An Industry Oriented Dissertation Project On

“FUNDAMENTAL & RATIO ANALYSIS OF

CEMENT STOCK”

Submitted for the partial fulfillment of the requirement of

the degree of

MASTER OF MANAGEMENT STUDIES OF

UNIVERSITY OF MUMBAI

Submitted by

VARAD SUSHMA GURUNATH MHATRE

Roll No. 52

Specialization: Finance

Submitted To

SASMIRA’S INSTITUTE OF MANAGEMENT

STUDIES AND RESEARCH, SASMIRA MARG,
WORLI, MUMBAI.

July 2019
 DECLARATION BY THE CANDIDATE

I hereby certify that the work which is being presented in this Industry
Oriented Dissertation Project entitled- “Fundamental & ratio analysis of
cement stock” in partial fulfillment of the requirement for the award of the
Degree of Master of Management Studies, University of Mumbai and
submitted to the Sasmira’s Institute of Management Studies and Research,
Worli, Mumbai, is an authentic record of my own work carried out during a
period from May, 2019 till July, 2019 under the guidance of Dr. Rupali
More.

The matter presented in this project report has not been submitted by me for
the award of any other degree of this or any other Institute.

Wherever references have been made to intellectual properties of any

individual / Institution / Government / Private / Public Bodies / Universities,
research paper, text books, reference books, research monographs, archives of
newspapers, corporate, individuals, business / Government and any other
source of intellectual properties viz., speeches, quotations, conference
proceedings, extracts from the website, working paper, seminal work etc. have
been clearly indicated, duly acknowledged and included in the Bibliography.

Name of the Student: Varad Gurunath Mhatre

Signature of the Student:

This is to certify that the above statement made by the candidates is correct to
the best of our knowledge.

Signature of Guide:

Name of Guide: Dr. Rupali More

i
ii
 CERTIFICATE BY THE GUIDE

This is to certify that Mr. Varad Sushma Gurunath Mhatre of the two year
full- time Master's Degree Programmer in Management Studies (MMS),
(Finance), Roll No. 52 has carried out the work on the Industry Oriented
Dissertation Project titled “Fundamental & Ratio Analysis of Cement
stocks” under my guidance in partial fulfillment of requirement for the
completion of M.M.S as prescribed by the University of Mumbai.

This Industry Oriented Dissertation Project Report is the record of authentic

work carried out by her during the period from May 2019 to July 2019.

Place: Mumbai

Date:

Signature of Guide:

Name of Guide: Dr. Rupali More

iii
 ACKNOWLEDGEMENT

This project has been a great learning experience for me. I take this
opportunity to thank Dr. Rupali More, my internal project guide whose
valuable guidance & suggestions made this project possible. I am extremely
thankful to her for her support. He has encouraged me and channelized my
enthusiasm effectively.

I express my heart-felt gratitude towards my industry guide Mr. Rushabh

Savla, my parents Mr. Gurunath Mhatre & Mrs. Sushma Mhatre, siblings
and all those friends who have willingly and with utmost commitment helped
me during the course of my project work.

I also express my profound gratitude to Dr. Kamal Tandon, Director of

Sasmira’s Institute of Management Studies & Research for giving me the
opportunity to work on the projects and broaden my knowledge and
experience.

I would like to thank all the professors and the staff of Sasmira Institute
especially the Library staff who were very helpful in providing books and
articles I needed for my project.

Last but not the least, I am thankful to all those who indirectly extended their
co- operation and invaluable support to me.

iv
 EXECUTIVE SUMMARY

Indian cement production commenced in 1914, growing slowly over the next
65 years with a production of only 27 million MT of capacity through the
period.

According to CRISIL Research, as of 31 March 2018, India is the second-

largest producer of cement in the world with an installed capacity of
approximately 317 million MT and production at 224 million MT. As of 31
March 2012, the Indian cement industry comprised over 41 cement producers,
operating 144 large cement plants with an average installed capacity of 1.68
million MT over the year.

In 2011, global cement consumption was reported at 3.6 billion tones, with
China accounting for nearly half of the total output. During the same time, the
Indian cement industry recorded a CAGR in cement production of 6.8%,
principally due to improved economic conditions and increased construction
activity. One of the defining features of the Indian cement industry is its
highly clustered nature, as cement units are concentrated in close proximity to
limestone deposits. As a result, cement units tend to be located close to both
limestone deposits, as well as the markets those units' service.

The cement production in India is about 400 million tons, as of FY 2017-2018,

with this data India is the 2nd largest cement producer in the world and with a
projected capacity of more than 550 million tons by the year 2025 according
to a report published by Mckinsey.

Out of the total capacity 98% of the production of cement is dominated by

private sector companies and the remaining 2% lies with public sector
companies out of which top 20 companies account for almost 70% of the total
cement production in the country.

210 large cement plants account for a cumulative installed capacity of over
350 million tons, while over 350 mini cement plants have an estimated
production capacity of nearly

v
11.10 million tons, as of 2016. The biggest winner in this scenario is the
cement industry as the demand for real estate increases the demand for cement
which is an integral element will also directly increase. FDI inflow in industry
related to manufacturing of Cement & Gypsum products reached US$5.23
billion, during April 2000 to March 2017.

In recent years the north-eastern region has witnessed a strong boom in

construction, with cement factories willing to set up.

The cement industry is witnessing slow uptake in demand and badly needs a
booster from the Modi government in the upcoming Union Budget 2018.
Since 2007-08 import of cement into India is freely allowed without having to
pay basic customs duty whereas all the major inputs for manufacturing cement
such as Limestone, Gypsum, Coal, Pet coke, Packing Bags etc.

Cement companies will continue to bear the brunt of higher pet-coke prices
that increased 13 per cent q-o-q to $96 per ton in Q1 FY18. The profitability
of cement companies too is expected to decline 3 per cent y-oy to Rs 828 per
ton as the burden of higher production costs outweighs the benefit of a modest
price increase.

Almost every building constructed relies on cement for its foundation. The
cement business is a $10 billion industry, measured by annual cement
shipments. Cement is a solid material and consumers rarely have complaints
about the product. Regional distribution plants have also made cement widely
available to any type of buyer. The cement industry relies on construction jobs
to create a profit. About two-thirds of cement production takes place between
May and October. Cement producers often use the winter months to produce
and stockpile cement, to meet demand.

Another weakness is the cost of transport; the cost of transporting cement is

high and this keeps cement from being profitable over long distances. One
such opportunity is the cement industry's efficiency. The cement industry has
recently streamlined its production efforts, using dry manufacturing instead of
wet, which is heavier and more time- consuming. The cement industry has
also invested about $6 billion in expansion efforts to meet unmet cement
needs.

vi
The nature of the economy has uncovered a number of threats to the cement
industry. The current economy has lessened the number of construction jobs,
which in turn hurts the cement industry. The cement industry controls the
majority of the United States market, but not all of it. About 11.5 metric tons
of cement are imported annually to support the unmet need.

The Indian government is also attempting to regulate the cement industry's

waste. The Environmental Protection Agency has introduced regulations for
the cement industry to cut Down emissions. The cement industry SWOT
analysis indicates that the industry has been greatly affected by the economic
downturn. The shortened profitability period of cement has allowed cement
producers to stretch production across the year, to avoid overwork from May
to December. Indian consumers prefer buying branded cement like Ultratech
cement, Shree cement, Ambuja cement etc.

It has been seen in the past that mini cement plants with low brand value an
image are not able to survive against the cement giants. The government is
discussing technology transfer in the field of energy conservation and
environment protection to help improve efficiency of the Indian cement
industry. Cement industry has made tremendous strides in technological up-
gradation and assimilation of latest technology. Potential Entry of New
Competitors in cement Industry technology and manpower are easily available
but still entry of new firms is not that viable.

vii
 CONTENTS

Chapter No. Details Page No.

i
Candidate’s Declaration
ii
Certificate by the Company
iii
Certificate by the Guide
iv
Acknowledgement
v
Executive Summary
x
List of Abbreviations
xi
List of Tables

1 INTRODUCTION 1-13
1.1 Introduction to cement sector
1.1.1 History 1
1.1.2 Macroeconomic factors affecting the 3
industry
1.1.3. The growing Indian economy 4
1.1.4. Competitive advantage for India 5
1.1.5. Change in Government Policies 6
1.1.6. Inflation 8
1.1.7. Introduction to Ratios 10
1.2 Need and Significance of the Study 13
1.3 Scope of the Study 13
1.4 Objectives of the study 13

2 LITERATURE REVIEW 14-15

2.1 Industry Profile
2.1.1 SWOT analysis 14
2.1.2 PEST Analysis 15
2.1.3 Porter’s 5 Force model for Indian Cement 18
Industry
2.2 Literature review 19

3 RESEARCH METHODOLOGY 20
3.1 Methodology Adopted 20
3.2 Data Collection Methods 20

viii
3.3 Data Analysis Tool and Techniques 20

4 DATA DESCRIPTION & ANALYSIS 21-41

4.1 Application of Fundamental Analysis
4.1.1 Shree Cement limited 21
4.1.2 Ultratech Cement 23
4.1.3 Ambuja Cement 25
4.2 Ratio Analysis
4.2.1 Current Ratio 27
4.2.2 Quick Ratio 29
4.2.3 Debt-Equity Ratio 31
4.2.3 Profit Before Tax 33
4.2.4 Return on Asset 35
4.2.5 Earnings per share 37
4.2.6 Dividend per share 39
4.2.7 Price/Earnings(P/E) 41

5 SUMMARY & CONCLUSION 43-46

5.1 Observations and findings 43
5.2 Conclusion 44
5.3 Limitation of Study 46

BIBLIOGRAPHY & REFERENCES 47

ix
 LIST OF ABBREVIATIONS

CAGR : Compound Annual Growth Rate

FY : Financial Year

PBT : Profit Before Tax

Q-O-Q : Quarter on Quarter

Y-O-Y : Year on Year

ROA : Return on Asset

ROCE : Return on Capital Employed

EPS : Earnings Per Share

IIP : Index of Industrial Production

CPI : Consumer Price Index

x
 Table of Figures

Figure. No Contents Pg.No

Figure 2.1 Indian GDP growth w.r.t trend line 4

Figure
Current Ratio. 27
4.2.1
Figure
Quick Ratio. 29
4.2.2
Figure
Debt to Equity Ratio. (D/E) 31
4.2.3
Figure
Profit Before Tax. (PBT) 33
4.2.3
Figure
Return on Assets.(ROA) 35
4.2.4
Figure
Earnings per share (EPS) 37
4.2.5
Figure
Dividend per share (DPS) 39
4.2.6
Figure
Price/Earnings (P/E) 41
4.2.7

xi
 Chapter 1: Introduction

1.1 Introduction to the Cement sector

1.1.1 History

Indian cement production commenced in 1914, growing slowly over the next
65 years with a production of only 27 million MT of capacity through the
period. Severe competition from imported cement combined with various
governmental price and distribution controls contributed to the slow growth.
The industry was partially decontrolled in the 1980s, resulting in a substantial
increase in capacity and production– nearly 30 million MT of capacity was
added during the 11 years from 1980 to 1990. In 1989, the Government freed
the industry from price and distribution controls and delicensed it in 1991,
which led to a significant increase in cement production capacities. Between
1991 and June, 2012 approximately 265 million MT (installed) of fresh
capacity was added. Since 1980, save for recent years during which demand
exceeded supply, cement capacity in India has steadily outpaced demand.

According to CRISIL Research, as of 31 March 2018, India is the second-

largest producer of cement in the world with an installed capacity of
approximately 317 million MT and production at 224 million MT.

As of 31 March 2012, the Indian cement industry comprised over 41 cement

producers, operating 144 large cement plants with an average installed
capacity of 1.68 million MT over the year. Over the years, the cement industry
has made significant progress upgrading and assimilating the latest
technology. Source: CMA March 12 Executive Summary (CMA data is
excluding Holcem & Acc group data).

Actual cement production in the fiscal year ended 31 March 2018 was at
179.88 million MT as against 168.29 million MT in the previous fiscal year,
registering a CAGR of 6.89%. Source CMA March 12 Executive Summary
(CMA data is excluding Holcem& ACC group data).

In 2011, global cement consumption was reported at 3.6 billion tones, with
China accounting for nearly half of the total output. India was the second
largest producer with approximately 6.18% of the total output, closely

1
followed by the United States at approximately 2.01%. Global cement
consumption has increased significantly during the fiscal year ended 31 March
2012.

During the same time, the Indian cement industry recorded a CAGR in cement
Production of 6.8%, principally due to improved economic conditions and
increased Construction activity. Despite this comparatively high growth rate,
enjoyed by the Indian Cement industry, India’s per capita cement consumption
of 156 kgs per annum is amongst the lowest in the world, with other
developing nations like Egypt, Thailand and Vietnam having per capita
consumption of cement of more than 200 kgs per annum.

One of the defining features of the Indian cement industry is its highly
clustered nature, as cement units are concentrated in close proximity to
limestone deposits. As a result, cement units tend to be located close to both
limestone deposits, as well as the markets those units’ service. This is one of
the key factors which has resulted in the Indian market being more regional
and fragmented in nature.

2
1.1.2 Macroeconomic factors affecting the industry

Cement is a the most consumed product after water in the world and it is an
irreplaceable product and has lot of players in the market competing against
one another in all segments of the industry and this has led to a lot of new
companies venturing into this field of work.

The cement production in India is about 400 million tons, as of FY 2017-2018,

with this data India is the 2nd largest cement producer in the world and with a
projected capacity of more than 550 million tons by the year 2025 according
to a report published by Mckinsey (Mckinsey, 2018). Out of the total capacity
98% of the production of cement is dominated by private sector companies
and the remaining 2% lies with public sector companies out of which top 20
companies account for almost 70% of the total cement production in the
country (IBEF).

210 large cement plants account for a cumulative installed capacity of over
350 million tons, while over 350 mini cement plants have an estimated
production capacity of nearly.

11.10 million tons, as of 2016. In all the cement players in the country out of
210 companies 77 are situated in the states of Andhra Pradesh, Telangana,
Rajasthan & Tamil Nadu. This accounts to a large concentration of the cement
industry being situated in the South and Western part of the country.

3
1.1.3 The growing Indian economy

The Indian Economy is a fast growing economy and is valued at $2.848

trillion Nominal GDP. The growth in GDP can be attributed to the change in
economic policy and also the increase in disposable income of every company
and new entrant is becoming high

Due to high disposable income of the families in the country the expenditure
into real estate as an asset is increasing and this gives rise to increase in
purchasing of such assets. The biggest winner in this scenario is the cement
industry as the demand for real estate increases the demand for cement which
is an integral element will also directly increase.

Figure 1.1.3. Indian GDP growth w.r.t trend line.

Source: https://tradingeconomics.com/india/gdp-growth-annual

4
1.1.4 Competitive advantage for India

1.Robust Demand

Robust infrastructure growth during 12th Five Year Plan to drive growth.
Demand is expected to be boosted by growth in real estate sector, initiative to
build 100 smart cities to give a further stimulus.

Most of the demand has increased due to increase in disposable income of the
families who are now willing to invest money into the real estate sector. Many
companies are also expanding and because of this the demand for large
corporate parks has also increased this is one of the strongest reasons for the
cement industry’s exponential growth in the country.

2.Long Term Potential

It is expected that the production capacity of the cement sector will roughly hit
about 550 million tons of production by 2025, this will make India a very
strong competitor in the cement business across the world and will be a strong
competitor to china in the coming years as a major cement producer, exporter
and also a consumer.

Oligopoly market, where large players have partial pricing control. The initial
investment required for a player to enter the market is very high. This factor
leads to the existing players in the market having a strong presence and the
threat of a new entrant is low.

Improvement in the sector is expected if government led projects gets

translated into fs12execution mode. With the help of government projects
private sector companies bid for these projects and because of this the basic
products needed for the building of these projects is fulfilled by the cement
industry.

5
3.Increasing Investments

The investments being made by the existing players in the industry is

increasing and they want to increase their capacity and hence are investing in
robust manner and this is leading to many external investors taking interest in
the cement industry. FDI inflow in industry related to manufacturing of
Cement & Gypsum products reached US$5.23 billion, during April 2000 to
March 2017 (Young, 2017).

Companies like Dalmia group and planning to spend $293 million for
expanding their production capacity in the state of Odisha.Other major
companies like ACC, JK cement have also increased their spending year on
year to expand their production capacity to stay competitive in the market.

4.Attractive Opportunities

Since all the companies have their plants set up in the South and West of India
increasing capacity there isn’t practically possible hence companies are
looking at the North Eastern part of India as a lucrative opportunity to set up
their factories. In recent years the north-eastern region has witnessed a strong
boom in construction, with cement factories willing to set up. This creates
employment around the factories which will lead to development of nearby
villages and then this will lead to development of these villages. Connectivity
to the areas will also increase and this will also be an advantage for the cement
companies that are willing to risk setting up their plants there.

Even the Maharashtra state cabinet approved State Thermal Power Plant Ash
utilization policy, in this the cabinet invited cement companies to participate in
using the ash produced near power stations which amounts to about 1.8 crore
ton of ash produced annually.

6
1.1.5 Change in Government Policies

1. The cement industry is witnessing slow uptake in demand and badly

needs a booster from the Modi government in the upcoming Union
Budget 2018.

2. Since 2007-08 import of cement into India is freely allowed without

having to pay basic customs duty whereas all the major inputs for
manufacturing cement such as Limestone, Gypsum, Coal, Pet coke,
Packing Bags etc. attract customs duty.

3. In October 2017, retail cement prices jumped by Rs 12 per bag in the

second quarter of this fiscal, with a sharp rise of Rs 36 in west and Rs
15 in south on a year-on-year basis, owing to rising production costs.

4. Cement companies will continue to bear the brunt of higher pet-coke

prices that increased 13 per cent q-o-q to $96 per ton in Q1 FY18.
(Securituies, 2017).

5. The profitability of cement companies too is expected to decline 3 per

cent y-o-y to Rs 828 per ton as the burden of higher production costs
outweighs the benefit of a modest price increase.

6. The government has also allowed FDI inflow into the infrastructure
industry.

7
1.1.6 Inflation

Inflation is no stranger to the Indian economy. It is an increase in the

price of a basket of goods and services that is representative of the economy as
a whole. Inflation is an upward movement in the average level of prices.
Because inflation is a rise in the general level of prices, it is intrinsically
linked to money. It denotes too much money chasing too few goods.

High rates of inflation can have critical effects on economy. It is

characterized by depreciation in the value of money. Economists attribute a
number of factors to inflation that can be broadly categorized under supply
side factors like increased production costs and demand side factors like
excessive demand created by tax cuts, cheaper borrowings etc. High rates of
inflation can have serious consequences for the economy in general.
Therefore, for governments all over the world, reducing movements of prices
to a minimum is seen as a primary economic objective.

The above effects can be exemplified by taking the current scenario of

the Indian economy. Annual Inflation in India in May 2008 was 7.4% which
was the highest since November 2004. As a result, Industrial production
growth declined to 8.6 % in February 2008 as compared to 11 % in February
2007. Thus, high inflationary rate is harmful because the value of the money
falls, cost of living rises, reduces the value of savings, discourages future
investment and savings and slows down the overall growth of the economy.
The India’s economic story can be traced by seeing the general trend of
inflation rate in the year 2008.

In the Year 2008, RBI had revised its key rates several times to
maintain the liquidity in the banking system. The lower interest rates will
allow the banks to cut their benchmark lending rates, though the deposits will
also see the reduction in interest rates. Lower commodity prices and crude oil
prices is driving the Inflation on a downside. This will be wonderful as the
lower inflation means, lower cost of credit, which drives the economy on the
upside. For 2009, Indian inflation stood at 11.49% Y-o-Y.

8
 On March 19, 2010, the Reserve Bank of India raised its benchmark
reverse repurchase rate to 3.5% percent, after this rate touched record lows of
3.25%. The repurchase rate was raised to 5% from 4.75% as well, in an
attempt to curb Indian inflation. The inflation rate in India was 13.73 percent
in June of 2010. This is because of the prices of pulses were up by 34.40 per
cent from a year ago, milk by 21.12 per cent, fruits by 13.67 per cent, cereals
by 5.41 per cent, rice by 6.76 per cent and wheat by 3.97 per cent. On 19th
august, cheaper vegetables pull down inflation to 10.35%.

9
1.1.7 Introduction to Ratios

Current Ratio:

𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕𝒊𝒐 = 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭 /𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞s

Current ratio is the most common ratio for measuring liquidity. It represents
the ratio of current assets and current liabilities. It is also called working
capital ratio. It is calculated by dividing current assets by current liabilities.

Quick Ratio:

𝑸𝒖𝒊𝒄𝒌 𝑹𝒂𝒕𝒊𝒐 = 𝐐𝐮𝐢𝐜𝐤 𝐀𝐬𝐬𝐞𝐭 𝐐𝐮𝐢𝐜𝐤 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞s

This ratio is sometimes known as Acid Test or Liquidity Ratio.lt is the

Relation between quick asset and quick liability It is determined by quick asset
by quick liability.

Debt to equity ratio:

𝐃𝐞𝐛𝐭 −𝐭𝐨 − 𝐞𝐪𝐮𝐢𝐭𝐲 𝐫𝐚𝐭𝐢𝐨 = 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔 (𝑫𝒆𝒃𝒕) /𝑬𝒒𝒖𝒊𝒕y

The relation between borrowed funds and owner’s capital is a popular measure
of the long term financial solvency of the firm. This relationship is shown by
the debt-equity ratio. This ratio indicates the relative proportion of debt and
equity in financing the assets of the film.

10
Profit before Tax (PBT):

PBIT = Revenue - Operating Expenses

This is the Indicator of a company’s profitability, calculated as revenue minus

expenses, excluding the tax the company needs to pay. Hence it is referred to
as Earnings “Before” tax.

Return on assets:

ROA=Annual net income/Total Assets

Return on assets, this formula calculates how much profit an asset of a

company earns with respect to every dollar spent on it.

Return on Investment:

ROI= Gains-Investment cost/Total Assets

Return on investment is a very commonly used ratio where it calculates how

much returns a company will give at the time of investment looking at the total
asset size of the company. In this case a high ROI means that the company is
profitable and a higher investment would give.

Earnings per share:

EPS = Net Income- Dividends on preferred stock /Average Outstanding shares

This is the portion of the company’s profit allocated to each outstanding share
of the stock. This can be used as an indicator as to how profitable the company
is.

11
Dividend per share:

DPS = D—S/S

D= Sum of dividends over a period of time. (Usually 1 year) S= Shares

outstanding for that period. From this ratio we will be able to know the total
dividend declared for every ordinary share issued.

Price/Earnings Ratio:

𝐏𝐫𝐢𝐜𝐞/𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐑𝐚𝐭𝐢𝐨 = 𝑺𝒕𝒐𝒄𝒌 𝒑𝒓𝒊𝒄𝒆 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆/ 𝑬𝒂𝒓𝒏𝒊𝒏𝒈𝒔 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓e

The price-earnings ratio (P/E ratio) is the ratio for valuing a company that
measures its current share price relative to its per-share earnings. The price-
earnings ratio is also sometimes known as the price multiple or the earnings
multiple.

12
1.2 Need and Significance of the Study

To list out the top performing companies in the cement sector based on
various models and certain parameters. Creating an awareness about investing
in stock market.

1.3 Scope of study

In the present study three companies in Indian cement industry are covered. It
was an attempt to analyze the profitability of the selected companies in the
Indian cement industry during the period under study, i.e. from 2014 to 2018.

1.4 Objectives of the study

 To identify the top companies to invest based on market capitalization

 To evaluate the performance of the companies in relative to certain
parameters
 To find and suggest the best company to invest based on evaluation

13
 CHAPTER 2: LITERATURE REVIEW

2.1 Industry Analysis

2.1.1 SWOT Analysis

Strengths:

1. The cement industry has many strengths to be considered.

2. Cement is, literally, the building block of the construction industry.
3. Almost every building constructed relies on cement for its foundation.
The cement business is a $10 billion industry, measured by annual
cement shipments.
4. There is also a strong reputation behind the cement industry. Cement is
a solid material and consumers rarely have complaints about the
product.
5. Regional distribution plants have also made cement widely available to
any type of buyer.

Weakness:

1. The cement industry is not without its drawbacks.

2. The cement industry relies on construction jobs to create a profit. But
the cement industry heavily relies on weather.
3. About two-thirds of cement production takes place between May and
October. Cement producers often use the winter months to produce and
stockpile cement, to meet demand.
4. Another weakness is the cost of transport; the cost of transporting
cement is high and this keeps cement from being profitable over long
distances.
5. In other words, shipping cement costs more than the profit from selling
it.
14
Opportunities:

1. The cement industries have opportunities as well.

2. One such opportunity is the cement industry's efficiency.
3. The cement industry has recently streamlined its production efforts,
using dry manufacturing instead of wet, which is heavier and more
time-consuming.
4. The cement industry has also invested about $6 billion in expansion
efforts to meet unmet cement needs.
5. Projections show that by 2012, the cement industry will have 25
percent more production capabilities.

Threats:

1. The nature of the economy has uncovered a number of threats to the

cement industry. The cement industry greatly relies on construction.
2. The current economy has lessened the number of construction jobs,
which in turn hurts the cement industry.
3. The cement industry controls the majority of the United States market,
but not all of it. About 11.5 metric tons of cement are imported
annually to support the unmet need. If other countries can produce and
ship cement for a reduced price, the U.S. cement industry is in danger.
4. The Indian government is also attempting to regulate the cement
industry's waste. The Environmental Protection Agency has introduced
regulations for the cement industry to cut down emissions.
5. The cement industry SWOT analysis indicates that the industry has
been greatly affected by the economic downturn.
6. However, with investments, the industry believes it can rebuild and
increase production. This will lessen the need for foreign imports.
7. The industry has become very renationalized because of the high costs
of transporting cement.
8. However, the regional market caters to all types of jobs, from
residential to commercial projects, just within one region.

15
2.1.2 PEST Analysis

POLITICAL:

1. The price of cement is primarily controlled by the coal rates, power

tariffs, railway tariffs, freight, royalty and cess on limestone.
2. Interestingly, government controls all of these prices. Government is
also one of the biggest consumers of the cement in the country.
3. Most state governments, in order to attract investments in their
respective states, offer fiscal incentives in the form of sales tax
exemptions/deferrals.
4. States like Haryana offer a freeze on power tariff for 5 years, while
Gujarat offers exemption from electric duty.

Economic:

1. Currently, the industry is on the boom, with a lot of government

infrastructure and housing projects under construction. The current
economy has lessened the number of construction jobs, which in turn
hurts the cement industry.
2. In spite of seeing a fall during 2008-09, the export segment of the
industry is expected to grow again on account of various infrastructure
projects that are being taken up all over the world and numerous
outstanding cement plants coming up in near future in the country.

16
Social / Culture:

1. Usually, the cement industry in India consists of both the organized

sector and the unorganized sector.
2. Organized sector comprises of the well-known cement manufacturing
companies while the main players of the unorganized sector are the
regional and local cement- producing units in various states across the
state.
3. Indian consumers prefer buying branded cement like ULTRATECH,
SHREE CEMENT, AMBUJA CEMENT etc.
4. It has been seen in the past, as well, that mini cement plants with low
brand value an image are not able to survive against the cement giants.
5. With a population of more than 100 billion people, it is
expected that cement industry will create another 25 lakhs jobs in
the next 4-5 years.

Technological:

1. From mining to production the entire process depends on technology.

The Government of India plans to study and possibly acquire new
technologies from the cement industry of Japan.
2. The government is discussing technology transfer in the field of energy
conservation and environment protection to help improve efficiency of
the Indian cement industry.
3. Cement industry has made tremendous strides in technological up-
gradation and assimilation of latest technology.
4. At present 93% of the total capacity in the industry is based on modern
and environment-friendly dry process technology.

17
2.1.3 Porter’s 5 Force model for Indian Cement Industry

Rivalry among Competing Firms

Inter firm rivalry is very high in this sector. Reasons for this are manly large
number of players in the market, intermittent overcapacity, marginal product
differentiation, high storage cost and high exit barriers in the form of huge
capital investment.

Potential Entry of New Competitors

In cement Industry technology and manpower are easily available but still
entry of new firms is not that viable. This is because of huge capital
investment, broad distribution network and oversupplied market.

Potential Development of Substitute Products

Only bitumen in road and engineering plastics in building offer some element
of competition otherwise no close substitutes are popular in India.

Bargaining Power of Suppliers

The bargaining power of suppliers of raw materials and intermediate goods is

very high. Because of monopolistic control of external cost elements i.e. coal,
power, transportation and taxes suppliers are enjoying high bargaining power
with the government.

Bargaining Power of Consumers

Rising share of retail purchase, declining share of bulk purchase by

government has taken away the bargaining power of customers.

18
2.2 LITERATURE SURVEY

Monica, Sowmiya (2016), aims at carrying out the Fundamental analyses of

two leading companies of Cement sector and estimating their intrinsic value to
assist investment decisions. Fundamental analysis tries to predict a stock's
intrinsic or 'fundamental' value, and looks for opportunities where the current
price deviates from the calculated intrinsic price. The cement industry is one
of the core industries in India and is optimistic of posting good sales in the
coming years. So, the investment in the shares and securities of KCP cements
and Birla cements companies seems to be profitable. The study is done using
secondary data collected from Reserve Bank of India website, BSE website
and Company Annual Reports for the period of last five years from year 2010
to 2015.

Pankaj Soni (2015), studies the fundamental analysis of cement sector. The
Fundamental analysis is based on Economic, Industry and Company (EIC)
Analysis. The paper also develops a Multi-Regression Model for finding
values of Cement Company‟s share prices (Dependent Variable) through 4
parameters that is SENSEX, IIP, CPI and Realty Index (Independent
Variable). For this regression analysis was done on monthly share prices and
other variables from last 5 years and was tested. The model worked.

Sayed Mohammad (2011), states that India is the world's second largest
producer of cement behind China with ever growing industry capacity of over
200 plus million tonnes (MT) and has left behind developed markets such as
the US and Japan. It is a highly capital-intensive industry and operates with a
high level of fixed cost. For smooth running of cement industry, it is important
to have overall balanced projection. The current scenario of Cement industry
in India is more concerned of solving the consumer complaints, resolve
disputes with special attention given to public interface.

19
 CHAPTER 3: RESEARCH METHODOLOGY

3.1 Methodology Adopted

Top 3 companies are taken for analysis based on their revenue in last
financial years. The company must be listed in National Stock Exchange
(NSE) India. The analysis is based on secondary data published by the
respective companies. The following companies were

selected for data analysis.

1. UltraTech Cement

2. Shree Cement

3. Ambuja Cement

3.2. Data Collection Methods

The study has been done based on secondary data itself and the sources
used are various books, journals, Securities and Exchange Board of India
circulars, annual report of organizations. Statistics of Reserve Bank of India,
Indian union budget web sites
like,www.moneycontrol.com,www.rbi.gov.in,www.ibef.org,www.ficci.in,ww
w.tradingeconomics.com. The study is conducted from the period 2014 to
2018.

3.3. Data Analysis Tool and Techniques

The following financial techniques are used Earnings per share,

Dividend per share, P/E ratio, Return on Asset, Current ratio, Quick ratio,
Return on Capital Employed & Debt-Equity ratio in order to evaluate the
fundamental factors of select cement companies. The data so collected were
classified and tabulated for analysis and interpretation. The tools and
techniques used in this project are all computerized programming.

20
 CHAPTER 4: DATA DESCRIPTION & ANALYSIS

4.1 Application of Fundamental Analysis

4.1.1 Shree Cement limited

Shree Cement 2014 2015 2016 2017 2018

Current Ratio 1.56 1.61 1.56 1.65 1.92

Quick ratio 1.02 0.98 0.86 0.99 1.39

Debt to Equity Ratio 0.23 0.12 0.11 0.17 0.38

Profit Before Tax

815.15 400.83 1176.25 1530.81 1827.16
(in Cr)

Return on Assets (%) 10.73 5.33 12.07 11.99 9.14

EPS 225.98 122.38 328.13 384.39 397.33

Dividend per share 22 24 24 140 50

P/E ratio 25.2 78.7 34.6 39.7 45.5

ROCE (%) 13.5 6.5 13.77 14.59 11.36

21
1) Current ratio gives us an idea of how well a company can pay of its
debts. In the above table it can be noted that the current ratio is
fluctuating around the 1.56-1.92 mark, according to the standard norms
of current ratio it should 2:1, but here it is less than that.
2) Quick ratio is also known as acidity test which shows how good the
company is doing in terms of paying of its short term obligations.
3) It can be noted that the quick ratio of Shree cements is also slightly
lower than the general required ratio i.e. 1:1
4) For the last year it has maintained quick ratio at 1.39, whereas for year
2015-17 it has maintained ratio varying from 0.98, 0.86 & 0.99
meaning for every one liability the company can pay only 0.98, 0.86 &
0.99 of it.
5) Debt to equity ratio of a company is very consistent which means that
the company has borrowed funds from outside but is also capable of
paying it off year on year without letting its D/E ratio actually go up.
6) Profit before tax of Shree cement has been on the rise since the year
2015 which was recorded at Rs. 400.83 Cr and to Rs. 18,27.16 Cr in
the year 2018.
7) This profit before tax actually shows how well the company has been
doing and the company looks to be growing at steady pace.
8) The ROA number also took a hit in the year 2015 when the profit of
the company dropped with the drop in profit also and now has
increased to 10%, which means for each asset the company utilizes it
makes 10% more of its original expenditure.
9) P/E ratio is the most important ratio that investors look at while
investing the p/e ratio of the company saw a rise in 2015 and then it
started recovering this can be attributed to the company not doing well
in the market.
10) The ROCE is also rising in the past 3 years meaning that the
company’s invested money is yielding higher and higher returns
Y-O-Y.

22
 4.1.2 Ultratech Cement

Ultratech 2014 2015 2016 2017 2018

Current ratio 1.57 0.9 0.86 1.55 0.96

Quick Ratio 1.16 0.59 0.66 1.27 0.68

Debt to Equity 0.28 0.35 0.23 0.22 0.64

Profit Before Tax (in Cr) 2775.51 2886.25 3298.56 3775.95 3301.84

Return on assets (%) 7.2 5.72 6.18 6.68 4.1

EPS 73.21 73.44 86.37 95.74 81.27

Dividend per share 9 9 9.5 10 10.5

P/E 22.4 35 32.7 36.3 51.7

ROCE 8.92 7.62 8.78 13.96 10.88

23
1) Current ratio gives us an idea of how well a company can pay of its
debts. In the above table it can be noted that the current ratio is
fluctuating around the 0.9-0.96 mark, according to the standard norms
of current ratio it should 2:1, but here it is very less and isn’t really
optimal.
2) Quick ratio is also known as acidity test which shows how good the
company is doing in terms of paying of its short term obligations.
3) It can be noted that the quick ratio of Ultratech Cement is not very
good and is below the expected ratio in most of the years except in
2014 and 2017 where it was recorded at 1.16 and 1.27 respectively.
4) Debt to equity ratio of a company is very high which means that the
company has borrowed funds from outside but is also capable of
paying it off year on year without letting its D/E ratio actually go up.
5) But the D/E has been around 0.64 in the year 2018 meaning that the
borrowed funds of Ultratech cement is 0.64x.
6) Profit before tax of saw a steady rise till the year 2017 but then it fell
by about 3% in the year 2018 to Rs. 33,015 million from Rs. 38,721 in
2017 This profit before tax actually shows how well the company has
been doing and the company looks to be having some issues with its
profit earnings.
7) The ROA number also took a hit in the year 2018 when the profit of
the company dropped with the drop in profit to about 4.1% from 6.68%
in the year 2017. This is also a cause for the drop in profit earned by
the company.
8) P/E ratio is the most important ratio that investors look at while
investing the P/E ratio of the company has been seeing a consistent
increase from 2014 at 22.4x to 51.7x in 2018, this makes the company
less lucrative for investors.
9) The ROCE has dropped in the year 2018 to 10.88% from 13.96 in
2017 this is a strong reason why profits are decreasing & P/E
increasing.

24
 4.1.3 Ambuja Cement

Ambuja Cement 2014 2015 2016 2017 2018

Current ratio 1.9 1.9 1 1.1 1.2

Quick Ratio 1.75 0.95 1.08 1.21 1.21

Debt to Equity 0.4 0.3 0.2 0.3 0.6

Profit Before Tax (in Cr) 1783.41 1172.21 1279.47 1619.12 1506.07

Return on assets (%) 10.4 11.2 2.6 4.8 6.1

EPS 8.3 9.6 5.2 7.2 9.8

Dividend per share 3.6 5 2.8 2.8 3.6

P/E 21.7 20.6 37.9 32.3 25.5

ROCE 16.5 18.2 12.5 10.9 14.4

25
1) Current ratio gives us an idea of how well a company can pay of its
debts. In the above table it can be noted that the current ratio is
fluctuating around the 1.0-1.2 mark, according to the standard norms
of current ratio it should 2:1, but here it is very less and isn’t really
optimal.
2) Quick ratio is also known as acidity test which shows how good the
company is doing in terms of paying of its short term obligations.
3) It can be noted that the quick ratio of Ambuja Cement is very good and
is above the expected ratio.
4) Debt to equity ratio of a company is very high which means that the
company has borrowed funds from outside but is also capable of
paying it off year on year without letting its D/E ratio actually go up.
5) But the D/E has been around 0.6 in the year 2018 meaning that the
borrowed funds of Ultratech cement is 0.6x.
6) Profit before tax of saw a steady rise from 2014 to 2015 but then fell in
2016, again it can be noted that the company has now pulled back up
on its numbers and is rising at a very strong pace and is recorded to
have a profit of Rs. 1506.07 Cr.
7) The ROA number also took a hit in the year 2016 when the profit of
the company dropped with the drop in profit to about 2.6% from 11.2%
in the year 2015. This is also a cause for the drop in profit earned by
the company.
8) P/E ratio is the most important ratio that investors look at while
investing the P/E ratio of the company has been seeing a constant
fluctuation from 2014 up until 2018 and was finally recorded at 25.5x,
but is significantly lower than what it was in 2016 and 2017.
9) The ROCE has increased in the year 2018 to 14.4% from 10.9 in 2017
this is a strong reason why profits are increasing and P/E decreasing.

26
 4.2 Ratio Analysis

4.2.1 Current Ratio

Current
2014 2015 2016 2017 2018
Ratio
Shree
1.56 1.61 1.56 1.65 1.92
Cement
Ultratech
1.57 0.9 0.86 1.55 0.96
Cement
Ambuja
1.9 1.9 1 1.1 1.2
Cement

1.9 1.9 1.92

1.61 1.65
1.56 1.57 1.56 1.55

1.2
1.1
1 0.96
0.9 0.86

2014 2015 2016 2017 2018

Shree cement Ultratech cement Ambuja cement

Figure 4.2.1 Current ratio (2014-2018)

27
Interpretation:

 The current ratio is important to understand how well the company is

doing in terms of long term liquidity.
 We can notice that Shree Cement has a current ratio that hovers around
the 1.5-1.9 mark which is not according to the standard prescribed 2:1
ratio.
 It can also be noted that Ultratech Cement is in a far worse situation
where its current ratio is only at 1.55 as recorded in 2017 it indicates
that the company isn’t really ready to pay of its long terms debts and
will run in a negative cash flow cycle for the next few years.
 Ambuja Cement had a good current ratio at the start of 2014 and 2015
which was recorded at 1.9 but in recent years has seen a decline and
has hit a low of 1.2 in the year 2018
 This is big indicator that like Ultratech Cement even Ambuja isn’t
ready to play off its long term debts and will have to run on a credit
heavy balance sheet for the next few years till the time they can
actually start making more profits.
 Now if we compare the 3 companies we can safely say that Shree
Cement has maintained the best current ratio.

28
 4.2.2. Quick Ratio

Quick Ratio 2014 2015 2016 2017 2018

Shree Cement 1.02 0.98 0.86 0.99 1.39

Ultratech Cement 1.16 1.59 0.66 1.27 0.68

Ambuja
1.75 0.95 1.08 1.21 1.21
Cement

2
1.8
1.6
1.4
1.2
Axis Title

1
0.8
0.6
0.4
0.2
0
2014 2015 2016 2017 2018
Shree cement 1.02 0.98 0.86 0.99 1.39
Ultratech cement 1.16 1.59 0.66 1.27 0.68
Ambuja cement 1.75 0.95 1.08 1.21 1.21

4.2.2 Quick ratio (2014-2018)

29
Interpretation:

 Quick ratio is also known as acidity test, this basically test if the
company is geared enough to pay its short term debts and loans.
 Shree cement has maintained an average quick ratio of 1.05 across all
5 years which means that company has been able to more or less pay of
its short terms debts.
 Ultratech cement has an average quick ratio of 1.072 across all 5 years
which is very good meaning it has successfully paid its short term
debts.
 Ambuja cement has maintained a quick ratio of 1.24 over the course of
5 years which means even Ambuja cement has paid its short term
debts.
 Comparing all 3 companies Ambuja cement seems to have the best
quick ratio, but this doesn’t mean the company is doing well in terms
of earning profit.

30
 4.2.3. Debt to Equity Ratio

D/E Ratio 2014 2015 2016 2017 2018

Shree Cement 0.23 0.12 0.11 0.17 0.38

Ultratech
Cement 0.28 0.35 0.23 0.22 0.64

Ambuja
Cement 0.4 0.3 0.2 0.3 0.6

0.7

0.6
0.6
0.5

0.4
0.4
0.3
0.3 0.3
0.2
0.2
0.1

0
2014 2015 2016 2017 2018

Shree cement Ultratech cement Ambuja cement

Figure 4.2.3 Debt to Equity ratio (2014-2018)

31
Interpretation:

 Debt to Equity ratio is an important tool of financial analysis to

appraise the financial structure of a firm. The higher the ratio it means
that the business is funded by creditors and if the ratio is less than the
involvement in creditors is less.
 While looking at the D/E ratio of all 3 companies it was noted that all
the companies have similar D/E ratios meaning they do have some
amount of their working capital which is borrowed from the market.
 But Ultratech and Ambuja cement have a higher amount borrowed
which was recorded at 0.6 in 2018 for both the companies, but this can
be solely attributed to the fact that they are companies that have higher
market cap and asset size as compared to Shree cement.

32
 4.2.4. Profit Before Tax (in Cr)

PBT 2014 2015 2016 2017 2018

Shree Cement 815.15 400.83 1176.25 1530.81 1827.16

Ultratech
Cement 2775.51 2886.25 3298.56 3775.95 3301.84

Ambuja
Cement 1783.41 1172.21 1279.47 1619.12 1506.07

Shree cement Ultratech cement Ambuja cement

3775.95

3298.56 3301.84
2886.25
2775.51

1783.41 1827.16
1530.81 1619.12 1506.07
1172.21 1176.25 1279.47
815.15
400.83

2014 2015 2016 2017 2018

Figure 4.2.4 Profit Before tax (2014-2018)

33
Interpretation:

 Profit before tax ratio helps us understand the profitability of a

company before it pays of its taxes. This measures the profit of a
company that it generates from its operations and helps the investor
take a decision if the money he/she invests will be actually used
properly or not.
 Shree cement has seen a rise in PBT from the year 2018 and is
recorded at Rs. 1827.16 crore this is an indicator that the company is
doing really well and is growing at a steady pace and will continue to
do so in the future years.
 The profit before tax of Ultratech cement was on a rise but has started
to gradually fall off, even though the company has a great quick ratio,
the PBT seems to be dropping which is not a good sign for the
company.
 Ambuja cement had seen an increase in profit till 2016 when there was
a drastic drop but the company has picked up from that point on and is
appearing to grow at a steady rate, this is also another reason that the
company has a good current ratio.
 Comparing all 3 companies the conclusion drawn is that Ambuja and
Shree Cement are really doing well.

34
 4.2.5. Return on Assets (in %)

ROA 2014 2015 2016 2017 2018

Shree Cement 10.73 5.33 12.07 11.99 9.14

Ultratech
Cement 7.20 5.72 6.18 6.68 4.1

Ambuja
Cement 10.4 11.2 2.6 4.8 6.1

14

12

10

0
2014 2015 2016 2017 2018

Shree cement Ultratech cement Ambuja cement

Figure 4.2.5 Return on Asset (2014-2018)

35
Interpretation

 Return on Asset is an Indicator of how profitable a company is relative

to its total assets.
 This indicates how much the company makes for every outstanding
asset it has.
 The ROA of Shree cement across 5 years as noted above was very
volatile and was last recorded at 9.14 in 2018, this means that the
company makes 9.14% more profit per asset they have invested into.
 Ultratech cement out of all these has the lowest ROA % which means
that the company doesn’t make use of its asset size in a proper manner
and earn less for every asset they have invested in.
 Ambuja cement also across the years has had highly volatile ROA %,
this can likely be attributed to change in assets across the years, this
effect is directly shown in the PBT numbers of Ambuja cement
 Comparing all 3 companies it can be concluded that Shree cement has
the best ROA% in terms of consistency.

36
 4.2.6. Earnings per share (in Rs)

EPS 2014 2015 2016 2017 2018

Shree
Cement 225.98 122.38 328.13 384.39 397.33

Ultratech
Cement 73.21 73.44 86.37 95.74 81.27

Ambuja
Cement 8.3 9.6 5.2 7.2 9.8

Ambuja cement Ultratech cement Shree cement

1.2
2018 81.27
397.33
7.2
2017 95.74
384.39
5.2
2016 86.37
328.13
9.6
2015 73.44
122.38
8.3
2014 73.21
225.98

Figure 4.2.6 Earnings per Share (2014-2018)

37
Interpretation:

 Earnings per share helps us understand how much money a company

makes for each of its share outstanding in the market and this is also an
indicator if the company is going on an upward or a downward trend.
 It can be noted that Shree cement has a very high EPS in all 5 years it
was recorded at Rs225.98/per share in 2014 and is at 397.33 in the year
2018, this shows that the company is doing really well in the market
and it can also be inferred that the share prices in the market are also
pretty high.
 Ultratech cement hasn’t been doing well in the recent past and it can be
seen by its downward EPS, it was last recorded at Rs.81.27/per share
in the year 2018. This shows that the company isn’t doing really well
in the market.
 Ambuja cement being such a giant company and doing well in terms of
profit it is noted that they have the lowest EPS out of all the 3
companies at a mere Rs.9.8/Per share. Which is an indicator that the
stocks of Ambuja cement aren’t really traded in the market.

38
 4.1.7. Dividend per share (in Rs)

DPS 2014 2015 2016 2017 2018

Shree Cement 22 24 24 140 50

Ultratech
Cement 9 9 9.5 10 10.5

Ambuja
Cement 3.6 5 2.8 2.8 3.6

160

140

120

100

80

60

40

20

0
2014 2015 2016 2017 2018

Shree cement Ultratech cement Ambuja cement

Figure 4.2.7 Dividend per share (2014-2018)

39
Interpretation:

 Dividend per share is a very helpful measure of letting investors know

how much money they will make if they hold a single share of a
company.
 Shree cement has a high DPS similar to its high EPS, these 2
parameters can be directly related and because of this the Dividend per
share numbers are doing really well for this and was recorded Rs50/per
share outstanding.
 Ultratech has a fairly decent dividend per share even though the
company isn’t doing well in recent times they are trying to pay high
dividend to its investors so as to keep them invested in the company
and not pull their money out.
 It was noted in the EPS that Ambuja was performing poorly as
compared to the other 2 companies it is the same case in DPS as well,
Ambuja only has a DPS of Rs.3.6/per share, which is very low and this
number doesn’t look very nice for the investor to invest in.

40
 4.1.8. Price/Earnings(P/E) (in x)

P/E(in x) 2014 2015 2016 2017 2018

Shree Cement 25.2 78.7 34.6 39.7 45.5

Ultratech
Cement 22.4 35 32.7 36.3 51.7

Ambuja
Cement 21.7 20.6 37.9 32.3 25.5

90

80

70
60
50
40

30
20

10

0
2014 2015 2016 2017 2018

Shree cement Ultratech cement Ambuja cement

Figure 4.2.8 Price/Earnings(P/E) ratio (2014-2018)

41
Interpretation:

 P/E ratio is the most important ratio that investors look at while
investing the p/e ratio of the company saw a rise in 2015 and then it
started recovering this can be attributed to the company not doing well
in the market.
 P/E ratio Ultratech has been seeing a consistent increase from 2014 at
22.4x to 51.7x in 2018, this makes the company less lucrative for
investors.
 P/E for Ambuja cement is only at 25.5 as of the year 2018 meaning
that if an investor invests only Rs 1 in the company it will take 25.5
years for him to recover the original invested amount.
 Ambuja cement has the lowest P/E when comparing all 3 companies
meaning that it’s the best option to invest in if we want to recover our
money back and also the company is making increasing profits Y-O-Y.

42
 CHAPTER 5: SUMMARY & CONCLUSION

5.1 Observations and findings

 In the project various things learned that is ups and down in the market
and effect on the securities. In the time of purchasing and selling the
securities how many bid price and ask price effect on the client
purchase and selling securities.

 Also through Porter’s five force analysis we can get the idea that the
parameters like Potential threats from firms which make substitute
products, Supplier’s bargaining power, Buyer’s bargaining power,
Forces of competition created by the rivalry amongst existing firms
also affects the sales of Cement Sector.

 Cement is a the most consumed product after water in the world and it
is an irreplaceable product and has lot of players in the market
competing against one another in all segments of the industry and this
has led to a lot of new companies venturing into this field of work.

 Through SWOT analysis we can evaluate company’s strength,

weaknesses, opportunities & threats. In the SWOT analysis strength
and opportunities is better than threats and weakness.

 On the basis of Company Analysis, ratios like Earnings per share,

Dividend Per Share, Quick ratio, Current ratio, Debt to Equity ratio
have been calculated and it has been observed that Shree Cement, is
better than Ultratech Cement and Ambuja Cement.

 Based on the Intrinsic value of the shares of the companies it can be

noted that Shree Cement is the safest option to invest in as the
company is doing really well in terms of P/E, D/E and even EPS and it
is also an undervalued share making it very lucrative for investing in.

43
5.2 Conclusion

 It can be concluded that given the sustained growth in the housing

sector, the government's emphasis on infrastructure (both at the
national and the state level) and increased global demand, the prospect
for India's cement industry is exceedingly promising.
 The dynamics of Indian cement industry is undergoing a gradual shift.
From an oversupply situation not long ago, a phase has come where
demand growth is outstripping supply. While tracing the growth of the
industry in different policy regimes, it became observable that the
industry has matured with the help of all indicators of performance,
such as size, production, capacity utilization, consumption and exports,
after its decontrol in 1989-1990.
 Technology of production and quality of product too has advanced a
lot along with decrease in regional concentration. Another significant
trend which the industry has witnessed is of greater consolidation of
power by larger players through mergers and acquisitions and entry of
foreign majors in the ever growing market.
 This growth and development of the industry is all the more evident in
recent years especially after 1999-2000. All the above mentioned
trends in the Indian cement industry have only contributed to the
growing competitiveness among the firms. The efforts have been made
to build up a composite index that reflects the competitiveness of firms
in the industry, indicating their areas of superiority and the domains of
weaknesses.
 A composite competitiveness index is defined as the mathematical
combination of individual indicators that represent different
dimensions of the concept whose description is the objective of the
analysis. The findings of the study reflect the relative competitive
position of the sample firms and also the overall picture of the
industry.

44
 It also throws some light on the regional dominance of the players. Out
of 3 sample firms Ambuja Cement Ltd. scored highest in the group
getting top most ranking mainly because of its consistent performance
in both financial and non-financial indices.
 This is followed by Grasim Industries, which has scored second rank
due to better non-financial performance in terms of sales and
marketing strategy, etc.
 Looking at the financial and non-financial index separately, it is seen
that the rankings differ a lot as some firms perform better in one than
the other.
 It can be hoped that the overall index, ten indicator indices, financial
index and non- financial index prove to be helpful in formulating
competitive policies by the firms. It will also be useful to consumers to
judge the competitive performance of these firms from the product
quality and investment point of view.

45
5.3 Limitations

1. The study covered only last five years based on financial reports
published by the company.

2. The study took top five companies based on market capitalization and
more specific it had covered only cement industry of India.

3. It covered only the fundamental analysis of the companies and other

factors remain constant.

46
 BIBLIOGRAPHY & REFERENCES

Bharat, D. (2017). Indian Cement Industry an overview. Mumbai: Dalmia

Group. (2018). Cement Industry in India: Trade Perspectives. Mumbai.

(2017). HOLTEC-Indian Industry Intercem. Dubai.

IBEF. (n.d.). Overview of the Indian Cement Industry. IBEF.org. Mckinsey.

(2018). Indian Infrastructure 2020. Mumbai: Mckinsey.

Mishra, M. K., Nandamuri, P. P., & Vijayudu, G. (n.d.). Indian Cement

Industry – The business environment.

Securituies, K. (2017). Report on Indian stocks. Kotak Securities Ltd.

Shodhganga.ac.in. (2018). Retrieved from

http://shodhganga.inflibnet.ac.in/bitstream/10603/110784/11/12_chapter3.pdf:
http://shodhganga.inflibnet.ac.in/bitstream/10603/110784/11/12_chapter3.pdf

Young, E. &. (2017). Indian Cement Industry. E&Y Publications Ltd.

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