CEMENT INDUSTRYCONSTRUCTING THE FUTURE

Cement Industry – An Introduction

• India, being the second largest cement

producer in the world after China with a total

capacity of 151.2 Million Tones (MT), has got

a huge Cement Company.

• The cement industry in India is dominated by

around 20 companies, which account for

almost 70% of the total cement production

in India.

Cement Industry – An Introduction

• It is also predicted that the cement production in

India would rise to 236.16 MT in FY11. It's also

expected to rise to 262.61 MT in FY12.

DEFINITIONS

Definitions

• PV Ratio - The Profit Volume (PV) Ratio is

the ratio of Contribution over Sales. It

measures the Profitability of the firm and is

one of the important ratios for computing

profitability.

• Fixed Cost - A cost that does not change

with an increase or decrease in the amount

of goods or services produced.

• Variable Cost - A corporate expense that

varies with production output.

• Contribution Per Unit -

A quantitative assessment of

the amount that each good or service sold

by a company adds to its

total sales numbers.

• BEP - Point at which gains equal losses.

Definitions

ULTRATECH CEMENT

UltraTech Cement• UltraTech Cement Limited is among the

world’s top 10 cement companies.

• The company has an annual capacity of 48.8

million tonnes, and manufactures and

markets ordinary Portland Cement,

Portland blast furnace slag cement and

Portland Pozzalana Cement.

• The company has eleven integrated plants,

one white cement plant, twelve grinding

units and five terminals — four in India and

one in Sri Lanka.

UltraTech Cement

UltraTech Cement

Variable cost 6475.49 4774.93 4491.38 3614.69 3307.28Production Quantity (Cr. Tonne) 3.36 1.76 1.59 1.51 1.46

Variable cost PU 1929.24 2707.03 2831.18 2398.76 2259.84Variable cost (%) 60.35% 70.98% 73.12% 71.03% 70.43%Fixed Cost 4253.90 1952.43 1651.15 1474.60 1388.81Fixed Cost (%) 39.65% 29.02% 26.88% 28.97% 29.57%Contribution 6730.15 2267.89 1894.12 1897.74 1601.77Contribution (%) 50.96% 32.20% 29.66% 34.43% 32.63%Contribution PU 2005.11 1285.72 1193.97 1259.37 1094.48P/V Ratio 0.51 0.32 0.30 0.34 0.33BEP in unit 2.12 1.52 1.38 1.17 1.27BEP in volume 8346.84 6063.17 5566.39 4283.32 4256.38Margin of Safety 1.23 0.25 0.20 0.34 0.19Margin of Safety (%) 58.21% 16.16% 14.72% 28.70% 15.33%

JK CEMENT

JK Cement

• J.K. Cement is an affiliate of the J.K. Organization,

which was founded by Lala Kamlapat Singhania.

• Today, J. K. Cement Ltd. is one of the largest

cement manufacturers in Northern India.

JK Cement

Variable cost 1916.54 1487.06 1217.61 1061.07 938.7Variable Cost (%) 90.78% 90.60% 90.51% 91.34% 92.45%Fixed Cost 194.70 154.29 127.63 100.66 76.64Fixed Cost (%) 9.22% 9.40% 9.49% 8.66% 7.55%Contribution 444.81 566.10 446.81 534.50 404.94Contribution (%) 18.8% 27.6% 26.8% 33.5% 30.1%Production quantity (Crore Metric Tonnes) 0.55 0.46 0.40 0.40 0.39

Contribution Pu 808.21 1234.27 1103.36 1336.94 1041.06P/V ratio 0.19 0.28 0.27 0.33 0.30BEP (Volume) 1033.60 559.59 475.44 300.49 254.30BEP (Units) 0.24 0.13 0.12 0.08 0.07MOS 0.31 0.33 0.29 0.32 0.32MOS (%) 128% 267% 250% 431% 428%

MADRAS CEMENT

Madras Cement• Madras Cements Ltd is the flag ship

company of RamCo Group, a well known

business group of South India. It is based at

Chennai.

• The cement capacity is 10.49 million tons

per annum.

• The company is the fifth largest cement

producer in the country.

Madras Cement

Variable Cost 1833.46 1767.45 1628.87 1149.24 916.55Variable Cost % 0.91 0.91 0.92 0.91 0.91Fixed Cost 172.53 179.81 147.47 118.34 85.96Fixed Cost % 0.09 0.09 0.08 0.09 0.09Contribution 787.25 1039.73 900.37 856.08 650.82Contribution % 0.30 0.37 0.36 0.43 0.42Production Capacity 0.73 0.80 0.65 0.58 0.57Contribution Pu 1077.73 1295.43 1379.65 1464.61 1148.11

BEP (units) 1600858.15

1388029.85

1068895.03 807995.08 748711.57

BEP in Rs 2620.71 2807.18 2529.24 2005.32 1567.37P/V Ratio 0.30 0.37 0.36 0.43 0.42

MOS 5703816.85

6638088.15

5457184.97

5037098.92

4919930.43

MOS %tage 3.56 4.78 5.11 6.23 6.57

INDIA CEMENT

• The India Cements Ltd was established in

1946 and the first plant was setup at

Sankar-Nagar in Tamil-Nadu in 1949.

• Seven plants spread over Tamil-Nadu and

Andhra Pradesh.

• The capacities as on March 2010 have

reached 14.05 mtpa.

India Cement

India Cement

Variable Cost 2,664.46 2,540.95 2,117.90 1,726.87 1,376.66

Variable Cost (%) 86.67% 86.29% 87.04% 87.13% 90.90%

Fixed Cost 409.92 403.88 315.24 255.11 137.74Fixed Cost (%) 13.33% 13.71% 12.96% 12.87% 9.10%Contribution 3413.29 3687.06 3358.34 3044.25 2255.21

Contribution (%) 100.00% 100.00% 100.00% 100.00% 100.00%

Production Capacity 1.00 1.05 0.91 0.92 0.84

Contribution PU 3420.03 3513.64 3685.88 3296.63 2677.28

BEP (Units) 1198586.87 1149463.87 855262.79 773851.77 514477.38

BEP (Volume) 409.92 403.88 315.24 255.11 137.74P/V Ratio 1.00 1.00 1.00 1.00 1.00

MOS 8781713.13 9344104.13 8256091.21 8460589.23 7909034.62

MOS (%) 732.67% 812.91% 965.33% 1093.31% 1537.29%

ACC CEMENT

ACC Cement

• Established in 1936, ACC has been a

pioneer and trend-setter in cement and

concrete technology.

• Among the first companies in India to

include commitment to environment

protection as a corporate objective.

• ACC is now part of the worldwide Holcim

Group.

ACC Cement

Variable cost 5,252.12 4,853.55 4,762.99 4,252.68 3,505.30Variable % 87.14% 88.50% 87.44% 85.74% 87.36%Fixed Cost 775.22 630.43 684.03 707.24 507.10Fixed Cost % 12.86% 11.50% 12.56% 14.26% 12.64%Contribution 2,395.65 3,168.04 2,466.98 2,642.11 2,226.45Contribution % 31.32% 39.49% 34.12% 38.32% 38.84%Production Capacity 2.1375 2.1369 2.0836 1.99 1.8733

Contribution PU 1120.77193 1482.540128 1183.998848 1327.693467 1188.517589

BEP in units(Tonnes) 6916839.897 4252363.818 5777286.026 5326831.964 4266659.615

BEP in Rs. 2474.778978 1596.271191 2004.684424 1845.597375 1305.473029

P/V ratio 0.313248176 0.394939158 0.3412158 0.383203839 0.388441575

Margin of Safety(Tonnes) 14458160.1 17116636.18 15058713.97 14573168.04 14466340.38

Margin of Safety % 209.03% 402.52% 260.65% 273.58% 339.06%

ANALYSIS

Comparison Between Companies

• Variable Cost Dec '10 Dec '09 Dec '08 Dec '07 Dec '06

ACC 87.14% 88.50% 87.44% 85.74% 87.36%

JK Cement 90.78% 90.60% 90.51% 91.34% 92.45%

India Cement 86.67% 86.29% 87.04% 87.13% 90.90%

Madras Cement 91.40% 90.77% 91.70% 90.66% 91.43%

Ultratech Cement 60.35% 70.98% 73.12% 71.03% 70.43%

Fixed Cost Dec '10 Dec '09 Dec '08 Dec '07 Dec '06

ACC 12.86% 11.50% 12.56% 14.26% 12.64%

JK Cement 9.22% 9.40% 9.49% 8.66% 7.55%

India Cement 13.33% 13.71% 12.96% 12.87% 9.10%

Madras Cement 8.60% 9.23% 8.30% 9.34% 8.57%

Ultratech Cement 39.65% 29.02% 26.88% 28.97% 29.57%

Contribution PU Dec '10 Dec '09 Dec '08 Dec '07 Dec '06

ACC 1120.772 1482.54 1183.999 1327.693 1188.518

JK Cement 808.2103 1234.272 1103.36 1336.943 1041.056

India Cement 750.3081 1092.202 1361.422 1426.594 1042.974

Madras Cement 1077.734 1295.433 1379.649 1464.613 1148.106

Ultratech Cement 2005.109 1285.725 1193.974 1259.367 1094.479

P/V Ratio Dec '10 Dec '09 Dec '08 Dec '07 Dec '06

ACC 0.313248 0.394939 0.341216 0.383204 0.388442

JK Cement 0.188371 0.275721 0.268448 0.33499 0.301375

India Cement 0.219387 0.310847 0.369361 0.432744 0.389565

Madras Cement 0.300396 0.370382 0.355984 0.426904 0.415231

Ultratech Cement 0.509642 0.322014 0.296628 0.344266 0.326289

Margin Of Safety Dec '10 Dec '09 Dec '08 Dec '07 Dec '06

ACC 209.03% 402.52% 260.65% 273.58% 339.06%

JK Cement 128.46% 266.91% 250.08% 431.00% 428.37%

India Cement 82.68% 183.77% 293.49% 416.40% 537.83%

Madras Cement 356.30% 478.24% 510.54% 623.41% 657.12%

Ultratech Cement 58.21% 16.16% 14.72% 28.70% 15.33%

CONCLUSION

A PRESENTATION BY:Adil Anwar (11DCP003)

Amritanshu Mehra (11DCP008)Ravi Gupta (11DCP038)

Rohit Aggarwal (11DCP040)