financial performance of select cement companies throughtraditional...

IJBMEIT: Vol. 4, No. 1, January-June 2012: 57-68

Financial Performance of Select Cement CompaniesThroughTraditional Measures

M. RAJESH1, N.R.V. RAMANA REDDY2 T. NARAYANA REDDY3

1Annamacharya P.G. College of Computer Studies, Rajampet, E-mail: [email protected] P.G. College of Management Studies, Rajampet, Kadapa (Dist), A.P., India3Department of H&S JNTU College of Engineering, Anantapur, A.P. India.

In recent years most of the researchers were concentrated on value added financial performance measures to assessthe company’s performance and shareholders wealth. But the traditional financial measures plays vital role since1990’s in decision making and forward planning of business. So the present study identified the importance of traditionalfinancial measures. In this paper an attempt has been made to analyze the financial performance of 10 cement companiesin India with Return on Assets (ROA), Return on Capital Employed (ROCE), Return on Network Worth (RONW) andEarning per share (EPS) and rank them on the basis of Mean, Variance, Standard Deviation and Co-efficient ofVariation of traditional measures. The study clearly shows that the ROCE and RONW were the better measures toassess the financial performance.

Keywords: Shareholders wealth, Return on Assets, Return on Capital Employed, Return on Network Worth andEarning per share.

INTRODUCTIONMaximizing shareholders value has become the newcorporate paradigm in recent years. The Corporates,which gave the lowest preference to shareholderscuriosity, are now bestowing the utmost preference toit. Shareholder's wealth is measured in terms of returnsthey received on their investment. It can either be inform of dividends or in the form of capital appreciationor both. Capital appreciation depends on the changesin the market value of the stocks. The market value ofstocks depends upon number of factors ranging fromcompany specific to market specific. Financialinformation is used by various stakeholders to assessfirm’s current performance and to forecast the futureas well. It is important to recognize that the objectivesof management may in some situations differ fromthose of the company’s shareholders. One of the bestways to induce management to adopt a shareholderorientation is to use performance measures.

Financial measures like growth in revenue,earnings, and book value-as well as return on equity(ROE) and return on assets (ROA)-are at the heart ofthe traditional approach to company analysis. Alongthis line, the “DuPont formula” is often used to showhow profitability and leverage changes at a companycan impact-either positively or negatively-the

shareholder’s return on equity (ROE). Also, managersand investors to see if a company’s internal growthopportunities are correctly “priced” in the marketplaceuse traditional valuation measures such as price/earnings and price/book value ratios. In this regard,active investors should avoid overpaying for the firm’sperceived future growth opportunities, while theyshould consider buying those securities where stockprice has been incorrectly driven down to a level thatis inconsistent with a firm’s fundamental earningpotential (James L Grant, 2004).

REVIEW OF LITERATUREReimann (1989) published his work on RONW andits Implications. In that, RONW was used extensivelyfor measuring whether value was being created forshareholders and conclude that the adoption of RONWas a measure was that it gave more reliable resultsthan earnings per share (EPS). Finegan(1991) madea study on “ROCE and investors’ reactions” and foundthat ROCE does not consider the timing of cash flows.For that reason the free cash flow model is often citedas a better means to determine whether shareholdervalue is being created and he concluded that, themanagers of a company cannot rely on earningsfigures alone to measure performance, unless they

58 / M. Rajesh, N.R.V. Ramana Reddy and T. Narayana Reddy

want to wait for investors’ reactions to see how theyare performing. Copeland, Koller and Murrin(1996) made a study on “how the investors value theshares of a company? “and argue that ROCE is a short-term performance measure and that too much focuson it can lead a company to overlook long-term growthopportunities that might increase shareholder value.He conclude that A company may also be able toimprove its ROCE, while at the same time earning areturn that is below its weighted average cost ofcapital (WACC), and thereby destroy value. Doddand Chen (1996) study the correlation between stockreturns and different Traditional profitabilitymeasures including non-adjusted residual income,ROA, EPS and ROE. In their study ROA explainedstock returns best with R squared of 24.5%. Petersonand Peterson (1996) analyzed traditional and value-added measures of performance and their relationshipwith stock returns. Their findings state thattraditional measures like ROE, ROI, RONW are notempirically less related to stock returns than returnon value added measures. KPMG-BS Study (1998)assessed top companies on sales, PAT (Profit afterTax) and EPS. The survey has used the BS 1000 listof companies using a composite index comprisingsales, profitability and compounded annual growthrate of those companies covering the period 1996-97.Sixty companies have been found able to createmaximization of EPS where as 38 companies havebeen found to decrease of shareholders’ earnings.Jain, et.al. (1999) carried out a research based onempirical data. Among the selected independentvariables (EPS, ROI, and RONW), For this purpose,the time frame was of eight years and all the variableswere calculated over this period for the samplecompanies and found that ROI has proved to be themost explanatory variable. Black et al. (2001)investigated with a hypothesis that ROE is consistentwith the creation of shareholder value and found thatROE is not consistent with the creation of shareholdervalue. The main disadvantage of ROE is that it isaffected by a company’s gearing levels. Gearing andasset turnover can influence the ROE so that highergearing and higher asset turnover, which are notnecessarily beneficial, can cause ROE to be higher.Thomas and Lipson(2001), by applying Black et al.study, found through their research that thecoefficient of determination (r2) of ROE to market/book ratios was 19 percent, which indicated thatchanges in market to book ratios cannot be reliablyexplained by ROE. Madhu Malik (2004) examinedthe relationship between shareholder wealth andcertain financial variables like EPS, RNOW andROCE. By using correlation analysis, it was foundthat there was positive and high correlation between

Shareholder wealth and RONW, ROCE. There was apositive but low correlation between Shareholderwealth and EPS. By using co-effic ient ofdetermination (r2), Shareholders’ wealth wascompared with Traditional performance measuresand it was found that not a single traditionalperformance measure explains to the fullest extentvariation in shareholders’ wealth. Venkateswarluand Nitesh Kumar (2004) investigated therelationship between non-market performancemeasures and true market value of selected firms fromfour industries viz., FMGC, Health Care, IT Industryand Public Sector Units in India. It was found thatcash flow per share (CFPS) plays an important rolein the market return of any company. In case of FMGCsector, EPS and ROS have appreciable correlationwith the market return, in case of IT sector, it wasfound that the ROIC has significant relation with thevalue. Heath Care and Public Sector Units are similarto the FMGC sector with regard to the relationshipbetween market returns and performance measures.By using multi -variate analysis, it was found thatROE, ROIC, CFPS, and GRCE contribute significantlyto the market value and similarly, ROE, CFPS andCFROS play significant role in FMGC sector. In caseof IT sector, significant relation was observed amongEPS, ROE, ROIC and CFROS. But, it is surprising toknow that in case of PSU sector, no significant relationwas observed between market return and other non -market value performance measures.

It is generally accepted that the most importantrole of managers is to maximize the firm value(Rappaport, 1986, 1998; Worthington and West, 2001,2004 and Lovata and Costigan, 2002). Since 1900s,traditional accounting-based measures ,such asearnings per share (EPS), return on equity (ROE) andreturn on assets (ROA), have been used tooperationalize this concept (Maditions et al, 2006, 2009and Worthington and West, 2001, 2004). The empiricalstudies highlight that a single accounting measure isnot sufficient to explain the financial performance ofthe company. A set of measures are required to assessthe financial performance and shareholders wealth(Chen and Dodd, 1997; Rogerson, 1997).Therefore, thepresent paper made an attempt to analyze the financialperformance of select Cement Companies with thetraditional performance measures - Return On Assets(ROA), Return On Capital Employed (ROCE), ReturnOn Net Worth (RONW) and Earnings Per Share (EPS)and rank them based on their performance.

STUDY OBJECTIVETo evaluate the performance of select cementcompanies in India through the traditional

Financial Performance of Select Cement Companies Through Traditional Measures/ 59

performance measures Return On Assets(ROA),ReturnOn Capital Employed(ROCE), Return On Networth(RONW), Earnings Per Share(EPS) and to rankthem based on these measures.

SAMPLE SELECTION AND DATA SOURCESample cement companies for the study are selectedfrom listed companies in Bombay Stock Exchange.Initially 154 cement companies are listed from theBombay Stock Exchange as the population. Furtherfrom the list of 154 companies 60 companies areidentified based on the availability of historical shareprices of the companies to suite the objectives of thestudy. Finally the study considered 10 companies fromthe identified 60 companies with the assumption thatminimum 10 years of historical data (2001-02 to 2010-11) as a constraint for the study.

The following are the selected sample companiesfor the present study.

1. ACC Cement 2. Ambuja Cements

3. Anjani Cements 4. Grasim Cements

5. India Cements 6. Madras Cements

7. Panyam Cements 8. Sagar Cements

9. Shree Cements 10. UltraTech Cements.

TOOLS OF ANALYSISReturn On Assets (ROA) =

Profit After Tax + Interest100

Total Assets

Return on Capital Employed (ROCE) =

Profit Before Interest and Tax100

Capital Employed

Return on Net worth (RONW) =

Profit After Interest Tax & preference Dividend100

Equity Share holders funds

EarningsPer Share (EPS) =

Profit After Tax Preference DividendNumber of Shares Outstanding

DATA ANALYSISThe collected financial data (2001-02 to 2010-11) wereanalyzed with the traditional financial measures ROA,ROC, RONW and EPS and results were depicted inTable 3.1, Table 3.2, Table 3.3 and Table 3.4 along with

relevant statistics -Mean, Variance, StandardDeviation (SD) and Co-efficient of Variation (CV).

RETURN ON ASSETSTable 3.1 shows the Return on Assets(ROA) of selectcement companies of the study from the year 2001-02to 2010-11.

Associated Cement Companies (ACC) Ltd:TheROA of ACC is 1.69%, 5.16%, 4.19%, 7.47%,12.56%, 13.90%, 27.63%, 26.59%, 18.42% and 28.45%for the year 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11respectively. It is lowest(1.69%) in the year 2001-02and highest (28.45%) in the year 2010-11.The gradualincrease from 1.69% to 28.45% during the study periodshows steady growth of ROA of the company. Thecalculated Mean ROA is 14.61%, Variance is 104.40%,the Standard Deviation is 10.22% and the Co-efficientof Variation (CV) is 69.90%. The ROA is satisfactoryand the CV shows consistency of ROA of the company.

Ambuja Cements Ltd: The ROA of Ambuja Cementis 5.86%, 5.47%, 6.58%, 10.23%, 14.17%, 34.50%,35.44%, 23.52%,18.36% and 29.78% for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest(5.86%) in the year 2001-02 and highest (35.44%) inthe year 2007-08. The gradual increase from 5.86% to29.78% during the study period shows steady growthof ROA of the company. The calculated Mean ROA is18.39%, Variance is 139.37%, the Standard Deviationis 11.81% and the Co-efficient of Variation (CV) is64.10%. The ROA is satisfactory and the CV showsconsistency of ROA of the company.

Anjani Cements Ltd: The ROA of Anjani Cements is0.22%, 1.47%, 0.27%, 0.11%, 0.25%, 0.04%, 18.99%,18.23%, 15.76% and 4.39% for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest (0.04%)in the year 2006-07 and highest (18.99%) in the year2007-08. The ROA figures saw significant fluctuationsduring the study period. The calculated Mean ROA is5.89%, Variance is 67.63%, the Standard Deviation is8.22% and the Co-efficient of Variation (CV) is 137.40%.The ROA is unsatisfactory and the CV showsinconsistency of ROA of the company.

Grasim Cements Ltd: The ROA of Grasim Cementsis 7.57%, 8.09%, 7.27%, 13.73%, 13.98%, 12.40%,16.73%, 18.05%, 12.80% and 25.57% for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest(7.27%) in the year 2003-04 and was high (25.57%) inthe year 2010-11. It increased dramatically from 7.57%


to 25.56% during the study period shows steady growthof ROA of the company. The calculated Mean ROA is13.62%, Variance is 31.31%, the Standard Deviation

is 5.60% and the Co-efficient of Variation (CV) is41.00%. The ROA is satisfactory and the CV showsconsistency of ROA of the company.

Table 3.1Return on Assets (ROA) of Select Cement Companies in India (Rs in Percentage)

Year ACC Ambuja Anjani Grasim India Madras Panyam Sagar Shree UltraCements Tech

2001-02 1.69 5.86 0.22 7.57 1.96 5.31 –21.98 4.94 –5.17 –37.04

2002-03 5.16 5.47 1.47 8.09 –0.03 3.55 –11.31 3.60 0.23 –42.06

2003-04 4.19 6.58 0.27 7.27 –8.87 1.33 –17.82 –10.10 0.98 36.67

2004-05 7.47 10.23 0.11 13.73 –2.78 3.68 76.38 0.90 1.93 1.48

2005-06 12.56 14.17 0.25 13.98 0.14 5.45 91.79 3.16 4.57 0.12

2006-07 13.90 34.50 0.04 12.40 1.38 7.94 84.73 6.32 2.63 9.24

2007-08 27.63 35.44 18.99 16.73 11.22 22.92 –24.03 28.23 12.80 23.48

2008-09 26.59 23.52 18.23 18.05 12.42 15.77 50.91 9.58 13.40 22.72

2009-10 18.42 18.36 15.76 12.80 7.69 9.76 43.73 3.70 21.85 17.02

2010-11 28.45 29.78 4.39 25.57 5.65 8.58 7.62 5.85 17.61 17.65

MEAN 14.61 18.39 5.89 13.62 2.88 8.33 28.00 5.26 7.08 4.91

VARIANCE 104.40 139.37 67.63 31.31 42.30 6.60 46.74 89.98 76.52 666.03

S.D 10.22 11.81 8.22 5.60 6.50 1.22 13.25 9.49 8.75 25.81

CV(%) 69.90 64.10 137.40 41.00 226.00 14.60 47.30 168.70 123.50 525.50

India Cements LtdThe ROA of India Cements is 1.96%, -0.03%, -8.87%, -2.78%, 0.14%, 1.38%, 11.22%, 12.42%,7.69% and 5.65%for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11respectively. ROA is negative (-0.03%, -8.87% and -2.78%) it shows that, ROA suffered a dramatic declineduring the years 2002-03 to 2004-05.The calculatedMean ROA is 2.88%, Variance is 42.30%, the StandardDeviation is 6.50% and the Co-efficient of Variation(CV) is 226.00%. The ROA is very poor and the CVshows inconsistency of ROA of the company.

Madras Cements LtdThe ROA of Madras Cements is 5.31%, 3.55%, 1.33%,3.68%, 5.45%, 7.94%, 22.92%, 15.77%, 9.76% and 8.58%for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11respectively. It is lowest (1.33%) in the year 2003-04and highest (22.92%) in the year 2007-08. The calculatedMean ROA is 8.33%, Variance is 6.60%, the StandardDeviation is 1.22% and the Co-efficient of Variation (CV)is 14.60%. The ROA is very poor and unsatisfactory.

Panyam Cements LtdThe ROA of Panyam Cements is –21.98%, –11.31%,17.82%, 76.38%,91.79%,84.73%,-24.03%, 50.91%,

43.73% and 7.62% for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is negative (-21.98%, -11.31% –17.83% and –24.03%) in the year 2001-02,2002-03, 2003-04 and 2007-08. It means the values ofROA declined dramatically. The calculated Mean ROAis 28.00%, Variance is 46.74%, the Standard Deviationis 30.25% and the Co-efficient of Variation (CV) is47.30%. The ROA is good and the CV shows consistencyof ROA of the company, even the company incurredlosses some of the years of the study period.

Sagar Cements LtdThe ROA of Sagar Cements is 4.94%,3.60%, –10.10%,0.90%, 3.16%, 6.32%, 28.23%, 9.58%, 3.70% and 5.85%for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11respectively. In the year 2003-04 saw a marginaldecline from 3.60% to -10.06%. The calculated MeanROA is 5.26%, Variance is 89.98%, the StandardDeviation is 9.49% and the CV is 168.70%. The ROA isunsatisfactory and the CV shows inconsistency of ROAof the company.

Shree Cements LtdThe ROA of Sagar Cements is –5.17%, 0.23%, 0.98%,1.93%, 4.57%, 2.63%, 12.80%, 13.40%, 21.85% and


17.61% for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is negative (–5.17%) in the year 2001-02 shows the company is in losses. It jumpedsignificantly from –5.17% to 17.61% during the studyperiod shows considerable growth of ROA of thecompany. The calculated Mean ROA is 7.08%, Varianceis 76.52%, the Standard Deviation is 8.75% and theCV is 123.50%. The ROA is very low and the CV showsinconsistency of ROA of the company.

Ultra Tech Cements LtdThe ROA of Ultra Tech Cements is –37.04%,–42.06%, 36.67%, 1.48%, 0.12%, 9.24%, 23.48%,22.72%, 17.02% and 17.65% for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. A marginal declineof –37.04% and –42.06 happened in the year 2001-02and 2002-03 and it dramatically increases from -37.04% to 17.64% during the study period showssignificant growth of ROA of the company. Thecalculated Mean ROA is 4.91%, Variance is 666.03%,the Standard Deviation is 25.81% and the CV is25.50%. The ROA is very low and unsatisfactory. TheCV shows more inconsistency of ROA of the company.

RETURN ON CAPITAL EMPLOYEDTable 3.2 shows the Return on Capital Employed(ROCE) of select cement companies of the study fromthe year 2001-02 to 2010-11.

Associated Cement Companies (ACC) Ltd: TheROCE of ACC is 14.16%, 18.69%, 14.25%, 16.77%,23.33%, 43.18%, 43.55%, 32.96%, 38.98% and 46.14%for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11

respectively. It is lowest (14.16%) in the year 2001-02and highest (46.14%) in the year 2010-11. The gradualincrease from 14.16% to 46.14% during the study periodexplains the significant growth of ROCE of thecompany. The calculated Mean ROCE is 29.10%,Variance is 173.30%, the Standard Deviation is 13.16%and the Co-efficient of Variation (CV) is 45.20%. TheROCE is satisfactory and the CV shows consistency ofROCE of the company.

Ambuja Cements LtdThe ROCE of Ambuja Cements is 56.11%, 69.65%,71.99%, 82.07%, 78.34%, 50.18%, 37.83%, 56.39%,69.07% and 74.95% for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10, 2010-11 respectively. It is lowest (37.83%) inthe year 2007-08 and highest (82.07%) in the year 2004-05. It gradual increase from 56.11 % to74.95% duringthe study period shows positive growth of ROCE of thecompany. The calculated Mean ROCE is 64.66%,Variance is 196.11%, the Standard Deviation is 14.00%and the Co-efficient of Variation (CV) is 21.60%. TheROCE is good and the CV shows consistency of ROCEof the company.

Anjani Cements LtdThe ROCE of Anjani Cements is 13.54%, 15.34%, 13.36%,13.20%, 13.62%, 11.37%, 28.26%, 36.74%, 37.12% and10.10% for the year 2001-02, 2002-03, 2003-04, 2004-05,2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11respectively. It is lowest (10.10%) in the year 2010-11and highest (28.26%) in the year 2007-08. The calculatedMean ROCE is 19.26%, Variance is 111.45%, theStandard Deviation is 10.56% and the Co-efficient ofVariation (CV) is 54.80%. The ROA is satisfactory andthe CV shows consistency of ROA of the company.

Table 3.2Return on Capital Employed (ROCE) of Select Cement Companies in India(Rs in Percentage)

Year ACC Ambuja Anjani Grasim India Madras Panyam Sagar Shree Ultra Tech

2001-02 14.16 56.11 13.54 16.81 1.44 15.67 –2.35 17.00 14.51 11.452002-03 18.69 69.65 15.34 17.30 7.21 17.95 –28.27 13.16 15.38 13.522003-04 14.25 71.99 13.36 20.54 1.81 15.82 –70.32 0.63 18.15 13.832004-05 16.77 82.07 13.20 22.56 4.88 18.32 24.78 12.81 22.86 13.052005-06 23.33 78.34 13.62 25.51 6.05 14.66 57.69 2.21 30.43 14.292006-07 43.18 50.18 11.37 20.47 11.06 20.94 46.52 17.30 34.21 22.562007-08 43.55 37.83 28.26 25.94 19.63 41.12 –57.78 14.35 44.52 42.592008-09 32.96 56.39 36.74 27.23 14.79 24.86 64.51 17.83 44.54 38.942009-10 38.98 69.07 37.12 19.90 18.95 20.89 59.79 13.26 36.07 30.362010-11 46.14 74.95 10.10 32.80 13.38 21.02 13.12 13.04 39.16 31.84MEAN 29.10 64.66 19.26 22.92 9.38 21.53 10.77 12.16 29.98 23.24Variance 173.30 196.11 111.45 24.61 46.48 63.96 2438.11 35.78 134.00 139.13S.D 13.16 14.00 10.56 4.96 6.81 8.00 49.38 5.98 11.58 11.80CV(%) 45.20 21.60 54.80 21.61 72.60 37.10 458.50 49.20 38.60 50.70


Grasim Cements LtdThe ROCE of Grasim Cements 16.81%, 17.30%,20.54%, 22.56%, 25.51%, 20.47%, 25.94%, 27.23%,19.90% and 32.80% for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10, 2010-11 respectively. It is lowest (16.81%) inthe year 2001-02 and highest (32.80%) in the year 2010-11. It jumped significantly from 16.81% to 32.80%during the study period shows considerable growth ofROCE of the company. The calculated Mean ROCE is22.92%, Variance is 24.61%, the Standard Deviationis 4.96% and the Co-efficient of Variation (CV) is21.61%. The ROCE is good and the CV shows moreconsistency of ROCE of the company.

India Cements LtdThe ROCE of India Cements is 1.44%, 7.21%, 1.81%,4.88%, 6.05%, 11.06%, 19.63%, 14.79%, 18.95% and13.38% for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. . It is lowest (1.44%) in the year 2001-02 and highest (19.63%) in the year 2007-08. Amarginal increase from 1.44% to 13.38% during thestudy period shows steady growth of ROCE of thecompany. The calculated Mean ROCE is 9.38%,Variance is 46.48%, the Standard Deviation is 6.81%and the Co-efficient of Variation (CV) is 72.60%. TheROCE is unsatisfactory and the CV showsinconsistency of ROCE of the company.

Madras Cements LtdThe ROCE of Madras Cements is 15.67%, 17.95%,15.82%, 18.32%, 14.66%, 20.94%, 41.12%, 24.86%,20.89%and 21.02%for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest (14.66%) in theyear 2005-06 and highest (28.86%) in the year 2008-09. The calculated Mean ROCE is 21.53%, Variance is63.96%, the Standard Deviation is 8.00% and theCo-efficient of Variation (CV) is 37.10%. The ROCE issatisfactory and the CV shows consistency of ROCE ofthe company.

Panyam Cements LtdThe ROCE of Panyam Cements is –2.35%, –28.27%,–70.32%, 24.78%, 57.69%, 46.52%, –57.78%, 64.51%,59.79% and 13.12% for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10, 2010-11 respectively. It is negative (–2.35%,–28.27% –70.32% and –57.78%) in the year 2001-02,2002-03, 2003-04 and 2007-08 shows the company

suffered with dramatic decline in these years. Thecalculated Mean ROCE is 10.77%, Variance is2438.11%, the Standard Deviation is 49.38% and theCo-efficient of Variation (CV) is 458.50%. The ROCEis unsatisfactory and the CV shows inconsistency ofROCE of the company.

Sagar Cements LtdThe ROCE of Sagar Cements is 17.00%, 13.16%, 0.63%,12.81%, 2.21%, 17.30%, 14.35%, 17.83%, 13.26% and13.04% for the year 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest (0.63%) in the year 2003-04 and highest (17.83%) in the year 2008-09. Thecalculated Mean ROCE is 12.16%, Variance is 35.78%,the Standard Deviation is 5.98% and the CV is 49.20%.The ROCE is unsatisfactory and the CV showsconsistency of ROCE of the company.

Shree Cements LtdThe ROCE of Sagar Cements is 14.51%, 15.38%,18.15%, 22.86%, 30.43%, 34.21%, 44.52%, 44.54%,36.07% and 39.16% for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10, 2010-11 respectively. It is lowest (14.51%) inthe year 2001-02 and highest(44.54%) in the year 2008-09. It climb from 14.51% to 39.16% during the studyperiod, shows significant growth of ROCE of thecompany. The calculated Mean ROCE is 29.98%,Variance is 134.00%, the Standard Deviation is 11.58%and the CV is 38.60%. The ROCE is good and the CVshows consistency of ROCE of the company.

Ultra Tech Cements LtdThe ROCE of Ultra Tech Cements is 11.45%, 13.52%,13.83%, 13.05%, 14.29%, 22.56%, 42.59%, 38.94%,30.36% and 31.84% for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10, 2010-11 respectively. It is lowest (11.45%) inthe year 2001-02 and highest (42.59%) in the year 2007-08. It rise from 11.45% to 31.84% during the studyperiod shows significant growth of ROCE of thecompany. The calculated Mean ROCE is 23.24%,Variance is 139.13%, the Standard Deviation is 11.80%and the CV is 50.70%. The ROCE is satisfactory. TheCV shows consistency of ROCE of the company.

RETURN ON NET WORTHTable 3.3 shows the Return on Net worth (RONW) ofselect cement companies of the study from the year2001-02 to 2010-11.


Associated Cement Companies(ACC) LtdThe RONW of ACC was 4.125, 17.79%,

9.655,10.795, 23.645, 17.31%, 29.66%, 29.19%, 20.16%and 30.92% for the year 2001-02, 2002-03, 2003-04,2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10,2010-11 respectively. It was low (4.12%) in the year2001-02 and was high (30.92%) in the year 2010-11. Itincreases from 4.12% to 30.92% during the studyperiod, shows steady growth of RONW of the company.The calculated Mean RONW is 19.23%, Variance is83.38%, the Standard Deviation is 9.13% and the Co-efficient of Variation (CV) is 47.42%. The RONW issatisfactory and the CV shows consistency of RONWof the company.

Ambuja Cements LtdThe RONW of Ambuja Cements was 12.22%, 11.47%,13.72%, 16.66%, 21.50%, 43.05%, 37.95%, 24.72%,18.83% and 30.42% for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10, 2010-11 respectively. It is lowest (11.47%) in

the year 2002-03 and highest (43.05%) in the year 2006-07. It rises from 12.22% to 30.42% during the studyperiod, shows significant growth of RONW of thecompany. The calculated Mean RONW is 23.05%,Variance is 119.88%, the Standard Deviation is 10.95%and the Co-efficient of Variation (CV) is 47.40%. TheRONW is good and the CV shows consistency of RONWof the company.

Anjani Cements LtdThe RONW of Anjani Cements is 0.83%, 4.02%, 0.70%,0.26%, 0.58%, 0.11%, 42.71%, 38.50%, 29.80% and17.77% for the year 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest (0.11%) in the year 2006-07 and highest (42.71%) in the year 2007-08. Thecalculated Mean RONW is 13.54%, Variance is300.00%, the Standard Deviation is 17.32% and theCo-efficient of Variation (CV) is 127.90%. The RONWis unsatisfactory and the CV shows inconsistency ofRONW of the company.

Table 3.3Return on Net Worth (RONW) of Select Cement Companies in India (Rs in Percentage)


2001-02 4.12 12.22 0.83 12.22 6.34 14.80 –16.33 10.54 -11.86 7.88

2002-03 17.79 11.47 4.02 14.25 –0.13 9.64 10.52 9.42 0.41 10.37

2003-04 9.65 13.72 0.70 12.35 –46.13 4.81 32.47 -32.84 1.98 12.16

2004-05 10.79 16.66 0.26 21.58 –7.05 11.41 41.39 2.85 3.84 3.61

2005-06 23.64 21.50 0.58 20.46 0.36 16.74 31.22 7.38 8.24 0.27

2006-07 17.31 43.05 0.11 17.33 2.58 20.10 36.46 11.39 5.24 22.13

2007-08 29.66 37.95 42.71 24.65 21.68 46.22 –10.70 37.56 35.13 44.35

2008-09 29.19 24.72 38.50 25.15 19.20 42.80 11.08 29.40 38.70 37.36

2009-10 20.16 18.83 29.80 17.39 11.90 28.85 56.36 8.56 47.77 27.12

2010-11 30.92 30.42 17.77 29.28 8.57 22.70 28.90 9.23 36.88 23.72

MEAN 19.23 23.05 13.54 19.47 1.73 21.80 22.24 9.35 16.63 18.90

Variance 83.38 119.88 300.00 33.37 160.94 190.05 540.82 336.65 429.13 212.24

S.D 9.13 10.95 17.32 5.78 19.00 13.79 23.26 18.35 20.72 14.57

CV(%) 47.42 47.40 127.90 29.60 1097.40 63.20 104.50 196.20 124.40 77.02

Grasim Cements LtdThe RONW of Grasim Cements is 12.22%, 14.25%,12.35%, 21.58%, 20.46%, 17.33%, 24.65%, 25.15%,17.39% and 29.28%for the year 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest (12.22%) in theyear 2001-02 and highest (29.28%) in the year 2010-11. It increases from 12.22% to29.28% during the studyperiod, shows steady growth of RONW of the company.The calculated Mean RONW is 19.47%, Variance is

33.37%, the Standard Deviation is 5.78% and the Co-efficient of Variation (CV) is 29.60%. The RONW issatisfactory and the CV shows more consistency ofRONW of the company.

India Cements LtdThe RONW of India Cements 6.34%,-0.13%,-46.13%,-7.05%, 0.36%, 2.58%, 21.68%, 19.20%, 11.90% and8.57% for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-


11 respectively. It is negative (-0.13%, -46.13% and -7.05%) in the year 2002-03,2003-04 and 2004-05. Thecalculated Mean RONW is 1.73%, Variance is 160.94%,the Standard Deviation is 19.00% and the Co-efficientof Variation (CV) is 1097.40%. The RONW is very poorand the CV shows more inconsistency of RONW of thecompany.

Madras Cements LtdThe RONW of Madras Cements is 14.80%, 9.64%,4.81%, 11.41%, 16.74%, 20.10%, 46.22%, 42.80%,28.85% and 22.70% for the year 2001-02 ,2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest (4.81%)in the year 2003-04 and highest (46.22%) in the year2007-08. The calculated Mean RONW is 21.80%,Variance is 190.05%, the Standard Deviation is13.79% and the Co-efficient of Variation (CV) is63.20%. The RONW is good and the CV showsconsistency of RONW of the company.

Panyam Cements LtdThe RONW of Panyam Cements is –16.33%, 10.52%,32.47%, 41.39%, 31.22%, 36.46%, –10.70%, 11.08%,56.36% and 28.90% for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10, 2010-11 respectively. It is negative (-16.33and -10.70) in the year 2001-02 and 2007-08, showsthe company is in losses. The calculated Mean RONWis 22.24%, Variance is 540.82%, the Standard Deviationis 23.26% and the Co-efficient of Variation (CV) is104.50%. The RONW is good and the CV shows moreinconsistency of RONW of the company.

Sagar Cements LtdThe RONW of Sagar Cements is 10.54%,9.42%, -32.84%, 2.855, 7.38%, 11.39%, 37.56%, 29.40%, 8.56%and 9.23% for the year 2001-02 ,2002-03, 2003-04,2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10,2010-11 respectively. There is a marginal decline (-32.84%) in the year 2003-04. The calculated MeanRONW is 9.35%, Variance is 336.65%, the StandardDeviation is 18.35% and the CV is 196.20%. The RONWis very poor and the CV shows inconsistency of RONWof the company.

Shree Cements LtdThe RONW of Shree Cements is -11.865,0.41%, 1.98%,3.845, 8.245, 5.245, 35.135, 38.70%, 47.775 and 36.88%for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11respectively. There is a marginal decline (–11.86%) inthe year 2001-02. It is lowest (0.41%) in the year 2002-

03 and highest(47.76%) in the year 2009-10. Itincreases most dramatically from 0.41% to 36.88%during the study period shows significant growth ofRONW of the company. The calculated Mean RONWis 16.63%, Variance is 429.13%, the Standard Deviationis 20.72% and the CV is 124.40%. The ROCE isunsatisfactory and the CV shows more inconsistencyof RONW of the company.

Ultra Tech Cements LtdThe RONW of Ultra Tech Cements is 7.88%, 10.37%,12.16%, 3.61%, 0.27%, 22.13%, 44.35%, 37.36%, 27.12%and 23.72% for the year 2001-02 ,2002-03, 2003-04,2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10,2010-11 respectively. It is lowest (0.27%) in the year2005-06 and highest(44.35%) in the year 2007-08. Itjumped significantly from 7.88% to 23.72% during thestudy period. The calculated Mean RONW is 18.90%,Variance is 212.24%, the Standard Deviation is 14.57%and the CV is 77.02%. The RONW is unsatisfactory.The CV shows inconsistency of RONW of the company.

EARNINGS PER SHARETable 3.4 shows the Earnings Per Share (EPS) of selectcement companies of the study from the year 2001-02 to 2010-11.

Associated Cement Companies (ACC) LtdThe EPS of ACC is Rs.2.79, Rs.7.63, Rs.5.86, Rs.11.22,Rs.20.50, Rs.29.05,Rs.15.65, Rs.,16.65, RS.14.59 andRs.15.65 for the year 2001-02 ,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest ( Rs 2.79) in the year 2001-02 and highest (Rs.29.05) in the year 2006-07. Itincreases from Rs. 2.69 to Rs.15.65 during the studyperiod shows positive growth of EPS of the company.The calculated Mean EPS is Rs. 13.77, Variance is Rs.64.89, Standard Deviation is Rs.8.05 and the Co-efficient of Variation (CV) is 58.4%. The EPS issatisfactory and the CV shows consistency of EPS ofthe company.

Ambuja Cements LtdThe EPS of Ambuja Cements is Rs. 12.46, Rs.11.99,Rs.14.28, Rs.18.77, Rs.3.46, Rs.9.91, Rs.11.62, Rs.9.21,Rs.8.67andRs.8.95 for the year 2001-02 , 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest ( Rs.3.46) in theyear 2005-06 and highest ( Rs.18.77) in the year 2004-05. The calculated Mean EPS is Rs.11.07, Variance isRs.18.10, Standard Deviation is Rs.4.25 and the Co-efficient of Variation (CV) is 38.00%. The EPS isSatisfactory and the CV shows consistency of EPS ofthe company.


Anjani Cements Ltd:The EPS of Anjani Cements is Rs. 0.09, Rs. 0.42, Rs.0.07, Rs. 0.03, Rs. 0.06, Rs. 0.01, Rs. 6.83, Rs. 8.87,Rs.9.07 and Rs. 9.55for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10, 2010-11 respectively. It is lowest ( Rs.0.01) in

the year 2006-07 and highest ( Rs.9.55) in the year2010-11. The calculated Mean EPS is Rs.2.82, Varianceis Rs. 16.95, Standard Deviation is Rs.4.11 and theCo-efficient of Variation (CV) is 145%. The EPS isunsatisfactory and the CV shows inconsistency of EPSof the company.

Table 3.4Earnings Per Share (EPS) of select cement companies in India (Rs)


2001-02 2.79 12.46 0.09 41.22 3.41 7.20 –162.78 4.69 –4.88 12.67

2002-03 7.63 11.99 0.42 42.27 –0.26 11.33 –396.35 2.49 0.15 13.95

2003-04 5.86 14.28 0.07 40.12 –13.84 7.30 –185.85 -6.52 2.19 17.42

2004-05 11.22 18.77 0.03 15.01 –6.87 7.65 –404.98 0.58 3.74 3.12

2005-06 20.50 3.46 0.06 16.62 0.33 46.32 –186.47 1.55 8.34 0.23

2006-07 29.05 9.91 0.01 14.16 2.83 5.42 –25.55 2.54 5.28 18.47

2007-08 15.65 11.62 6.83 17.53 21.73 5.02 5.32 21.78 5.81 6.84

2008-09 16.65 9.21 8.87 23.35 22.62 3.02 26.16 23.21 4.74 8.94

2009-10 14.59 8.67 9.07 29.76 15.35 15.27 21.52 10.97 15.91 8.48

2010-11 15.65 8.95 9.55 25.65 17.89 15.65 24.89 12.65 16.71 9.23

MEAN 13.77 11.07 2.82 26.66 4.97 12.06 –145.38 6.81 4.59 10.01

Variance 64.89 18.10 16.95 141.35 156.39 177.90 28509.24 99.49 32.31 38.21

S.D 8.05 4.25 4.11 11.88 12.50 13.41 168.84 9.97 5.68 6.18

CV(%) 58.40 38.00 145.00 44.59 251.20 110.60 –116.10 146.40 123.70 61.00

Grasim Cements Ltd:The EPS of Grasim Cements is Rs. 41.22, Rs. 42.27,Rs. 40.12, Rs. 15.01, Rs. 16.62, Rs. 14.16, Rs. 17.53,Rs. 23.35, Rs. 29.76 and Rs. 25.65 for the year 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is lowest(Rs. 14.16) in the year 2006-07 and highest (Rs. 42.27)in the year 2002-03. The calculated Mean EPS is Rs.26.66, Variance is Rs. 141.35, Standard Deviation isRs. 11.88 and the Co-efficient of Variation (CV) is44.59%. The EPS is good and the CV shows moreconsistency of EPS of the company.

India Cements LtdThe EPS of India Cements is Rs. 3.41, Rs. –0.26, Rs.–13.84, Rs. –6.87, Rs. 0.33, Rs. 2.83, Rs. 21.73, Rs.22.62, Rs. 15.35 and Rs. 17.89 for the year 2001-02,2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08,2008-09, 2009-10, 2010-11 respectively. It is negative(Rs. –0.26, Rs. –13.84 and Rs. –6.87) in the year 2002-03, 2003-04 and 2004-05. The calculated Mean EPS isRs.4.97, Variance is Rs.156.39, Standard Deviation isRs.12.50 and the Co-efficient of Variation (CV)is251.20%. The EPS is poor and the CV showsinconsistency of EPS of the company.

Madras Cements LtdThe EPS of Madras Cements is Rs. 7.20, Rs. 11.33, Rs.7.30, Rs. 7.65, Rs. 46.32, Rs. 5.42, Rs. 5.02, Rs. 3.02,Rs. 15.27 and Rs. 15.65 for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10, 2010-11 respectively. It is lowest (Rs. 3.02) inthe year 2008-09 and highest (Rs. 46.32) in the year2005-06. The calculated Mean EPS is Rs. 12.06,Variance is Rs. 177.90, Standard Deviation is Rs. 13.41and the Co-efficient of Variation (CV) is 110.60%. TheEPS is satisfactory and the CV shows inconsistency ofEPS of the company.

Panyam Cements LtdThe EPS of Panyam Cements is Rs. –162.78, Rs. –396.35, Rs. –185.85, Rs.–404.98, Rs. –186.47, Rs. –25.55, Rs. 5.32, Rs. 26.16, Rs. 21.52 and Rs. 24.89 forthe year 2001-02, 2002-03, 2003-04, 2004-05, 2005-06,2006-07, 2007-08, 2008-09, 2009-10, 2010-11respectively. It is negative (Rs. –162.78, Rs. –396.35,Rs. –185.85, Rs. –404.98, Rs. –186.47 and Rs. –25.55)in the year 2001-02, 2002-03, 2003-04 , 2004-05, 2005-06 and 2006-07, shows the company is in losses. Thecalculated Mean EPS is Rs. –145.38, Variance is Rs.28509.24, Standard Deviation is Rs.168.84 and the Co-


efficient of Variation (CV) is –116.10%. The EPS isvery poor and the CV shows inconsistency of EPS ofthe company.

Sagar Cements LtdThe EPS of Sagar Cements is Rs. 4.69, Rs. 2.49, Rs. –6.52, Rs. 0.58, Rs. 1.55, Rs. 2.54, Rs. 21.78, Rs. 23.21,Rs. 10.97 and Rs. 12.65 for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10 and 2010-11 respectively. It is negative(Rs. –6.52) in the year 2003-04. It is lowest (Rs. 0.58)in the year 2004-05 and highest (Rs. 23.21) in the year2008-09. The calculated Mean EPS is Rs. 6.81, Varianceis Rs. 99.49, Standard Deviation is Rs. is 9.97 and theCV is 146.40%. The EPS is unsatisfactory and the CVshows inconsistency of EPS of the company.

Shree Cements LtdThe EPS of Shree Cements is Rs. –4.88, Rs. 0.15, Rs.2.19, Rs. 3.74, Rs. 8.34, Rs. 5.28, Rs. 5.81, Rs. 4.74, Rs.15.91 and 16.71 for the year 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 respectively. It is negative (Rs. –4.88) inthe year 2001-02. It is lowest (Rs.0.15) in the year 2002-03 and highest (Rs.16.79) in the year 2010-11. Thecalculated Mean EPS is Rs.4.59, Variance is Rs.32.31,Standard Deviation is Rs. 5.68 and the CV is 123.70%.The EPS is poor and the CV shows inconsistency ofEPS of the company.

Ultra Tech Cements LtdThe EPS of Ultra Tech Cements is Rs. 12.67, Rs. 13.95,Rs. 17.42, Rs. 3.12, Rs. 0.23, Rs. 18.47, Rs. 6.84, Rs.8.94, Rs. 8.48 and 9.23 for the year 2001-02, 2002-03,2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09,2009-10 and 2010-11 respectively. It is lowest (Rs. 0.23)in the year 2005-06 and highest (Rs. 18.47) in the year2006-07. The calculated Mean EPS is Rs. 10.01,Variance is Rs. 38.21, Standard Deviation is Rs. 6.18and the CV is 61.00%. The EPS is satisfactory. The CVshows consistency of EPS of the company.

RANKING OF COMPANIESThe ranking procedure is adopted to rank the selectedcompanies of thestudybased on its mean ROA, ROCE,

RONW and EPS along with CV and depicted in Table3.5 and Table 3.6.

Ranking Based on MeanTable 3.5 shows the calculated ranks of select cementcompanies of the study based on Mean of ROA, ROCE,RONW and EPS.

Panyam Cements Limited is the 1st rank basedon Mean ROA. Ambuja Cements Limited is in 2nd andACC is in 3rd rank. Grasim Cements Limited, MadrasCements Limited, Shree Cements Limited, AnjaniCements Limited, Sagar Cements Limited, UltraTechCements Limited and India Cements Limited are in4th, 5th, 6th, 7th, 8th, 9th and 10th rank respectively.

Ambuja Cements Limited is the 1st rank based onMean ROCE. Shree Cements Limited is in 2nd andACC is in 3rd rank. UltraTech Cements Limited,Grasim Cements Limited, Madras Cements Limited,Anjani Cements Limited, Sagar Cements Limited,Panyam Cements Limited and India Cements Limitedare in 4th, 5th, 6th, 7th, 8th, 9th and 10th rankrespectively.

Ambuja Cements Limited is the 1st rank based onMean RONW. Panyam Cements Limited is in 2nd andMadras Cements Limited is in 3rd rank. GrasimCements Limited, ACC, UltraTech Cements Limited,Shree Cements Limited, Anjani Cements Limited,Sagar Cements Limited and India Cements Limitedare in 4th, 5th, 6th, 7th, 8th, 9th and 10th rankrespectively.

Grasim Cements Limited is the 1st rank based onMean EPS. ACC is in 2nd and Madras CementsLimited is in 3rd rank. Ambuja Cements Limited,UltraTech Cements Limited, Sagar Cements Limited,India Cements Limited, Shree Cements Limited,Anjani Cements Limited and Panyam CementsLimited are in 4th, 5th, 6th, 7th, 8th, 9th and 10thrank respectively.

Based on Mean ROA, ROCE, RONW andEPSAmbuja Cements Limited is in 1st rank. ACC is in2nd rank and Grasim Cements Limited is in 3rd rank.The ranking procedure made a conclusion that AmbujaCements Limited performance was more in the studyperiod followed by ACC andGrasim Cements Limited.

Table 3.5Ranking of Companies Based on Different Performance Measures with Reference to Mean

Company Rank of Rank of Rank of Rank of Average Final RankROA ROCE RONW EPS Rank based on Mean

ACC 3 3 5 2 3.25 2

Table Cont’d


Ranking Based on CVMadras Cements Limited is in 1st rank based on CVof ROA. Grasim Cements Limited is in 2nd rank andPanyam Cements Limited is in 3rd rank. AmbujaCements Limited, ACC, Shree Cements Limited,Anjani Cements Limited, Sagar Cements Limited,India Cements Limited and UltraTech CementsLimited are in 4th, 5th, 6th, 7th, 8th, 9th and 10thrank respectively.

Ambuja Cements Limited is in 1st rank basedon CV of ROCE. Grasim Cements Limited is in 2ndrank and Shree Cements Limited is in 3rd rank.Madras Cements Limited, ACC, Panyam CementsLimited, Sagar Cements Limited, UltraTechCements Limited, Anjani Cements Limited and IndiaCements Limited are in 4th, 5th, 6th, 7th, 8th, 9thand 10th rank respectively.

Grasim Cements Limited is in 1st rank based onCV of RONW. Ambuja Cements Limited is in 2nd rankand ACC is in 3rd rank. Madras Cements Limited,UltraTech Cements Limited, Panyam CementsLimited, Shree Cements Limited, Anjani Cements

Limited, and India Cements Limited and SagarCements Limited are in 4th, 5th, 6th, 7th, 8th, 9thand 10th rank respectively.

Ambuja Cements Limited is in 1st rank based onCV of EPS. Grasim Cements Limited is in 2nd rankand ACC is in 3rd rank. UltraTech Cements Limited,Madras Cements Limited, Shree Cements Limited,Anjani Cements Limited, Sagar Cements Limited,India Cements Limited and Panyam Cements Limitedare in 4th, 5th, 6th, 7th, 8th, 9th and 10th rankrespectively.

Based on CV of ROA, ROCE, RONW and EPSGrasim Cements Limited is in 1st rank. AmbujaCements Limited is in 2nd rank and Madras CementsLimited is in 3rd rank. The ranking procedure made aconclusion that Grasim Cements Limited wasconsistent in the study period followed by AmbujaCements Limited and Madras Cements Limited.

CONCLUSIONSThe financial performance of the selected 10 cementcompanies has analyzed through the traditionalfinancial performance measures - ROA, ROCE, RONW

Table 3.5 Cont’d

Ambuja 2 1 1 4 2.00 1

Anjani 7 7 8 9 7.75 8

Grasim 4 5 4 1 3.50 3

India 10 10 10 7 9.25 9

Madras 5 6 3 3 4.25 4

Panyam 1 9 2 10 5.50 5

Sagar 8 8 9 6 7.75 8Shree 6 2 7 8 5.75 6Ultratech 9 4 6 5 6.00 7

Table 3.6Ranking of Companies Based on Different Performance Measures with Reference to Coefficient of Variation (CV)

Company Rank of Rank of Rank of Rank of Average Final RankROA ROCE RONW EPS Rank based on CV

ACC 5 5 3 3 4.00 4

Ambuja 4 1 2 1 2.00 2

Anjani 7 9 8 7 7.75 8

Grasim 2 2 1 2 1.75 1

India 9 10 9 9 9.25 10

Madras 1 4 4 5 3.50 3

Panyam 3 6 6 10 6.25 6

Sagar 8 7 10 8 8.25 9

Shree 6 3 7 6 5.50 5

Ultratech 10 8 5 4 6.75 7


and EPS. The study clearly identifies the significanceof these measures to assess the financial performanceof the company. The Mean ROA of Panyam CementsLtd. is (28%) highest and consistence. The analysis ofROA shows that the performance of Panyam Cementsis more to compare with other companies of the study.The mean ROC of Ambuza Cements Ltd. is (64.66%)highest and consistence. The analysis of ROCE showsthat the performance of Ambuza Cements is more tocompare with other companies of the study. The RONWof Ambuza Cements Ltd. is (23.05%) highest andconsistence. The analysis of RONW shows that theperformance of Ambuza Cements is more to comparewith other companies of the study. The EPS of GrasimCements Ltd. is (28.66%) highest and consistence. Theanalysis of EPS shows that the performance of GrasimCements is more to compare with other companies ofthe study.

The measures ROCE and RONW reveal thatAmbuza Cements Ltd financial performance is moreand consistence based on Mean and CV. The studyconcludes that among ROA, ROCE, RONW and EPS,the ROCE and RONW were the better measures toassess financial performance.

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