APROJECT REPORT

ON

ON CEMENT SECTORFOR

WITH REFERENCE TO MARWADI SHARES AND FINANCE LTD.

SUBMITTED TO UNIVERSITY OF PUNEIN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE

MASTERS IN BUSINESS ADMINISTRATION (M.B.A.)

Submitted By:-MUSTAQ KADIVAR(Batch 2006 – 08)

Guided by:-Prof. Mahesh Halale

BRACT’sVISHWAKARMA INSTITUTE OF MANAGEMENT

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FUNDAMENTAL ANALYSIS

KODHAWA PUNE- 411014ACKNOWLEDGEMENT

Who does not thanks for little, will not thanks for much

Talent and capabilities are of course necessary but opportunities and good guidance

are two very important things without which no person can climb those infant ladders

towards progress

At the time of making this report I express my sincere gratitude to all of the.

During the course of this project various person have rendered valuable help &

guidance to me. I am highly grateful to Mr. PRATIK TANNA (Officer Marwadi

Shares & Finance Pvt. Ltd.) who allowed me to do my summer training in their

prestigious organization.

I would like to extend my sincere thanks to Mr. RAVI TANDAN. My project guide

for his guidance and support throughout my training at MARWADI SHARES &

FINANCE Pvt. Ltd. At distribution senior manager. His clam demeanor and

willingness to teach has been a great help in successfully completing the project. My

learning has been immeasurable and working under him was a great experience. My

sincere thanks also extend to all the staffs of Marwadi Shares & Finance Pvt. Ltd. For

providing a helpful work environment and making our summer training an exciting

and memorable event.

I am very thankful to our director Dr. Sharad Joshi for giving me valuable

suggestion and to encourage me for bring out good project.

I am extremely thankful and obliged to Prof. Mahesh Halale (Internal Project Guide)

for providing streamed guidelines since inception, till the completion of the project.

I would also thank Marwadi Shares & Finance Pvt, Ltd, employees and customers

whom I met during the course of this project, for their support and for providing

valuable information which helped me, complete this project successfully.

MUSTAQ KADIVAR

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CONTENTS

SR. NO. PARTICULAR PAGE.NO.

1. EXECUTIVE SUMMERY 4

2. OBJECTIVE AND SCOPE OF PROJECT 5

3. COMPANY PROFILE 6

4. THEORETICAL BACKGROUND 14

5. RESEARCH METHODOLOGY 24

6. DATA ANALYSIS 26

7. FINDING & RECOMMENDATIONS 45

8. CONCLUSION 47

9. BIBLIOGRAPHY 48

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1. EXECUTIVE SUMMARY

Project Title: Fundamental Analysis

Company Name: Marwadi Shares & Finance limited

The training at Marwadi Shares & Finance Limited involved the day to day working

at corporate accounts departments with the senior & junior managers and research

department in the company. This project helped us to get the deeper understanding of

the process of portfolio management in Marwadi Shares & Finance Limited and how

decisions are taken to strengthen the financial position.

For this study three years’ comparisons Income Statement, Balance Sheet, Change

shares market price and taken for calculating ratio analysis. Main objective in

undertaking this project is to supplement academic knowledge with absolute practical

exposure to day to day functions of the sector.

COMPANY ANALYSIS IN CEMENTS SECTOR.

The reason behind choosing this project is that it provides hands on experience with

what goes on in the stock market on a day to day basis. The field of equity research is

very vast and one has to look into various aspects of the functioning of the company

to get to any conclusion about the possible performance of the company in the market.

Investors like warren buffet made a fortune out of investments in the stock market,

which is quiet impossible without proper research about the companies. The field of

equity research is full of challenges. It is your door to fame, fortune and, above all,

professional challenge. In a world that is shrinking in size due to information

technology and blurring boundaries between nations, the stock market (or the equities

market) is all set to grow in size. The project is done with Marwadi Shares & Finance

Ltd. a very well known company in the field of stock broking and capital market

services sector. This project gave me a chance to get valuable insights from a hoard of

vastly experienced people in this field and to get various approaches each one adopts

to evaluate various companies.

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2. OBJECTIVE OF PROJECT:-

TO STUDY THE STOCK MARKET IN INDIA

TO UNDERSTAND THE CONCEPT AND TECHNIQUES OF

FUNDAMENTAL ANALYSIS.

TO STUDY CEMENT SECTOR AND KEY PLAYERS IN THE INDIAN

STOCK MARKET.

TO ESTIMATE PROSPECTS OF CEMENT SECTOR.

TO STUDY AND ANALYZE THE MOVEMENT OF SENSEX AND ITS

EFFECT ON CEMENT SECTOR

SCOPE:-

THE SCOPE OF THIS PROJECT IS LIMITED TO THREE SECTORS i.e.

CEMENT SECTOR THIS PROJECT IS CONCERNED WITH THREE

SECTORS OF COMPANIES IN THE STOCK MARKET. THE PROJECT

DOES NOT EXTENTD ITS SCOPE TO ANY OTHER SECTOR OF

COMPANIES.

SOURCE OF INFORMATION FOR THIS PROJECT IS ONLY

SECONDARY DATA.

THE DATA ABOUT THE CEMENT SECTORS, THE GOVERNMENT

POLIES, WITH RESPECT TO THE SECTOR, AND THE INFORMATION

ABOUT THE COMPANIES ARE ALL GATHERED FROM SECONDARY

SOURCES AVAILABLE ON THE WEBSITE, ANNUAL REPORT, DATA

BANK OF THE VARIOUS COMPANY, JOURNAL AND REFRENCE BOOK.

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3. COMPANY PROFILE

2.1 MARWADI SHARES & FINANCE LIMITED

2.2 CORPORATE MISSION & VISION:

“To be a world class financial services provider by arranging all

conceivable financial services under one roof at affordable price through cost-

effective delivery systems and achieve organic growth in business by adding newer

lines of business.”

HEAD OFFICE : Marwadi Financial CenterNr. Kathiawad GymkhanaDr. Radhakrishnana RoadRajkot – 360 001

C.E.O.: Mr. Jeyakumar A. S.

DIRECTORS: Mr. Ketan MarwadiMr. Deven MarwadiMr. Sandeep Marwadi

GENERAL MANAGER: Mr. Hareshbhai Maniar

E-MAIL: smarwadi@hotmail.com

WEB SITE: www.marwadionline.com

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2.3 COMPANY PROVIDES FACILITIES:-

Marwadi Sales and Finance P. Ltd. started in the year 1994 when acquired

membership of National Stock Exchange of India Ltd. That was the time when Govt.

had just started liberalization. Capital market being at the base of every thing else was

among the first few sectors taken up for liberalization and alignment with global

benchmarks. NSE was therefore a result of Government’s policy to modernize stock

market and give our investors a cost - effective trading and settlement system.

Facilities and infrastructure, in all their operations, they use information technology,

which has facilitated seamless contact with customers and proactive resolution of

customer problems. This has been built up by their honest efforts. It was the first

private corporate broking house in Saurashtra-Kutch region to discern the potential of

this business by taking it retail to every doorstep in this region. Their core strength

lies in being able to network with customers who in turn provide them with vibrant

critical mass. They have built up expertise in leveraging technology for optimum

business results. It is also the first private corporate Depositary participant in this

region. This was primarily started for their broking customers. However the retail

response was so good that they had to offer it as separate service and recognize it as a

separate profit center. The company has always been driven by the desire to create

value for its customers. Their business activities include

Products & Services offers:

Equity & Derivatives:

Can look for an easy and convenient way to invest in equity and take positions

in the futures and options market using their research and tools. To start trading in

Equity, all you need to do is open an online trading account. You can call them and

they will have their representative meet you. You can get help opening the account

and get guidance on how to trade in Equity.

Commodity:

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You can enter the whole new world of commodity futures. Investors looking

for a fast-paced dynamic market with excellent liquidity can NOW trade in

Commodity Futures Market. The Commodity Exchange is a Public Market forum and

anyone can play in these vital Commodity Markets. Marwadi Commodity Broker (P)

Ltd can certainly be your point of entry to the Commodity Markets. Marwadi is a

registered trading-cum-clearing member of NCDEX and MCX.

Internet Trading:

Making the right trade at the right time! E-Broking service, which brings you

experience of online buying and selling of shares with just a click.

A detail resource like live quotes, charts, research and advice helps you take proper

decisions. Their robust risk management system and 128 bit encryption gives you a

complete security about money, shares, and transaction documents.

IPO:An active player in the primary market with waste customer base and reaching

distribution network spread through out the lands. Then breathe Saurashtra peninsula.

Marwadi offer bidding for all booked bills IPOs being floated through NSE network.

Marwadi offer services to customer such as advises on the minimum lot to

applied in case of refer and details and data to be furnished into IPO form.

Marwadi scripts even fill up the form for related clients.

Marwadi offer bidding services at all major location in Saurashtra and Kutch

there by enabled the interline investors to subscribes qualitative IPOs.

Mutual Funds:

Transact in a wide range of Mutual Funds. Mutual Funds are an attractive

means of saving taxes and diversifying your investment portfolio. So if you are

looking to invest in mutual funds, Marwadi offers you a host of mutual fund choices

under one roof; backed by in-depth information and research to help you invest

smartly.

 PMS: Can you analyze the prices of 1,500 shares every morning? Can you afford to

gamble only on the recommendations from your friends and the information overload

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from magazines and financial dailies? And, of course, more importantly, if you

happen to be a High Net worth Individual, do you have the time to judge which

advice is reliable, authentic and has the least chance of failure? With Marwadi PMS,

you can be assured that your investments are in safe hands! Give your portfolio the

expert edge to smoothly steer towards wealth creation.

Cash Market Services:Marwadi also F & O market to all clients in to entire Saurashtra and Kutch

region, which they cover through, distributed cover.

Marwadi offer cash market trading services for the both retail and in station

clients at all the certain Saurashtra and Kutch where placed either a branch or

franchise or sub broker

2.4 COMPANY’S MILESTONE:

1992: Marwadi Shares And Finance Pvt. Ltd. was incorporated

1996: Became a corporate member of national Stock Exchange of India.

1998: Became a member of Saurashtra Kutch Stock Exchange.

1999: Launched Depository services of Depository Participant under National

Securities Depository Ltd.

2000: Commenced Derivative Trading after obtaining registration as a Clearing and

Trading Member in NSE

2003: (MCBPL) became a corporate member of The National Commodity and

Derivatives Exchange of India Ltd.

2004: Became a corporate member of The Stock Exchange, Mumbai.

2004: Launched Depository Services of Depository Participant under Central

Depository Services (India) Ltd.

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2006: MSFPL converted to Public Limited (Marwadi Shares And Finance Limited)

2.5 MEMBERSHIP:-

Capital Market:National Stock Exchange of India Ltd.

Bombay Stock Exchange Ltd.

Saurashtra-Kutch Stock Exchange Ltd.

Over-the-Counter Exchange of India Ltd.

Commodities Derivatives:National Commodity & Derivatives Exchange Ltd.

Multi Commodity Exchange of India Ltd.

Depository Operations:National Securities Depositories Ltd. (NSDL)

Central Depository Services (India) Ltd.

2.6 The Complete Investment Destination:

It provides comprehensive range of investment services. That’s advantage of

having all the services investor need under one roof.

Stock broking:It offers complete range of pre-trade and post-trade services on the BSE and

the NSE. Whether an investor come into its conveniently environment, or issue

instruction over the phone, its highly trained team and sophisticated equipment ensure

smooth transactions and prompt services.

E-Broking and Web-Based Services:It is one of the offers online trading on site www.marwadionline.com, high

bandwidth leased lines, secure services and a customs-built user interface give you an

international standards trading experience. It also gives regular trading hours, and

access to information, analysis of information, and a range of monitoring tools.

Trading Terminals-Money pore Express:

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It offer its sub-broker and approved/authorized user fully equipped trading

terminals-Money pore Express, at the location of investors choice. It is fully

functional terminal, with a variety of helpful features like market watch, order entry,

order confirmation, charts, and trading calls, all available in resizable windows. And

it can be operated through the keyboard using F1 for buy, F2 for sell.

Depository Participant Services:It offers DP services mean hassle-free, speedy settlements. It is depository

participants with NSDL and CDSL.

Premium Research Services:Its research team offers a package of fee-based services, including daily

technical analysis, research reports, and advice on clients existing investments. It is

research beyond desk and company-provider reports. If you have an equity portfolio,

you know that the pace of life in the world of stocks and shares is frantic. Managing

your portfolio means you have to take firm, informed decisions, and quickly!

Other Investment Products:

To help investor balance their portfolio, it offers a completer range of other

investment products, like Mutual Funds, IPO’s, SIP in mutual funds etc.

Commodity Exchange:It is the member of MCX, a commodity exchange and has providing services

in the field of commodity trades to its clients. It deals in gold silver, and all other

commodities.

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2.7 HIRARCHY STRUCTURE:

2.8 LIST OF COMPETITORS:

SHERKHAN

MOTILAL OSWAL

ANGELS BROKING

IL & FS

KOTAK SECURITIES

5 PAISE

SKSE(Saurashtra Kutch stock exchange in Rajkot)

2.9 SWOT ANALYSIS:

During this training at Marwadi Shares & Finance Limited we had come to know

the Strengths -Weaknesses -Opportunities -- Threats for the company and it is very

useful for a company to analyze them. Therefore, the SWOT analysis is presented

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Board of Director

General Manager

DP Front Trading Account Technology

DP Back Audit (Compliance) Software

here and the suggestions for maintaining strengths and removing weaknesses are

explained.

SWOT ANALYSIS:

STRENGTHS:

Well-maintained infrastructure.

Dedicated, Intelligent and Loyal staff.

On-line trading products.

Lowest brokerage and other charges w.r.t. competitors.

The best investment advice correct up to 70-90 % through dedicated research

and reports.

Wide product range to enable the clients to choose the best alternative.

One of the best DPs in India.

A positive image in the existing clients.

WEAKNESSES:

Less awareness in the market.

Time consuming process for account opening, resolving the problems of the

customers, etc.

Service quality is not maintained accordingly how they are promoted.

OPPORTUNITIES:

Large primary market to sit as a book runner for the other companies just like

Kotak securities ltd. that runs the books of share holdings for many companies

Slope of stock market towards delivery based transactions.

Large potential market for delivery and intra-day transactions.

Open interest of the people to enter in stock market for investing.

Attract the customers who are dissatisfied with other brokers & DPs.

An indirect opportunity generated by the market from its bullishness

THREATS:

Decreasing rates of brokerage in the market.

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Increasing competition against other brokers & DPs.

Poor marketing activities for making the company known among the customers.

A threat of loosing clients for any kind of weakness of the company.

Indirect threat from instable stock market, i.e., low/no profit of Religar security ltd

clients would lead them to go for other broker/DP.

4. THEORETICAL BACKGROUND

INTRODUCTION:

For instance, it’s been proved that a delayed monsoon in India will create the

problems of flooding in the European countries, effecting adversely economies of

both the regions.

The pulse of the market also depends upon timely exit and entry. For arriving at a

correct conclusion reasonable data is required to understand the mechanics of the

stock and the industry – vis-à-vis global and local in which the company operates.

While a practical long-term view will help reduce risks, marrying the stock on the

other hand may totally increase risks.

By going through the Industry the stock markets are the most volatile markets and are

difficult to understand as the weather. Though this does not mean that the markets

cannot be predicted but it only means that trends may change without warning, as

with weather.

The stock markets are characterized by almost all factors, again starting right from

weather and ending at the political environment. Effects of one market also causes a

spillover into the other and an external cause in one market can lead to the reaction in

another market. Reports, Financials the investor can arm himself with reasonable

information about the stocks, which are being tracked by the investor. However, for

consistent monitoring of stocks, it is imperative that the investor has limited exposure

to the stocks, which are being capable of being tracked by him – a too big a portfolio

will divert attention and ultimately harm investor interests.

In the present project an attempt is made to study the importance of fundamental

analysis for investors. For this purpose fundamental of CEMENT Sector is done.

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CAPITAL MARKET:

The term capital market indicates it is the market, which deals with capital. Capital

market is concern with the raising of money capital. It is the place where different

types of securities are bought and sold. Those who purchase or own security must be

assured of fast, fair, orderly and open system for purchases and sales at known prices,

which is provided by stock exchanges.

Organized Stock Exchange:

As per securities contract and Regulation Act, 1956

“Stock Exchange is an association, organization or Body of Individuals whether

incorporated or not and controlling the business in buying, selling and dealing in

securities.”

The stock Exchange serves as a trading center for stocks, shares and bond. The Stock

Exchange is considered to be most important constituent of capital market. They act

as ‘Weather cock’ of the economic climate of the country. The Stock Exchange serves

as a mirror of the investor’s confidence in the financial position of the economy. The

stock exchange is physical market place where the agent or broker of buyers and

sellers operate through auction process. Bombay and National stock Exchange of

India are important stock exchange in India among total 22 stock exchanges.

BSE – SENSEX:

For the premier Stock Exchange that pioneered the stock broking activity in India,

125 years of experience seem to be a proud milestone. A lot has changed since 1875

when 318 persons became members of what today is called "Bombay Stock Exchange

Limited" by paying a princely amount of Re1.

Since then, the stock market in the country has passed through both good and bad

periods. The journey in the 20th century has not been an easy one. Till the decade of

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eighties, there was no measure or scale that could precisely measure the various ups

and downs in the Indian stock market. Bombay Stock Exchange Limited (BSE) in

1986 came out with a Stock Index that subsequently became the barometer of the

Indian Stock Market.

BSE-SENSEX, first compiled in 1986 is a "Market Capitalization-Weighted" index

of 30 component stocks representing a sample of large, well established and

financially sounds companies. The base year of BSE-SENSEX is 1978-79. The index

is widely reported in both domestic and international markets through print as well as

electronic media. BSE-SENSEX is not only scientifically designed but also based on

globally accepted construction and review methodology. The "Market

Capitalization-Weighted" methodology is a widely followed index construction

methodology on which majority of global equity benchmarks are based.

The growth of equity markets in India has been phenomenal in the decade gone by.

Right from early nineties the stock market witnessed heightened activity in terms of

various bull and bear runs. More recently, the bourses in India witnessed a similar

frenzy in the 'TMT' sectors. The BSE-SENSEX captured all these happenings in the

most judicial manner. One can identify the booms and bust of the Indian equity

market through BSE-SENSEX.

The launch of BSE-SENSEX in 1986 was later followed up in January 1989 by

introduction of BSE National Index (Base: 1983-84 = 100). It comprised of 100

stocks listed at five major stock exchanges in India at Mumbai, Calcutta, Delhi,

Ahmedabad and Madras. The BSE National Index was renamed as BSE-100 Index

from October 14, 1996 and since then it is calculated taking into consideration only

the prices of stocks listed at BSE.

With a view to provide a better representation of the increased number of companies

listed, increased market capitalization and the new industry groups, the Exchange

constructed and launched on 27th May, 1994, two new index series viz., the 'BSE-

200' and the 'DOLLEX-200' indices. Since then, BSE has come a long way in attuning

itself to the varied needs of investors and market participants. In order to fulfill the

need of the market participants for still broader, segment-specific and sector-specific

indices, the Exchange has continuously been increasing the range of its indices. The

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launch of BSE-200 Index in 1994 was followed by the launch of BSE-500 Index and

5 sectoral indices in 1999. In 2001, BSE launched the BSE-PSU Index, DOLLEX-30

and the country's first free-float based index - the BSE TECk Index taking the family

of BSE Indices to 13.

The Exchange also disseminates the Price-Earnings Ratio, the Price to Book Value

Ratio and the Dividend Yield Percentage on day-to-day basis of all its major indices.

The values of all BSE indices (except the Dollar version of indices) are updated every

15 seconds during the market hours and displayed through the BOLT system, BSE

website and news wire agencies.

The “Index Committee” of the Exchange reviews all BSE-Indices periodically. The

committee frames the broad policy guidelines for the development and maintenance

of all BSE indices. The Index Cell of the Exchange carries out the day-to-day

maintenance of all indices and conducts research on development of new indices.

FUNDAMENTALS ABOUT SHAREHOLDERS AND STOCK MARKET

Investment v/s Speculation: -

Investment and speculation both are next-door neighbors. Motive is determining

factor distinguish between Investment and Speculation.

Investment: -

An investment is commitment of fund made in expectation of some positive rate of

return. Investments are distinguished from speculation by the time horizon of the

investor and often by risk return characteristics of investment. True investor is

interested in a good rate of return earned on a consistent basis for relatively longer

period of time. An investor generally prefers liquidity for his investment, safety of his

fund and a good return with minimum risk. An investment can be defined as the

commitment of funds to one or more assets that will be held over some future time

period. The field of investments, therefore, involves the study of the investment

process. Investment is concerned with the management of an investor’s wealth, which

is the sum of current income and the present value of all future income. Although the

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field of investments encompasses many aspects, as the title of this text suggests, it can

be thought of in terms of two primary functions, analysis and management.

Speculation: -

Speculator seeks opportunities promising very large returns rather quickly. Speculator

is less interested in consistent performance than investor and more interested in

abnormal or extremely high rate of return than moderate rate.

Speculation is increasing ingredient of the stock market all over world, to impart

liquidity and continuous trade and quotation. Presence of speculator in stock market

for securities, wider distribution of ownership and enhance capital market. In India 60

to 80% trading in stock market is of speculative nature.

Shares: -

The companies Act 1956 defines Shares as “a share in the capital of a company and

includes stock except where distinction between stock and share is expressed or

implied. A share is regarded as property, which can be bought and sold like any other

property. It also consists other rights given by Articles of Association of company.

Equity or ordinary shares: -

These are those shares, which do not enjoy any special rights in respect of payment of

dividend or repayment of capital. The return of capital to equity shareholders is not

guaranteed. Also when the company is wound up, capital of equity shareholders is

lastly paid, only after all other claims have been paid in full. That is why equity is also

called as “The Risk Bearing or Venture Capital.”

There are two sources of return on equity shares: -

1. Dividend : -When companies earn sufficient profit, then Board of Directors

declares for all shares.

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2. Capital Gain : -Which arises from an increase in the market price of shares,

which is generally associated with growth in per share earning.

Benefits of Investments in Equity shares: -

1. You can earn good rate of dividend or can make better profit on market

fluctuation.

2. Bonus issue: - These are given as free gift to existing shareholders either fully

or partly paid up out of accumulated profits.

3. Existing shareholders can get “Right issue” in case of further issue of capital

by company.

4. Equity shareholders have “Right to vote” in annual general meeting and other

rights like call meeting, winding up of the company.

5. Shareholders get free copy of Annual Report in which details of all business

conducted in last year is mentioned.

6. A share is “Transferable Property”. It can be transferred or transmitted by

shareholder to any other person.

7. Tax Exemption: -As per Income Tax Act, Dividend is not taxable in the

hands of shareholders similarly Long Term Capital Gain on shares is

exempted up to March 2007.

8. Liquidity: -Because of large market for share investor can convert his

investments into liquid money easily.

FUNDAMENTAL ANALYSIS: STEP- BY –STEP:-

Step -1: politico -economic analysis:

1. Politico-economic factors affect an industry and a country.

2. Stable political environment necessary for steady, balanced growth.

3. International events impact industries and companies.

4. Countries need foreign exchange reserves to meet its commitments, pay for

imports and service foreign debts.

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5. Low interest and taxation rates stimulate investment and industry.

6. Domestic savings can accelerate economic growth.

7. Development of a country is dependent on its infrastructure.

Economic Cycle:

1. Business or economic cycle has direct impact on industry and individual

companies. It affects investment decisions, employment, demand and

profitability.

2. Four stages of economic cycle are depression, recovery, boom, and recession.

3. Investors should determine the stage of the economic cycle before investing.

Investors should invest just before or during a boom.

Step-2: Industry Analysis:

1. Importance of industry can never be understated. State of industry will affect

company performance.

2. Investors should purchase in the first two stages and disinvest at the maturity

stage.

3. It is better to invest in evergreen industries. Results of cyclical industries are

volatile.

4. Investors should consider competition as the greater the competition

lower the profit.

5. It is safer to invest in industries not subject to government controls.

Export oriented industries currently favored by the government

Step-3: Company Analysis:

1. Final stage of fundamental analysis is company analysis.

2. Areas to be examined are the company, the results, ratios and cash flow.

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Management:

1. Management is the single most important factor to consider in a company.

Upon its quality rests the future of the company.

2. In India two main types of the management - family and professional.

3. Investors must check on integrity of managers, proven competence, how high

is it rated by its peers, how did it performs at times of adversity, the

management’s depth of knowledge, its innovativeness and professionalism.

The Company:

1. It is important to check how company is perceived by its competition and

weather it is the market leader in its products or in its segments.

2. The investor must study the policy a company follows and its plans for

growth.

3. Labor relations are important.

Annual Report:

1. The annual report is the primary and most important source of information on

a company.

2. The investor must read between and beyond the lines of an annual report

to determine the state of the company being considered.

3. The annual report is broken into the director’s report, the auditor’s.

the financial statements and the schedules.

The Directors Report:

1. This report gives investors insights into the company.

2. It enunciates the opinions of the directors on the company, the industry and the

political situation.

3. It explains the performance of the company, its plans for diversification,

modernization and expansion. It discusses the profits earned and states the

dividend proposed.

4. The report, if read properly, can give the investor a good grasp of the working

of the company.

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Auditors Report:

1. The auditor represents shareholders and reports to them on the stewardship of

the directors and whether the accounts presented do present a true and fair

view of the company.

2. Auditors will comment on any changes made in accounting principles and the

effect of the changes on the results.

3. Auditors will also comment on any action or method of accounting they do not

agree with.

4. Investor must read the auditor report in detail and in depth as the results can

materially change if adjustments are made based on the notes or the comments

in the auditor’s report.

Financial Statements:

1. Financial statements of a company in an annual report consist of the balance

sheet and profit and loss account. These detail the financial health and the

performance of the company.

2. The balance sheet details all the assets and liabilities a company has on a

particular date. Assets are those that the company owns such as fixed assets

(buildings, cars etc), investments and current assets (stock, debtors, and cash).

Liabilities are those that the company owes (trade creditors, loans etc) and the

shareholders investment in the company (share capital and reserves).

3. The profit and loss account details numerically the activities the company had

undertaken during the accounting period and the result of these activities

(profit or loss).

4. Contingent liabilities are also detailed. These are liabilities that may arise on

the happening of event that may never arise (guarantees, bill discounted). The

liability crystallizes on the happening of the event.

5. The profit and loss account also details the dividend given (interim) and

proposed.

Schedules and Notes to the Accounts:

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1. Schedules and notes to the accounts are found after the financial statements in

an annual report

2. The schedules detail pertinent information about the items of the balance sheet

and profit and loss account.

3. The notes are even more important as they give very important as they give

very important information such as the accounting policies that the company

has, followed the contingent liabilities of the companies and the like.

4. It is imperative that the schedules notes to the accounts be read for a clearer

understanding of the company’s financial condition.

Ratios:

1. No investment should be made without analyzing the financial statements of

the company and comparing the company’s results with that of earlier years.

2. Ratios express mathematically the relationship between the performance

figures and / or assets / liabilities in a form that can be easily understood and

interpreted.

3. No single ratio tells the complete story.

4. Ratios can be broken into four broad categories: -

a) Profit and loss ratios

b) Balance sheet ratios

c) Balance sheet and profit and loss ratios, and

d) Financial statements to market ratios.

5. Ratios may also be grouped into categories that will enable investors

To easily determine the company’s strengths and weaknesses.

Cash Flow:

1. Cash flow statements will enable an investor to determine how are the

company’s cash earnings, how the company is being financed and how it uses

the finance received.

2. The statement begins with the cash in hand at the beginning of the period.

It then details the sources and the amount of the funds received and the

manner they were applied ending with the final cash in hand.

23

5. RESEARCH METHODOLOGY

Research is often described as an active, diligent and systematic process of inquiry

aimed at discovering, interpreting and revising facts. This intellectual investigation

produces a greater understanding of events, behaviors or theories and makes practical

applications through laws and theories. The term research is also used to describe a

collection of information about a particular subject, and is usually associated with

science and scientific method.

BASIC RESEARCH:

Basic research is also called as fundamental or pure research. Its primary objective is

the advancement of knowledge and the theoretical understanding of the relations

among the variables. It is exploratory and often driven by researcher s curiosity or

interest. It is conducted without any practical end in mind. Basic research often lays

down the foundation for further applied research.

APPLIED RESEARCH:

Applied research is done to solve specific, practical questions. Its primary objective is

not to gain knowledge for its own sake. It is usually descriptive in nature. It is almost

always done on the basis of basic research.

The present study is the outcome of systematic procedures adopted by the researcher,

which includes primary data collection as well as secondary data collection. They are

explained below:

1. Primary data collection:

24

Primary data is originally gathered specifically on project hand. One can obtain

information from dealers, salesmen, etc. It offers much greater accuracy and

reliability.

In this study, the facts and figures are raw material with which researcher works.

Thus, in primary data collection researcher come across many methods as follows:

Observation method

Interview method

2. Secondary Data Collection: Secondary data is the data already collected by someone else. This data is not

especially collected to solve present or specific problem. The information is relevant

and can be used for our purpose.

After doing the data collection in primary method, the researcher did the collection

through the secondary data. In this there are several types such as:

General library

Trade-Books

Publisher survey of market

Internet etc.

25

6. DATA ANALYSIS

CEMENT INDUSTRY-INDIA:

            Cement is a key infrastructure industry. It has been decontrolled from price

and distribution on 1st March 1989 and deli censed on 25th July 1991.   However, the

performance of the industry and prices of cement are monitored regularly.   The

constraints faced by the industry are reviewed in the Infrastructure Coordination

Committee meetings held in the Cabinet Secretariat under the Chairmanship of

Secretary (Coordination).   The Cabinet Committee on Infrastructure also reviews its

performance.

OVERVIEW:

1. Indian cement industry dates back to 1914 - first unit was set-up at Porbandar

with a capacity of 1000 tones

2. Currently India is ranked second in the world with an installed capacity of

114.2 million tones. Industry estimated at around Rs. 18,000 crores (US $

4185 mn)

3. Current per capita consumption - 85 kgs. As against world standard of 256 kgs

Cement grade limestone in the country reported to be 89 Bt. A large

proportion however is unexploitable.

26

4. 55 - 60% of the cost of production are government controlled

5. Cement sales primarily through a distribution channel. Bulk sales account for

< 1% of the total cement produced.

6. Ready mix concrete a relatively nascent market in India

CEMENT INDUSTRY STRUCTURE

Installed capacity 114.2 mn tones per annum (mntpa) Production around 87.8 mn tones 

27

Major cement plants

 Companies: 59

 Plants: 116

 Typical installed capacity 

   Per plant: Above 1.5 mntpa

 Total installed capacity: 105

mntpa

 Production 98-99: 81.6 mntpa

 Excise: Rs. 350/ tones

 

 All India reach through multiple

plants

 Export to Bangladesh, Nepal, Sri

Lanka, UAE and

   Mauritius

 Strong marketing network, tie-ups

with customers, 

Contractors

 Widespread distribution network. 

 Sales primarily through the dealer

channel

Mini cement plants

 Nearly 300 plants

 Located in Gujarat, Rajasthan, MP

 Typical capacity < 200 tpd

 Installed capacity around 9 mn.

Tones

 Production around: 6.2 mn tones 

 Excise: Rs. 200/ tones

 

 Mini plants were meant to tap

scattered 

limestone reserves.

However most set up in AP

 Most use vertical kiln technology

 Production cost / tones – Rs. 1,000

to 1,400 

 Presence of these plants limited to

the state

 Infrastructures facilities not the

best

USAGE:

Private housing sector is the major consumer of cement (65%) followed by the

government infrastructure sector at 15% down from 20%) < 1% of the cement

produced is sold in bulk form unlike US & Japan

28

CAPACITY AND PRODUCTION

1. Excess capacity exists, though some units are sick

2. 99 – 2000 production expected to reach 95 mn tunes]

3. Cement manufactured through the wet, semi-dry or dry process. 

4. Dry process accounts for 90% of  the installed capacity 

5. Wet process popular in the past – better control over mixing of raw material

6. Dry process replacing wet process as it is space saving energy efficient and

economical

The cement industry comprises of 125 large cement plants with an installed capacity

of 148.28 million tones and more than 300 mini cement plants with an estimated

capacity of 11.10 million tones per annum.   The Cement Corporation of India, which

is a Central Public Sector Undertaking, has 10 units. There are 10 large cement plants

owned by various State Governments. The total installed Capacity in the country as a

whole is 159.38 million tones. Actual cement production in 2002-03 was 116.35

million tones as against a production of 106.90 million tones in 2001-02, registering a

growth rate of 8.84%. Keeping in view the trend of growth of the industry in previous

years, a production target of 126 million tones has been fixed for the year 2003-04.  

During the period April-June 2003, a production (provisional) was 31.30 million

tones. The industry has achieved a growth rate of 4.86 per cent during this period.

And in 2005-06 production was 135 mn tones.

PRICES:

29

Average Maximum Retail Price (Rs.Per 50 Kgs)

Delhi Calcutta Chennai BangaloreAug-06 137 146 175 170Oct-06 139 139 175 160Jan-07 145 150 175 170Jun-07 145 155 180 175Aug-07 150 165 185 180Sep-07 160 170 185 185

Price fluctuations high 

Essentially determined by demand 

Prices also vary with grades

PLAYERS:

Key Player in Market(Percentagewise)

Gujarat Ambuja, 7.60%

ACC, 11.80%

Shree Cem., 3.30%

India Cem., 6.90%

Ultra Tech Cem., 11.30%

Grasim Cem., 9.60%

Others, 49.50%

Gujarat Ambuja ACC Shree Cem. India Cem.

Ultra Tech Cem. Grasim Cem. Others

Over 370 companies in the organized sector

However, industry dominated by 20 companies who account for over 70%

of the market

Individually no company accounts for over 12% of the market

INDUSTRY INPUTS:

Highly capital intensive industry

Nearly 55-60% of the inputs controlled by the government

Facing problems due to power shortage

Coal availability and quality affecting production

Mini plants realization of revenue lower than large plants, survival difficult

30

KEY POINTS:

Supply – There is a regional oversupply situation in the industry due to past

capacity additions by major players in the industry. The situation is likely to

improve, as there is no major Greenfield expansion in sight.

Demand – Housing sector acts as the principal growth driver for cement.

However, in recent times, industrial and infrastructure sector have also

emerged as demand drivers.

Barriers to Entry – High capital costs and long gestation periods. Access to

limestone reserves (principal raw material for the manufacture of cement)

also acts as a significant entry barrier.

Bargaining Power of Suppliers – Licensing of coal and limestone reserves,

supply of power from the state grid and availability of railways for transport

are all controlled by a single entity, which is the government.

Bargaining Power of Customers – Cement is a commodity business and

sales volumes mostly depend upon the distribution reach of the company.

However, things are changing and few brands have started commanding a

premium on account of better quality perception.

Competition – Due to large number of players in the industry and very little

brand differentiation to speak of, the competition is intense with players

resorting to frequent price cuts in the past in order to gain market share.

However, this scenario has been absent since the last few quarters as the

demand-supply equation continues to improve.

FINANCIAL YEAR 06:

After a relatively dismal FY04 wherein the cement industry’s performance was

adversely affected owing to prolonged monsoons, FY05 witnessed the recovery in

demand and production, which grew by about 6.7% and 6.4% YoY respectively.

Exports during the fiscal were higher by 20% YoY. It must be noted that owing to its

locational advantage, India has Significant potential to cater to the cement

requirements of the Middle East and the South East Asian nations.

31

Although demand grew by only 6.4% YoY, average industry cement realisations were

higher by about 10% YoY owing to the fact that the demand-supply situation is

slowly improving. Had the demand grown at a faster rate, the improvement in price

realization would have been higher. In effect, we believe that FY05 was a positive

year for the industry.

While cement prices, on a YoY basis, were higher by around 10% for the

industry, the rise in prices was higher in the western and the northern region

as compared to the southern market. The pricing scenario is relatively

unfavorable in the southern market given the fact that this region has an

excess capacity of close to 11 MT, the highest among all the regions in the

country.

Although the government has reduced the import duty on cement, imports

do not pose a threat since prices of cement in India are lower than those

prevailing in the international markets. Besides, the Indian ports are not well

equipped for cement imports, which is a major deterrent. The government

continued to provide a fillip to the infrastructure sector in the budget. While

the budget emphasized a great deal on the completion of various irrigation

Projects, it raised the outlay for the national highway development

programmed.

32

PROSPECTS:

The industry is likely to grow at around 8% in the medium to long term.

Government’s initiatives on the infrastructure and housing sector fronts are

likely to be the main drivers. With no major capacity expansion in the

pipeline, the demand supply equation is expected to continue to improve and

this will help in the improvement of prices. However, since the level of

demand supply mismatch is higher in the southern region, it will take longer

to achieve demand supply parity. We expect cement price to increase by

around 5% to 6% per annum in the medium-term owing to fundamental

reasons.

The acquisition of Ultra Tech cement division by Grasim has changed the

landscape of the entire cement industry and in one fell swoop has catapulted

Grasim to the leadership position. This is a healthy sign for the industry, as

this would result in consolidation and would give

Significant pricing power to the bigger players. With consolidation taking

place at the lower end also, the unviable units will be forced to shut down

thus benefiting the long-term interests of the industry.

Despite these positives, the possibility of interest rates heading north and the

consequent impact on housing demand remains to be seen. The importance

of the housing sector in cement demand can be gauged from the fact that it

consumes almost 75%-80% of the country’s cement. If this support wanes, it

could take much longer for demand-supply balance to reach parity. Also, the

hike in prices of coal and petroleum products could impact margins

ULTRATECH CEMENT LIMITED:

BSE: 532538 NSE: ULTRACEMCO

Market Price Change [28 Apr 06 to 14 Sep 07]

Bombay Stock Exchange LimitedOpen(Rs.) High(Rs.) Low(Rs.) Close(Rs.) Vol.(in Lacs)

28-Apr-06 838 855 752.3 776.45 2333.5729-May-06 804 817.9 786 805.75 1221.613

33

30-Jun-06 701 749.45 701 747.7 1174.10531-Jul-06 745 746.4 710 722.5 326.2646

18-Aug-06 777.6 781.4 762.05 776.65 252.925322-Sep-06 839 872 831.15 867.6 538.276110-Oct-06 871.05 894 871.05 887.5 437.5033

27-Nov-06 880 894.65 875 889.85 287.60120-Dec-06 1058.7 1070 1005.25 1012.3 344.922710-Jan-07 1098.9 1098.9 1023.55 1035.25 559.039428-Feb-07 862.15 923 805 888.05 1139.36320-Mar-07 790 811.45 782.1 798.05 964.895518-Apr-07 810 823 789.9 795.05 398.81199-May-07 816 825 806.1 819.7 157.320429-Jun-07 887.2 9916.9 880 900.4 1308.23512-Jul-07 909 915 881.5 902.9 436.1539

21-Aug-07 870 876.95 846 854.85 1437.02414-Sep-07 1009 1014.9 967.5 974.55 500.1613

Income Statement: Rs. In Cr.As On (Months) 31-Mar-05 31-Mar-06 31-Mar-07Profit/Loss A/c (12 Mths) (12Mths) (12Mths)Net Sales 2681.06 3227.7 4910.83Other Income 22.25 33.13 61.46Total Income 2703.3 3260.83 4972.29Expenditure -2331.4 -2711.34 -3493.02Operating Profit 371.9 549.49 1479.27Interest -106.88 -89.43 -86.83Gross Profit 265.02 460.06 1392.44Depreciation -221.78 -209.51 -226.25Profit Before Tax 43.24 250.55 1166.19Tax -36.45 -85.09 -383.91Profit After Tax 2.85 165.46 782.28Net Profit 2.85 165.46 782.28Equity Capital 1244 1244 1244.9Reserves 942.73 1108.19 1639.29

Balance Sheet:

As On 31/3/05 31/3/06 31/3/07Assets Rs. Cr. % BT Rs. Cr. % BT Rs. Cr. % BTGross Block 4304.29 127.36 4605.38 136.85 4784.7 107.08Net Block 2548.9 75.42 2537.21 75.39 2517.28 56.33Capital WIP 48.18 1.43 141.03 4.19 576.95 12.91Investment 184.79 5.47 172.39 5.12 483.45 10.82Inventories 283.71 8.39 379.57 11.28 433.58 9.7Receivables 0 0 0 0 0 0

34

Other Current Assets 314.1 9.29 135.13 4.02 457.13 10.23Bal. Sheet Tot.(BT) 3379.68 100 3365.33 100 4468.39 100Liabilities Rs. Cr. % BT Rs. Cr. % BT Rs. Cr. % BTEquity Share Capital 1244 36.81 1244 36.97 1244.9 27.86Reserves 942.73 27.89 913.78 27.15 1639.29 36.69Total Debt 171.95 5.09 172.55 5.13 183.5 4.11Creditors 224.67 6.65 318.13 9.45 463.99 10.38Other Current Liab./Prov. 796.33 23.56 716.87 21.3 936.71 20.96Bal. Sheet Tot.(BT) 3379.68 100 3365.33 100 4468.39 100

Ratio Analysis: As On 31-Mar-05 31-Mar-06 31-Mar-07Gross Profit 9.88 14.25 28.35Operating Profit 13.87 17.02 30.12Return On Capital Employed 2.74 11.98 34.47Return On Net Worth 0.27 21.83 55.84Debtor Turnover Ratio 17.5 21.98 30.81Fixed Assets Turnover Ratio 1.05 1.27 1.95Inventory Turnover Ratio 9.45 8.5 11.32Total Assets Turnover Ratio 1.16 1.49 1.88Current Ratio 0.39 0.19 0.49Debt Equity Ratio 1.48 1.42 1.08Interest Coverage Ratio 0.69 4.19 14.43EPS Ratio 0.28 13.3 62.83

Share Statistics:

As On 31-Mar-05 31-Mar-06 31-Mar-07EPS (Rs) 0.28 13.30 62.83DPS (Rs) 9.33 21.79 49.79Book Value (Rs) 85.78 83.45 141.68

ULTRA TECH CEMENT LIMITED ANALYSIS:

35

2681.06

2.85

3227.7

165.46

4910.83

782.28

0100020003000400050006000

2005 2006 2007

Year

Sales Volume & Net Profit(Rs. in Cr.)

Net Sales Net Profi

Sales have increased in the year of 2005-06 by 20.39 % and 52.15% in 2006-07.

Continues increase in sales last three years.

Net Profits have increased in the year of 2005 – 06 by 5705.61% and 372.79% in

2006 – 07. Continues increase in net profit last two years.

Ratio Analysis

0%

20%

40%

60%

80%

100%

Per

cen

tage

2005 2006 2007

2007 34.47 1.95 0.49 1.08 62.83

2006 11.98 1.27 0.19 1.48 13.3

2005 2.74 1.05 0.39 1.48 0.28

ROCE Fixed Current Debt EPS

36

Earning Per Share (EPS) – It was Rs.0.28 in 2005-04, Rs.13.30 in 2005-06

and Rs.62.83 in 2006-07. This shows increase in the value of company as the

value has of the shares have increased.

Debt ratio is reducing i.e. company may be aiming in the policy of zero debt.

Current ratio has increased in the year of 2006-07.

Fixed Assets Turnover Ratio increased in the year of 2004 – 05 by 1.05%,

In 2005 – 06 it was 1.27% and last year in 2006 – 07 was 1.95%

INDIA CEMENT LIMITED:

BSE: 530005 NSE: INDIACEM

Market Price Change [28 Apr 06 to 14 Sep 07]

Bombay Stock Exchange LimitedOpen(Rs.) High(Rs.) Low(Rs.) Close(Rs.) Vol.(in Lacs)

28-Apr-06 182 224.25 182 221.95 12152.629-May-06 210.9 225.4 205.65 220.8 24501.7331-Jun-06 150 157.6 150 156.8 13703.1631-Jul-06 190.5 193.5 183.55 184.05 12644.9818-Aug-06 194 196.5 191.85 193.4 8103.59122-Sep-06 215.6 224.9 215.6 222.9 5853.41810-Oct-06 225 228.4 224.1 225.05 7393.1727-Nov-06 230.5 235.8 228 234.65 7546.19920-Dec-06 222 225.8 214 218.35 10261.8210-Jan-07 227 232.4 225 226.2 2426.707

37

28-Feb-07 189.7 189.7 154.05 178.7 15401.3220-Mar-07 164 173.8 163 172.85 12145.3318-Apr-07 170.1 174.55 170.1 171.45 4905.7169-May-07 182 186.1 179.5 184.9 5587.87529-Jun-07 208 212.9 205.05 208.2 9200.15912-Jul-07 222 225 219.1 220.25 2825.48221-Aug-07 215 218 206.05 207.15 3074.17914-Sep-07 273.55 280 270.3 275.45 10677.16

Income StatementAs On (Months) 31-Mar-05 31-Mar-06 31-Mar-07

Profit/Loss A/c (12 Mths) (12 Mths) (12 Mths)Gross Sales 1385.39 1829.44 2372.92Excise Duty -223.25 -287.69 -317.86Net Sales 1162.14 1541.75 2055.06Other Income 16.91 7.25 10.26Total Income 1179.05 1549 2065.32Expenditure -1025.6 -1280.79 -1393.39Operating Profit 153.45 268.21 671.93Interest -133.5 -148.93 -143.03Gross Profit 19.95 119.28 528.9Depreciation -78.77 -78.87 -77.84Profit Before Tax -58.82 40.41 451.06Tax 0 -4.67 -1.78Profit After Tax -58.82 35.74 449.28Extra Ordinary Items 63.4 9.57 4.02Net Profit 4.58 45.31 453.3Equity Capital 138.59 190.77 220.37Reserve 177.53 628.52 877.39

Balance Sheet:

As On 31/3/05 31/3/06 31/3/07Assets Rs. Cr. % BT Rs. Cr. % BT Rs. Cr. % BTGross Block 2985.27 90.6 3002.74 69.16 3856.04 80.58Net Block 2201.85 66.83 2083.99 48 2795.83 58.43Capital WIP 2.99 0.09 30.97 0.71 142.75 2.98Investments 34.83 1.06 34.83 0.8 55.07 1.15Inventories 179.9 5.46 192.97 4.44 228.07 4.77Receivables 487.21 14.79 1500.77 34.57 824.58 17.23Other Current Assets 387.9 11.77 498.03 11.47 738.89 15.44Bal. Sheet Tot. (BT) 3294.68 4341.56 100 4785.19Liabilities Rs. Cr. % BT Rs. Cr. % BT Rs. Cr. % BTEquity Share Capital 1385.9 42.06 1907.7 43.94 2203.7 46.05Reserves 1419.55 43.09 1789.76 41.22 1948.16 40.71Total Debt 183.38 5.57 240.58 5.54 260.21 5.44Other Current 305.85 9.28 403.52 9..29 373.12 7.8

38

LiabilitiesBal. Sheet Tot. (BT) 3294.68 100 4341.56 100 4785.19 100

Ratio Analysis:

As On 31-Mar-05 31-Mar-06 31-Mar-07Gross Profit 1.72 7.74 25.74Operating Profit 13.2 17.4 32.7Return On Capital Employed 3.23 8.34 18.41Return On Net Worth 12.55 4.1 36.59Debtors Turnover Ratio 8.43 8.63 10.43Fixed Assets Turnover Ratio 0.53 0.74 0.74Inventory Turnover Ratio 6.46 7.99 9.01Total Assets Turnover Ratio 0.42 0.57 0.7Current Ratio 1.27 1.23 1.98Debt Equity Ratio 5.39 2.81 1.55Interest Coverage Ratio 0.53 1.27 4.28EPS Ratio 0.33 2.37 19.68

Share Statistics:

As On 31-Mar-05 31-Mar-06 31-Mar-07EPS (Rs) 0.33 2.37 19.68DPS (Rs) 0 0 26.04Book Value (Rs) 24.39 45.13 62.92

INDIA CEMENT LIMITED ANALYSIS:

39

1162.14

4.58

1541.75

45.31

2055.06

453.3

0500

10001500200025003000

2005 2006 2007

Year

Sales Volume & Net Profit(Rs. in Cr.)

Net Sales Net Profit

Sales have increased in the year of 2005-06 by 32.66 % and 32.29 % in the

year of 2006-07. Continues increase in sales last three years

Net Profits have increased in the year of 2005-06 by 889.30 % and 900.44 %

in the year of 2005-06.

40

Ratio Analysis

0%

20%

40%

60%

80%

100%P

erce

nta

ge

2005 2006 2007

2007 18.41 0.74 1.98 1.55 19.68

2006 8.34 0.74 1.23 2.81 2.37

2005 3.23 0.53 1.27 5.39 0.33

ROCEFixed Assets

Current Ratio

Debt Equity

EPS

Earning Per Share (EPS) – It was Rs. 0.33 in 2004-05, Rs.2.37 in 2005-06 and

Rs. 19.68 in 2006-07 This shows increase in the value of company as the

value has of the shares have increased.

Debt ratio is reducing i.e. company may be aiming in the policy of zero debt

Current ratio has decreased in the year of 2005-06 as compared to the previous

year(2004-05) and next year (2007-06)

Fixed Assets Turnover Ratio increased in the year of 2004 – 05 by 0.53%,

In 2005 – 06 it was 0.74% and last year in 2006 – 07 was 0.74%

41

SHREE CEMENT LIMITED:

BSE: 500387 NSE: SHREECEM

Market Price Change [28 Apr 06 to 14 Sep 07]

Bombay Stock Exchange LimitedOpen(Rs.) High(Rs.) Low(Rs.) Close(Rs.) Vol.(in Lacs)

28-Apr-06 1043 1100 1042.3 1074.3 848.225499-May-06 1120 1150.2 1100 1155.2 739.315023530-Jun-06 770 782.35 770 777 152.14589531-Jul-06 924 973.2 920 934.35 458.5410315

18-Aug-06 972.6 980 930 946.5 96.330390522-Sep-06 1035 1049.9 1015 1032.55 155.33633910-Oct-06 1168.95 1186 1086 1097.45 1998.788831

27-Nov-06 1349.5 1349.5 1311.35 1322.3 106.900393520-Dec-06 1392.8 1399.9 1332 1358.85 194.144335510-Jan-07 1400 1489.9 1385.2 1461.4 200.239230528-Feb-07 1151.35 1210 1104.3 1177.4 1385.9984520-Mar-07 990 1037 921 1023.85 282.714472618-Apr-07 998.8 1015 985.35 1011.55 232.91783159-May-07 1030 1046.5 1015 1041.1 44.676276529-Jun-07 1315 1315 1260.15 1279.25 123.18428212-Jul-07 1287 1348.9 1285 1332.9 105.480628

21-Aug-07 1215 1225 1059.45 1125.4 230.426719514-Sep-07 1371 1379 1325 1338.85 52.706928

Income Statement:

As On (Months) 31-Mar-05 31-Mar-06 31-Mar-07Profit/Loss A/c (12 Mths) (12 Mths) (12 Mths)Net Sales 582.07 667.69 1367.97Other Income 4.09 3.47 21.16Total Income 671.16 671.16 1389.14Expenditure -412.24 -445.98 -756.26Operating Profit 173.93 225.18 632.87Interest -19.83 -12.83 -10.37Gross Profit 155.09 212.35 622.5Depreciation -122.96 -163.97 -433.05Profit Before Tax 31.13 48.38 189.45Tax -2.07 -8.74 -12.44Profit After Tax 29.07 39.64 177Extra Ordinary items 0 -21.24 0Net Profit 29.07 18.4 177Equity Capital 34.84 34.84 34.84Reserves 254.65 261.46 419.71

42

Balance Sheet:

As On 31/3/05 31/3/06 31/3/07Assets Rs. Cr. % BT Rs. Cr. % BT Rs. Cr. % BTGross Block 924.04 127.7 1238.49 138.96 1657.34 137.55Net Block 419.72 58 575.31 64.55 548.18 45.5Capital WIP 152.16 21.03 97.75 10.97 328.55 27.27Investments 0 0 0 0 50 4.15Inventories 72.59 10.03 112.94 12.67 156.07 12.95Receivable 23.95 3.31 18.26 2.05 15.2 1.26Other Current Assets 55.16 7.62 86.98 9.76 106.86 8.87Bal. Sheet Tot.(BT) 723.58 100 891.24 100 1204.86 100Liabilities Rs. Cr. % BT Rs. Cr. % BT Rs. Cr. % BTEquity Share Capital 34.84 4.81 34.84 3.91 34.84 2.89Reserves 254.65 35.19 261.46 29.34 468.94 38.92Total Debt 297.12 41.06 372.73 41.82 226.27 18.78Creditors 36.51 5.04 100.27 11.25 210.8 17.5Other Current Assets/prov. 100.46 13.88 121.94 13.68 264.01 21.91Bal. Sheet Tot.(BT) 723.58 100 891.24 100 1204.86 100

Ratio Analysis:

As On 31-Mar-05 31-Mar-06 31-Mar-07Gross Profit 26.64 31.80 45.50Operating Profit 29.88 33.72 46.26Return On Capital Employed 13.06 9.71 42.48Return On Net Worth 18.52 9.65 19.77Debtors Turnover Ratio 26.94 39.06 72.45Fixed Assets Turnover Ratio 1.39 1.16 2.49Inventory Turnover Ratio 8.02 5.91 8.76Total Assets Turnover Ratio 1.08 1.2 1.49Current Ratio 0.55 0.71 0.4Debt Equity Ratio 1.2 1.14 1.74Interest Coverage Ratio 2.46 2.92 16.66EPS Ratio 8.34 5.28 50.81

Share Statistics:

As On 31-Mar-05 31-Mar-06 31-Mar-07EPS (Rs) 8.34 5.28 50.81DPS (Rs) 13.93 17.42 20.9Book Value (Rs) 83.09 85.05 130.47

43

SHREE CEMENT LIMITED ANALYSIS:

582.07

29.07

667.69

18.41367.97

177

0

500

1000

1500

2000

2005 2006 2007

Year

Sales Volume & Net Profit(Rs. in Cr.)

Net Sales Net Profit

Sales have increased in the year of 2005-06 by 14.71 % and 104.88 % in the

year of 2006-07. Continues increase in sales last three years

Net Profits have decreased in the year of 2005-06 by -36.70 % and increase in

the year of 2006-07 by 861.96%.

44

Ratio Analysis

0%

20%

40%

60%

80%

100%P

erce

nta

ge

2005 2006 2007

2007 42.48 2.49 0.4 1.74 50.81

2006 9.17 1.16 0.71 1.14 5.28

2005 13.06 1.39 0.55 1.2 8.34

ROCEFixed Assets

Current Ratio

Debt Equity

EPS

Earning Per Share (EPS) – It was Rs. 8.34 in 2004-05, Rs.5.28 in 2005-06 and

Rs. 50.81 in 2006-07. This shows increase in the value of company as the

value has of the shares have increased.

Debt ratio is reducing i.e. company may be aiming in the policy of zero debt

Current ratio has increased continues two year in 2004-05 and 2005-06

Than next year in 2006-07 has decrease.

Fixed Assets Turnover Ratio increased in the year of 2004 – 05 by 1.39% next

year was decrease in 2005 – 06 it was 1.16% and last year in 2006 – 07 was

increase 2.49%.

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7. FINDING & RECOMMENDATIONS

Based on the year of 2006 - 07

Company Name

Sales Change in%

Profit Change in %

Current Ratio EPS

Change in Share Price%

Ultra Tech Cement Ltd. 52.15 372.79 0.49 62.83 25.51

India Cement Ltd. 32.29 900.44 1.98 19.68 24.1

Shree Cement Ltd. 104.88 861.96 0.4 50.81 24.63

As from the above chart if we compare ultratech cement, India cement and shree

cement, it can be concluded that following should be priority of the company of

investor due to its various particulars discussed/shown above:

ULTRA TECH CEMENT LTD.

SHREE CEMENT LIMITED

INDIA CEMENT LIMITED

Investors give their first preferance to Ultra Tech cement limited and shree cements

due their high EPS, Sales % and change in share price in% comparisons with India

cements. The companies of Ultra Tech cement and shree cement are fundamentally

strong so they are good for long term investment but India cements is good for short

term investments.

The financial performance of the selected cement companies for the 3 years

reflected a good growth in sales and though all the market segments

sustained or bettered their performance over the previous years. Cost

overrun in a few long term projects impacted the profitability. However, the

company’s track record has always been oriented towards profitable growth

and with the strong fundamentals; the company is well placed to grow

continuously on major fronts.

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On completion of the company analysis, I feel that Ultra Tech cement Ltd. Is

fundamentally a very strong company. I recommend Marwadi Shares &

Finance Ltd. and all its clientele to invest in this company’s shares, exit in a

medium term and derive maximum value from it.

While carrying out the analysis, I felt that the Earning Per Share and P/E

Ratio of the company is given too much weight age of the company. What is

value of the company in market? Huge market capital etc…

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8. CONCLUSION

Fundamental analysis holds that no investment decision should be without processing

and analyzing all relevant information. It strength lies in the fact the information

analyzed is real as opposed to hunches or assumptions. On the other hand, while

fundamental analysis deals with tangible fact, it does not tend to ignore the fact that

human beings do not always act rationally. Market prices do sometimes deviate from

fundamentals. Prices rise or fall due to insider trading, speculation, rumors, and a host

of other factors.

This is true to an extent but strength of fundamental analysis is that an investment

decision is arrived at after analyzing information and making logical assumptions and

deductions. Furthermore, fundamental analysis ensures that one does not recklessly

buy or sell shares- especially buy.

Study of fundamental analysis of cement sector companies, there income statements,

balance sheet and ratios. I conclude that Ultra Tech cement limited is fundamentally

very strong because of it’s paid high dividend, got more profit last three years and

sales increase continues last three years. So that It’s fundamentally strong in

comparison with Shree cement and India Cement. Hence fundamental analysis

supports and encourages safe investment.

Indian stock market is volatility (sensitive) we here compare with cement sector. Use

lot of chemical at time manufacture of cement one of them chemical is methanol.

When methanol price is increase so direct affect cements stock price, cement price

increase so it’s affect we can show in infrastructure stock price.

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8. BIBLIOGRAPHY

WEBSITES: -

o www.bseindia.com o www.nseindia.com o www.moneycontrol.com o www.myiris.com o www.finance.sify.com o www.finance.yahoo.com o www.marwadionline.com

BOOKS, MAGZINES AND NEWSPAPERS: -

Fundamental analysis for investors – Palat

Security analysis and portfolio management-Prasanna Chandra.

Economic times

Business standard

Indian capital market

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