abhay soni swot file

8/7/2019 abhay soni swot file

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Pioneer Institute of Professional Studies IndorePioneer

Diligence & Excellence

Since 1996

REPORT ON

SWOT ANALYSIS

OFPRIM CEMENT

Submitted To: - Submitted By:-Prof. NIHIT JAISAWAL ABHAY KUMAR SONIMBA 3rd SEM.

SEC. P


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First phase of SWOT

Contents

Define business/companyPromotersVisionMissionProduct mixMerger/take overTop managementLocation of manufacturing unit

Define business/company

Prism Cement Limited is an ISO 9001: 2008, ISO 14001: 2004, OHSAS 18001: 2007 &SA 8000: 2008 Certified Company. It operates one of the largest single kiln cementplants in the country at Satna, Madhya Pradesh. Equipped with state-of-the-art machineryand technical support from F.L Smidth & Co A.S Denmark, the world leaders in cementtechnology, Prism Cement has successfully created a niche for itself in the Indian cementindustry.

The Company is managed by a focused Board comprising of eminent experts fromdiverse fields ably supported by a professional management team. The Management teamensures high levels of transparency, accountability and equity in all facets of the

companys operations.

Promoters

Mr. Rajesh KapadiaMr. Rajan Raheja

Vision

To be acknowledged as a leading player in the industry with the highest level of integrity.

Mission

State of the art cement plantstransparent dealings with all stakeholdersCommitted to the principles of good corporate governance


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Product mix

Merger/take over

SUBSIDIARY AND JOINT VENTURE COMPANIES

Pursuant to the Scheme, the subsidiaries and joint venture companies of the erstwhile H.

& R. Johnson (India) Limited have come under the fold of the Company. During the yearunder review the Companys subsidiaries and joint venture companies performedsatisfactorily.

Subsidiaries- Raheja QBE General Insurance Company Limited, the insurance JV Company with

QBE Holdings (AAP) Pty Ltd., is in growing stage and has introduced significant numberof liability products including other general insurance policies approved by the IRDAduring the year.- Silica Ceramica Private Limited, the vitrified tile Company in Andhra Pradesh, has

completed one full year of manufacturing operations and has been running at a utilisationlevel of over 90% since the last quarter of the year under review. During the year, theCompany increased its stake in the Joint Venture from 50% to 65.7%.

- H. & R. Johnson (India) TBK Limited, the wholly owned subsidiary of the Company inthe field of tile, batii and kitchen retailing has taken necessary steps to increase itsgeographical coverage. The Company is. going through a learning curve and based on itsinitial learning has modified its business model for further scale-up.


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- Lifestyle Investments Private Limited (LIPL) is an overseas wholly owned subsidiary.LIPL issued 60,05,000 preference shares of 1 GBP each and redeemed 53,45,884preference shares of 1 GBP during the year.- Porselano Tiles Limited, the wholly owned subsidiary of the Company, is yet to

commence business.Joint Ventures (JV)

- Ardex Endura (India) Private Limited, the JV with the German group Ardex, completed

one full year of successful operations of its secondplant at Vadodara.- Sentini Cermica Private limited, the mid-segment glazed floor tile JV Company in

Andhra Pradesh has been consistently operating at full capacity.- Antique Granito Private Limited, the vitrified tile JV Company in Gujarat has installed

and commissioned a new Multi-Colour charging system (Magic Brush) enabling the plantto manufacture value-added, full-body effect products. During the year, Antique GranitoPrivate Limited has acquired a 50% stake in Umiya Ceramics Private Limited.Umiya Ceramics has an installed capacity of 7.26 million m2 per annum of ceramic

vitrified tiles at Gujarat.- Milano Bathroom Fittings Private Limited, the bath fittings JV at Baddi, Himachal

Pradesh, has been consistently operating at full capacity.- Spectrum Tiles Private Limited, the mid-segment wall tiles JV Company in Gujarat,

has performed satisfactorily.The Company has received the exemption from the Central Government under Section

212(8) of the Companies Act, 1956, from attaching a copy of the Balance Sheet, Profitand Loss Account, Directors Report and

Auditors Report of the subsidiary companies and other documents required to beattached under Section 212(1) of the Act to the Balance Sheet of the Company.Accordingly, the said documents are not being attached herewith. However, the financialdata of the subsidiaries has been furnished along with the statement pursuant to Section212 of the Companies Act, 1956 forming part of the Annual Report. Further, pursuant toAccounting Standard (AS - 21) issued by the Institute of Chartered Accountants of India,the Company has presented the consolidated financial statements which include thefinancial information relating to its subsidiaries and forms part of the Annual Report.The Company shall provide a copy of the Annual Report and other documents of its

subsidiary companies as required under Section 212 of the Companies Act, 1956 to theshareholders upon their written request.

These documents will also be available for inspection at the

registered office of the Company and the registered offices of the

respective subsidiary companies during working hours up to the date of

the Annual General Meeting.


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Top management

Chairman Mr. Rajesh KapadiaMr. Rajan Raheja

Non-executive Directors Mr. Satish RahejaMr. Akshay RahejaMr. James Arthur BrooksMs. Ameeta A. Parpia

Managing Directors Mr. Manoj ChhabraMr. Vijay Aggarwal

Executive Director Mr. Ganesh Kaskar

Location of manufacturing unit

Satna, Madhya PradeshDate of Establishment 1992Revenue668.63 ( USD in Millions )Market Cap 31333.947105 ( Rs. in Millions )Corporate Address

305 Laxmi Niwas Apartments,Ameerpet, Hyderabad-500016, Andhra Pradeshwww.prismcement.com

CORPORATE OFFICE

Prism Cement Limited"Rahejas", Main Avenue, Vallabhai Patel road, Santacruz(W), Mumbai 400 054.Tel. No. 022-66754142/3/4, Fax No. 022-26001304.

WORKS

Prism Cement LimitedVillage: Mankahari, Tehsil.Rampur Baghelan, Satna 485 111 (MP).Tel. No. 07672-275622/1, 410260, Fax No.07672-275303.

Central Marketing Office

Prism Cement Limited16/1/6A Jawahar Lal Nehru Road, Tagore Town, Allahabad 211 002.

Tel. No. 0532-2465228, 2465332, 2465360, Fax No. 0532-2465291.

MARKETING OFFICE
http://www.prismcement.com/http://www.prismcement.com/


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KanpurHouse No.X1/170, Opp.Swarnalata Education Centre, Krishnapuram Kanpur 208 007.

Tel. No. 0512-2404123, 2400932, Fax No. 0512-2404123.

Lucknow3/113 Vivek Khand, Gomti Nagar, Lucknow 226 010.Tel. No. 0522-2396847, 2397589, Fax No. 0532-2397590.

Bareilly(UP)C-77/3 Opp.Tagore Park, Rajindra Nagar, Bareilly(UP).Tel. No. 0581-2530089/91, Fax No. 0581-2530089.

Allahabad16/1/6A Jawahar Lal Nehru Road, Tagore Town, Allahabad 211 002.Tel. No. 0532-2465228, 2465332, Fax No. 0532-2465291.

VaranasiUnit I,C.19/40 VIP Fariman, Behind Kashi, Gramin Bank, Varanasi 221 002.Tel. No. 0542-2227428/9, Fax No. 0542-2227427

Patna302, Abhishek Plaza, Exihibition Road, Patna 800 001.

Tel. No. 0612-2224017, 2238744, Fax No. 0612-2224017.

Satna (MP)Rajdeep, Satna Rewa Road, Satna 485 001 (MP).

Tel. No. 07672-404401/2, Fax No. 07672-227514.

Jabalpur4 H.I.G. Near Main Post Office, South Civil Lines, Delight Talkies Compound, Jabalpur 482 001.

Tel. No. 0761-2620026, 2678907, Fax No. 0761-2620026.

Second phase of SWOT

Current plan and objectives


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Mumbai, Sep (EPC News): Prism Cement Ltd has commenced commercial production ofthe 3.6 million tonnes cement project - Unit II at Satna, Madhya Pradesh with effect fromSeptember 23, 2010, a statement from the company said. The total outlay of the projecthas been funded through a mix of internal accruals and debt.

The expansion will enhance the companys cement and clinker dispatch capacity to 6.6million tonnes from the present 3 million tonnes from its existing Unit I.

The project has been completed in a short span of 19 months from the commencement ofcivil construction.

EPC News Bureau

MUMBAI: Few would have heard of Raheja QBE General Insurance, the companythats been around for a year. Thats because it is the only insurer that has chosen to

adopt a unique business model where it will restrict itself to manufacturing and will nothave a distribution set-up. The company only sells to brokers who approach it and hashighly specialised liability covers as focus area.

Raheja QBE is a joint venture between Prism Cement and QBE Holdings, a wholly-owned subsidiary of QBE Insurance Group, Australia. As a general insurer, our focus ison manufacturing and we have decided to leave distribution to the intermediaries, saidPraveen Gupta, MD & CEO of Raheja QBE General Insurance.

The company is also different from its peers in the sense that it is at present not chasingautomobile and health insurance. A unique aspect of the company is that it employs

actuaries for pricing of products. In India, although non-life companies have an actuary,their involvement in product pricing is far lower than in the life insurance business.

OBEs focus is on underwriting and while it may not be the biggest, it is the mostprofitable insurer in the world, said Mr Gupta. By maintaining a disciplined approachto underwriting, we expect to become one of the catalysts for change in the Indianmarket, he added.

Buy Prism Cement with a target of Rs 72-75, says Amit Harchekar, India Infoline.

Harchekar told to CNBC TV18, Prism Cement has given a good breakout from a flatformation and what we believe is the stock is likely to head towards Rs 75-78 in the nearterm. On the medium term chart the stock has been consolidating well above Rs 64 forquite some time, so since there is a breakout with good volumes we might see a goodrally in this counter. So even at these levels, we would advocate buy in this stock with astop of Rs 60 and target comes in the range of Rs 72-75.


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Disclosures: We have recommended these stocks to our clients but I do not have any

personal holding.

Prism Cement Ltd today announced the company will acquire the remaining 50 per cent

stake in its joint venture Milano Bathroom Fitting Pvt Ltd (MBF).

''Post acquisition, this company becomes a wholly owned subsidiary and will continue tobe managed through its H & R Johnson (India) Division,'' it said in a statement.

However, the company did not disclose the financial details of the deal.

In 2006, H & R Johnson (India) Ltd had acquired a 50 per cent stake in MBF, which hasa manufacturing plant in Baddi, Himachal Pradesh. The plant, which manufacturesbathroom fittings, currently has a capacity of three lakh pieces per annum.

Prism cement stake holders

You can view the latest shareholding pattern for Prism Cement Ltd...Shareholding pattern - Prism Cement Ltd.

Holder's Name No of Shares % Share HoldingPromoters 376880669 74.87%GeneralPublic 57442391 11.41%ForeignInstitutions 32918478 6.54%OtherCompanies 16333276 3.24%Others 13074894 2.60%NBanksMutualFunds 3758530 0.75%

ForeignNRI 2818377 0.56%ForeignOcb 84200 0.02%FinancialInstitutions 45265 0.01%ForeignPromoter 500 0.00%

Prism Cement Limited, H. & R. Johnson (India) Limited and RMC Readymix (India)Private Limited Boards approve AmalgamationThe Board of Prism Cement Limited ('Prism'), H. & R. Johnson (India) Limited ('HRJ'),and RMC Readymix (India) Private Limited ('RMC') have today unanimouslyst approved the amalgamation of HRJ and RMC with Prism and the share swap ratio. The

appointed date for the amalgamation is 1 April 2009.

Prism, HRJ and RMC are engaged in the business of building materials and the Schemeseeks to consolidate their business interests under Prism.The amalgamation of the HRJ and RMC with Prism will create an integrated company inthe Building materials segment. The Ready-mixed concrete business would provide astrategic route to market for the cement business. Tiles, bathrooms and kitchens businesswould exploit its synergies with the cement and ready-mix concrete business in terms of


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distribution network, customer management, and the ability to offer complete buildingmaterial solutions under one roof. As a strategy, the merged entity would be able tocreate a niche for itself and gain advantage from this unique position within the market.The Scheme of Amalgamation shall result in:

Consolidation of the business interests of the HRJ, RMC and Prism in the buildingmaterial segment by creating an integrated company, thereby achievingsynergies in themarket place. Enhancement in shareholders' value by achieving economies of scale and reduction inoverheads, administrative, managerial and other expenditure, operational andorganisational rationalisation efficiency by pooling of managerial, technical, distributionand marketing skills, productivity gains, logistic advantages and optimal utilisation ofvarious other resources. Creation of a company with a larger asset base and multiple revenue streams which willbe in the ultimate benefit of the shareholders and stakeholders.Prism Cement Limited commenced its production from August 1997 and manufactures

Portland Pozzollana Cement (PPC) with the brand name 'Champion' and OrdinaryPortland Cement (OPC). Prism's cement is being mainly used in housing construction,roads, bridges and specialised applications. It has the highest quality standards due toefficient plant operations with automated controls. The strength and other characteristicsof its cement are much higher than the BIS specifications, which alongwith a strongbrand pull, has placed its products in the premium price segment. Prism caters mainly tomarkets of UP, MP and Bihar, with an average lead of 340-370 kms of its plant at Satna,MP. Prism has a wide marketing network with about 2000 dealers serviced from 46stocking points.Prism currently sells over 3 MTPA of cement and clinker and is in the process ofestablishing another unit at the same location with a proposed cement capacity of 3.6MTPA by 2010-2011. It is also in the process of setting up a 4.8 MTPA capacity cementplant in Andhra Pradesh by 2013-2014. This will take its overall capacity above 11MTPA.Prism has a 74% stake in Raheja QBE General Insurance Company Limited which is aJV with QBE Group of Australia.For the nine-month period ended March 31, 2009, Prism's standalone sales turnover wasRs. 721 crores with an EBITDA of Rs. 180 crores.HRJ is the market leader in the field of ceramic tiles in India. Incorporated in 1958, HRJhas consistently maintained its leadership position in the field of tiles over the past fivedecades. Today, HRJ enjoys the recognition of being the only company in India to offerend-to-end solutions of Tiles, Sanitaryware, Bath Fittings and Kitchens. HRJ uses arobust model of own manufacturing, joint-ventures and outsourcing as a manufacturingstrategy. HRJ has a wholly-owned subsidiary which focuses on organized buildingmaterials retailing and a wholly-owned overseas subsidiary. Moreover, HRJ has a 50%stake in Ardex Endura (India) Private Limited (AEIPL) which is a Joint-Venture with Ardex Group of Germany. AEIPL is a pioneer in its field in India and offersworld's leading adhesives, grouts, specialty industrial flooring, and waterproofingsolutions. HRJ's sales turnover has grown at a CAGR of 17% over the past 10 years. Forthe year ended March 31, 2009, HRJ's consolidated sales turnover was Rs.


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2 2 1,122 crore and EBITDA was Rs. 146 crores. HRJ's sales volume for the year 2008-09 was 37 million m of tiles and HRJ plans to scale-up the same to 90 million m by 2014-15.RMC is the second-largest ready-mixed concrete manufacturer in India. Incorporated in1996, RMC currently operates 55 ready-mixed concrete plants in 25 cities/towns across

the Country. RMC also ventured into aggregates business and operates large quarries andcrushers. At present, RMC has 6 quarries across the country. RMC has been at theforefront in setting high standards for plant and machinery, production and qualitysystems and product services in the ready-mixed concrete industry. RMC's sales turnoverhas grown at a CAGR of 44% over the past 10 years. For the year ended March 31, 2009,RMC's sales turnover was Rs. 675 3 3 crores and EBITDA was Rs. 35 crores. RMC plansto scale-up its capacity from 3.87 million m at present to 11 million m by 2014-15.The share swap ratio for the amalgamation as per the joint valuation report prepared byM/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai and the StatutoryAuditors of Prism M/s. N. M. Raiji & Co., Chartered Accountants, Mumbai is as follows: 124 shares of Prism (Face Value Rs. 10/- each) for every share held in HRJ (Face Value

Rs. 100/- each) 73 shares of Prism (Face Value Rs. 10/- each) for every 100 shares held in RMC (FaceValue Rs. 10/- each)M/s. Enam Securities Private Limited, Mumbai has given a fairness opinion confirmingthat the share swap ratio is fair.At present, the Promoters of Prism hold 100% of the equity share capital of HRJ and 76%of the equity share capital of RMC directly and the balance 24% is held by HRJ.Upon the Scheme becoming effective, the Promoter's shareholding in Prism wouldincrease from 61.74% to 74.87%. Cross-holding as a result of shares held by HRJ inRMC is proposed to be transferred to a trust, to be held for the benefit of Prism. The'Prism Trust' would hold 2.45% of Prism's expanded equity capital.Safe Harbor:Certain statements in this release concerning our future growth prospects are forward-looking statements which involve a number of risks and uncertainties that could causeactual results to differ materially from those in such forward-looking statements. Prismdoes not undertake to update any forward-looking statement that may be made from timeto time byor on behalf of Prism.

Prism Cement touched an intraday high of Rs 47.45 and an intraday low of Rs 45.40. At11:29 am, the share was quoting at Rs 46.75, up Rs 1.90, or 4.24%.

It was trading with volumes of 724,880 shares. Yesterday the share closed down 0.33%or Rs 0.15 at Rs 44.85.


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FINANCIAL ASPECTS OF COMPANY (in crores)

Gross profit margin

RATIOS 06 07 08 09 10 FORMULE

1. Operating

profit margin

(%)

5.09 11.12 11.36 5.75 10.02 OM= PBIT / Net Sales

2. Gross profit

margin (%)

23.56 42.81 34.94 23.3

7

14.61 GPM= (Total Sales- COGS) /

Total Sales3. Net profit

margin (%)

10.83 25.02 27.09 15.0

9

8.80 Net Profit/Net Sales

4. EPS (Rs) 2.08 6.46 8.10 3.23 4.99 Profit After Tax / Sales

5. Return on net

worth (%)

24.51 46.88 39. 11 14. 5

4

21.46 Operating Profit/Capital

Employed6. Dividend

payout ratio

- --- -- --- 18.10 14. 44 54. 4

0

49.12 Dividend Payout Ratio= Yearly

Dividend Per Share/ EPS7. PBDIT 149.02 334.6

7

352.3

1

179.

83

500.6

2

PBDIT = Total Sales Expenses

(Excluding D, I&T)

8.

Depreciation

30.73 31.87 31.93 24.3

1

89.85

9. PBIT 118.29 302.8

0

320.2

8

155.

52

410.7

7

PBIT = PBDIT -

DEPRECIATION

10. PBT 90.65 294.0

6

316.5

5

151.

98

358.2

5

PBT = PBIT - INTREST

11. PAT 358.25 192.7

7

241.6

3

96.2

3

251.0

5

PBIT = PBDIT TAX

12. Net profit 358.25 192.7

7

241.6

3

96.2

3

251.0

5

PAT


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Gross Profit X 100------------------Net Sales

Interpretation: the company is maintaining consistent Gross Profit Margin Prism CementLtd maintaining almost 50 % Gross Profit in its total sales. In nutshell we can say that

Prism cement Ltd is getting more margin of GP

Net profit margin

Net Profit-------------- X 100Net Sales

Interpretation: Here company is getting lesser Net Profit Margin as compare to GPMargin. It shows that Cement Industries have lot of administrative expenses because of

which its net profit margin is decreases. Prism cement Ltd. it is 10% in 2005-06 andincreases to 25%, 28% and 15% respectively in successive years. Here again PrismCement Ltd. is performing better.

Operating margin (%): It compares the quality of a companys activity to itscompetitors. A business that has a higher operating margin than others in the industry isgenerally doing better as long as the gains didn't come by piling on debt or takinghighly risky speculations with shareholders' money.

Gross profit margin (%): The gross profit margin is a measurement of a company'smanufacturing and distribution efficiency during the production process. The gross

profit tells an investor the percentage of revenue / sales left after subtracting the cost ofgoods sold.

Net profit margin (%): The profit margin tells you how much profit a companymakes for every $1 it generates in revenue or sales.

EPS (Rs): Earnings per share is generally considered to be the single most importantvariable in determining a share's price. It is also a major component used to calculatethe price-to-earnings valuation ratio.

Return on net worth (%): Indicator of profitability. It is the ratio of net profit to

share holder's investment. It is the relationship between net profit (after interest and tax)and share holder's/proprietor's fund.

Dividend payout ratio (net profit): Measures what a companys pays out toinvestors in the form of dividends.

PBDIT: It is profit before any expenses like depreciation, interest & tax.


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Depreciation: A noncash expense that reduces the value of an asset as a result ofwear and tear, age, or obsolescence.

PBIT: Profit before interest and taxes ( PBIT ) or operating income is a investmentformula to measure of a corporation's profitability by subtracting operating expenses

from revenue excluding tax and interest.

PBT: A profitability measure that looks at a company's profits before the companyhas to pay corporate income tax.

PAT: It the net profit earned by the company after deducting all expenses likeinterest, depreciation and tax. It can be fully retained by a company to be used in thebusiness.

Net profit: Net profit is the money left over after paying all the expenses of anendeavor. It also includes other income like dividend, interest on loan.


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Types of Ratio

1. Liquidity Ratio

i). Current RatioThe ratio is worked out by dividing the current assets of the concern by its currentliabilities. Current ratios indicate the relation between current assets and currentliabilities. Current liabilities represent the immediate financial obligations of thecompany. Current assets are the sources of repayment of current liabilities. Therefore, theratio measures the capacity of the company to meet financial obligation as and when theyarise. Textbooks claim a ratio of 1.5 to 2 is ideal; bit in practice this is rarely achieved.This ratio is also known as working capital ratio.ii). Acid Test RatioQuick assets represent current assets excluding stock and prepaid expenses.

Stock is excluded because it is not immediately realizable in cash. Prepai expenses areexcluded because they cannot be realized in cash. A minimum of 1: 1 is expected whichindicates that the concern can fully meet its financial obligations. This also called asLiquid ratio or Quick ratio.

2. Activity Ratios

i). Debtors Turnover RatioThe ratio obtained should be compared with that of other similar units. If the ratio of thecompany being studied is greater (say, 10 weeks as against 6 weeks for the industry), itindicates that the company is allowing longer than the usual credit periods. This may be

justified in the case of new companies or existing companies entering into new venturesii). Creditors Turnover RatioThis ratio shows how frequently company is paying to its creditor. Usually, higher theratio- betters the performance of company.

iii). Inventory Turnover RatioThe ratio is usually expressed as number of times the stock has turned over. Inventorymanagement forms the crucial part of working capital management. As a major portion ofthe bank advance is for the holding of inventory, a study of the adequacy of abundance ofthe stocks held by the company in relation to its production needs requires to be madecarefully by the bank.

iv). Fixed Assets Turnover RatioThe ratio shows the efficiency of the concern in using its fixed assets. Higher ratiosindicate higher efficiency because every rupee invested in fixed assets generates highersales. A lower ratio may indicate inefficiency of assets. It may also be indicative of underutilizations or non-utilization of certain assets. Thus with the help of this ratio, it ispossible to identify such underlined or unutilized assets and arrange for their disposal.


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3. Leverage Ratio

i). Debt-Equity Ratio

Also known as external - Internal equity ratio is calculated to measure the relative claimsof outsiders against the firms assets. This ratio indicates the relationship between theexternal equities or the equities or the outsiders funds and the internal equities or theshareholders funds.

ii). Interest Coverage RatioHigher the ratio better is the coverage. The firm may not fail on its commitments to payinterest even if profits fall substantially.

4. Profitability Ratios

i). Gross Profit RatioA comparison with the standard ratio for the industry will reveal a picture of theprofitability of the concern. Also the ratio may be worked out for a few years andcompared to verify if a steady ratio is maintained.

ii). Net Profit RatioThis ratio serves a similar purpose as, and is used in conjunction with, the gross profitratio.

iii). Return on AssetsThis ratio measures the profits of the concern as a percentage of the total assets. For thepurpose of this ratio, the operating profit is calculated by adding back to net profit: (1)Interest paid on the long term borrowings and debentures; (2) Abnormal and non-recurring losses; (3) Intangible assets written off. Similarly, from the net profit abnormaland non-recurring gains are deducted. The idea is to get profit generated out of totalinvestments made.

iv). Earning PowerEarning power is a measure of business performance which is not affected by interestcharges and tax burden. It abstracts away the effect of capital structure and tax factor andfocuses on operating performance. Hence it is eminently suited for inter-firm comparison.Further, it is internally consistent. The numerator represents a measure of pre-taxearnings belonging to all sources of finance and the denominator represents totalfinancing.


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v). Return on Capital EmployedROCE is the post-tax version of earning power. It considers the effect of taxation, but notthe capital structure. It is internally consistent. Its merit is that it is defined in such a waythat it can be compared directly with the post-tax weighted average cost of capital of thefirm.

vi). Return on EquityThe return on equity measures the profitability of equity funds invested in the firm. It isregarded as a very important measure because it reflects the productivity of theownership capital employed in the firm.

5. Valuation Ratios

Valuation ratios indicate how the equity stock of the company is assessed in the capitalmarket. Since the market value of equity reflects the combined influence of risk andreturn, valuation ratios are the most comprehensive measures of a firms performance.

i). Price Earnings RatioThe PE Ratio is a summary measure which primarily reflects the following factors:growth, prospects, risk-characteristics, shareholder orientation, corporate image, anddegree of liquidity.

ii). EV-EBIDTA RatioEV is the sum of the market value of equity and the market value of debt. The marketvalue of equity is simply the number of outstanding equity shares times the price pershare. As far as debt is concerned, if it is in the form of loans, its market value has to beimputed. Generally, a rupee of loan is deemed to have a rupee of market value.EV-EBIDTA is supposed to reflect profitability, growth, risk, liquidity and corporateimage.


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Operating margin

Operating margin is a measurement of what proportion of a company's revenue is leftover after paying for variable costs of production such as wages, raw materials, etc. Ahealthy operating margin is required for a company to be able to pay for its fixed costs,such as interest on debt.

Also known as "operating profit margin" or "net profit margin".

Gross Profit Margin

Indicates what the company's pricing policy is and what the true mark-up margins are.

Gross Profit Margin Analysis:

The gross margin is not an exact estimate of the company's pricing strategy but it doesgive a good indication of financial health. Without an adequate gross margin, a companywill be unable to pay its operating and other expenses and build for the future. Cory'sTequila Co. has a gross margin of 65% therefore their mark-up is over 100% of the cost.In general, a company's gross profit margin should be stable. It should not fluctuate muchfrom one period to another, unless the industry it is in has been undergoing drasticchanges which will affect the costs of goods sold or pricing policies.

The profit margin is mostly used for internal comparison. It is difficult to accuratelycompare the net profit ratio for different entities. Individual businesses' operating andfinancing arrangements vary so much that different entities are bound to have differentlevels of expenditure, so that comparison of one with another can have little meaning. Alow profit margin indicates a low margin of safety: higher risk that a decline in sales willerase profits and result in a net loss.


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Profit margin is an indicator of a company's pricing strategies and how well it controlscosts. Differences in competitive strategy and product mix cause the profit margin to varyamong different companies.

Interpretation of earning ratio

High Price-Earnings Ratio show good market return for equity shareholder. In 2005-06PE Ratio for JK Cement is 27.35 times. It shows that investor see good growth prospectin future. But from next year onward its PE Ratio is decreased sharply. It is 5.66 in 2006-07, 4.30 in 2007- 08 and 1.95 in 2008-09. For Prism Cement Ltd. it is 13.43 in 2005-06,6.67 in 2006-07, 4.15 in 2007-08 and 7.05 in 2008-09, respectively.

EV-EBIDTA ratio

Cement Ltd was showing EV-EBIDTA ratio of 9.58 times, which was good indicator forcompany. But for next years this ratio decreases to 4.45 in 2006-07, 3.78 in 2007-08 and2.44 in 2008-09. For Prism Cement Ltd it is 6.71 times in 2005-06, 3.88 in 2006-07, 2.85in 2007-08 and 3.78 in 2008- 09.

v). Return on Capital Employed

ROCE is the post-tax version of earning power. It considers the effect of taxation, but notthe capital structure. It is internally consistent. Its merit is that it is defined in such a waythat it can be compared directly with the post-tax weighted average cost of capital of thefirm.

vi). Return on Equity

The return on equity measures the profitability of equity funds invested in the firm. It isregarded as a very important measure because it reflects the productivity of theownership capital employed in the firm.


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PHASE III

15. BENCH MARKING

PERFORMANCE BENCH MARKING

The last few years of this decade have been good for cement companies as prices

have remained high, and hence profits have been good. In the same period, UltraTech

and ACC have shown the same trends of increasing sales growth and capacity

utilization of Ultra tech and ACC both are growing continuously because of the

increase in the demand of the cement in this scenario and they are very effective in

meeting the demand of the consumers by doing their best performance

PROCESS BENCH MARKING

The last few years of this decade have been good for cement companies as prices

have remained high, and hence profits have been good. In the same period, UltraTech

and ACC have shown the same trends of increasing sales growth and capacity

utilization of Ultra tech and ACC both are growing continuously because of the

increase in the demand of the cement in this scenario and they are very effective in

meeting the demand of the consumers by doing their best performance

STRATEGIC BENCHMARKING

Can adopt the strategies of Ultra tech cement i.e., Cost leadership: Striving to become

a cost leader by means of setting up captive power plants, and/or up-gradation of

technology to enhance productivity, is increasingly becoming critical for large cement

players in this sector.

Rising Exports: Due to the increasing construction activity in the Middle-East,

exports will constitute a major sales driver. Hence, the coming years would see

companies scrambling for bases on the Western coast to minimize their export

transportation costs.

Retail Stores: A unique concept, which Ultra Tech is experimenting with in recent

times, and one that is important for the future, is to continue setting up retail stores.


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Other companies like Asian paints, and most recently Tata Steel have tried a similar

concept.

Relationship Management: UltraTech should focus on managing its relationships with

importers, exporters, distributors, warehouse providers, wholesalers, retailers and

dealers for their long-term profitability.

17. PRODUCT LIFE CYCLE


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18. COMPANY LIFE CYCLE


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19. INDUSTRY LIFE CYCLE


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STRATEGIC MODELS

PORTERS FIVE FORCE MODEL


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BCG MATRIX


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SWOT ANALYSIS

STRENGHTS

Production

High quality 43 grade OPC, 53 grades OPC, cement 53 blended.

Annual production capacity of 1 million tonnes per annum.

Use of high-end equipment such as the Gamma Metrics Machine and the X-ray

Analyser ensures that each product passing out of JK Lakshmi's manufacturing

facility adheres to global standards of quality and performance.

Integrated operations

Good technology used for operations like new soft-wares/machine/other equipment

Technically operations handle in the in side of the plant.

Seperated human resource requited for operation

Expert advice they also take form out side word.

Logistics

They have its own network for transportation road/railways.

They have ERP in the business.

They believe to less inventory and high production.

Brand Positioning

The Company has a network of 52 cement dumps.Over 1900 dealers spread across the states of Rajasthan, Gujarat, Delhi, Haryana,

Uttar Pradesh, Uttaranchal, Punjab, madhya pradesh, Mumbai.

Distribution Channels

Can directly deals with the limestone tenders and thus the middle man do not affect

its cost.

Use the local transporters which provide the efficient transportation cost.

Human Resource

Honest and Ethical Conduct

Selection of Suppliers

Continuously developing & maintaining safe work practices

Focusing on operational & occupational hazards & risks

Creating awareness about preventive health


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Exports

They also export cement some country like Bhutan, Shri Lanka etc.

They have good policy for export.

T hey adopt new international standard for production

Subsidiary

Prism cement has larrge no of subsidiaries.

The conpany have good command in its all subsidiaries.

Company did a large no of JV with other companies.

The company has new maeger with some company also.

Awards

PRISM CEMENT also won the Productivity Excellence Award 2007-08, Energy

Conservation Award 2008, NCB award 2007, Building Leadership Award 2007,

National Award for Environmental Excellence & Energy Management 2007, Golden

Peacock Award for Corporate Social Responsibility 2007, ICWAI National Award

2007 for Excellence in Cost Management, The Pinnacle Cement 2006 award by

MTech Zee TV, Green Tech Safety Award and a place of pride amongst the top ten

companies in India in HR practices. (as per the Business Today- TNS Mercer

survey).

Finance

Consistent revenue growth

Gross sales increase from 144.05 cr. to 1644.05 cr. (from year 2009 to 2010)

EBIT increase from 247.59 cr. to 353.89 cr. (from year 2009 to 2010)

PAT increase from 178.59 cr. to 241.13 cr. (from year 2009 to 2010)

EPS (Rs.) increase from 14.59 to 19.70(from year 2009 to 2010

Quality

Champion and the full range of Ordinary Portland Cement (OPC) of 33, 43 and 53

Grades.

Champion Prisms largest selling product is a general-purpose cement popular for

all applications during house construction by individuals. Prism Cements OPC is in


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demand for specialised cement concrete applications like high-rise buildings, bridges,

manufacturing AC sheets, pipes, poles etc.

Rich deposits of high quality limestone, highly automated and sophisticated controls

ensure that the cement manufactured by Prism meets the highest quality standards.

All the cement manufactured by Prism Cement carry the BIS Certification Mark. In

fact, the strength and other characteristics are much higher than the BIS requirements.

Excellent quality has placed Prism Cement in the premium price segment.

Strong Risk Management System

High inventory cost but company has exceptional facility for this.

High level of care require for handling

WEAKNESSESS

Raw materials

Its need high level inventory cost and company invest lot of capital in it.

Production inconsistency arrives.

Inventory cost varies rapidly.

Availability is depending on the nature.

Highly competition for raw materials.

ProductsLimited product offer in this sector

No research approach require for future.

Availability of product is less in the market.

Operations

High skill people are required for operation.

High technology needed for production.

The probability of accident and mishap chances high.

Finance

They have lots of tax liabilities.

They have invested high inventory which require lot money result block of capital.

Interest rate is high in cooperation of competitors


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Health

Employees are afraid about their health in the organization.

Some diseases specially caused only due to cement plant but prism cement does not

find the solution for that.

Peoples are more conscious about their health so prism cements suffering this

problem a lot.

Production process

In dry process loss of raw material is very much

Accident changes high

wet process they are not accepted as process method.

OPPURTUNITIES

Capacity

Huge demand in the market. They need to expand his facilities.

They can adopt new technologies through which they can .

Huge capacity and demand are available in the market.

Population

High growth rate population becomes great factor for new opportunity for the

company.Infrastructure development of rural area also open new opportunity .

Government policies open new door for developing company like prism cement

Globalization gives the changes to increase JV.

Diversification strategy increases the financial condition of the company.

They launch new sale promotion strategy to improve the sale of the product.

Recession also provide good opportunity of prism cement because plenty of technical

HR free they can easily hire them and take advantages in his company.

Rapid growth is taking place in Bihar and Madhya Pradesh.

Institutional market like corporate and offices, school society complexes are growing

in large scale, which will increase the requirement.


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People are opting for more stable structures and intensive use of cement is taking

place, even government is spending heavily on infrastructure projects. Thus, this is

the right time to fully tap these markets.

As Indian core industry is also growing at rate of nearly 10% per annum, it is having

a good future.

FDI in infrastructure sector going to increase in the coming years, which will increase

the demand of cement.

Roads are undergoing through the transformation process through which the

traditional method of road building will be replaced by modern concrete roads.

Marketing

They have less promotion for sell.

They are not investing in the advertisement.

They only concentrate in big dealer/contractors of tire 2 city.

They do not try to promote his product in globally

.

Customers

Customers are very less as compare to the competitors.

Most of them are only B grade contractors.

They need credit for product which affects the cash flow of company

They are not reliable.

THREATS

Large number of players in cement industry makes it more competitive for ACC to

carefully price its product and at the same time satisfy its dealers and customers.

Cheep priced brand are grabbing rapidly a large chunk of lower income customer

base.

Players such as Jaypee Cement, Ultratech Cement, and Birla cement,ACC cement are

eating up considerable market share.

Due to Indias exponential growth many new international cement companies are

expected in coming years which will bring a tide of change and can start price war.


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The emergence of small players in this market may increase the competition and start

the malpractices, and heavy discounts to retailers. They can also influence many

retailers by giving better profit margin, and other Benefits.

Now-a-days Timber is also being considered as one of the substitutes of cement. In

many countries like Japan, Indonesia, Singapore etc are now using timber in

construction since those areas are high earthquake affected. They now prefer timber

which is cheap and long lasting for years.

CORPORATE LEVEL STRATEGIES

Emphasis on providing value goods to consumers,

Alliances with players like ACC and visible presence in all leading national and

regional markets.

Sustained expansion in capacity to meet the growing demand of CEMENT in India.

Diversify geographic footprint, and enhance scale and reach of operations

BUSINESS LEVEL STRATEGIES

In the process of expanding total cement capacity by 1 Mn MTPA by FY2011.

Improve the ability to source raw materials required from multiple sources in a timely

and cost effective manner, with reduced dependence on third parties

The Company entered into MoU with State governments securing access to a portion

of the raw material at certain plantations.

Mergers and acquisition with foreign players to enter in the foreign market of cement


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FUNCTIONAL LEVEL STRATEGIES

Increase of sales and marketing efforts in regions where the Company does not have a

strong presence, particularly towns with population less than 50,000

Strategy of prism cement classify product on popular and premium range products. It

can more focus on value for money products.

Aggregator in highly fragmented, with presence across value chain from supply chain

to manufacturing to branding. It can extend plantations through mergers and

acquisitions.

Company can secure land for lime stone plantation in other geographical areas.

(Presently the company has acquired land only in Ethiopia and Cambodia)

SUGGESTION

Adopt new technology for the production like wet process of cement manufacturing.

it will reduce the cost of product that will increase the profit margin and good for

human health also.

Proper use of waste material

They can increase the production plant because of high growth rate of infrastructure.

They can increase the production for global market.

CONCLUSION

As India is the second largest producer of cement in the worlds many big player presents in

the market after that prism cement increases his market share due to the high growth rate of

real estate.

Prism cement is not a big player of India in this sector but it has lots of capability to in cash

the market opportunity

Prism cement have high growth rate in production and profit so they can able to reach in

higher position in this sector.


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abhay soni swot file

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