Ambuja Cements.docx

4.1.2 Ambuja Cements 1. About Company :

Business Idea

Ambuja Cements Ltd. (ACL) is one of the leading cement manufacturing companies in India and commenced cement production in 1986. Initially called Gujarat Ambuja Cements Ltd, the Company later became Ambuja Cements Ltd. In 2006. The company from its initiation had a vision of becoming the most sustainable and competitive company in our industry. For this ambuja cements aimed and planned to focus on certain aspects for its success in the future. The company focused on creating values for all and specifically in following aspects

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Delighted Customers

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Inspired Employees

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Enlightened Partners

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Energized Society

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Loyal Shareholders

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Healthy Environment

Background

Ambuja Cements Ltd. (ACL) is one of the leading cement manufacturing companies in India and commenced cement production in 1986. Initially called Gujarat Ambuja Cements Ltd, the Company later became Ambuja Cements Ltd. In 2006, global cement major Holcim, acquired management control of the Company. Today, Holcim holds a little over 50% equity in ACL. The current capacity is 27.25 million tones. . Ambuja Cements Ltd (ACL), a part of a global conglomerate Holcim, is one of India’s leading cement manufacturers. The company has completed over 25 years of operations. The company has a significant presence across western,

eastern and northern markets of India as a brand for Ordinary Portland Cement (OPC) and Pozzolana Portland Cement (PPC) 

Management Details : N S Sekhsaria Eric Olsen Ajay Kapur Martin Kreigner Rajendra P Chitale Omkar Goswami Usha Sangwan

Chairman Vice Chairman Managing Director & CEO Non Exe.Non Ind.Director Director Director Director

Christof Hassig

Director

Nasser Munjee

Director

Shailesh Haribhakti

Director

Haigreve Khaitan

Director

B.L Taparia

Director

Table. 4.8 Management details of Ambuja cements

 Key persons Mr. N. S. Sekhsaria

Mr.Eric Olsen

Non-Executive Chairman, NonIndependent Non-Executive Promoter Director representing LafargeHolcim Ltd., NonIndependent Executive, Non-Independent, Managing Director & CEO

Mr. Ajay Kapur

Table 4. 9Key persons in Ambuja Cements

 Share Holding Patterns :Names

Share Holding %

Promoters

50.3 %

Public

7.8 %

DII

40.4 %

Custodians

1.5 %

FII

0.0 %

Table no 4.10 Share Holding patterns of ambuja cements

2. Size of the company 

Market Capitalization The Market capitalization of Ambuja cements is Rs. 39,107.82 Cr.

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Market share Name of the companies Ultra Tech Cements ACC ltd. Ambuja cements Jai Prakash associates India Cements Ltd. Shree Cement Ltd. Century Textiles & Inds. Madras Cements Lafarge India Pvt. Ltd Birla corporation Ltd. Binani Cement Ltd.

Percentage of shares 22% 15% 13% 10% 7% 6% 5% 5% 5% 4% 4%

Table no. 4.11 Market share of cement companies

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Revenue or Sales

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

9461.40

9978.12

9160.35

9730.30

8554.26

7371.52

7083.21 6182.09 5671.39 6226.2 8

Table no. 4.12 Net Sales value of Ambuja cements ( In Rs. Crores)

Comments :- The company sales have gone up by 52 % since 2006 

CAGR

The CAGR of Ambuja cements for 10 years is 8. 43 % 

Profits

Net Profits 1600 1400

In Rs. Crs.

1200 1000 800 600 400 200 0

2012

2013

2014

2015

Exhibits 4.2 Net Profits of Ambuja cements

Comments :- The company sales have gone up by 52 % in the last 5 years tenure.

2016

3. Quality of Business :-

 Product Portfolio :a) Portland Pozzolana Cement (PPC) :- PPC constitutes 93% of our product

portfolio. They have developed an innovative way of using fly ash to produce high strength Portland Pozzolana Cement (PPC) Millions of tons of fly ash is generated as waste annually by thermal power plants and poses a high environmental hazard. b) Ambuja Plus Roof Special :- is a special quality PPC cement with advanced SPE technology that extracts 100% of silicate gel from cement thus helps in making the concrete stronger, denser and leak proof, resulting in strengthening of the roof. c) Alccofine Micro Materials :- Our wholly owned subsidiary Alccofine, specializes

in micro materials which are widely used in high strength concrete at prestigious projects throughout India. The Alccofine Micro Materials range from high strength concrete additives to special applications in tunnels and dams. 

Value of Migration :-

Ambuja Cement Ltd announced plans to expand its Sankrail grinding unit in West Bengal, India. The project, which represents an investment of Rs.325 crores, will see the plant’s cement production capacity increase from 1.5 million tpa to 2.4 million tpa. The Company has also planned to invest Rs2,000 crore for capacity expansion in Rajasthan and the northern region with the proposed Rajasthan project adding five million tonne capacity to the company's total production. CRISIL has also have predicted a better growth in the cement sector in the future which means in coming the major cement companies are likely to perform good. Prospects of cement companies provide an opinion of assessment of problems in liquidity and profitability analysis and prospects of the cement companies based on their balance sheet and profit and loss a/c. The tools used and analysis and interpretation have given method for useful and productive

suggestions. The ratio analysis of the company is suitable. The company should enrich its performance for meeting challenges and exploiting chances in future and helps the management to take financial decisions. The movement and growth of the Ultra Tech, ACC, Ambuja, Shree and Prism companies are favorable in future period. 

Market Dominance :-

The fact that ACL is India's most efficient producer of cement has led the analyst to rate the stock as a 'BUY'. The management quality of the company is considered to be another factor in favour of the company. Their plants are particular of the most effective in the world. With environment protection actions that are on equality with the luxury in the world. Ambuja monitors an exclusive homemade attitude of giving people the expert to set their own objectives and the liberty to attain their objectives. Ambuja is the maximum profitable cement corporation in India, and one of the lowermost cost producers of cement in the world 

Niche Opportunities :-

Ambuja Cements will need to create niche products and develop the market for such products by providing solution-based offerings to the customer. Innovation will be very important, to create high-grade and cheaper quality of cement. Indian companies have been moving from lower grade cement to higher over the years, and would have to continue to roll out even better quality to compete with the global players, and local competition. New cement products like RMC (Ready Mix Concrete) will help create a company carve out a niche in the markets 4. SWOT

SWOT Analysis

Strengths

1. It has an operational experience of over many decades 2. It is one of the leading cement manufacturers in the country.

3. It has a strong revenue year on year 4. Holcim, one of the world’s largest cement manufacturers has a significant share in Ambuja Cements 5. Branding activities through TVCs, online marketing etc in India make it a prominent brand 6. The company is also listed on NSE & BSE 1. It exports cement to a limited number of countries, as compared to its global competitors.

2. It deals primarily with cement and concrete while many global players manufacture other construction materials Weaknesses

along with cement to provide greater portfolio to the customers. 1. Ambuja cements is planning to buy share from Holcim that would strengthen the brand as a Indian Brand and It would help the brand to grow in the country as Indian customers

Opportunities

would psychologically relate to the brand now. 2. It can increase its global exports business by mergers and acquisitions. 3. The government is promoting Manufacturing sector in India which is a huge opportunity for Ambuja cements and other manufacturing companies.

1. It is facing strong competition from Indian and Global players in cement sector. 2. If it tries to increase its global operations, it would face Threats

tough competition and moreover, each country has different policies that might hamper its expansion. Table 4.13 SWOT of Ambuja Cements

5. Competitors

Name

Market Cap. (Rs. cr.)

Sales Turnover ( Rs. Cr.)

Net Profit Rs. Cr.

Total Assets Rs. Cr

UltraTechCement

92,750.40

24,107.36

2,174.65

25,566.00

Shree Cements

49,991.42

5,567.75

454.93

5,892.76

Ambuja Cements

39,185.41

9,461.40

807.56

10,329.55

ACC

30,092.91

11,796.83

591.57

8,478.54

Ramco Cements

13,551.49

3,678.18

558.26

4,908.82

Dalmia Bharat

10,401.69

204.31

65.55

582.33

Prism Cement

5,270.14

5,550.36

8.36

2,775.74

J. K. Cement JK Lakshmi Cem

4,644.11 4,547.95

3,560.32 2,619.85

101.54 6.28

4,068.69 3,000.91

Birla Corp

4,287.27

3,274.99

157.35

3,646.91

Table 4.14 Competitors of Ambuja cement

6. Financials PARAMETERS

Dec 15

Dec 14

Per Share Ratios Basic EPS (Rs.) Diluted EPS (Rs.) Cash EPS (Rs.) Book Value /Share (Rs.) Book Value /Share (Rs.) Dividend / Share(Rs.) Revenue from Operations/Share (Rs.) PBDIT/Share (Rs.) PBIT/Share (Rs.) PBT/Share (Rs.) Net Profit/Share (Rs.) Profitability Ratios PBDIT Margin (%) PBIT Margin (%) PBT Margin (%) Net Profit Margin (%) Return on Networth / Equity (%) Return on Capital Employed (%) Return on Assets (%) Total Debt/Equity Asset Turnover Ratio (%) Liquidity Ratios Current Ratio Quick Ratio Inventory Turnover Ratio Dividend Payout Ratio (NP) (%) Dividend Payout Ratio (CP) (%) Earnings Retention Ratio (%) Cash Earnings Retention Ratio (%) Valuation Ratios Enterprise Value (Cr.) EV/Net Operating Revenue EV/EBITDA MarketCap/Net Operating Revenue Retention Ratios (%) Price/BV Price/Net Operating Revenue Earnings Yield Table 4.15 Financial Ratios of Ambuja Cements

Analysis :-

5.21 5.21 9.24 66.41 66.41 2.80 60.97 12.18 8.14 7.55 5.20

9.67 9.66 12.94 65.19 65.19 5.00 64.39 15.21 11.92 11.51 9.66

19.97 13.35 12.38 8.53 7.83 7.38 5.70 0.00 66.80

23.62 18.51 17.87 14.99 14.81 13.91 10.76 0.00 71.78

2.03 1.75 10.57 53.80 30.31 46.20 69.69

1.90 1.62 11.23 51.76 38.61 48.24 61.39

28,724.42 3.04 15.20 3.33 46.19 3.06 3.33 0.03

33,003.75 3.31 14.00 3.55 48.23 3.51 3.55 0.04

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The EPS has declined by 46 % in the current year as compared to the previous financial year indicating negative sign for Ambuja cements. This shows company financial health

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is poor for investors The enterprise value has also fell down by 13 % if we compare it from the FY 14. Also Net profit margin and other profitable ratios show decline indicating the negative

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sign for ambuja cements. ROE also fell by 47 %. As Cement sector doing good, There are possibilities the these numbers will show positive sign till the end of the current financial year.

7. Capitals Total revenue for the company for the financial year 2015 was Rs. 9819.59 crores. The expenses recorded for the FY 15 was 8647.38 crores. Details about the expenses of the company is given in the table below :-

Table

Cost Of Materials Consumed Purchase Of Stock-In Trade Changes In Inventories Of FG,WIP And Stock-In Trade Employee Benefit Expenses Finance Costs Depreciation And Amortisation Expenses Other Expenses Expenses details of ambuja cemnts fo FY 15

2,850.05 4.20 25.39 589.52 91.79 625.66 4,464.86

4.16