RAMCO CEMENTS LTD

RAMCO CEMENTS LTD Project By:

Ritish AdhikariRajveer SinghRahul AgarwalMahima Choudhary Pooja MakhijaVirek Shah

One of Core industries and plays a vital role in the growth and development of the nation.Second Largest Producer in the worldThe production of cement has increased at a compound annual growth rate (CAGR) of 9.7 per cent to reach 375million tones (MT) during FY 1314. Cement Consumption: 67% -Housing sector13% -Infrastructure Sector 11%-Commercial Sector 9%- Industrial SectorAbout the Cement Industry

The Ramco Cements Limited (Formerly Madras Cements Ltd) is the flagship company of the Ramco Group, a well-known business group of South India. It is headquartered at Chennai.The company is the fifth largest cement producer in the country.Ramco is the most popular cement brand in South India.Ramco deals with Portland cement, Ready Mix Concrete and Dry Mortar products.Integrated Cement Plants , Grinding Units, Packing Terminals of the company are located in Tamil Nadu , Chennai , karnataka , West Bengal, Andhra pradesh .

About Ramco Ltd

Ramco and its Portfolio.

Share Price of Ramco LtdCompetitors & Market Capitalizations

Ramco Cements Balance Sheet :Ramco Cements P&L Statements

Ramco Cements P&L Cash Flow Statements

Ratios Price/Earnings Ratio: (Market Price per Share)/ (Net Income per Share) =334.10/5.79 = 57.70 TimesImpact:With a comparatively higher Market price than the Industry average of INR 175, and lower Earnings per share, Ramco is deemed to be having a high growth prospect with little risk.Return on Assets: [Net Income +Interest (1-Tax Rate)] / [Total Assets] = [137.7 + 188.95(1-0.107)] / [6868.5]*100= 4.46%Impact: Industry Average: 13.67%. A significantly higher Long Term borrowing which in turn a higher interest expense of 188.95 Crore, i.e., 29% is the driver of to a lower Return on Assets.

Return on invested capital =[Net Income +Interest (1-Tax Rate)] / [Long term Liabilities + Shareholders Equity]= [137.7 + 188.95(1-0.107)]/2482.08 = 12.34 %Impact: Thiscalculation is used to assess a company's efficiency at allocating the capital under its control to profitable investments.

Earnings Per share = Net income / number of shares Outstanding = 137.7 / 2379.69 = Rs. 5.78 Impact : Earnings per share is generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio.

Return on Share Holders Equity: Net Income/Share Holders Equity =[137.7/2482.08]*100= 5.54%

Impact: Industry Average: 10%. A significantly higher Long Term borrowing which in turn a higher interest expense of 188.95 Crore, i.e., 29% is the driver of to a lower Return on Share Holders Equity.

Asset Turnover:Sales Revenues/Total Assets=3683.51/6868.56= 0.5362 TimesImpact:Industry Average: 0.5. Ramcos industry average is at par with the industry average. It means that Ramco is utilizing the correct amount of Assets to generate Sales.

Equity Turnover: Sales Revenue/Share Holders Equity =3683.51/2482.08= 1.484 TimesImpact:Industry Average: 2.3. Ramco can make more sales than what it has done. Since it is a high growth company, there is every feasibility that it will come up with a higher equity turnover in the future.Capita Intensity: Sales Revenue/Property Plant and Equipment =3638.51/ (6675.44-2034.37) = 0.783 times.

Dividend pay out Dividend/ net income =17.3Impact: The part of the earnings not paid to investors is left for investment to provide for futureearnings growth. Investors seeking high current income and limited capital growth prefer companies with high Dividend payout ratio. However investors seeking capital growth may prefer lower payout ratio because capital gains are taxed at a lower rate.Debt equity ratio Long term liabilities/shareholders equity =2482.08/2681.80= 92.5%Impact: It indicates what proportion of equity and debt the company is using to finance its assets. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.

Inventory turnover ratio Cost of sales/inventory = 3683.51/685.53 = 5.37Impact: Alow inventory turnover ratiois a signal of inefficiency, Ahigh inventory turnover ratioimplies either strong sales or ineffective buying (the company buys too often in small quantities, therefore the buying price is higher).

Financial leverage ratio Assets/shareholders equity =6868.56/2482.08= 2.76Impact: high financial leverage shows that companys more trusted and a good investment for investors.

Work capital ratio Sales revenue/working capital =3683.51/455.14= 8.093Impact: Theworking capital turnover ratiomeasures how well a company is utilizing itsworking capital to support a given level of sales A high turnover ratio indicates that management is being extremely efficient in using a firm's short-term assets and liabilities to support sales. Conversely, a low ratio indicates that a business is investing in too many accounts receivable and inventory assets to support its sales, which could eventually lead to an excessive amount of bad debts and obsolete inventory.Current ratio Current assets/current liabilities =1249.54/1704.68= 0.733Impact: Current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months.

Trend Analysis

Balance Sheets for the last 5 Fiscal.

Profit and Loss for the last 5 Fiscal.

Cash Flow for the last 5 Fiscal.

RECENT NEWS OF RAMCO :Ramco Cement Ltd is among the lowest-cost cement producers in India, with operating costs (excluding freight costs)/tn. at Rs2, 459 versus industry average of Rs2, 564 in FY13.This was primarily driven by higher usage of captive power, strategic location of plants, investment in operating cap-ex and a low fixed-cost base.

Presence in the southern region, which is facing an oversupply situation but able to manage higher capacity utilization than the industry average.

Ramco cements Ltd is among the first to adopt dry process technology in South India. Provision of railway sidings to all its plants, which help in handling large material inflow/outflow& cost under control.

ConclusionDemand has been consistently weak over the last 12-18 months FY14 production (proxy for demand) grew 3% vs. FY04-14E demand growth of 7% pa.

The key reason for demand weakness has been a slowdown in both government and private expenditure and a slow pace of infrastructure growth.

The recent election win by the right of center BJP-led NDA has positive implications for the sector.

Cement demand should be boosted by the new governments stated focus on infrastructure and low-cost housing in the coming years.

With the recent proposal given by ministry of making the roads with cements and not by tar cement industry has all the reasons to get a push.

With lots of budget allocated for construction of ports, road & in infrastructure in recent budget cement industry is in line to increase the market supply.

Conclusion..