A STUDY ON FINANCIAL & PERFORMANCE ANALYSIS OF ACC LIMITED.

Presented by: Vignesh C

J

8uta45

HISTORY:

YEAR HAPPENINGS

16th century Roman’s was the first to use cement .

1760 John Smeaton was first to develop best composition of hydraulic cement.

1824 Joseph Aspdin was granted a patent (no. 5022) for “Portland cement”.

YEAR HAPPENING

1904 First cement factory was started in Chennai.

1914 Manufacture of Portland cement on large scale started by Indian Cement Co.Ltd.

1924 10 cement factories in India with total production of 5.81 lakh tones PA.

1936 Incorporation of The Associated Cement Companies

Limited on August 1, 1936.

1939 17 Factories in India with total capacity of 26.15 lakh tones PA.

1947 After partition 18 factories remained in India of total capacity 21.15 lakh tones.

ABOUT INDUSTRY

• The Indian cement industry is the second largest market after China.

• Cement industry plays an important role in the process of

development of an economy.

• The infrastructural development of a country depends considerably on

the growth of cement industry.

• Cement is used as binding material along with bricks, stones, iron and

steel in the construction building, bridges, roads, etc..

ABOUT COMPANY

• India's foremost manufacturer of cement and concrete.

• spread throughout the country with 14 modern cement

factories, more than 30 Ready mix concrete plants, 20 sales

offices, and several zonal offices.

• Every factory has pollution control equipment and devices.

• Company has won several prizes and certificates of merits for

environmental measures undertaken at its various plants and

mines.

• As the largest cement producer in India, it is one of the biggest

customers of the Indian Railways.

OBJECTIVE OF THE STUDY

• To compute the financial position of the ACC Ltd.,

• To analyze the profitability and solvency position of the

firm.

• To analyze the efficiency of the firm through ratios.

• To suggest ways and means to improve the present

condition.

• To examine the over all performance of the company.

• To study the future prospect of Indian Cement Industry.

FINANCIAL ANALYSIS

• The primary objective is to judge profits and financial

soundness of the company.

• The financial analysis are the mirrors, which reflect the

financial positions and operating strength or weakness of the

concern

• Better understanding of a firm’s position and performance.

• Consist of various ratios.

RATIOS USED

• CURRENT RATIO

The company’s ability to meet current obligations, the current

assets must be sufficient to pay current liabilities.

Current assets *100 Current liability

• QUICK RATIO

Quick assets are those assets, which are readily convertible

into cash. They include cash and bank balances, bills

receivable, debtors, short-term investments.

current Assets - Inventories

Current Liability

Cont…• CASH RATIO

Trade investment or marketable securities are equivalent of

cash; they may be included in the computation of cash ratio.

Cash + Marketable Securities

Current Liabilities

• NETWORKING CAPITAL RATIO

The difference between current assets and current

liabilities excluding short-term bank borrowing. The larger NWC

has the greater ability to meet its current obligations.

Net Working Capital Net Assets

Cont…

• DEBTORS TURNOVER RATIO

The liquidity position of the firm depends on the quality of

debtors largely.

Sales

Debtors

• DEBTORS COLLECTION PERIOD

The ratio indicates the extent to which the debts have

been collected in time. It gives the average debt collection period

Debtors

Sales x 360

• NET ASSETS TURNOVER RATIO

Net assets include Net Fixed Assets (NFA) and Net Current Asset

(NCA) that is Current Assets (CA) minus Current Liabilities (CL).

Sales

Net assets

• CURRENT ASSETS TURNOVER RATIO

The firm may wish to know its efficiency of utilizing fixed assets and

current assets separately.

Sales

Current assets

Cont…

Cont…• WORKING CAPITAL TURNOVER RATIO

The ratio indicates the relationship between the sales and working

capital and this ratio shows whether the working capital has been

efficiency or not.

Sales

Network capital

• INVENTORY TURNOVER RATIO

The efficiency of the firm in producing and selling its product.

Cost of goods sold

Average Inventory

• FIXED ASSETS TURNOVER RATIO

Indicates whether the investments in fixed assets have been

judicious or not. Firms efficiency of utilizing fixed assets.

Sales

Net fixed assets

• GROSS PROFIT RATIO

The difference between sales and the manufacturing cost of goods

sold.Gross profit

Sales x 100

Cont…

• NET PROFIT RATIO

Obtained when operating expenses, interest and taxes are

subtracted from the gross profit. Net profit

Sales x 100

• STOCK TO CURRENT ASSETS RATIO

This ratio establishes the relationship between stock and current

assets. This shows low much of current assets are occupied by the

stock.

Stock

Current Assets

Cont…

Cont…• SUNDRY DEBTORES TO TURNOVER RATIO

The relationship between sundry debtors and current assets. Higher

ratio indicates the high contribution of sundry debtors towards current

assets of the firm.

Sundry debtors

Current Assets

• RETURN ON CAPITAL EMPLOYED

This ratio is also called Return on Investment. It measures the

sufficiency or profit in relation to Capital Employed.

Net Profit

Capital Employed *100

Cont…• RETURN ON SHAREHOLDERS FUND

Determines the profitability from the Shareholders point of view.

Net Profit (After Interest & Tax)

Shareholders Fund

• RETURN ON CAPITAL TURNOVER RATIO

Calculate the rate of return on common equity, and is a measure of how well a company uses its stockholders equity to generate revenue.

Sales

Capital Employed

Cont…• DEBT EQUITY RATIO

Indicates what is the proportion of fixed interest bearing capital

taken by the company, as compared to the equity shareholders

capital.

Total debt *100

Equity

• CAPITAL EMPLOYED TO NET WORK RATIO  

shows funds contributed by lenders and owners

 

Capital Employed (CE)

Net Worth (NW)

Cont…• EQUITY RATIO

The ratio of proprietor’s funds to total funds is an important ratio for

determining long-term solvency of a firm. The total asset on the

other hand denotes total resources of the concern

Shareholders fund

Total Assets

• RATIO OF FIXED ASSETS TO PROPRIETORS FUND

The ratio establishes the relationship between the fixed assets and

shareholders funds i.e. the share capital plus reserves, surplus and

retained earnings.

Fixed Assets

Shareholders fund

Cont…

• RATIO OF CURRENT ASSETS TO PROPRIETORS FUND

The ratio indicates the extent to which proprietors funds are

invested in current assets.

 

Current Assets

Shareholders funds

RATIO ANALYSIS OF ACC CEMENTS

PARTICULARSYEARS

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

CURRENT RATIO 1.24 1.22 1.27 1.16 1.31 1.07

QUICK RATIO 0.76 0.75 0.66 0.67 0.91 0.72

CASH RATIO .69 .66 .57 .68 .95 .76

NETWORKING

CAPITAL RATIO.06 .05 .06 .05 .11 .03

DEBTORS

TURNOVER RATIO19.17 18.01 20.48 21.45 27.12 24.22

DEBTORS

COLLECTION

PERIOD

18.78 20.89 18.58 22.38 13.27 14.86

NETASSETS TURNOVER RATIO 1.24 1.08 1.15 .89 1.33 1.41

Cont…PARTICULARS

YEARS

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

FIXED ASSETS TURNOVER RATIO 1.47 1.38 1.56 1.10 1.99 2.11

CURRENT ASSETS TURNOVER RATIO 3.92 3.24 3.21 2.25 2.89 3.18

WORKING

CAPITAL

TURNOVER RATIO

19.91 20.08 20.39 16.76 12.11 48.48

INVENTORY

TURNOVER RATIO8.93 7.28 5.88 4.27 7.49 6.79

GROSS PROFIT RATIO

11.57 16 18 19.78 19 29

NET PROFIT RATIO

2.98 6.09 9.70 16.99 20.92 20.53

STOCK TO CURRENT ASSETS RATIO .39 .37 .45 .42 .31 .33

Cont…PARTICULARS

YEARS2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

RETURN ON SHAREHOLDERS FUND

.09 .15 .23 .25 .39 .37

CAPITAL

TURNOVER RATIO1.12 .91 .94 .71 1.07 1.0

DEBT EQUITY

RATIO.66 .63 .64 .77 .49 .50

CAPITAL EMPLOYED TO NET WORK RATIO

2.69 2.28 2.14 1.69 1.39 1.19

EQUITY RATIO .38 .44 .47 .59 .72 .84

FIXED ASSETS TO PROPRIETORS FUND

2.20 1.75 1.57 1.36 .93 .80

CURRENT ASSETS

TO PROPRIETORS

FUND

.83 .75 .76 .67 .64 .53

CHART SHOWING THE RATIO ANALYSIS

Cont…

Cont…

CURRENT R

ATIO

DEBTO

RS TURNOVER

RATIO

DEBTO

RS COLLE

CTION PER

IOD

NETASS

ETS T

URNOVER RATIO

WORKING CAPITA

L TURNOVER

RATIO

INVENTO

RY TURNOVER

RATIO

GROSS PROFIT

RATIO

0

5

10

15

20

25

30

35

40

45

50

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

FINDINGS

• Current Ratio shows an average ratio of 1.21which is less than the

ideal ratio is 2:1.

• Cash Ratio shows as average greater than its ideal ratio that is

0.5.

• Debtors Turnover Ratio shows the amount of credit sales has been

increased, collection period is derived as 18 days.

• In the calculation of Working capital Turnover Ratio there is an

adequacy of fund except the year 2007-2008.

• Gross profit ratio is fluctuating during the period of study.

• The company’s Net Profit Margin has declined.

• Capital Employed in the concern has been efficiently utilized

CONCLUSION

• The company should maintain quick ratio of 1:1.

• The Debt/Equity ratio is satisfactory during the period of study.

• Company is efficiently utilizing its Fixed Assets and Current Assets

in generating sales

• Inventory Turnover ratio implies that the Inventory has been

utilized efficiently.

THANK YOU !!!