S.K.

PATEL INSTITUTE OF
MANAGEMENT & COMPUTER SUDIES.

M.B.A. – 1
TRIMESTER - II
GROUP - 11
Project 2

PROJECT REPORT ON PROJECTION OF GROWTH & FUTERE PRICE ON

“ASSOCIATED CEMENT COMPANIES” OF NIFTY

Submitted to:
Prof. Sandhya Harkawat

DATE: 29/12/2008.
MONDAY.

Submitted by:

PANKAJ GURJAR (34)-

AKSHAY JADAV (38)
SWAPNIL KHARPATE (47)
DHARA MODI (59)

ASSOCIATED CEMENT COMPANYS 1

 INDEX
Preface
Acknowledgement
Company history
Company’s dividend history
Projection of future price
Bibliography

ASSOCIATED CEMENT COMPANYS 2

 PREFACE
This report is about projection of dividend discount and projection of future price of
dividend . There are details of 10 years dividend provided by the annual report of
“associated cement companys”,with those data we have calculated dividend dividend
discount with the help of dividend discount model.There are 10 years dividend data is
given in this report .Most of the discussion on dividend policy and firm value assumes
that the investment decision of a firm is independent of its dividend decision however
there are some models which assume that investment and dividend decision are related.

ASSOCIATED CEMENT COMPANYS 3

 Acknowledgement
We are feeling great pleasure in submitting this report and it is our
great opportunity to convey thanks to all of them who have helped us in
completing this report. There are many people who play a very vital role in our
achievements but giving a vote of thanks to that great people is also one
achievement. And this opportunity I have got at a time of submitting this report.

We are thankful to my college authority and especially my

project guide Prof. Sandhaya Harkawat for continuous encouragement and
guidance.
And lastly, We are thankful to all my friends and others who have
helped us in completing this report.

Thanking you.

ASSOCIATED CEMENT COMPANYS 4

 Company history

Associated Cement Companies the single largest producer in the country and part of the
Holcim-Gujarat Ambuja combine, has posted excellent results for the first quarter ended
31 march 2006. The company’s performance has been aided by higher cement prices
during the quarter because of sustained growth in demand.
On a consolidated basis, ACC has reported a net profit of Rs 231.34 crore for the quarter,
an increase of 26.94 percent as compared to the Rs 182.24crore reported for the same
quarter of previous year. Total revenue for the quarter increased by 13.35 percent to Rs
1,389.91 crore from Rs 1,226.19 crore.
The results are not strictly comparable with the previous year’s quarter as the company
had undertaken major restructuring exercise recently.it sold off the refactory business to
private equity investors last year. Asbestos sheet manufacturer Everest industries,which
was a subsidiary of ACC,was also sold off.
The company merged two cement manufacturing unitd,Bargarh Cement and Damodar
Cement,with itself during the year.
As compared to net profit of Rs 192.48crore,or Rs10.46per equity share reported for the
quarter ended December 2005,profit for the march 2006quarter on a stand alone basis has
increased by 22.34 percent to Rs235.48crore were higher by 24.87percent from
theRs1,106.61crore reported for the December 2006quarter.
The company has sold its real estate in Delhi for a consolidation of Rs 140.2 crore this
month. The profit from this sale would be reflected in the results for the second quarter
ending June2008

ASSOCIATED CEMENT COMPANYS 5

 COMPANY’S DIVIDEND HISTORY
Accordingly, the Company allotted 1,63,124 Equity Shares of the face value of Rs 10
each to these bondholders at the conversion price of Rs 374.42 per share. With this, the
entire Foreign Currency Convertible Bonds issued bythe Company in 2004 stands
converted. Further, the Company allotted 1,83,172 Equity Shares of the face value of Rs
10 each consequent to exercise of stock options by its employees.93.62 percentage of the
Equity Shares of the Company have been dematerialized as at December 31, 2007.
In august 2007 company paid an interim dividend of Rs10 per share which involved an
outgo (including the dividend distribution tax) of Rs219.25crore.
Directors now recommend a final dividend of Rs 10 per equity share of Rs16 each .Thus,
the total dividend for the year 2007 would be Rs20 per share (200%on the par value of
Rs10) as against Rs15 per equity share for the year ended December 31,2006.The total
dividend outgo for the current fiscal would amount to Rs438.78 crore including dividend
distribution tax of Rs63.74 crore including dividend distribution tax of Rs39.40crore in
the previous year.
Dividend(crore) year
23 98-99
19 99-00
38 00-01
51 01-02
48 02-03
80 03-04
143 04-05
169 05-06
322 06-07
439 07-08
On dividend company has spent 438.92 crore which is 5.36% of total investment.

ASSOCIATED CEMENT COMPANYS 6

 PROJECTION OF FUTURE PRICE

Price- Dividend table

Year Dividend Growth Rate of Price
(EPS) rate % return (Rs)
(g1) %
(r)
2000 3.35 - - -
2001 4.1 30 32 82
2002 4.5 25 30 152
2003 4.8 40 44 192
2004 5.25 70 73 237.67
2005 6.53 107.3 110 241.8
2006 10.62 62.33 66 312.3
2007 21.27 100.28 104 531.7
2008 32.9 54.67 57.6 709
2009 51.0 55 59.7 1085
Calculation:-

Expected growth rate (g1) = 59.7%

Expected rate of return (r) = 55%

Expected dividend = D0 (1+g1)

= 32.9(1+.55)
=51.0

Price of share = Dividend

r- g
= 51.00
0.597-0.55

ASSOCIATED CEMENT COMPANYS 7

 = 1085.1 Rs

Conclusion

Associated cement companys has high growth of its earnings and

variation in its growth rate because of its expansion plan which is
adding more revenue and profit to its balance sheet. From above
table we can see that growth of its dividend on that basis we have
found the expected price for the year 2009 which comes to Rs.
1085.1

ASSOCIATED CEMENT COMPANYS 8

 BIBLIOGRAPHY
• www.acc.com
• Reference of Financial management : Prasanna Chandra
• Press notes and The Annual report of the company
• WWW.

ASSOCIATED CEMENT COMPANYS 9