financial_analysis

8/7/2019 financial_analysis

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75th Annual Report 2010 77

Financial Analysis of ACC Limited (Standalone)

THTHTHTHTHE FOLLE FOLLE FOLLE FOLLE FOLLOOOOOWIWIWIWIWINGNGNGNGNG TTTTTABABABABABLE SET FORLE SET FORLE SET FORLE SET FORLE SET FORTTTTTHHHHH TTTTTHHHHHE BE BE BE BE BRRRRREEEEEAKAKAKAKAKUUUUUP OFP OFP OFP OFP OF TTTTTHHHHHE COE COE COE COE COMPMPMPMPMPANANANANANY’S EY’S EY’S EY’S EY’S EXPENSES AXPENSES AXPENSES AXPENSES AXPENSES AS PS PS PS PS PARARARARART OFT OFT OFT OFT OF TTTTTHHHHHE NE NE NE NE NETETETETET SALESSALESSALESSALESSALESFigures in ` Crore

2010 % of Net sales 2009 % of Net sales

Net SalesNet SalesNet SalesNet SalesNet Sales 7,717.337,717.337,717.337,717.337,717.33 100%100%100%100%100% 8,027.208,027.208,027.208,027.208,027.20 100%100%100%100%100%

Other income 356.93 5% 240.42 3%

Increase in stock in trade and work in progress (56.58) -1% (28.74) 0%

Consumption of Raw materials 1,123.20 15% 891.51 11%

Purchase of Traded Cement 117.63 1% 93.16 1%

Personnel Expenses 461.89 6% 367.72 5%

Power and Fuel 1,598.67 21% 1,539.65 19%

Outward Freight charges on Cement etc. 1,070.30 14% 1,054.41 13%

Depreciation and Amortisation 392.68 5% 342.09 4%

Other Expenditure 1,848.24 24% 1,629.13 20%

Interest Expenses 56.78 1% 84.30 1%

PrPrPrPrProfitofitofitofitofit bef bef bef bef bef orororororeeeee TTTTTaxaxaxaxax 1,461.451,461.451,461.451,461.451,461.45 19%19%19%19%19% 2,294.392,294.392,294.392,294.392,294.39 29%29%29%29%29%

CCCCComponenomponenomponenomponenomponents of Netts of Netts of Netts of Netts of Net Sales (%)Sales (%)Sales (%)Sales (%)Sales (%)

1.1.1.1.1. NET SALES:NET SALES:NET SALES:NET SALES:NET SALES:Figures in ` Crore

2010 2009 Change Change%

Sale of Products and Services (Gross) 8,563.71 8,724.24 (160.53) -1.84%

Less - Excise Duty 846.38 697.04 149.34 21.42%

Sale of Products and Services (Net) 7,717.33 8,027.20 (309.87) -3.86%

Net sales decreased by 3.86% during current year over previous year due to reduction in cement sales volumes by

1.12% which can be seen from the below mentioned table. The price per ton of cement has increased marginally

by ` 26.51 per ton as compared to previous year.

19%29%

14%

13%

21%19%

15% 11%

Profit before Tax

Others

Depreciation

Personnel Expenses

Outward Freight

Power & Fuel

Raw Materials

2009

19%

4%5%

2010

20%

5%6%



78 ACC Limited

C M Y K

Financial Analysis

Figures in million tonnes

2010 2009 Change Change%Cement (Mt) 21.28 21.52 (0.24) -1.12%

Clinker 0.12 0.20 (0.08) -40.00%

2.2.2.2.2. OTOTOTOTOTHHHHHER INCER INCER INCER INCER INCOOOOOME:ME:ME:ME:ME:Figures in ` Crore


Other operating income 258.45 163.70 94.75 57.88%

Other income 98.48 76.72 21.76 28.36%

Other Operating income has increased by 57.88% as it includes ` 64.45 Crore arising due to a write back of

provisions made in earlier years in relation to claims of Gagal Sales Tax Subsidy, such provision is considered to be

no longer required pursuant to a decision of the Supreme Court in the matter of Transport Subsidy delivered

during the year.

Other income is increased by 28.36% as compared to previous year, primarily on account of increase in dividend

income from mutual funds.

3.3.3.3.3. PUPUPUPUPURRRRRCCCCCHAHAHAHAHASE OFSE OFSE OFSE OFSE OF TRTRTRTRTRADIADIADIADIADING CEMENTNG CEMENTNG CEMENTNG CEMENTNG CEMENT:::::

Figures in ` Crore


Purchase of Trading Cement 117.63 93.16 24.47 26.27%

Purchase of trading cement has increased by 26.27% due to increase in quantity by 25% from 0.24 to 0.30 million

tons.

4.4.4.4.4. RARARARARAW MAW MAW MAW MAW MATTTTTERERERERERIALIALIALIALIALS CONSUS CONSUS CONSUS CONSUS CONSUMED:MED:MED:MED:MED:

Figures in ` Crore


Raw Materials Consumed 1,123.20 891.51 231.69 25.99%

Consumption of raw materials has increased by 25.99% over the previous year mainly due to following:-

Average cost of slag has increased by ` 375.39 per ton.

Purchased clinker has gone up by 0.38 million tons.



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5.5.5.5.5. PAPAPAPAPACCCCCKIKIKIKIKING MANG MANG MANG MANG MATTTTTERERERERERIALIALIALIALIALS CONSUS CONSUS CONSUS CONSUS CONSUMED:MED:MED:MED:MED:

Figures in `

Crore


Packing Materials Consumed 268.55 238.72 29.83 12.50%

Consumption of packing material has increased by 12.50% mainly due to increase in the price of bags consumed

for dispatch of cement.

6.6.6.6.6. POPOPOPOPOWER ANWER ANWER ANWER ANWER AND FUD FUD FUD FUD FUEL:EL:EL:EL:EL:Figures in ` Crore


Power and Fuel 1,598.67 1,539.65 59.02 3.83%

Power and fuel cost has marginally increased by 3.83%. By prudent sourcing we were able to bring the fuel costsunder control both imported and coal. The increase in purchased power tariff led to increase in costs.

7.7.7.7.7. REPREPREPREPREPAIAIAIAIAIRRRRRS:S:S:S:S:Figures in ` Crore


Repairs 474.03 371.06 102.97 27.75%

Expenditure on account of repairs has increased by 27.75% due to following:-

Provision of ` 71.16 Crore (including ` 47.36 Crore pertaining to the period until December 31, 2009) is madeduring the year, consequent to change its basis of identifying obsolescence of spare parts based on the actual

usage pattern. Increase in maintenance costs in various units of the company.

8.8.8.8.8. ROROROROROYYYYYALALALALALTYTYTYTYTY:::::Figures in ` Crore


Royalty 116.59 98.39 18.20 18.50

Royalty paid on limestone has increased by 18.50% since the rate of royalty on limestone had been increased from` 45 to ` 63 per ton in the previous year w.e.f. August 13, 2009.

9.9.9.9.9. PERPERPERPERPERSONSONSONSONSONNNNNNEL EXPENSES:EL EXPENSES:EL EXPENSES:EL EXPENSES:EL EXPENSES:Figures in ` Crore


Personnel Expenses 461.89 367.71 94.18 25.61%



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15.15.15.15.15. OTOTOTOTOTHHHHHER EXPENSES:ER EXPENSES:ER EXPENSES:ER EXPENSES:ER EXPENSES:Figures in ` Crore


Excise Duties (Net) 115.14 84.52 30.62 36.23%

Rent 19.75 19.14 0.61 3.19%

Insurance 18.32 17.60 0.72 4.09%

Stores and Spare parts Consumed 11.30 10.03 1.27 12.66%

Commission on Sales 23.64 23.12 0.52 2.25%

Miscellaneous Expenses 354.64 317.51 37.13 11.69%

Provision for Bad and Doubtful Debts 5.79 31.26 (25.47) -81.48%

TOTAL 548.58 503.18 45.40 9.02%

a) Excise Duties (Net):- There is increase in excise duty charges during the current year by 36.23%, due to increasein excise duty rate on captive consumption of clinker at exempted units from ` 300 per ton to ` 375 per ton.

b) Miscellaneous Expenses: - Miscellaneous expenses has gone up by ` 37.13 crore as compared to previous yeardue to loss on sale / discarding of assets at various locations.

c) Provision for Bad and Doubtful debts: - During the current year, there is decrease in provision for bad anddoubtful debts by ` 25.47 crore as in the previous year provision was made of ` 29 crore in respect of sales taxincentive available under a state government policy in respect of one of its cement plants.

16.16.16.16.16. DEPRDEPRDEPRDEPRDEPRECECECECECIAIAIAIAIATTTTTION ANION ANION ANION ANION AND AMD AMD AMD AMD AMORORORORORTTTTTISISISISISAAAAATTTTTION:ION:ION:ION:ION:Figures in ` Crore


Depreciation and Amortisation 392.68 342.09 50.59 14.79%

There is increase in depreciation on account of asset capitalization of ` 1,333.67 Crore as compared to ` 1,005.71Crore in the previous year.

During the current year, there is commissioning of Bargarh capacity expansion, Wadi capacity expansion, installationof grinding units at Kudithini and Thondebhavi and other capitalization.

17.17.17.17.17. INTINTINTINTINTERERERERERESESESESEST EXPENSES:T EXPENSES:T EXPENSES:T EXPENSES:T EXPENSES:Figures in ` Crore


Interest Expenses 56.78 84.30 (27.52) -32.65%

Interest expenses has decreased by 32.65% due to following:-

Repayment of Rupee Term loan of ` 50 crore (` 200 Crore was repaid in the month of Dec 2009).

Interest claim on delayed payment of royalty on limestone provided in the previous year of ` 22.43 Crore.



82 ACC Limited

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Financial Analysis

18.18.18.18.18. FIXED ASSETFIXED ASSETFIXED ASSETFIXED ASSETFIXED ASSETS:S:S:S:S:Figures in ` Crore


Net Fixed Assets 5,082.44 4,158.29 924.15 22.22%

Capital Work in progress 1,562.80 2,156.21 (593.41) -27.52%

Net Fixed assets increased by 22.22% as compared to previous year mainly due to commissioning of Bargarhexpansion / modernization project, Wadi capacity expansion, captive power plants at Chanda and Bargarh, grindingunits at Kudithini and Thondebhavi and other capitalizations.

Capital work in progress decreased by 27.52% as compared to previous year mainly due to capitalization of projects.

19.19.19.19.19. INVESINVESINVESINVESINVESTTTTTMENTMENTMENTMENTMENTS:S:S:S:S:Figures in ` Crore


Investments 1,702.67 1,475.64 227.03 15.39%

There is increase in investments by 15.38% due to following:-

Increase in the investment of mutual funds as compared to previous year. As on December 31, 2010 thecompany invested ` 1,307.56 Crore (Previous Year ` 1,129.47 Crore) in mutual funds of its surplus cash.

100% Investment in Encore Cement and Additives Private Limited, a Company engaged in manufacturing andsupply of ground Slag.

45% Investment in Asian Concretes and Cements Private Limited, a Company engaged in cement grinding.

20.20.20.20.20. INVENTINVENTINVENTINVENTINVENTORORORORORIIIIIES:ES:ES:ES:ES:Figures in ` Crore


Stock-in-trade and Stores & Spares 914.98 778.98 136.00 17.46%

Inventories has increased by 17.46% due to following:-

Stock-in-trade as on December 31, 2010 was higher than the level of December 31, 2009 by ` 56.57 Crore.

Raw materials inventory was higher by 50.45% due to increase in inventories of gypsum and slag.

Inventory of Coal increased by 44.28% as compared to previous year.

Provision of ` 71.16 Crore is made during the year, consequent to change its basis of identifying obsolescenceof spare parts based on the actual usage pattern

21.21.21.21.21. SUSUSUSUSUNNNNNDRDRDRDRDRY DEBY DEBY DEBY DEBY DEBTTTTTORORORORORS:S:S:S:S:Figures in ` Crore


Sundry Debtors 178.28 203.70 (25.42) -12.48%

Sundry Debtor has decreased by 12.48% as compared to previous year. During the current year, the Company hasreceived ` 45.19 from state government on account of Transport subsidy claim from director of Industries Simla.

The average collection period outstanding for cement customer third party sales as on December 31, 2010 is 4.37days as compared to 2.95 days as on December 31, 2009.



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22.22.22.22.22. OTOTOTOTOTHHHHHER CUER CUER CUER CUER CURRRRRRRRRRENT ASSETENT ASSETENT ASSETENT ASSETENT ASSETS:S:S:S:S:Figures in ` Crore


Other Current assets 56.12 10.99 45.13 410.65%

During the current year, the other current assets have gone up as compared to previous year due to increase inaccrued interest on investment. Further there is increase in asset held for disposal at various locations.

23.23.23.23.23. LOLOLOLOLOANS ANANS ANANS ANANS ANANS AND ADD ADD ADD ADD ADVVVVVANCANCANCANCANCES:ES:ES:ES:ES:Figures in ` Crore


Loans and Advances 523.94 516.11 7.83 1.52%

Loans and advances increased by 1.52 % as compared to previous year due to following:-

Increase in advances and deposits on account of ` 57.45 Crore pertaining to sales tax incentive scheme at oneof the location.

Decrease in balance with excise, customs ports & other authorities by ` 77.10 crore on account of utilization of cenvat credit on capital items of capex projects, as the company has registered itself under the Large Tax PayerUnit (LTU) w.e.f October 1, 2009.

24.24.24.24.24. CUCUCUCUCURRRRRRRRRRENT LIABENT LIABENT LIABENT LIABENT LIABIIIIILITLITLITLITLITIIIIIES:ES:ES:ES:ES:Figures in ` Crore


Current Liabilities 2,093.96 1,963.91 130.05 6.62%

Current liabilities have increased marginally by 6.62 % as compared to previous year.

25.25.25.25.25. PRPRPRPRPROOOOOVISIONS:VISIONS:VISIONS:VISIONS:VISIONS:Figures in ` Crore


Provisions 1,652.46 1,150.00 502.46 43.69%

Provisions has increased by 43.69% due to following:-

Employee benefits provision has increased by ` 22.99 crore on account of change in discount rate as well aschange in assumption for salary escalation rate.

Proposed a one-time special Platinum Jubilee final dividend of ` 7.50 per share. Higher Provision for income tax.



84 ACC Limited

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Financial Analysis

26.26.26.26.26. LOLOLOLOLOAN FUAN FUAN FUAN FUAN FUNNNNNDS:DS:DS:DS:DS:Figures in ` Crore


Secured Loans 509.93 550.00 (40.07) -7.29%

Unsecured Loans 13.89 16.92 (3.03) -17.91%

There is decrease in secured loans primarily on account of repayment of rupee term loan of ` 50 crore during thecurrent year.

There is marginal decrease in unsecured loan of ` 3.03 on account of repayment as compared to previous year.

27.27.27.27.27. CACACACACASH FLSH FLSH FLSH FLSH FLOOOOOWWWWW:::::Figures in ` Crore


Net cash flow from operating activities 1,950.72 2,397.08 (446.36) -18.62%

The net cash from operating activities is decreased by ` 446.36 Crore due to following:-

Lower operating EBITDA during the current year.

Marginal decrease in net working capital.

Decrease in Direct taxes paid (net) during the current year.Figures in ` Crore


Net cash flow from investing activities 802.25 1,504.94 (702.69) -46.69%

During the current year, fund used in investing activities has decreased by ` 702.69 Crores due to following:

Decreased in cash outflow for Capex purpose by ` 690 Crore.

Decreased in purchase of investment by ` 72.20 Crore.

Increased in loans to subsidiary companies by ` 81.51 Crore.

Figures in ` Crore


Net cash flow from financing activities 636.73 454.58 182.15 40.07%

The net cash from financing activities is increased by ` 182.15 Crore due to following:

Higher payment of dividend and dividend distribution tax as compaired to previous year.

No fund raised during the current year while ` 300 Crores was raised in previous year through issue of debentures.



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ECECECECECONOONOONOONOONOMICMICMICMICMIC VVVVVALALALALALUUUUUE ADDED [EE ADDED [EE ADDED [EE ADDED [EE ADDED [EVVVVVA] SA] SA] SA] SA] STTTTTAAAAATTTTTEMENTEMENTEMENTEMENTEMENT

`

Crore

2010 2009 2008 2007 2006

Capital employed 7,355 6,932 5,746 4,791 4,234

Avg Capital Employed 7,144 6,339 5,268 4,512 3,868

EEEEEVVVVVAAAAA

Net operating profit after taxes 1,120 1,607 1,213 1,439 1,232

Cost of Capital 819 694 643 538 419

EEEEEVVVVVAAAAA 301301301301301 913913913913913 570570570570570 901901901901901 813813813813813

Return on Capital employed (%) 15.68 25.35 23.02 31.89 31.85

Weighted Average Cost of Capital (%) 11.47 10.95 12.20 11.92 10.83

EEEEEVVVVVA / AA / AA / AA / AA / Avvvvverererererage Cage Cage Cage Cage Capital Emploapital Emploapital Emploapital Emploapital Employyyyyed (%)ed (%)ed (%)ed (%)ed (%) 4.214.214.214.214.21 14.4014.4014.4014.4014.40 10.8210.8210.8210.8210.82 19.9619.9619.9619.9619.96 21.0221.0221.0221.0221.02

EnEnEnEnEnterpriseterpriseterpriseterpriseterprise VVVVValuealuealuealuealue

Market Capitalisation 20,194 16,362 9,012 19,228 20,349

Add: Debts 524 567 482 306 771

Less: Cash and Cash Equivalents 2,388 1,876 1,438 1,489 1,080

EEEEEV (EnV (EnV (EnV (EnV (Enterpriseterpriseterpriseterpriseterprise VVVVValue)alue)alue)alue)alue) 18,33018,33018,33018,33018,330 15,05315,05315,05315,05315,053 8,0568,0568,0568,0568,056 18,04518,04518,04518,04518,045 20,04020,04020,04020,04020,040

EEEEEV /V /V /V /V / YYYYYrrrrr. End C. End C. End C. End C. End Capital Emploapital Emploapital Emploapital Emploapital Employyyyyed (ed (ed (ed (ed (TTTTTimesimesimesimesimes))))) 2.492.492.492.492.49 2.172.172.172.172.17 1.401.401.401.401.40 3.773.773.773.773.77 4.734.734.734.734.73

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