Project of Corporate Finance

On

Comparative Analysis of Company

Company name: J.K.Cement

Submitted to: Submitted By:

Mrs. Mamta Simhar Abhishek Hasiza

Ankush Bhatia

Ankush Soni

Dhaval Patel

Divyabhan Singh

Mohit Khandelwal

Rahul Katoch

Table of Content

1. Objectives2. Company Profile3. Its Competitors4. Market Share of J.K Cement5. Financial Statement of company6. Ratio’s

- Liquidity ratio’s

- Solvency Ratio’s

- Turnover Ratio’s

- Profitability Ratio’s7. Financial Position of company8. Summary

Objectives

We have chosen this project because we want to know how to analyze of financial and interoperate the financial statement of J.K.Cement Limited. By this project we are able to understand how ratios analysis of any company helpful in decision making related to liquidity, profitability and activity.

Company Profile

J.K. Cement is an affiliate of the J.K. Organization, which was founded by Lala Kamlapat Singhania. The J.K. Organization is an association of industrial and commercial companies and has operations in a broad number of industries.

Our cement operations commenced commercial production in May 1975 at our first plant at Nimbahera in the state of Rajasthan. At Nimbahera, Company started with a single kiln with a production capacity of 0.3 million tons. Company added a second kiln in 1979 with production capacity of 0.42 million tons, and a third kiln in 1982 with a production capacity of 0.42 million tons. Company added a precalciner with a capacity of 0.4 million tons in 1988, which increased our capacity at Nimbahera to 1.54 million tons. During the years 1998 through 2003, it continued to implement modifications to each of our kilns, which increased our aggregate capacity at Nimbahera to 2.8 million tons as of September 30, 2005.

It has commissioned a second grey cement plant at our Mangrol plant in 2001, with a production capacity of 0.75 million tons. As of September 30, 2005, company had an aggregate production capacity of 3.55 million tons per annum of grey cement. Its white cement plant was completed in 1984 with a capacity of 50,000 tons. Company increases the plant’s production capacity to 300,000 tons as of September 30, 2005.

Today, J. K. Cement Ltd. is one of the largest cement manufacturers in Northern India. J.K.Cemant is the second largest white cement manufacturer in India by production capacity. While the grey cement is primarily sold in the northern India market, the white cement enjoys demand in the export market including countries like South Africa, Nigeria, Singapore, Bahrain, Bangladesh, Sri Lanka, Kenya, Tanzania, UAE and Nepal.

Market cap (Rs): 13bn52 - wk Hi/Lo (Rs): 211 / 109Avg. daily vol. (3mth): 169,547Face Value (Rs): 10

Competitors

Comparison of cement industry on the basis of EPS and Price earning ratios:

Company EPS P/EFY09E FY10E FY09E FY10E

ACC 73.2 78.4 10.9 10.2Grasim 299.2 316.7 8.6 7.1Ambuja cement

9.6 10.8 11.8 10.5

Ultra tech cement

105.3 122.3 7.4 6.4

India cements 26.2 30.3 6.9 5.9JK cement 51.8 60.6 2.9 2.5Shree cement 175.1 235.4 6.2 4.6

ACC

Grasim

Ambuja cem

ent

Ultra t

ech ce

ment

India cem

ents

JK cemen

t

Shree

cemen

t

73.2

299.2

9.6

105.3

26.251.8

175.1

78.4

316.7

10.8

122.3

30.360.6

235.4

EPSEPS FY09E EPS FY10E

ACC

Grasim

Ambuja cem

ent

Ultra t

ech ce

ment

India cem

ents

JK cemen

t

Shree

cemen

t

10.9

8.6

11.8

7.46.9

2.9

6.2

10.2

7.1

10.5

6.45.9

2.5

4.6

P/EP/E FY09E P/E FY10E

Comparison of competitors on the basis of market capitalization, sales turnover, net profit and total assets:

Company Mkt Cap cr Sale Turnover

Net Profit Total Assets

ACC 17124.73 7474.15 1212.78 5409.74Ambuja Cement

16178.94 6281,73 1402.275 5961.54

Ultra Tech Cement

12327.84 6326.96 977.02 5743.73

Shree cement

7734.04 2740.57 577.97 2644.31

India Cement

3619.87 3470.78 432.18 5619.41

Madras Cement

2834.22 2538.50 363.72 3723.65

Birla Corp 2832.64 1809.70 323.51 1515.48Rain Commodities

1692.59 1112.16 85.06 988.11

Dalmia Cement

1528.94 1778.68 158.63 3606.48

Binani Cement

1526.31 1497.32 108.66 1254.73

J.K Cement 1147.86 1502.46 142.34 1750.46

Mkt Cap cr

ACCAmbuja CementUltra Tech CementShree cementIndia CementMadras CementBirla CorpRain CommoditiesDalmia CementBinani CementJ.K Cement

Market Share

Cement and clinker exports have grown at a CAGR of 18.1 per cent since 1995-96 with total exports of 9 million tones in 2007-08. This accounts for 7.7 per cent of the total production. As cement is bulky item those companies, who have their own jetties, have a higher share in exports. Trade in cement is underway with the neighboring countries and countries in Africa and West Asia. L&T (now a part of Grasim), Gujarat Ambuja Cements Ltd and Jaiprakash Industries are the top exporters. The western region, due to its proximity to the coasts accounts for 92.4 per cent of total exports, of which Gujarat holds a share of 76 per cent.

Birla Corp's product portfolio includes acetylene gas, auto trim parts, casting, cement, jute goods, yarn, calcium carbide etc. The cement division has an installed capacity of 4.78 million metric tones and produced 4.77 million metric tones of cement in 2007-08. The company has two plants in Madhya Pradesh and Rajasthan and one each in West Bengal and Uttar Pradesh and holds a market share of 4.1 per cent.

The product portfolio of CTIL includes textiles, rayon, cement, pulp & paper, shipping, property & land development, builders and floriculture. Cement is the

largest division of CTIL and contributes to over 40 per cent of the company's revenues. The company has an installed capacity of 4.7 million tones with a total cement production of 5.43 million tones in 2007-08.

Grasim-UltraTech Cemco

Grasim's product profile includes viscose staple fibre (VSF), grey cement, white cement, sponge iron, chemicals and textiles. With the acquisition of UltraTech, L&T's cement division in early 2004, Grasim has now become the world's seventh largest cement producer with a combined capacity of 31 million tonnes. Grasim (with UltraTech) held a market share of around 21 per cent in 2007-08.

Jaiprakash Associates Limited

Jaiprakash Industries, now known as Jaiprakash Associates Limited JAL) is part of the Jaypee Group with businesses in civil (engineering, hospitality, cement, hydropower, design consultancy and IT. It has an annual capacity of 4.6 million tones with plants located in Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar Pradesh). The company has a market share of 3.8 per cent with the cement division contributing US$ 172 million to revenue in 2007-08.

India Cements

India Cements is the largest cement producer in southern India with a total capacity of 8.81 million tones and plants in Andhra Pradesh and Tamil Nadu. The company has a market share of 5.4 per cent with a total cement production of 6.36 million tones in 2007-08.

JK Cement

JK Cement, a Singhania Group company, started manufacturing nylon at Kota in 1962. Subsequently, it diversified into PSY/PFY, nylon tyre-cord, cement (in 1975), acrylic and white cement (in 1984). The company has a market share of 2.7 per cent.

Company Name Market Share

Grasim Ultra 21%

Jaiprakash Associates 3.8%

Indian Cements 5.4%

J.K Cement 2.7%

Others 67.1%

Financial Statement of company

Rs./LacsBALANCE SHEET 31-03-2009 31-03-2008SOURCE OF FUNDS Shareholder's Funds Capital-Equity 6992.72 6992.72

Reserve & Surplus a) Capital Reserve 6680.43 3470.14 b) Revenue Reserve 36733.82 26733.82 c) Revaluation Reserve 27785.45 29115.19 d) Surpluse in Profit & Loss Account 14489.48 13118.47 e) Share Premium Account 25923.60 25903.61 111612.78 98341.23Loan Funds a) Secured Loans 43686.44 38278.60 b) Unsecured Loans 12753.64 12773.98 56440.08 51052.58Deferred Tax Liability 10060.00 5099.30 185105.58 161485.83APPLICATION OF FUNDS Fixed Assets a) Net Block : Historical 93789.62 79798.19 Revaluation 27785.45 29115.19

Market Share

Grasim UltraJaiprakash AssociatesIndian CementsJ.K CementOthers

121575.07 108913.38 b) Capital Work-in-Progress 3505.73 13384.01 125080.80 122297.39Investments a) Investment in Subsidiary Companies Unquoted 651.07 527.38 b) Others Unquoted 423.01 423.01 1074.08 950.39Current Assets, Loans & Advances a) Inventories 13612.58 11453.15 b) Sundry Debtors 5303.82 5725.59 c) Revaluation Reserve 12520.06 14544.35 d) Other Current Assents 131.63 133.31 e) Loans & Advances i) To Subsidiary Companies 47763.18 26354.18 ii) Others 10386.01 8895.38 89717.28 67105.96Less: Current Liabilities & Provisions Liabilities 26636.95 23862.95 Provisions 4373.57 5200.96 31010.52 29063.91Net Current Assets 58706.76 38042.05Miscellaneous Expenditure ( to the extent not written-off or adjusted) 243.94 196.00TOTAL 185105.58 161485.83

Rs./Lacs INCOME AND EXPENDITURE ACCOUNT 31-03-2009 31-03-2008INCOME Sales (Net) 149683.56 145825.28Dividend - 27.93Interest 914.26 1533.16Other Income 791.18 757.78TOTAL 151389.00 148144.15EXPENDITURE Cost of goods Consumed/Sold 15821.83 15816.98i) Opening Stock of WIP & Finished goods 2104.63 3831.18ii) Raw Materials Consumed 16344.43 14090.43Less: Closing Stock of WIP & Finished Goods 2627.23 2104.63Power & Fuel 37614.01 32969.06Manufacturing Expenses 12496.59 11625.23Selling & Distribution Expenses 36353.56 32039.49Salaries, Wages and Other Employees benefits 7776.84 6200.88Managerial Remuneration 684.89 646.99Interest 5467.33 5120.87

Depreciation (Net) 5242.22 4106.92 - Depreciation 6510.47 5380.51 - Less: Transfer from Revaluation Reserve 1268.25 1273.59Auditor's Remuneration 13.09 9.58Provision for doubtful debts/Advances 16.40 399.86Other Expenses 6506.18 4551.40TOTAL 127992.94 113487.26PROFIT BEFORE TAX 23396.06 34656.89PROVISION FOR TAX Fringe Benefit Tax 196.50 210.00Current Tax 5568.00 7150.00Deferred Tax 3397.16 780.30PROFIT AFTER TAX 14234.40 26516.59Balance from previous year 13118.47 5692.45Amount Available For Appropriations 27352.87 32209.04APPROPRIATIONS General Reserve 10000.00 15000.00Proposed Dividend - Equity Shares 2447.45 3496.36Dividend Tax on above 415.94 12863.39 594.21 19090.57Balance carried to Balance Sheet 14489.48 13118.47Earning per share - Basic and Diluted (In Rs.) 20.36 37.92Refer Notes forming part of Abridged Accounts.

Ratio Analysis

Liquidity Ratio’s

Current Ratio = Current Assets/ Current Liabilities

2009 = 89717.28/31010.52

= 2.89:1 (Thumb rule 2:1)

2008 = 67105.96/29063.91

= 2.31:1

Liquid Ratio = Quick assets/Current Liabilities

2009 = 76104.7/31010.52

= 2.45 (Thumb Rule 1:1)

2008 = 55652.81/29063.91

= 1.91

Absolute Liquid Ratio = Absolute Liquid assets/current liabilities

2009 = 17823.88/31010.52

= 0.57 (Thumb Rule 0.5:1)

2008 = 20269.94/29063.91

= 0.69

Solvency Ratio’s

Debt-Equity Ratio = Outsider’s Fund/Shareholder’s Fund

2009 = 56440.08/111612.78

= 0.505

2008 = 51052.58/98341.23

= 0.519

Equity Ratio = Shareholder’s Fund/Total Assets

2009 = 111612.78/215872.16

= 0.517

2008 = 98341.23/190353.74

= 0.516

Solvency Ratio = Total Liabilities to outsiders/ Total assets

2009 = 56440.08/215872.16

= 0.267

2008 = 51052.58/190353.7

= 0.261

Fixed assets Net worth ratio= Fixed assets/Shareholder’s Fund

2009 = 125080.80/112612.78

= 1.11

2008 = 122297.39/98341.23

= 1.24

Profitability Ratio’s

Net Profit Ratio = N.P after tax/ Net Sales*100

2009 = 14234.10/149683.56*100

= 9.51%

2008 = 26516.59/145825.28*100

= 18.18%

Return on Shareholder’s Funds = Net profit/ Shareholder’s Fund*100

2009 = 14234.10/111612.78*100

= 12.75%

2008 = 26516.59/98342.23*100

= 26.96%

Earning per share (EPS) = Net Profit after Tax/No. of equity shares

2009 = 14234.5(in lacs)/69927250

= 20.36

2008 = 26516.59(in lacs)/69927250

= 37.92

Price Earning ratio (P/E ratio) = Market price per equity share/Earning per share

2009 = 168.4/20.36

= 8.27

2008 = 167/37.92

= 4.04

Activity Ratio’s

Working Capital Turnover Ratio= Cost of sales or Sales/Working capital

2009 = 149683.56/31010.52

= 4.826 times

2008 = 145825.28/29063.91

= 5.017 times

Inventory Turnover ratio = Cost of goods sold or sales/Average inventory

2009 = 149683.56/13612.58

= 10.99 times

2008 = 145825.28/11453.15

= 12.73 times

Debtors turnover ratio = Net Credit Annual sales/Av. Trade Debtors

2009 = 149683.56/5303.82

= 28.22times

2008 = 145825.28/5725.59

= 25.46times

Average Collection Period = No. of working Days/Debtors turnover ratio

2009 = 360/28.22

= 12.75days

2008 = 360/25.46

= 14.13days

Financial Position of company

Liquidity Ratios

Liquidity ratio of the Company is quite satisfactory because the Current ratio is good of company. In 2009 it 2.89:1 as compared to 2008 2.31:1. It shows company’s solvency position is better. Acid test ratio or Quick ratio is useful in measuring the liquidity position of Company. Acid test ratio of company in 2009 is 2.45:1 as compared to its standard of 1:1. It also shows that there is not much difference between current ratio and acid test ratio which is quite good for company. It shows that there is Limited stock available at the end of year.

Solvency Ratios

Solvency ratio’s of company shows ability of a concern to meet its Long term obligations. Like Debt-equity ratio it shows outsider’s fund as compared to Shareholder’s Fund. In 2009 it is 0.505:1 as compared to 0.519:1 in 2008. Lower debt equity ratio is better for the company. Equity Ratio shows a relationship between shareholder’s funds to total assets of the Firm. Higher the ratio or the share of the shareholders in the total capital of company better is the long term solvency position of the company. In 2009 it is 0.517 as compared to 0.516 in 2008. It is satisfactory from company point of view. Solvency ratio indicates the relationship between the total liabilities to outsiders to total assets of a firm. Lower the solvency ratio more satisfactory or stable is the long term position of a firm. In 2009 company’s solvency ratio is 0.267 as compared to 0.261 in 2008, which is not good it is increasing.

Profitability Ratios

These ratios measure the results of business operation or overall performance and effectiveness of the firm. Net profit ratio shows percentage of net profit as compared to sales. Higher the rate better for the company. In 2009 N.P ratio of company is 9.19% as compared to 18.18% in 2008. It is not good for the company because N.P ratio shows firm’s capacity to face adverse economic conditions such as price competition, low demand etc. Return on shareholder’s fund used for measuring the overall efficiency of a firm. In 2009 company’s ROS is 12.75% as compared to 26% in 2008. It shows negative site to its shareholders because net profit of company are decreasing. EPS of company shows earning power of a firm as compare to its competitors. In 2009 company’s EPS is 20.36 as compared to 37.92 in 2008. It is also not good from investor’s point of view. It reduces the market price of equity shares. Price earning ratio is the ratio between market price per equity share and earning per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares. Higher the P/E ratio the better it

is. P/E ratio in 2009 of company is 8.27 as compared to 4.04 in 2008. Overall profitability of company is not satisfactory apart from P/E ratio.

Activity Ratios

Activity ratios measure the efficiency or effectiveness with which a firm manages its resources or assets. Working capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio indicates the number of times the working capital is turned over in the course of a year. Higher ratio indicates efficient utilization of working capital and a low ratio indicates otherwise. In 2009 it is 4.826 times and 2008 it is 5.017 times. Inventory Turnover ratio indicates the number of times the stock has been turned over during the period and evaluates the efficiency with which a firm is able to manage its inventory. Higher it is better for the company. In 2009 it is 10.99 times as compared 12.73 times. Debtor velocity indicates the number of times is tuned over during a year. Generally the higher the value of debtor turnover the more efficient is the management of debtors or more liquid is the debtors. It basically shows in how much times money collected from debtors. In 2009 it is 12.75 days as compared in2008 it is 14.13 days.

Summary

In this project we came to know about market capitalization of JK cement in the cement industry and in this project we also came to know about dramatically change in share of JK cement over a period of time. From this project we are able to know about the financial position of JK Cement and How to analyze the Financial Statement of any company. This will helpful us in future while analyzing the financial statement.

Thank You