MIRA
INFORM REPORT
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Report Date : |
31.10.2008 |
IDENTIFICATION DETAILS
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Name : |
AMBUJA
CEMENTS LIMITED |
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Formerly Known As : |
GUJARAT
AMBUJA CEMENTS LIMITED |
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Registered Office : |
Ambuja Nagar P.O. Taluka Kodinar, District Junagadh -
362715, |
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Country : |
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Financials (as on) : |
31.12.2007 |
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Date of Incorporation : |
20.10.1981 |
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Com. Reg. No.: |
4717 |
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Legal Form : |
Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacturing and Marketing of Cement. |
RATING & COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
USD 230000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well-established and reputed company having fine track. Available information indicates high financial responsibility of the company. Financial position of the company is good. Payments are always correct and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
Ambuja Nagar P.O. Taluka Kodinar, District Junagadh -
362715, |
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Tel. No.: |
91 - 2795 – 244131/62/5144/61/2853044 |
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Fax No.: |
91 – 2792-2852921 |
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E-Mail : |
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Website : |
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Corporate Office 1 : |
122, Maker Chambers III, Nariman Point, Mumbai 400 021, |
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Tel. No.: |
91-22-22853044/22846270 |
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Fax No.: |
91-22-22852921 |
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E-Mail : |
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Corporate Office 2 : |
106, Maker Chambers III, Nariman Point, Mumbai 400 021, |
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Tel. No.: |
91-22-66597300 |
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Fax No.: |
91-22-22853051 |
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Corporate Office 3 : |
Elegant |
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Factory 1 : |
Cement Plants ·
Ambujanagar, P.O. Taluka Kodinar, District
Junagadh - 362 715, ·
Village Suli, P.O. Darlaghat, District Solan -
171 102, ·
Maratha Cement Works, At Post - Upperwahi,
District Chandrapur, ·
Village Daburji, District Roopnagar - 140 001, ·
P. O. and District Bathinda, Punjab – 150001, ·
P.O. and Village Dhulagori, P.S. Sankrail, Dist. ·
Roorkee, Village Lakeshwari, Pargana -
Bhagwanpur, Tehsil - Roorkee, Dist. Haridwar, Bulk Cement Terminals ·
Muldwarka, Taluka Kodinar, District Junagadh -
362715, ·
Survey No. 39/40, ·
Village Moha, Near Ulwa Reti Bunder, Post.
Ulwa, District Raigad - 410306, |
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Branches : |
Near Vidyanagri, Kalina, |
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Tel. No.: |
91-22-26523253 / 3251 / 3252 |
DIRECTORS
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Name : |
Mr. Suresh Neotia |
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Designation : |
Chairman |
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Name : |
Mr. N S Sekhsaria |
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Designation : |
Vice Chairman |
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Name : |
Mr. Markus Akermann |
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Designation : |
Director |
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Name : |
Mr. Paul Hugentobler |
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Designation : |
Director |
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Name : |
Mr. M.L. Bhakta |
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Designation : |
Director |
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Name : |
Mr. Nasser Munjee |
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Designation : |
Director |
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Name : |
Mr. Rajendra P. Chitale |
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Designation : |
Director |
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Name : |
Mr. Shailesh Haribhakti |
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Designation : |
Director |
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Name : |
Mr. Nirmalya Kumar |
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Designation : |
Director |
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Name : |
Dr. Omkar Goswami |
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Designation : |
Director |
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Name : |
Mr. N.P. Ghuwalewala |
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Designation : |
Whole Time Director |
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Name : |
Mr. Narotam Sekhsaria |
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Designation : |
Managing Director |
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Age |
55 Years |
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Qualification |
B.E.(Chemical) |
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Experience |
34 Years |
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Date of Appointment |
1st April 1983 |
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Name : |
Mr. Vinod Neotia |
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Designation : |
Director |
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Name : |
Mr. Nimesh Kampani |
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Designation : |
Director |
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Name : |
Mr. M. T. Patel |
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Designation : |
Director |
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Name : |
Mr. Harshavardhan Neotia |
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Designation : |
Director |
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Name : |
Mr. Pulkit Sekhsaria |
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Designation : |
Whole Time Director |
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Age |
33 years |
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Qualification |
B.Com |
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Experience |
11 years |
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Date of Joining |
01.07.1993 |
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Name : |
Mr. A. L. Kapur |
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Designation : |
Managing Director |
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Age |
73 Years |
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Qualification |
B.A., F.C.A., F.I.C.W.A. |
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Experience |
49 Years |
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Date of Appointment |
20.02.1999 |
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Other Directorship |
·
W.H.Brady and Company
Limited as a Chief Accountant cum Assistant Secretary ·
Birla Corporation
Limited as a Executive Director and Chief Executive Officer |
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Name : |
Mr. P. B. Kulkarni |
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Designation : |
Whole Time Director |
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Age |
70 years |
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Qualification |
B.E. (Mech.) |
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Experience |
38 years |
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Date of Joining |
08.02.1983 |
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Other Directorship |
Lakshmi Cement J. K. Cement Limited – Chief Engineer |
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Name : |
Mr. A. V. Rao |
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Designation : |
Whole Time Director upto 31/01/2004 |
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Age |
72 years |
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Qualification |
B.E. [Civil] |
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Experience |
50 years |
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Date of Joining |
10.11.1990 |
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Other Directorship |
Straw Products Limited – Chief Engineer
(Construction) |
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Name : |
Mr. B. L. Taparia |
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Designation : |
Whole Time Director and Company Secretary |
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Age |
54 years |
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Qualification |
B.Com, LLB, F.C.S. |
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Experience |
34 years |
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Date of Joining |
28.11.1983 |
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Other Directorship |
Jain Spinners Limited, Secretary and
Finance Manager |
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Name : |
Mr. Anil C. Singhvi |
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Designation : |
Whole Time Director |
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Age |
45 years |
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Qualification |
B.Com, F.C.A. |
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Experience |
22 years |
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Date of Joining |
21.01.1986 |
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Other Directorship |
Century Enka Limited – Manager Accounts |
KEY EXECUTIVES
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Name : |
Mr. Darak R. R. |
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Designation : |
Joint President
(Finance) |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
(As on 30.09.2008)
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Indian |
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Individuals/ Hindu Undivided Family |
4000 |
0.00 |
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Bodies Corporate |
12041909 |
0.79 |
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Foreign |
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Bodies Corporate |
695393717 |
45.67 |
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Public shareholding |
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Institutions |
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Mutual Funds/ UTI |
8422052 |
0.55 |
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Financial Institutions / Banks |
18717056 |
1.23 |
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Insurance Companies |
210664783 |
13.84 |
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Foreign Institutional Investors |
328208700 |
21.55 |
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Non-institutions |
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Corporate Bodies |
19003893 |
1.25 |
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Individuals |
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Individuals -i. Individual shareholders holding nominal share
capital up to Rs 0.100 Million |
130705786 |
8.58 |
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ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100
Million |
22496874 |
1.48 |
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[NRI [ REP] |
19085551 |
1.26 |
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NRI [NON REP] |
2219306 |
0.15 |
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OCB |
12870 |
0.00 |
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Trust |
56240 |
0.00 |
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Shares held by
Custodians and against which Depository Receipts have been issued |
55510811 |
3.65 |
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Total |
1522579548 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturing and Marketing of Cement. |
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Products : |
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PRODUCTION STATUS
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Particulars |
Unit |
Installed
Capacity |
Actual
Production |
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Cement |
MT |
18500000 |
16861080 (excluding Trial Run Production of 11948
MT;) |
GENERAL INFORMATION
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No. of Employees : |
1,692 |
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Bankers : |
· Bank of India · Dena Bank · Bank of Baroda · Punjab National Bank · ANZ Grindlays Bank Plc · The Hong Kong and Shanghai Banking Corporation Limited · Credit Lyonnais |
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Facilities : |
Note: Debentures comprise of :
Series No. 22,
24 and 30 are secured by way of first pari passu charge by mortgage of
immovable properties of the three cement plants of the Company situated at Ambujanagar,
in the state of Gujarat, as covered under respective Trust Deeds. Series No. 21,
and 27 are secured by way of first pari passu charge by mortgage of immovable
properties of the Company situated at Upparwahi, in the state of Maharashtra,
as covered under the respective Trust Deeds.
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
· Dalal and Shah Chartered Accountants. · Chaturvedi and Company Chartered
Accountants |
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Membership : |
Confederation of Indian Industry |
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Associates : |
· Ambuja Cement Rajasthan Limited · ICAN Securities and Research Limited · Development Limited · Sakambari Holdings Private Limited · Bengal Ambuja Housing Development Limited ·
Bengal Ambuja Metro Development Limited |
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Subsidiaries : |
·
Cement Ambuja International Limited ·
Ceylon Ambuja Cements (Private) Limited ·
Indo Nippon Special Cements Limited (Merged with
the Company on 1.01.2007 with effect
from 01.07.2005 ·
Kakinada Cements Limited ·
M.G.T. Cements Private Limited ·
Chemical Limes Mundwa Private Limited ·
Holcim CTC Trading Company - Fellow Subsidiary of
Holderind Investments Limited, Mauritius ·
Holcim Trading Pte Limited, Singapore - Fellow
Subsidiary of Holderind Investments Limited, Mauritius ·
Holcim Group Supports Limited - Fellow Subsidiary
of Holderind Investments Limited, Mauritius ·
ACC Machinery Company Limited - Wholly Owned
Subsidiary of ACC Limited ACC Nihon Casting Limited - Wholly Owned Subsidiary
of ACC Limited ·
ACC Limited
- Associate of Holderind Investments Limited, Mauritius ·
Ambuja Cement India Private Limited - Subsidiary
of Holderind Investments Limited, Mauritius (Associate upto 30.04.2007 ) ·
Holcim Trading FZCO, Dubai - Fellow Subsidiary of
Holderind Investments Limited, Mauritius ·
Holcim Services (Asia) Limited - Fellow
Subsidiary of Holderind Investments Limited, Mauritius ·
Holcim Services (South Asia) Limited - Fellow
Subsidiary of Holderind Investments Limited, Mauritius ·
Siam City Cement, Thailand - Fellow Subsidiary of
Holderind Investments Limited, Mauritius ·
Holcim Limited - Ultimate Parent Company
Holderind Investments Limited, Mauritius |
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Sub-subsidiary : |
Midigama Cements (Private) Limited |
CAPITAL STRUCTURE
(As on 31.12.2007)
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
2500000000 |
Equity Shares |
Rs.2/- each |
Rs.5000.000 millions |
|
150000000 |
Preference Shares |
Rs.10/- each |
Rs.1500.000 millions |
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Total |
|
Rs.6500.000
millions |
Issued Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
1522710942 |
Equity Shares |
Rs.2/- each |
Rs.3045.400
millions |
Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
1522375422 |
Equity Shares |
Rs.2/- each |
Rs.3044.800
millions |
Notes :
1) Out of above
Equity Shares :
·
97,31,57,405 Equity Shares of Rs. 2 each have been
issued as fully paidup Bonus Shares by way of capitalisation of Securities
Premium and Capital Redemption Reserve.
·
2,47,14,990 Equity Shares of Rs. 2 each fully
paid-up have been issued against exercise of Tradable Warrants attached to
18.5% Secured Redeemable Non-Convertible Debentures.
·
1,33,12,370 Equity Shares of Rs. 2 each fully
paid-up have been allotted to the Shareholders of the amalgamating company
Ambuja Cement Rajasthan Limited (ACRL) pursuant to the scheme of amalgamation
as approved by the Board for Industrial and Financial Reconstruction (BIFR)
without payment being received in cash.
·
15,39,61,356 Equity Shares of Rs. 2 each fully
paid-up issued to the Shareholders of the amalgamating company ACEL without
payment being received in cash.
2) Outstanding
Employee stock options exercisable into 96,92,013 (31.12.2006; 82,16,938)
Equity Shares of Rs. 2 each fully paid-up
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.12.2007 (12 Months) |
31.12.2006 (18 Months) |
30.06.2005 (12 Months) |
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SHAREHOLDERS FUNDS |
|
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|
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1] Share Capital |
3044.800 |
3033.700 |
2703.800 |
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2] Share Application Money |
0.000 |
0.500 |
0.000 |
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3] Reserves & Surplus |
43563.900 |
31872.100 |
19080.100 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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5] Employee Stock Option Outstanding |
3.800 |
10.900 |
0.000 |
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NETWORTH |
46612.500 |
34917.200 |
21783.900 |
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LOAN FUNDS |
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1] Secured Loans |
1000.000 |
3177.700 |
5493.300 |
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2] Unsecured Loans |
2304.200 |
5476.100 |
5781.200 |
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TOTAL BORROWING |
3304.200 |
8653.800 |
11274.500 |
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DEFERRED TAX LIABILITIES |
3783.800 |
3838.600 |
0.000 |
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TOTAL |
53700.500 |
47409.600 |
33058.400 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
29598.600 |
24891.800 |
22452.400 |
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Capital work-in-progress |
5100.300 |
5419.200 |
1181.000 |
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Advances against capital expenditure |
1867.600 |
930.100 |
0.000 |
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INVESTMENT |
12889.400 |
11331.200 |
11250.600 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
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Inventories |
5816.000
|
4088.200 |
3170.000 |
|
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Sundry Debtors |
1456.800
|
899.500 |
458.400 |
|
|
Cash & Bank Balances |
6507.900
|
3781.000 |
865.300 |
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Other Current Assets |
39.100
|
50.400 |
0.000 |
|
|
Loans & Advances |
2053.500
|
2957.000 |
1418.500 |
|
Total
Current Assets |
15873.300
|
11776.100 |
5912.200 |
|
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Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Current Liabilities |
6755.400
|
5329.100 |
6767.300 |
|
|
Provisions |
4935.500
|
1686.800 |
1067.700 |
|
Total
Current Liabilities |
11690.900
|
7015.900 |
7835.000 |
|
|
Net Current Assets |
4182.400
|
4760.200 |
(1922.800) |
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MISCELLANEOUS EXPENSES |
62.200 |
77.100 |
97.200 |
|
|
|
|
|
|
|
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TOTAL |
53700.500 |
47409.600 |
33058.400 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.12.2007 (12 Months) |
31.12.2006 (18 Months) |
30.06.2005 (12 Months) |
|
|
Sales Turnover |
64696.800 |
70167.000 |
30258.400 |
|
|
Other Income |
10089.600 |
1587.800 |
841.100 |
|
|
Total Income |
74786.400 |
71754.800 |
31099.500 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
27123.500 |
18416.000 |
5185.400 |
|
|
Provision for Taxation |
9432.500 |
3383.500 |
502.500 |
|
|
Profit/(Loss) After Tax |
17691.000 |
15032.500 |
4682.900 |
|
|
|
|
|
|
|
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Earnings in Foreign Currency : |
|
|
|
|
|
|
FOB Value of Exports |
2774.700 |
5146.100 |
NA |
|
|
Royalty |
0.000 |
45.200 |
NA |
|
|
Other Earnings |
4.700 |
17.100 |
NA |
|
Total Earnings |
2779.400 |
5208.400 |
NA |
|
|
|
|
|
|
|
|
Imports : |
|
|
|
|
|
|
Raw Materials |
280.300 |
175.200 |
NA |
|
|
Stores & Spares |
258.400 |
462.700 |
NA |
|
|
Capital Goods |
197.700 |
348.000 |
NA |
|
|
Others |
3222.300 |
2166.700 |
NA |
|
Total Imports |
3958.700 |
3152.600 |
NA |
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Manufacturing Expenses |
5699.400 |
7244.500 |
3466.100 |
|
|
Administrative Expenses |
13034.800 |
13566.900 |
5551.500 |
|
|
Raw Material Consumed |
4452.800 |
3724.400 |
1322.700 |
|
|
Excise Duty |
7982.900 |
7963.100 |
4278.900 |
|
|
Increase/(Decrease) in Finished Goods |
(587.900) |
109.200 |
(69.700) |
|
|
Employee Cost |
1949.600 |
2144.900 |
938.100 |
|
|
Interest |
758.500 |
1132.300 |
917.700 |
|
|
Miscellaneous Expenses |
1967.400 |
1793.600 |
770.700 |
|
|
Power & Fuel |
10042.000 |
12398.700 |
6784.000 |
|
|
Depreciation & Amortization |
2363.400 |
3261.200 |
1954.100 |
|
Total Expenditure |
47662.900 |
53338.800 |
25914.100 |
|
QUARTERLY RESULTS
|
Year |
31.03.2008 |
30.06.2008 |
|
Type |
1st
Quarter |
2nd
Quarter |
|
Sales
Turnover |
16548.500 |
15697.700 |
|
Other
Income |
422.000 |
3491.500 |
|
Total
Income |
16970.500 |
19189.200 |
|
Total
Expenditure |
11463.700 |
10954.700 |
|
Operating
Profit |
5506.800 |
8234.500 |
|
Interest |
56.900 |
57.100 |
|
Gross
Profit |
5449.900 |
8177.400 |
|
Depreciation |
618.200 |
615.800 |
|
Tax |
1550.000 |
1700.000 |
|
Reported
PAT |
3262.000 |
5770.200 |
KEY RATIOS
|
PARTICULARS |
31.12.2007 (12 Months) |
31.12.2006 (18 Months) |
30.06.2005 (12 Months) |
|
Debt-Equity
Ratio |
0.15 |
0.35 |
0.57 |
|
Long
Term Debt-Equity Ratio |
0.15 |
0.34 |
0.51 |
|
Current
Ratio |
1.05 |
0.91 |
0.63 |
|
TURNOVER
RATIOS |
|
|
|
|
Fixed
Assets |
1.32 |
1.13 |
0.82 |
|
Inventory |
13.06 |
12.89 |
10.59 |
|
Debtors |
54.91 |
68.9 |
68.34 |
|
Interest
Cover Ratio |
26.14 |
17.26 |
6.65 |
|
Operating
Profit Margin(%) |
34.30 |
32.51 |
26.63 |
|
Profit
Before Interest And Tax Margin(%) |
30.65 |
27.86 |
20.17 |
|
Cash
Profit Margin(%) |
21.93 |
26.07 |
21.93 |
|
Adjusted
Net Profit Margin(%) |
18.28 |
21.42 |
15.48 |
|
Return
On Capital Employed(%) |
42.49 |
34.10 |
18.55 |
|
Return
On Net Worth(%) |
29.02 |
35.36 |
22.3 |
LOCAL AGENCY FURTHER INFORMATION
The Joint Venture between the public sector Gujarat
Industrial Investment Corporation (GIIC) and Narottam Sekhsaria and Associates
was the reason for confinement of the company. The company was incorporated in the
year 1981 as Ambuja Cements Private Limited and it was rehabilitated into a
public limited company on 19th March 1983 as Gujarat Ambuja Cements Limited,
cement production is the role of the company in nature and a cost efficient
cement manufacturer in the country. It is a National Quality ISO 9002 certified
company, the only cement company have this so. It's also the first to receive
the same and also have ISO 14000 Certification for environmental systems. The
total cement capacity of the company is 18.5 million tonnes (MT), having five
cement plants at Ambuja Nagar Gujarat (5 MT), Darlaghat Himachal Pradesh (6
MT), Upperwahi Maharashtra (2.5 MT), Rabriyawas Rajasthan (2 MT) and in
Chhaattisharh West Bengal (3 MT). It is also having three Bulk Cement Terminals
at Surat with a storage capacity of 15,000 tonnes has bulk cement unloading
facility, Panvel with a storage capacity of 17,500 tonnes has a bulk cement
unloading facility and in Galle 120 kms from Colombo, Sri Lanka. Handles
million tonnes of cement annually. The port terminal of the company Muldwarka
Gujarat, all weather port, 8 kms from Ambuja Nagar plant, handles ships with
40,000 DWT. Is also equipped to export clinker and cement and import coal and
furnace oil. A fleet of seven ships with a capacity of 20500 DWT ferry bulk
cement to the packaging units.
The company's cement plant was commissioned in 1985, had set up in technical
collaboration with Krupp Polysius, Germany, Bakau Wolf and Fuller KCP. The 12.6
MW diesel-generating sets were commissioned during the year, which were
imported in the year 1988-89. The company got necessary approvals for setting
up another cement plant with 1 million tonne capacity per annum at Himachal
Pradesh in the year 1991. The Company undertook bulk cement transportation, by
sea, to the major markets of Mumbai, Surat and other deficit zones on the West
Coast. Transportation was to be carried out by three specially designed ships
during the year 1992. During the year 1994, the company's Muller location 1.5
million tonne cement project with clinkeriation facility at site in H.P and
grinding facility both at Suli & Ropar in Punjab was bespoken. In 1997,
Kodinar plant of the company was originated its commercial production with an
enhanced capacity.
Subject had set up a $20 million clinker Grinding unit in Sri Lanka in the year
1998. In the year of 2000 cement giants Larsen and Tubro (L and T) and Gujarat
Ambuja Cements entered a unique agreement to reduce transportation costs in
dispatching bulk cement in Gujarat and also in the same year the company has
entered into an annual contract with a Soinhalese firm, Mahaveli Marine Cement,
to supply around 0.250 million tonnes of cement. The company has kick started
its operations in Sri Lanka with help of a cement terminal in the port of
Galle, in the south of the island country, which was started by the company.
The commercial production of Maratha Cement Works plant of the company was
started in the year 2002, a new 2-million tonne Greenfield cement plant at
Chandrapur, Maharashtra has started its commercial production on June of the
year and the merger of Ambuja Cement Rajasthan with the company was happened in
the same year. Again in the year 2004, the company merged Ambuja Cement
Rajasthan with itself.
During 2004-05 the company has installed a cement mill with a capacity of 80
TPH at Darlaghat and commenced its commercial production in February 2005. The
company have commissioned a captive thermal power plant with two 12 MW Steam
Turbo Generators (STG), with two boilers of 45 TPH capacity each at a cost of
Rs.940 millions. The first STG was commissioned in February 2005 and the second
in May 2005. The company has amalgamated its subsidiary company Indo-Nippon
Special Cements Limited in July of the year 2005. Subject has entered into a
partnership with Holcim Ltd of Switzerland through Ambuja Cement India Limited
(ACIL) during 2004-05. The company is setting up new clinker capacity at
Bhatapara in Chattisgarh and Rauri in Himachal Pradesh, each having a capacity
of 2.2 million tonnes per annum cost of 16000 millions, the enchantment in the
year 2007 around the amount of about Rs 35000 millions in different areas of
the company.
The company has awarded for its credit, the National Award for commitment to
quality by the Prime Minister of India, National Award for outstanding
pollution control by the Prime Minister of India, Best Award for highest
exports by CAPEXIL and Economic Times - Harvard Business School Association
Award for corporate excellence in different years. The company was adjudged as
the top Indian company in the cement sector for the Dun and Bradstreet -
American Express Corporate Awards 2007. The company developed a unique homespun
channel management model called Channel Excellence Programme (CEP) for marketing
their product. Over 7000 dealerships and 20,000 retailers across India are
covered under this model. The company name was changed from Gujarat Ambuja
Cements Limited to Ambuja Cements Limited on April, 2007, the word Gujarat was
dropped to reflect the true geographical presence of the company.
In the last decade the company has grown tenfold. The first company in India
introduced the concept of bulk cement movement by the sea transport. The
company's most distinctive attribute, however, is its approach to the business.
Subject follows a unique homegrown philosophy for successful survival. Subject
is the most profitable cement company in India, and one of the lowest cost
producers of cement in the world.
MANAGEMENT
DISCUSSIONS ANALYSIS
The Indian economy posted a record growth of 9.6% in
2006-07, accelerating from 9.4% recorded in the previous fiscal, and is
expected to clock close to 9% in 2007-08. The macro-economic fundamentals are
favourable for a sustained, rapid and more inclusive growth. Industrial
production recorded a growth of 10.63% in 2006-07, which is attributed mainly
to the manufacturing sector which grew at 12%.
The cement industry accounts for approximately 1.3% of the
country's GDP In 2006-07, it recorded a growth of 9.8% over 11.2% achieved in
2005-06.
Integration of Indian economy with the world has manifested
in a three-fold increase in foreign direct investment (FDI) flows into the
country, from US$ 5.5 bn during 2005-06 to US$ 15.7 bn in 2006-07. The
financial system is now more efficient and resilient than ever. The external
sector has been strengthened and considerable foreign exchange reserves of US$
275.55 bn or Rs.11.36 lakh crore (by December 2007 end) have provided a cushion
to withstand unforeseen financial contingencies.
On the political front, it is expected that the country will
continue to steer a course that successfully balances the maintenance of a
vibrant democracy with the need for tough decisions to be taken sometimes, in
order to support long term sustainable growth.
Infrastructure has tremendous potential to contribute to the
national economy. Thrust is continued in several sectors such as roads,
railways, irrigation, water supply and sanitation, housing, urban utility,
civil aviation, airports, ports, power and energy. Infrastructure spending is
expected to grow by 2.3 times to Rs.20 lakh crore in the XI plan period. This
favours high consumption of cement, which is also expected to continue its
strong growth trend in 2007-08.
Since, the current capacities are not enough to meet the
demand of the coming years, over 110 million tonnes of new capacities have been
planned by corporate in the next 5 to 7 years.
During the calendar year 2007, 163.4 million tonnes of
cement were dispatched as against 152.5 million tonnes in 2006, registering a
growth of 7%.
CHANGE
IN THE NAME CAF THE COMPANY
The company had set up its first cement plant in the joint
sector with GIIC in the state of Gujarat. To reflect the manufacturing base in Gujarat,
the name of the company was kept as Gujarat Ambuja Cements Limited. As the
operations of the company have spread to several states in the country in the
last 23 years, the word "Gujarat" was dropped to reflect the true
geographical presence of the company and the name was changed to 'Ambuja
Cements Limited' with effect from 5th April, 2007, with all requisite
approvals.
IMPROVED
PERFORMANCE
PROFITS REACH A NEW HIGH:
While reviewing the performance of the company in the subsequent paragraphs,
they have considered the results for the calendar year 2007 over the calendar
year 2006 to make the analysis of performance and the comparison more
meaningful. Riding on the economy's growth momentum, the company has posted
improved performance, with revenue and profits higher than ever before.
Performance
Highlights:
·
Production of cement up by 4% at 16.9
million tonnes.
·
Sales of cement up by 3% at 16.8
million tonnes.
- Domestic 15.4 million
tonnes, up by 7%.
- Exports 1.3 million
tonnes, down by 28%.
·
Total sales up by 18% at Rs. 57050
millionss over the previous year.
·
PBIDT for the current year at Rs. 22386
millions as against Rs.18807 millions in the previous year.
·
Net profit after tax at Rs.18461
millions as against Rs. 14352 millions in the previous year.
·
Exceptional Income during the year was
Rs.7955 millions as against as Rs.305 millions in the previous year.
PRODUCTION
An encouraging increase: From 16.3 million tonnes to 16.9 million
tonnes.
The company has reported an increase in cement production, from 16.3 million
tonnes in 2006 to 16.9 million tonnes in 2007. This growth was achieved despite
serious setback in production at the unit at Ambujanagar - which was affected
by unprecedented floods in August - September 2007. The higher cement
production was due to higher blending ratio in 2007, as well as the
commissioning of the new grinding facilities.
The clinker production was marginally lower at 11.6 million tonnes as compared
to 11.7 million tonnes in the previous year. Higher production at Darlaghat and
Rabriyawas was not sufficient to compensate for the loss of production at
Ambujanagar following the floods.
Clinker
capacity expansions
The company is setting up new clinker capacity at Bhatapara
in Chattisgarh and Rauri in Himachal Pradesh, each having a capacity of 2.2
million tonnes per annum. The project work is progressing well. The clinker
unit at Bhatapara is slated to be commissioned in mid 2009 while the unit in
Rauri is expected to go on stream in the second half of 2009. The total
investment in these projects is estimated at Rs. 16000 millions.
Grinding Stations
In line with the Hub and Spoke strategy, they are setting up
four cement mills. They are increasing cement grinding capacity by 5.5 million tonnes
per annum which will be commissioned in 2009-10.
FIXED ASSETS
·
Freehold Land
·
Leasehold Land
·
Buildings, Roads and Water Works
·
Marine Structures
·
Plant and Machinery
·
Electrical Installations
·
Railway Sidings and Locomotives
·
Railway wagons given on lease
·
Furniture, Fixtures and Office Equipments
·
Ships
·
Vehicles
·
Power Lines
Intangible Assets
:
·
Water Drawing Rights
·
Computer Software
CONTINGENT
LIABILITIES NOT PROVIDED FOR IN RESPECT OF :
|
|
(As on
31.12.2007) Rs. In millions |
|
a) Claims against
the Company not acknowledged as debts |
|
|
For acquisition of land |
286.100 |
|
Disputed liability relating to labour matters |
236.900 |
|
For Non Agriculture Assessment Tax |
26.500 |
|
Others |
182.600 |
|
|
|
|
Tax matters |
|
|
Disputed liability
in respect of Income-tax demands (including interest) matters under appeal |
163.700 |
|
Disputed
Sales-tax demands (including interest and penalty) – matters under appeal
(Deposit with Sales Tax Department Rs. Nil; Previous Year Rs.0.500 million) |
104.300 |
|
Disputed Excise
demands – matters under appeal (Deposit with Excise Department Rs. 4.000
millions; Previous Year Rs. 1.900 millions) |
100.600 |
|
Disputed Customs
demands – matters under appeal |
17.400 |
|
Disputed liability
of RTO Tax on Mining Machinery |
6.200 |
|
|
|
|
Disputed
liabilities relating to Railway Freight on Cement – matter once decided in
favour of the Company by the Honourable High Court of Gujarat was remanded
back by the Honourable Supreme Court pursuant to a Special Leave Petition
filed by the railways. |
55.100 |
|
|
|
|
Disputed liabilities relating to Coal claims –
matter pending in the Honourable High Court : |
|
|
Railway freight
on Coal |
14.900 |
|
Penal freight on
Excess Weight of Coal |
2.400 |
|
Interest on Premium on Coal |
32.900 |
In respect of
items above, future cash outflows in respect of contingent liabilities are
determinable only on receipt of judgments/decisions pending at various
forums/authorities.
|
b) The Honourable High Court of Himachal Pradesh has passed an order
in favour of the Company for its claim in respect of power subsidy in the
form of Power Tariff Freeze (PTF) and Peak Load Exemption Charges (PLEC).
Against this, Government of Himachal Pradesh on 1st May, 2004, has issued 296
5.13% H P Infrastructure Development Bonds of face value of Rs.1.000 million
each, having a value of Rs. 296.000 millions redeemable after 10 years and
balance of Rs. 0.800 million is refunded to the Company. The Government of
Himachal Pradesh has filed Special Leave Petition in the Honourable Supreme
Court against the decision of the Honourable High Court of Himachal Pradesh.
The Company has given an undertaking to refund Rs. 296.800 millions paid by
the State Government together with interest thereon up to the date of final
judgment in time bound manner, in the event that the matter is decided
against the Company. |
|
|
c) The Government of Rajasthan has granted 75% exemption from Sales
Tax in respect of Rabriyawas unit. However, the eligibility of exemption in
excess of 25% has been contested by the State Government in a similar matter
of another Company and the matter is pending before the Honourable Supreme
Court. The Company has given an undertaking to the Government of Rajasthan
that the Company will deposit the differential amount of Sales Tax, in case
the Supreme Court’s decision goes against in the matter referred above. |
821.600 |
|
d) Writ petition filed by erstwhile ACEL against the order of Madhya Pradesh
State Mining Department demanding Rs. 47.600 millions towards payment of
additional royalty on limestone based on the ratio of 1.6 tonnes of limestone
to 1 tonne of cement produced at its factory in Chhattisgarh. The matter is
now pending before Honourable High Court at Bilaspur. |
385.400 |
WEB DETAILS
Subject was set up in 1986. In the last decade the company has grown tenfold.
The total cement capacity of the company is 18.5 million tonnes.
Its plants are
some of the most efficient in the world. With environment protection measures
that are on par with the finest in the developed world.
The
company's most distinctive attribute, however, is its approach to the business.
Subject follows a unique homegrown
philosophy of giving people the authority to set their own targets, and the
freedom to achieve their goals. This simple vision has created an environment
where there are no limits to excellence, no limits to efficiency. And has
proved to be a powerful engine of growth for the company.
As a result, Subject is the most profitable cement
company in India, and one of the lowest cost producer of cement in the
world.
Achievements
In essence, cement
is a simple business. Unlike other industries it does not suffer rapid
technological obsolescence or shifting consumer trends. Therefore, it
constantly attracts new investments. Which results in surplus capacity. This
means only the very efficient players can prosper.
The people
recognize this. And their efforts to constantly raise efficiency has not only
raised the bar at company. But across the industry as well.
Environment protection measure that conform to the worlds
best.
The pollution levels at all the cement plants are even lower
than the rigorous Swiss standards of 100 mg/NM3. The air is so clean
that a rose garden flourishes right next to the main plant.
Benchmarking quality standards for the industry.
Subject has
received the highest quality award - the National Quality Award. The only
cement company to do so. Its also the first to receive the ISO 9002 quality
certification.
Reinventing cement transportation.
Almost 90% of cement in India travels by rail or road. And in bags.
The people
realized that the only way to speed up transportation was a completely
different approach. The result: a bulk transporting system via the sea. Making
them the first company to introduce the concept of bulk cement movement by sea
in India.
Management Policy
When they started
out, they approached the cement business with an open mind. Some things struck
them immediately. To compete with the older, established players who had
already written off their plant cost, it was important to have the lowest
capital cost per ton of cement. The plants would have to be set up in record
time. The capacity utilization would have to be above 100%. And the power
consumption would have to set a record low.
If costs had to be
controlled, it seemed absurd for engineers to check back with their seniors for
every little decision. The time lost would be far more expensive than any
errors they would make. It was the same with controlling power consumption. Who
better than the engineers to suggest ways to cut costs. They knew the plants
inside out. It made sense to listen to them.
Infrastructure
40% of the
production cost of cement is power.
It quickly became
clear to them that if they were to run a profitable company, wed need to keep
power costs to the minimum. So they focused the efforts on improving efficiency
at the kilns to get more output for less power.
Next they set up a captive power plant at a substantially
lower cost than the national grid. They sourced a cheaper and higher
quality coal from South Africa. And a better furnace oil from the Middle
East.
The result is that today were in a position to sell the
excess power to the local state government.
The
sea-borne bulk cement transportation facilities meanwhile has brought many
coastal markets within the easy reach. It has also made subject India's largest
exporter of cement consistently for the last five years.
UNAUDITED QUARTERLY RESULTS
|
|
Quarter Ended 30.06.2008 (Rs. In
Millions) |
Half-year Ended 30.06.2008 (Rs. In
Millions) |
|
Gross Sales / Income from Operations |
17957.600 |
36849.200 |
|
Less : Excise Duty |
2259.900 |
4603.000 |
|
Net Sales / Income from Operations |
15697.700 |
32246.200 |
|
Other Income |
|
|
|
Exchange rate difference (net) |
(102.900) |
(119.300) |
|
Interest Income |
245.800 |
410.400 |
|
Others |
206.700 |
464.300 |
|
|
|
|
|
Total Income |
16047.300 |
33001.600 |
|
|
|
|
|
Expenditure |
|
|
|
Increase/(Decrease) in Stock |
(605.800) |
(103.600) |
|
Consumption of Raw Material: |
|
|
|
Clinker Purchased |
771.800 |
1457.800 |
|
Others |
983.900 |
1899.500 |
|
|
1755.700 |
3357.300 |
|
|
|
|
|
Employee Cost |
643.800 |
1304.200 |
|
Power and Fuel |
3197.200 |
6014.400 |
|
Freight and Forwarding |
|
|
|
On Sales |
2742.600 |
5486.600 |
|
On inter-unit clinker transfer |
506.000 |
956.000 |
|
|
3248.600 |
6442.600 |
|
|
|
|
|
Depreciation and Amortization |
615.800 |
1234.000 |
|
Other Expenditure |
2715.200 |
5238.700 |
|
|
11570.500 |
23577.600 |
|
|
|
|
|
|
|
|
|
Interest |
57.100 |
114.000 |
|
|
|
|
|
Profit before exceptional items and tax |
4419.700 |
9310.000 |
|
|
|
|
|
Exceptional items : |
|
|
|
Profit on sale of investment in Associates |
3032.000 |
3032.000 |
|
Profit on sale of land |
109.900 |
109.900 |
|
Provision for diminution in value of
investment in a subsidiary |
0.000 |
(58.600) |
|
|
3141.900 |
3083.300 |
|
|
|
|
|
Profit before tax |
7561.600 |
12393.300 |
|
Tax expenses : |
|
|
|
Current tax |
1690.000 |
3240.000 |
|
Deferred tax |
91.400 |
89.100 |
|
Freight Benefit tax |
10.000 |
32.000 |
|
|
1791.400 |
3361.100 |
|
|
|
|
|
Net Profit for the period |
5770.200 |
9032.200 |
|
|
|
|
|
Paid up Equity Share Capital |
|
|
|
(Face Value of RS.2/- each) |
3045.100 |
3045.100 |
|
|
|
|
|
Earning Per Shares (EPS in Rs.) |
|
|
|
Basic |
3.79 |
5.93 |
|
Diluted |
3.79 |
5.93 |
|
(EPC not annualized) |
|
|
|
|
|
|
|
Public Shareholding |
|
|
|
No. of shares |
758.700 |
758.700 |
|
Percentage of Shareholding |
50% |
50% |
Notes:
·
In accordance with the
put and Call option agreement entered into with Holderind Investments Limited,
the Company has during the current quarter sold the remaining 95370000 equity
shares of Ambuja Cement India Private Limited for a consideration of
Rs.5889.100 millions and recognized a profit of Rs.3032.000 millions (net of
tax of Rs.400.300 millions.)
·
During the previous year
ended 31st December, 2007 and quarter ended 31st March,
2008, the Company had recognized a provision of diminution in value of
investment in its subsidiary Ceylon Ambuja Cements (Private) Limited (‘CACL’)
amounting to Rs.295.400 millions and Rs.58.600 millions, respectively.
During the current quarter, the Company has
sold its investment in CACL for a consideration of Rs.4.200 millions.
Consequently, CACL and its subsidiary Midigama Cements (Private) Limited ceased
to be subsidiaries of the Company w.e.f. 2nd June, 2008.
·
During the last quarter
of the previous year, the Company had revised its estimate of provision for
income tax to recognize a provision on sales tax incentive which had hitherto
been treated as a capital receipt. To facilitate comparison, the previous
corresponding quarter/half-year figures have been restated and accordingly the
provision for current tax for the quarter and half-year ended 30th
June, 2007 is higher by Rs.227.500 millions and Rs.472.400 millions
respectively.
·
Earning per Share on
profit before exceptional items (net of taxes) are as under:
|
|
Quarter Ended 30.06.2008 |
Half-year Ended 30.06.2008 |
|
Basic |
1.99 |
4.16 |
|
Diluted |
1.99 |
4.15 |
·
The Company has only one
business segment “Cement”.
·
At the beginning of the
quarter ended 30th June, 2008, no investor complaint was pending.
During the quarter, 10 complaints were received and all 10 complaints were
resolved. No complaint was pending disposal as on 30th June, 2008.
·
The Board has declared
interim dividend of Rs.1.20 per Equity Shares.
·
The figures for the
previous periods have been regrouped/restated wherever necessary to confirm to
the current periods presentation.
·
The above results have
been approved and taken on record by the Board of Directors at its meeting held
on 25th July, 2008.
·
Limited review of the
financial results for the quarter ended 30th June, 2008 has been
carried out by the Auditors.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals have
been formally charged or convicted by a competent governmental authority for
any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.49.77 |
|
UK Pound |
1 |
Rs.79.78 |
|
Euro |
1 |
Rs.63.36 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
9 |
|
PAID-UP CAPITAL |
1~10 |
9 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
9 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
75 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|