments issued by the Company are classified as either financial liabilities
or as equity in accordance with the substance of the contractual arrangements and the
definitions of a financial liability and an equity instrument. - Equity instruments An
equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by a Company are
recognized at the proceeds received.
Derivative financial instruments: The Company enters into derivative financial
instruments viz. foreign exchange forward contracts, interest rate swaps and cross
currency swaps to manage its exposure to interest rate, foreign exchange rate risks and
commodity prices. The Company does not hold derivative financial instruments for
speculative purposes. Derivatives are initially recognized at fair value at the date the
derivative contracts are entered into and are subsequently remeasured to their fair value
at the end of each reporting period. The resulting gain or loss is recognized in profit or
loss immediately excluding derivatives designated as cash flow hedge.
Hedge accounting: The Company designates certain hedging instruments in respect of
foreign currency risk, interest rate risk and commodity price risk as cash flow hedges.
Segment Reporting Policies: Primary Segment is identified based on the nature of
products and services, the different risks and returns and the internal business reporting
system. Secondary segment is identified based on geography in which major operating
divisions of the Company operate.
Company Overview Ambuja Cement

Ambuja Cements Ltd is India’s foremost cement company known for its hassle-free, home-building
solutions. Unique products tailor-made for Indian climatic conditions, sustainable operations and initiatives
that advance the company’s philosophy of contributing to the larger good of the society, have made it the
most trusted cement brand in India

Ambuja Cements Ltd, a part of the global conglomerate LafargeHolcim, is among the leading cement
companies in India. Ambuja Cement has provided hassle-free, home-building solutions with its unique
sustainable development projects and environment-friendly practices since it started operations. Currently,
Ambuja Cement has a cement capacity of 29.65 million tonnes with five integrated cement manufacturing
plants and eight cement grinding units across the country.

The company has many firsts to its credit – a captive port with four terminals that has facilitated timely,
cost-effective, cleaner shipments of bulk cement to its customers. To further add value to our customers,
the company has launched innovative products like Ambuja Plus Roof Special, Ambuja Plus Cool Walls
and Ambuja Compocem. The new products not only fulfil important customer needs but also help in
significantly reducing carbon footprints.

Significant Accounting Policies

I. Property, plant and equipment are stated at their cost of acquisition / installation / construction
net of accumulated depreciation, and impairment losses, if any, except freehold non-mining land
which is carried at cost less impairment losses. For this purpose, cost includes deemed cost
which represents the carrying value of property, plant and equipment recognised as at transition
date (1st January, 2016) measured as per the previous GAAP. Subsequent expenditures are
included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. When significant parts of plant and
equipment are required to be replaced at intervals, the Company depreciates them separately
based on their specific useful lives. Likewise, when a major inspection is performed, its cost is
recognised in the carrying amount of the plant and equipment as a replacement if the recognition
criteria are satisfied. All other repairs and maintenance are charged to statement of profit and
loss during the reporting period in which they are incurred. The present value of the expected
cost for the decommissioning of an asset after its use is included in the cost of the respective
asset if the recognition criteria for a provision are met.
II. Spares which meet the definition of property, plant and equipment are capitalised as on the date
of acquisition. The corresponding old spares are decapitalised on such date with consequent
impact in the statement of profit and loss.
III. Property, plant and equipment not ready for their intended use as on the balance sheet date are
disclosed as “Capital work-in-progress”. Such items are classified to the appropriate category of
property, plant and equipment when completed and ready for their intended use. Advances given
towards acquisition / construction of property, plant and equipment outstanding at each balance
 sheet date are disclosed as Capital Advances under “Other non-current assets”. IV. An item of
property, plant and equipment and any significant part thereof is derecognised upon disposal or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the statement of profit and loss in “other income
/ (expenses)” when the asset is derecognized

Company Analysis

ACC Cements
Number of Shares 18.799 18.799 18.799
Market Price Per Share 561 499 470
Dividend Rate 150% 60% 60%

UltraTech Cements
Number of Shares 27.461 27.451 27.443
Market Price Per
Share 3950 3984.75 3228.75
Dividend Rate 105% 100% 95%

Ambuja Cement
Number of Shares 397.13 397.13 397.13
Market Price Per Share 230.25 273.8 217.9
Dividend Rate 155% 180% 140%
 Profit Analysis
ACC Cement

2018 2017 2016

EBITDA 2,183 2,041 1,602

EBIT 1,583 1,401 997

PBT and EXCEPTIONAL ITEMS 1,494 1,298 914

PBT 1,494 1,298 871

PAT 1,507 915 647

Ultratech Cement

2018 2017 2016

EBITDA 6,252 5,629 5,107

EBIT 4,488 4,361 3,810

PBT and EXCEPTIONAL
ITEMS 3,302 3,790 3,299

PBT 3,302 3,776 3,299

PAT 2,231 2,628 2,370

Ambuja Cement

2018 2017 2016

EBITDA
2,266.44 2,299.23 2,202.56
EBIT
1,718.35 1,726.31 1,353.71
PBT and EXCEPTIONAL ITEMS
1,636.02 1,619.12 1,279.47
PBT
1,506.07 1,619.12 1,279.47
PAT
1,487.01 1,249.57 932.24
Profitability Analysis
ACC Cement

2018 2017 2016

EBITDA 15% 14% 13%
EBIT 11% 10% 8%
PBT and EXCEPTIONAL ITEMS 10% 9% 7%
PBT 10% 9% 7%
PAT 10% 6% 5%

Ultratech Cement

2018 2017 2016

EBITDA 20% 20% 19%
EBIT 14% 16% 14%
PBT and EXCEPTIONAL
ITEMS 11% 14% 12%
PBT 11% 14% 12%
PAT 7% 9% 9%

Ambuja Cement

2018 2017 2016

EBITDA 19% 21% 23%
EBIT 15% 16% 14%
PBT and EXCEPTIONAL ITEMS 14% 15% 13%
PBT 13% 15% 13%
PAT 13% 12% 10%

PROFIT and PROFITIABILITY RATIO ANALYSIS:

By analyzing the PROFIT and PROFITABILITY RATIO of three companies it indicates that Ambuja cements
has made mild incremental profit 1 - 3% compared to its previous years working and ACC cements have
considerable incremental from profit 5 – 10% over the earlier periods but mainly both companies have
done it by “Excess Tax Provision reversed related to prior years” whereas Ultratech cements PROFIT and
PROFITABILITY RATIO has declined from 9 – 7% mainly because of their rise in total expenses( cost of
materials consumed, employee benefits, Freight, Power & Fuel, Finance cost, Depreciation costs)
compared to previous years. Though Ultratech cements hold high market share the Ambuja cements is
doing better. The Average PBT of all companies is 11 – 12% in cement industries evident because of higher
coal, pet coke prices & Freight costs.
GROWTH – YOY

ACC Cement
2018 2017 2016
Revenue From Operations 4% 13% 6%
PAT 65% 41% 9%

Ultratech Cement
2018 2017 2016
Revenue From
Operations 13% 1% 4%
PAT -15% 11% 18%

Ambuja Cement

2018 2017 2016

Revenue From Operations 9% 14% 11%
PAT 19% 34% 26%

ACC cements Revenue from operation as declined substantially from 13% to 4% in

the year 2017 to 2018 because of there Total Operative Revenue generated has come down. Though the
PAT improved considerably from 9 to 41 to 65% which is mainly because of Tax Reversals.

WHEREAS, the UltraTech cement have made consistently improved their Total Operating
Revenue compared to previous year from 4 to 13% from 2016 to 2018 but their expenses in Freight,
material consumed, Power & Fuel cost as resulted in decrease in their profit compared to previous years
of 15%.

Ambuja cement have improved their Total operating Revenue in 2018 by higher sales in
volume compared to year 2017 and comparatively low to what they made in 2017 to 2016 which indicates
the company is inconsistent in Growth.

Dividend Policy:

ACC & UltraTech companies are averagely maintaining 1 -2% of Dividend payout ratio &
Retaining 98 – 99% which indicates that the company holds its nearly full profit for future projects &
Expansions

Whereas Ambuja cements has increased paying nearly 72% from 50% compared to its
previous years & Retaining the remaining fund which is because of increase in Work in Progress &
Inventories for upcoming Project

s.
Short Term Liquidity

ACC Cement
2018 2017 2016
Current Ratio (Times) 1.40 1.16 1.01
Liquid Ratio (Times) 1.04 0.87 0.71

Ultratech Cement
2018 2017 2016
Current Ratio
(Times) 0.96 1.55 0.86
Liquid Ratio
(Times) 0.68 1.27 0.66

Ambuja Cement

2018 2017 2016

Current Ratio (Times) 1.55 1.34 1.23
Liquid Ratio (Times) 1.21 1.08 0.95

Both ACC & Ambuja have a current ratio of more than 1.3 times but then UltraTech cement is
having marginally low which mean they are not self sufficient to Remittal the borrowing within & may
result in Further Raise in Loans or borrowing to handle the current liabilities..

Long Term Solvency

ACC Cement

2018 2017 2016

Debt Equity Ratio (Times) 0.00 0.00 0.00

2018 2017 2016

Financial Leverage Ratio (Times) 1.52 1.59 1.52

2018 2017 2016

Fixed Assets to Long Term Debt Ratio (Times) 0.00 0.00 0.00

2018 2017 2016

Interest Coverage Ratio (Times) 17.75 13.69 12.06

Ultratech Cement

2018 2017 2016

Debt Equity Ratio (Times) 0.54 0.18 0.12

2018 2017 2016

Financial Leverage Ratio (Times) 2.10 1.64 1.77

2018 2017 2016

Fixed Assets to Long Term Debt Ratio
(Times) 0.00 0.00 0.00

2018 2017 2016

Interest Coverage Ratio (Times) 3.78 7.63 7.45

Ambuja Cement

2018 2017 2016

Debt Equity Ratio (Times) 0.00 0.00 0.00

2018 2017 2016

Financial Leverage Ratio (Times)
1.20 1.23 1.21

2018 2017 2016

Fixed Assets to Long Term Debt Ratio (Times)
140.20 236.05 376.56

2018 2017 2016

Interest Coverage Ratio (Times)
20.87 16.11 18.23

Financial leverage: all the three companies are having adequate Financial Leverage in which
ULTRATECH. as the highest Financial leverage by ACC & then Ambuja cements. Which indicates that
DEBT is used effectively in purchasing the property.

Cash flow coverage ratio: Both ACC & Ambuja is having high Interest coverage ratio
compared Ultratech, which is vital from financial institutes point of view who may be interested in offering
loans for early return of loan amount.
 Assets & Liabilities Composition:
Ambuja cements has a Cash & Cash equal lent of about 11 to 13% whereas it has about 48% of
non current assets in Investments which is much higher then the Tangible assets which is about 23%.
companies totals liabilities is only 15 to 16% which hints us the company is not depending on external
funds to run the business.

ACC company maintains an average of 16 – 17 % as Cash & Cash Equal Lents, PPE accounting for
nearly 45% of three years .to note company’s liabilities is 32 to 35% & total Equity is about 65% avg., which
indicates the company is self-reliable for its funding.

UltraTech ,on an average, has 60% of Non Current Assets is held in PPE’s, company maintains an
average of 5% in inventories & trade receivables accounts for 3.5%. company’s liabilities - Equity of nearly
50-50% indicating 25% more long term borrowing compared to previous year which was 10%.

Turnover Ratios

ACC Cement
2018 2017 2016
Total Assets Turnover (Times) 0.92 0.95 0.93
Non-current Asset Turnover (Times) 1.57 1.53 1.34
Current Assets Turnover (Times) 2.25 2.53 3.08

Ultratech Cement
2018 2017 2016
Total Assets Turnover (Times) 0.56 0.69 0.70
Non-current Asset Turnover
(Times) 0.70 1.01 0.94
Current Assets Turnover (Times) 2.90 2.18 2.77

Ambuja Cement
2018 2017 2016
Total Assets Turnover (Times) 0.45 0.42 0.39
Non-current Assers Turnover (Times) 0.58 0.55 0.48
Current Assets Turnover (Times) 1.97 1.90 2.18

All the companies are consistently in maintaining Asset Utilization effectively. ACC cements has the
highest Turnover ratio stating that ACC is generating high revenues with the available assets.
Working Capital Efficiency

ACC Cement
2018 2017 2016
Trade Receivabel Turnover Ratio (Times) 17.05 21.25 23.36
Inventory Turnover Ratio (Times) 8.82 10.11 10.23
Trade Payable Turnover Ratio 1.21 1.09 1.28

2018 2017 2016

Days' Sales Outstanding (DSO) 21.41 17.18 15.62
Days' Sales Inventory (DSI) 41.39 36.09 35.67
Days' Puchase Payable (DPP) 300.62 335.71 285.53

Ultratech Cement
2018 2017 2016
Trade Receivabel Turnover Ratio
(Times) 17.90 21.28 19.05
Inventory Turnover Ratio (Times) 9.89 12.21 11.83
Trade Payable Turnover Ratio 2.00 2.35 2.51

2018 2017 2016

Days' Sales Outstanding (DSO) 20.39 17.15 19.16
Days' Sales Inventory (DSI) 36.89 29.90 30.85
Days' Puchase Payable (DPP) 182.79 155.43 145.30

Ambuja Cement
2018 2017 2016
Trade Receivabel Turnover Ratio (Times) 24.15 33.95 23.24
Inventory Turnover Ratio (Times) 8.89 9.94 9.81
Trade Payable Turnover Ratio 3.15 2.94 3.16

2018 2017 2016

Days' Sales Outstanding (DSO) 15.11 10.75 15.71
Days' Sales Inventory (DSI) 41.07 36.74 37.21
Days' Puchase Payable (DPP) 115.97 124.04 115.42

As far as DSO & DSI is concerned all the companies are having an average of DSO of 18 -19 days
& DSI of 35 to 40%. notably all the companies have a more than 120days .DPP with ACC cements has the
maximum of by 300days which means that ACC runs the Business on higher Credited payable for
Purchases indicating that vendors have no control on the product for business.
EPS, Dividend, ROE and Market Capitalization Ratios

ACC Cement
2018 2017 2016
Earnings Per Share (Rs.) 80.14 48.70 34.42

2018 2017 2016

Market Capitalisation 10546 9381 8836

2018 2017 2016

Price Earnings Ratio (Times) 7.00 10.25 13.66

Return on Equity
2018 2017 2016
ROE 14.3% 9.8% 7.3%

2018 2017 2016

PAT/Income 10.1% 6.4% 5.1%
Income/ Assets 0.93 0.96 0.94
Assets / Equity 1.52 1.59 1.52

2018 2017 2016

Book Value Per Share (Rs.) 560.01 498.19 469.81
Market Price Per Share (Rs.) 561 499 470

2018 2017 2016

Dividend Per Share (Rs.) 1.5 0.6 0.6
2018 2017 2016
Total Dividend 28.20 11.28 11.28
Tax on Dividend 5.78 2.31 2.31
Total Payout 33.98 13.59 13.59

2018 2017 2016

Dividend Payout Ratio 2% 1% 2%
Retention Ratio 98% 99% 98%
Ultratech Cement
2018 2017 2016
Earnings Per Share (Rs.) 81.25 95.72 86.37

2018 2017 2016

Market Capitalisation 108471 109385 88607

2018 2017 2016

Price Earnings Ratio
(Times) 48.61 41.63 37.38

Return on Equity
2018 2017 2016
ROE 8.6% 11.0% 11.0%

2018 2017 2016

PAT/Income 7.1% 9.4% 8.6%
Income/ Assets 0.58 0.71 0.72
Assets / Equity 2.10 1.64 1.77

2018 2017 2016

Book Value Per Share
(Rs.) 943.99 872.14 788.25
Market Price Per Share
(Rs.) 3950 3984.75 3228.75

2018 2017 2016

Dividend Per Share (Rs.) 1.05 1 0.95
2018 2017 2016
Total Dividend 28.83 27.45 26.07
Tax on Dividend 5.91 5.63 5.34
Total Payout 34.75 33.08 31.42

2018 2017 2016

Dividend Payout Ratio 2% 1% 1%
Retention Ratio 98% 99% 99%
Ambuja Cement

2018 2017 2016

Earnings Per Share (Rs.) 3.74 3.15 2.35

2018 2017 2016

Market Capitalisation 91439 108734 86535

2018 2017 2016

Price Earnings Ratio (Times) 61.49 87.02 92.82

2018 2017 2016

Return on Equity 7.1% 6.3% 4.8%

2018 2017 2016

PAT/Income 12.7% 11.6% 9.6%
Income/ Assets 0.47 0.44 0.42
Assets / Equity 1.20 1.23 1.21

2018 2017 2016

Book Value Per Share (Rs.) 52.91 50.29 48.74
Market Price Per Share (Rs.) 230.25 273.8 217.9

2018 2017 2016

Dividend Per Share (Rs.) 1.55 1.8 1.4
2018 2017 2016
Total Dividend 615.55 714.83 555.98
Tax on Dividend 126.19 146.54 113.98
Total Payout 741.74 861.37 669.96

2018 2017 2016

Dividend Payout Ratio 50% 69% 72%
Retention Ratio 50% 31% 28%

EPS(Equity per share ): it the most important profitability factor observed by the Shareholders of the
respective companies. below table shows the EPS of each companies to the corresponding period.
The EPS for has increased marginally for Ambuja cements from Rs 2.34 to 3.74 over the subsequent years
whereas, for ACC cement has significant changes year after year which is recorded all because of raise in
PAT & their NO. of shares are same which indicates that no company as not gone for issue of new shares
as the company is self sufficient with the available fund & there is no new project started in the
corresponding year. The change variation in EPS of Ultratech cements as mainly due to their change in
PAT for the corresponding years. It is noted that all the three companies haven’t gone for raising of
number of shares due self sufficiency of the existing fund & also haven’t gone for new projects due high
operating costs.

ACC’s ROE has increased from 7.3% to 14.3% from 2016 to 2018 though there share holder has increased
the company was able to make good profit to increase their ROE.

Ultratech ‘s ROE has reduced from 11% to 8.6% because of shareholders fund has increased more than
the PAT compared to previous years.

Ambuja’s ROE has increased consistently because of both PAT & Shareholders fund has increased
Proportionately which inferences that the company has managed to have better Return on Equity.

Change in Cash Flow Analysis

ACC Cement

Year
Activities 2018 2017 2016
Financial -441.11 -422.1 -420.06
Operating 1,118.08 1,554.76 1,380.10
Investing -367.78 -384.58 -539.1
Change in cash flows 309.19 748.08 420.94

Ambuja Cement
Cash Flow
Dec '18 Dec '17 Dec '16

1506.07 0 1279.47
Net Profit Before Tax
Net Cash From Operating
596.24 0 1415.83
Activities
Net Cash (used in)/from
-254.33 0 -3469.06
Investing Activities
Net Cash (used in)/from Financing
-502.73 0 -683.26
Activities
Net (decrease)/increase In Cash
-160.82 0 -2736.49
and Cash Equivalents

Opening Cash & Cash Equivalents 3311.15 0 5132.25

Closing Cash & Cash Equivalents 3150.33 0 2395.76