Ambuja Cements Limited

“About 70 percent of our population stays in villages. This population is largely dependent on
agriculture and there will be demand for housing if agricultural growth is high.”

– A L Kapur, Managing Director, Ambuja Cements

“Good evening all of you…” said Dr Dayal, Professor of Finance, to the students standing on the
corridor going towards the campus library of IBS, Hyderabad. For a few seconds the corridor was
brimming with Good evening Sir…Good evening Sir…Actually Dr. Dayal is one of the favorite
faculties of IBS Hyderabad and every student likes his friendly nature. “Sir, Please join us…we are
having a discussion on the present condition of the cement industry to prepare ourselves for the
end-semester class assignment” said Alok, first year MBA student. “Oh, really!!! That’s great”
was the reply from Dr Dayal. “Then, we will discuss it in the conference room” Dr Dayal added.
In the next five minutes, about ten students along with Professor Dayal, were sitting in the
conference room and discussing on the state of the cement industry in India.

“Sir, recently ACC announced its plan to expand business in rural areas…Sir why so? Is demand
from urban areas touched the peek level?” asked Kapil. “Sir, I heard rural India accounts for about
one-third of the cement sales in the country. Is this share going to increase in the future?” added
Ritu. “Sir, I heard that industry’s capacity utilization decreased to 82% in the 2nd quarter of FY09
compared to 90% in the corresponding quarter a year earlier” added Ramesh. Dr Dayal replied, “It
is like this…in our country the construction sector consumes 60% of the cement produced. Till
August 2008, there was healthy demand from the construction sector. But after August, the
demand side saw a significant fall due to slowdown in the real estate, construction, infrastructure
and corporate capital investments. Low utilization rate compared to the previous year is the
indication of the pitiable demand. At the same time, the rural areas were witnessing northward
movement in the demand backed by the Rs.710 billion farm-loan waiver, favorable weather and
higher government support price for different crops. Industry experts believe that these factors will
further fuel the demand for cement. So far the industry players concentrated on cities, towns and
semi-urban areas. However, now they are focusing on the rural areas to gain from the upcoming
increase in per capital consumption in rural areas.” “OK…. that is why Ambuja, ACC and others
are strengthening their presence in rural areas” Gaurav said.

“Sir, let us now discuss some more about Ambuja cement” said Ramesh. “Yes Sir…. Yes Sir…”
all students shouted simultaneous. Dr Dayal, “OK…OK but first I would like to tell something
about the Indian cement industry after which we will discuss about Ambuja cements; but, for that
purpose I need to open my laptop because no one can memorize the details about such a huge
industry.” “We are ready Sir” was the response from the students.

Cement Industry in India

Let us start with the overall cement Industry. It is one of the core industries, is vital for a country’s
development and because of its importance it is highly regulated in India. India is the second
largest producer of cement in the world, after China and is currently in an expansion mode. India’s
Ambuja Cements 2009-04

cement industry comprises 130 large cement plants and more than 300 mini cement plants; these
plants follow a standardized process of cement production from raw material to marketing. In
December 2008, the total production capacity of the industry stood at 207 million tons (mt). In
India, per capita production of cement is very low compared to the global average. India’s per
capita production of 115 kilograms (kg) per year is far behind the world average of over 250 kg
and China’s per capita production of more than 450 kg. The per capita consumption of cement in
India is 135 kg as against the global average of 270 kg.

As mentioned earlier, Indian cement industry is enjoying a series of successes; this is on account
of the higher GDP growth. The booming housing and real estate sector, global demand, and
increasing activity in the infrastructure sector, such as the state and national highways, drive the
demand for cement. To meet the rising demand for cement, the focus of the industry is now on
increasing its production capacity. Also, some of the major cement companies of the world are
evincing interest to enter the Indian market, sparking off a spate of mergers and acquisitions.
However, the major obstacles to the growth of the cement industry are power shortage and rising
input costs.

Though the cement industry is on a roll, experts believe that the Indian cement industry is going
through a consolidation phase. Some examples of consolidation in the Indian cement industry are:
Gujarat Ambuja taking a 14 percent stake in ACC, besides taking over DLF Cements and Modi
Cement; ACC’s taking over of IDCOL; India Cements’ taking over of Raasi Cement and Sri
Vishnu Cement; and, Grasim industries acquiring L&T’s cement business, Indian Rayon’s cement
division, and Sri Digvijay Cements. Foreign cement companies are also picking up stakes in large
Indian cement companies. Swiss cement major Holcim picked up 14.8 percent of the promoters’
stake in Gujarat Ambuja Cements Limited (GACL). Holcim’s acquisition has led to the emergence
of two major groups in the Indian cement industry: the Holcim-ACC-Gujarat Ambuja Cements
combine and the Aditya Birla group through Grasim Industries and UltraTech Cement. Lafarge,
the French cement major acquired the cement plants of Raymond and Tisco, and L&T’s Ready
Mix Concrete (RMC) business. Italy based Italcementi acquired a stake in the K.K. Birla promoted
Zuari Industries’ cement plant in Andhra Pradesh, and German cement company Heidelberg
Cement entered into an equal joint venture agreement with S P Lohia Group controlled Indo-Rama
Cement.

The above mergers and acquisitions facilitated Indian cement industry to acquire the technical
capability to produce different types of cements like Ordinary Portland Cement (OPC), Portland
Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid
Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement etc.

Nature of the Industry

Cyclical
Cement industry is cyclical in nature. It is highly sensitive to business cycles as well as broader
economic trends. There is a high degree of correlation between GDP growth rate and growth in
cement consumption. When the economy is in boom, the demand for cement increases due to the
development activities in the infrastructure sector, boom in real estate, and corporate expansion.
However, when the economy is in recession, cement industry too faces recession.

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Regulated Industry
Cement industry, being a core industry of the country, is vital for the latter’s development. In
India, the cement industry is highly regulated and cement prices are under government control. To
keep cement prices under control the government sometimes takes certain measures, which could
be a worrying factor for the industry, especially at a time when raw material prices and freight
costs are shooting through the roof. Cement prices have always been a bone of contention between
the government and the producers. Currently, the government is exerting pressure on the industry
to further decrease the prices.

Standardized Technology
Cement production involves a standardized and simple process. Technology is not an entry barrier
in the cement industry. Industry does not offer any technological advantage to specific players. It
is characterized by a mature and stable technology with simple, minor improvements taking place
over the years. Any change in the technology can be easily diffused in the industry.

Conglomerations
The domestic cement industry is characterized by the presence of various diversified companies,
which have significant stakes in the cement sector. Some of the prominent diversified players
operating in this sector are – Grasim Industries, Jaiprakash Industries and Century Textiles.
Diversified conglomerates like the Birla Group and the Singhanias (Raymond, JK Synthetics) have
significant interests in the cement business.

Industry Value Chain

Mining Manufacturing Testing Marketing Distribution

Mining
The important raw materials for making cement are limestone, clay and mart. These are extracted
from quarries using heavy machinery. The extracted raw materials are transported to the crushing
installation and then the crushed material is sent for storage. It is stored in blending beds and
homogenized. The desired raw mix of crushed raw materials and the additional component
required for the type of cement is prepared using metering devices. Roller grinding mills and ball
mills will then grind the mixture to a fine powder and dry it at the same time.

Manufacturing
Burning is the most important step in the manufacturing process, which takes place in huge rotary
kilns. At the end of the kiln, the raw material is fed either directly or using a pre-heater system.
Before reaching a temperature of about 14500 C, the raw material is slowly cascaded down the
inclined kiln towards the heat. In this burning zone, a process called clinkering takes place. The
clinker nodules now drop into coolers. Conveyors then take these nodules away to the clinker
storage silos. Electrostatic precipitators clear the kiln to prevent the gas leaving it, to discharge into
the atmosphere. Cement mills use steel balls of various sizes and a small quantity of gypsum to
grind the clinker. A fine powder called cement is then formed. Gypsum is used to control the
setting time of cement. The finished cement is then stored in silos. In order to ensure consistency,
further blending takes place at the silos where the cement is stored.

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Testing
Quality testing is carried out right from the supply of raw materials till the final product is
dispatched. Every company sets the standard for the quality of the product as also the raw material.
Hence, companies follow a standard testing procedure.

Marketing
Industry sources point out that cement business in India is mostly retail oriented. Companies
conduct research at the time when they enter the market and analyze the quality of cement
produced by their competitors. After market research, companies develop and refine the product
that meets customer needs. Packaging and pricing represents a very concrete way to communicate
with the target market and express the positioning of business. Companies also ensure the right
kind of distribution method that suits the company and the customer. Companies also promote the
product through advertisements.

Figure 1: Market Structure

Source: Myiris.com

The market structure of the Indian cement industry is fragmented with no firm having a significant
market share. The industry comprises small and medium sized companies. The top five players in
the Indian cement industry make up for more than half of the installed capacity of around 190
million tons while small players hold the balance portion in the industry. Market share of top five
players in the industry has increased from 42% in FY 02 to 56% in FY 07. In FY 07, Holcim
group maintained its leadership position with a market share of 22.6% followed by Aditya Vikram
Birla group at 19.4%.

The extent of concentration in the industry has increased over the years. The reason for this being
the focus of the larger and more efficient units to consolidate their operations by restructuring their
businesses and by taking over relatively weaker units. The relatively smaller and weaker units are
finding it difficult to withstand the cyclical pressure of the cement industry.

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Industry Performance
The growth in Indian cement industry has been there for past seven years. The reason is the boom
in real estate and housing sector, infrastructure projects and industrial expansion. Among these,
real estate sector is the key driver and accounted for almost 55% in FY 08. The growth in the
domestic demand for cement surpassed the economic growth rate of the country; also, the growth
rate of cement demand over the last five years at a CAGR 8.37% was higher than the growth rate
of supply at a CAGR 4.84%.

Figure 2: Growth in Demand and Production

Source: Hindu Business Line.

Cement production increased from 155.66 million tons in 2006-07 to 168.29 million tons in
2007-08 with an 8.11 percent growth rate. In March 2008, the industry produced 16.37 million
tons of cement, the highest when compared with the production in the remaining months of FY
2007-08. Simultaneously, the overall dispatches of the industry grew by 7.98 percent during
2007-08 to 167.65 million tons compared to 155.26 million tons in 2006-07. Cement dispatches
have increased by 6.05 percent to 14.72 million tons in April 2008 against 13.88 million tons in
April 2007.

Cement is a bulky commodity and cannot be transported with ease over long distances. This is the
reason it makes it to a regional market place. The country is divided into five regions and each
region is characterized by its own demand supply dynamics. Region-wise, the growth of
consumption as of March 2008 was about 10 percent over the previous year in the North and
South, 15 percent in the West, 5 percent in the centre and 2 percent in the East. These contribute to
a 9 percent growth across India.
Figure 3: Capacity Utilization

Source: Hindu Business Line.

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According to analysts, the growth in demand for cement has led to an increase in its production
capacity. The total production capacity of the Indian cement industry increased to 190 million tons
by the end of 2007-08, as against 167 million tons during the same period in 2006-07, recording a
growth rate of 13.7 percent. Further, with a capacity addition of 0.45 mt by Vasavadatta Cements
in April 2008, the installed capacity of the cement industry has increased to 196.22 mt as on April
30, 2008. Furthermore, by the end of August, India’s cement industry had 132 large plants and 365
small plants with an installed capacity of 204 mt. The capacity addition in the industry is at a
slower rate compared to demand growth and is leading to maximum capacity utilization. The
capacity utilization for second quarter ended September 2008 declined to 82%, lowest in last four
years.

Growth Initiatives

Infrastructure and Housing Boom

Currently, the Indian economy is growing at nearly 9 percent. To maintain this growth rate in
future, government spending on infrastructure facilities is expected to increase. In India, the real
estate and housing sector are in a boom phase. Government initiatives in the infrastructure sector,
coupled with the housing sector boom and urban development, will continue to be the main drivers
of growth for the Indian cement industry. Increased infrastructure spending has been a key focus
area over the last five years indicating good times ahead for cement manufacturers.

As per estimates, an investment of US$25 billion is required for urban housing and US$450 billion
is required for infrastructure related projects. Industrial expansion projects would witness
investments worth US$88 billion over the next five years. Furthermore, the then Finance Minister
P. Chidambaram had stated that India would double the amount to be spent on infrastructure over
the next five years to sustain its record economic growth and modernize its infrastructure. The
government has increased budgetary allocation for roads development under the National Highway
Development Project (NHDP) to USD 3.23 billion; this allocation will keep up the demand for
cement. The continuous increase in the number of infrastructure projects along with a rise in
construction activity has ensured rising demand levels for the cement industry. Hence, the demand
for domestic cement is expected to grow at a CAGR of approximately 10% for the next 5 years.

Capacity Addition
Cement companies are adding more plants to provide for a rapidly expanding economy. The
Indian cement industry is therefore expected to add 111 million ton (mt) of annual capacity by the
end of 2009-10 (FY 10), riding on the back of approximately 141 outstanding cement projects. As
per ICRA Industry Monitor, the installed capacity is expected to increase to 186 mt per annum
(mtpa) by FY 08-end, 219 mtpa by the end of FY 09, and up to 241 mtpa by FY 10-end.

Commercial Structure and Corporate Projects

Currently, various sectors including textiles, chemical, plastic and minerals are operating at 100%
capacity. Therefore, capacity expansion across these sectors is likely to boost the demand for
cement as also the huge demand for multiplexes and malls envisaged by real estate companies.
Hence, experts feel that the demand for cement is here to stay.

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Captive Power Plants

Rising cost of power and interruptions is a big concern for the industry as this affects the bottom
line of the companies. The power requirements of the cement industry average around 110-120
kilowatt hours per ton of cement produced. The average energy cost of the industry has increased
from Rs.528 a ton in Financial Year (FY) 2000 to Rs.581 a ton in FY 2007. The industry now
focuses on captive power generation to reduce power costs and to ensure continuous power supply.
Captive power generation tends to be more cost effective as compared to power from the grid.
According to an estimate, power from the grid usually averages Rs.3/unit, and that if generated
from DG sets costs Rs.5/unit; whereas, when power is generated using coal-fired steam turbines it
costs Rs.1.5-2/unit. At the end of FY 07, nearly 53% of the total cement production was powered
through captive sources.
Logistic Cost
Logistic cost is also an important cost element. Cement, being a low value bulk product, logistics
constitute a big cost component both by way of transporting the raw material to the plant and
cement to its market. Freight and distribution expenses as a percent of cost of sales for the cement
companies have increased from 18.4 percent in 2002 to 24 percent in 2007. In FY 2008, freight
costs soared with higher petroleum and diesel prices. The 2008 Railway Budget’s 14 percent
reduction in freight charges for fly ash, waiver of busy season surcharge on bulk goods and
addition of new lines to serve cement clusters in different regions, could bring some relief to
cement companies on this front in the coming quarters. Also, it’s important to note here that
cement movement by rail has increased over the years.
Issues and Concerns
Rising Input Costs
An increase in the cost of coal, power tariff, royalty on limestone and freight costs have resulted in
cost pressure. Domestic coal prices surged following a 10 percent hike in the prices of all grades of
coal by Coal India Limited in December 2007. The sharp surge in international oil prices prompted
the move towards coal-based power generation. Cement plants accounted for around 4.2 percent of
India’s coal demand. A further spike in energy cost, the profit margin of the market player erodes
further.
Oversupply
Though the cement industry is adding capacity, experts feel that this scenario poses a problem of
oversupply. Cement producers are expected to increase production by another 88 million tons by
the end of FY 10. Thus, the cement producers have more cement to supply than the demand.
Table 1: Cement Demand and Supply

Million Tons

Year Ending Total Total Demand Excess

Production
March 2007 154.8 148.4 6.4
March 2008 186 163.25 1.85
March 2009 219 179.57 18.03
March 2010 241 197.53 44.87
Source: www.hindu business line.com

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Future Outlook
Industry players expect the demand for cement to continue and to remain robust; they also expect
it to sustain the 9-10% per annum growth over the next few years in the wake of huge
infrastructure and housing development requirements across the country. However, the 80-90 mtpa
fresh capacity additions over the next couple of years will lead to softening of cement prices in the
country. Further, any increase in cement prices in the near term would primarily be aimed at
offsetting additional cost pressures.

Commenting on the outlook of the industry, the latest ICRA report said, “After an unexpected
slowdown during FY09, the cement sector is expected to witness strong production and
consumption growth of 9 percent during the medium-term in line with the economic growth…and
the increased activity in the construction sector…Future drivers of cement demand growth in India
would be increased spending on road and housing projects.”

Ambuja Cements Limited

Ambuja Cements Ltd. (ACL) was established as Ambuja Cements Private Ltd. (ACPL) in 1981 by
Narotam Satyanarayan Sekhsaria (Sekhsaria), a businessman from the western Indian state of
Gujarat. Originally a cotton trader, Sekhsaria entered the cement business because of factors such
as stable demand, lack of substitutes and limited competition. With the support of Gujarat
Industrial Investment Corporation (GIIC), Sekhsaria and his two partners, Suresh and Vinod
Neotia, set up APCL. In 1983, the company floated a public issue and its name was changed to
Gujarat Ambuja Cements Ltd. (GACL). The same year, production started at a 0.7 million tons per
annum (mtpa) plant, named Ambuja Cements, in Ambuja Nagar, Gujarat. GIIC sold its stake in
GACL in two tranches to Sekhsaria in 1987 and 1990.

Between 1993 and 1996, the company set up plants in different parts of the country. Among them
are 1 mtpa capacity plant in Ambuja Nagar in 1993; 1.5 mtpa plant at Suli in Himachal Pradesh in
1995; and the third plant with a capacity of 1 mtpa at Ambuja Nagar, named Guj Line-II in 1996.
To speed up the growth, the company acquired three companies between 1997-1999; they are a
sick company Modi Cements with a capacity of 1.4 mtpa at Raipur (Madhya Pradesh), in 1997;
Nadikudi (around 100 km from Guntur) and Proddatur (near Cuddaph) limestone mines in Andhra
Pradesh in 1998, and DLF cements in 1999. In 1999, it acquired a 7.2% stake in Associated
Cement Company (ACC).

By the late 1990s, ACL had emerged as one of the most energy efficient and technologically
advanced cement manufacturers in India. In 1999, ACL’s average production cost was Rs. 847 per
ton, 65 percent lower than that of its nearest rival ACC (Rs.1,302 per ton). In the same year it had
also achieved more than 100 percent capacity utilization. In December 1999, GACL acquired a
51% stake in Delhi-based DLF Cement for Rs.3,500 million. In 2001, private equity investors
American International Group and Government of Singapore, invested in ACIL. In the year 2005,
ACIL restructured as a joint venture with Holcim. In 2006, founder promoters of the company sold
part of their holding in ACL to Holcim and ACL became a Holcim Group company in May 2006.
The accounting year of the company has changed from June 30th to December 31st, to match it
with the account period of parent company Holcim.

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Business Model

Company authorities point out that the business model of the company is built on the following
lines:

i. It earns 92% of its revenue from domestic market and 8% from foreign market.

ii. Its business model is based on owned infrastructure which helps it to keep costs in control.

Company’s Strategies

Expanding business in rural areas is part of the company’s growth strategy. In addition to this,
some major aspects of the company’s strategies are as follows:

Increase in Grinding Capacity

The company is increasing its grinding capacity by 5.5 million tons per annum, which will be
commissioned in 2009-10. The estimated investment on setting up these units is Rs. 10000
million.

Table 2: Grinding Capacity Addition Plan

Location Cement (million tons) Year of Commissioning

Dadri (UP) 1.5 2nd half of 2009

Nalagarh (HP) 1.5 1st half of 2010

Ahmedabad
1.5 1st half of 2009
(Gujarat)

Barh (Bihar) 1.0 2nd half of 2010

Total 5.5
Source: Company’s Annual Report, 2007.

Increase in Capacity
To tap the growing market, the company is constantly focusing on capacity expansion programs.
According to company sources, two new production lines in Himachal Pradesh and Chattisgarh,
along with associated grinding facilities, are expected to be commissioned in 2009 during the 1st
and 2nd half. “We will add six million tons of capacity by 2009. Our expansion programs are on
track”, said A L Kapur, Managing Director of the company. He further added, “The Company
would expand the capacity of its two plants in Himachal Pradesh and Chhattisgarh by three million
tons each.” Company sources state that the total cement capacity would increase from the present
19 million tons to 25 million tons by the end of year 2009.

Addition in Sea Transportation Capacity

Considering it is the cheapest and fastet means for cement trasportaion, the company is planing to
increase its dependece on sea route. At present, the company has seven dedicated vessels for
cement trasportaion. Purchase deals for another three new vessels have been made. It will improve
the seaways capability of the company and help serve the Mharashtra coastal marekt from the
Gujarat plant.

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Captive Infrastructure

To reduce cost, the company is focusing more and more on infrastructure in the form of port,
receiving terminals and captive power plants. Out of the company’s 11 cement plants, four have
capative power plants with total capacity of 407 MW. Around 79% of the total power requirement
is met by capative power plants. The company is planning to set up capative power plants at all its
manufacturing units across the country with an investment of around Rs.16,000 millions, which
would have a capacity of 200 mw by 2010.

Strong Presence in the Growing Markets of North and West

Company is having a strong presence in North Central and South Western regions. And it is
planning maintain their strong position in these regions. They are the fastest growing markets for
cement when compared to the Eastern region.

Financial Performance

ACL is one of the leading cement companies in India. Cement production increased from 16.3
million tons in calendar year (CY) 2006, to 16.9 million tons in CY07. According to company
sources, it would touch 17.1 million tons by the end of CY08.

Chart 1: Last 5 years Sales, EBITDA and EBITDA Margin

Source: Icfai Research Team.

As we can see in Chart 1, the company’s revenue increased from Rs.17 billion in FY03 to Rs.57
billion in FY07, an impressive 35% Compound Annual Growth Rate (CAGR). In the same period,
operating income grew at a CAGR of 45% and crossed the Rs.20 billion mark in FY07. The
company is able to maintain its EBITDA margin above 30% since FY03 with a CAGR of 45%.
While on the one hand the company is able to maintain high growth in revenue, on the other it is
able to reduce energy costs by shifting from liquid to solid fuel which reduce cost of captive
energy.

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Chart 2: Energy Consumption – Per Unit of Production

Source: Icfai Research Team.

Future Outlook
Accessibility to foreign expertise and ability to produce cheapest cement make it one of the
leading cement companies in India. However, the recent slow down in real estate sector dent the
growth movement of the company. Apart from this, fluctuations in costs, excess capacity in short
term period and high rates of taxes are the main concerns for the investors. “The rising fuel costs
pushed inflation into double digits which muted the industry growth,” said Amrit Lal Kapur,
Managing Director of Ambuja Cements. Analysts believe that good expertise and an experienced
management will be able to overcome all these obstacles. In the words of Kapur, “We are not very
much affected in a large manner but prices are under pressure, demands are under pressure.”

The recent reduction in excise duty from 12 percent to 8 percent and the Government’s efforts to
revive the ailing realty sector brought in new hopes for the cement industry.

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ANNEXURE I
A financial analyst working in an investment banking firm has made the following forecasts
regarding the performance of the company in future.
FY08 FY09 FY10
Net Sale Growth (%) 12.00% 10.50% 9.50%
EBITDA Margins (%) 33.19% 32.86% 29.85%
Depreciation as a % of revenue (%) 4.00% 4.00% 4.00%
Other Income Growth (%) 17.14% 10.50% 9.50%
Net assets Turnover Ratio 1.08 1.05 1.02
Current Assets Growth (%) 11.27% 21.76% 22.54%

Current Liabilities (in mn Rs.) 12,240 13,275 14,271

Debt-Equity Ratio 0.04 0.02 0.01
Number of Shares Outstanding (in million) 1522.40 1522.40 1522.40
Intermediate Growth Rate (for FY 2012 to FY 2017) will be as follows:
2011 9.00%
2012 8.50%
2013 8.00%
2014 7.50%
2015 7.00%
2016 6.50%
Terminal Growth Rate will be at 6.00 percent.

Source: Icfai Research Team.

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ANNEXURE II
Consolidated Profit and Loss Account of Ambuja
Currency in Rs.mn 2007
Net Sales 57,921
Manufacturing and Operating Expenses 21,689
Employee Cost 2,108
Administrative, Selling and Other Expenses 14,384
Others (614)
Total Operating Expenses 37,567
EBITDA 20,353
EBITDA Margin 35.14%
Depreciation and Amortization 2,372
EBIT 17,982
Interest 771
Add: Other income 1,938
Profit before Share of profit in Associates 19,149
Share of profit in Associates 789
Profit Before Tax and Exceptional Items 19,938
Exceptional Items 7,955
PBT 27,894
Tax 9,433
PAT 18,461
PAT Margin 31.9%
Dividend 5,327
Dividend Tax (17% on dividend) 905
Total Dividend (including dividend tax) 6,232
Retained earnings 12,229
Source: Company Annual Reports.

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ANNEXURE III
Consolidated Balance Sheet of Ambuja
Particulars (Currency in Rs.mn) 2007
Gross Assets (Gross Block) 52,518
Accumulated Depreciation 22,740
Net Block 29,779
Capital WIP 6,969
Net Fixed Assets 36,748
Investments 14,804
Current Assets 15,899
Cash and Bank Balance 6,516
Inventories 5,863
Sundry Debtors 1,354
Loans and advances 2,052
Others 115
Current Liabilities 11,683
Net Current Assets Excluding Cash (2,299)
Deferred Tax (Net) (3,784)
Capital Deployed (Net) 51,984
Total assets (Gross) 63,667
Non-Current Liabilities
Secured Debt 1,083
Unsecured Debt 2,304
Total Debt 3,387
Contingent Liabilities
Share Capital 3,045
Share application money pending allotment –
Reserves and Surplus 45,548
Total Stockholders Equity 48,593
MINORITY INTEREST 4
Capital employed 51,984
Total Liability 63,667
Source: Company Annual Reports.

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ANNEXURE IV
Monthly Index Closing Values and Ambuja’s Closing Price
SENSEX Ambuja (ACL)

Month-End Closing Month-End Closing

Date Return in % Return in %
Value Price (in Rs.)

Jan-03 3250.38 157.90

Feb-03 3283.66 0.01 161.15 0.02
Mar-03 3048.72 –0.07 159.75 –0.01
Apr-03 2959.79 –0.03 166.45 0.04
May-03 3180.75 0.07 177.15 0.06
Jun-03 3607.13 0.13 205.20 0.16
Jul-03 3792.61 0.05 226.45 0.10
Aug-03 4244.73 0.12 230.35 0.02
Sep-03 4453.24 0.05 229.20 0.00
Oct-03 4906.87 0.10 252.70 0.10
Nov-03 5044.82 0.03 280.90 0.11
Dec-03 5838.96 0.16 303.85 0.08
Jan-04 5695.67 –0.02 288.55 -0.05
Feb-04 5667.51 0.00 308.60 0.07
Mar-04 5590.60 –0.01 295.30 –0.04
Apr-04 5655.09 0.01 332.60 0.13
May-04 4759.62 –0.16 283.70 –0.15
Jun-04 4795.46 0.01 284.45 0.00
Jul-04 5170.32 0.08 278.15 –0.02
Aug-04 5192.08 0.00 324.25 0.17
Sep-04 5583.61 0.08 337.60 0.04
Oct-04 5672.27 0.02 341.95 0.01
Nov-04 6234.29 0.10 368.10 0.08
Dec-04 6602.69 0.06 401.55 0.09
Jan-05 6555.94 –0.01 449.20 0.12
Feb-05 6713.86 0.02 449.35 0.00
Mar-05 6492.82 –0.03 401.60 –0.11
Apr-05 6154.44 –0.05 421.35 0.05
May-05 6715.11 0.09 453.55 0.08
Jun-05 7193.85 0.07 59.00 –0.87
Jul-05 7635.42 0.06 64.55 0.09
Aug-05 7805.43 0.02 65.60 0.02
Sep-05 8634.48 0.11 76.75 0.17
Oct-05 7892.32 –0.09 69.45 –0.10
Nov-05 8788.81 0.11 80.75 0.16
Dec-05 9397.93 0.07 79.60 –0.01
Jan-06 9919.89 0.06 88.50 0.11
Feb-06 10370.24 0.05 88.20 0.00
Mar-06 11279.96 0.09 103.25 0.17
Apr-06 12042.56 0.07 124.05 0.20
May-06 10398.61 –0.14 92.90 –0.25
Jun-06 10609.25 0.02 99.50 0.07
Jul-06 10743.88 0.01 104.70 0.05
Aug-06 11699.05 0.09 112.35 0.07
Sep-06 12454.42 0.06 116.85 0.04
Oct-06 12961.90 0.04 117.25 0.00
Nov-06 13696.31 0.06 144.15 0.23
Dec-06 13786.91 0.01 141.30 –0.02
Jan-07 14090.92 0.02 137.15 –0.03
Feb-07 12938.09 –0.08 115.95 –0.15
Mar-07 13072.10 0.01 106.70 –0.08
Apr-07 13872.37 0.06 117.95 0.11

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Ambuja Cements 2009-04

SENSEX Ambuja (ACL)

Month-End Closing Month-End Closing

Date Return in % Return in %
Value Price (in Rs.)

May-07 14544.46 0.05 113.15 –0.04

Jun-07 14650.51 0.01 124.55 0.10
Jul-07 15550.99 0.06 131.50 0.06
Aug-07 15318.60 –0.01 133.45 0.01
Sep-07 17291.10 0.13 143.80 0.08
Oct-07 19837.99 0.15 144.65 0.01
Nov-07 19363.19 –0.02 150.00 0.04
Dec-07 20286.99 0.05 146.90 –0.02
Source: www.bseindia.com and Icfai Research Team.

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Ambuja Cements 2009-04

References
1. http:// www.economictimes.indiatimes.com

2. http://www.iupindia.org/

3. http://www.topnews.in/ambuja-cements-plans-pump-rs-1600-crore-captive-power-272269

4. http:// www.businessweek.com

5. http://www.nseindia.com

6. http:// http://www.gujaratambuja.com/

7. http://www.finance.google.com

8. http://www.thehindubusinessline.com/

9. http://www.business-standard.com
10. http://www.financialexpress.com
11. http:// www.indiainfoline.com
12. http://www.livemint.com/2008/11/28000158/Ambuja-Cements-says-Rs3500-cr.html

13. http://www.bainet.org/news%20archive/cement.htm
14. http://www.financialexpress.com/news/ambuja-employs-new-tech-at-ropar-plant/367876/
15. http://www.iloveindia.com/economy-of-india/cement-industry.html
16. CMIE Database.

65