Top Banner
SUBMITTED UBMITTED B BY: : PANKAJ ANKAJ VERMA VERMA
79
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: final report

SSUBMITTEDUBMITTED B BYY: : PPANKAJANKAJ VERMAVERMA

Management and Commerce Institute Of Global Synergy.

Page 2: final report

ACKNOWLEDGEMENT

Just as a “gardener gather roses from an orchard and prepares a garland”, with the aid of the following, I submit my humble project report.

I would like to express my gratitude towards Mr. R.P. Singh(G.M., R.T.C,J.K. Cement) without whose support the project would not had been completed.

I would like to thank Mr. (chartered accountant,J.K. cement) who helped in studying the vital informations.

I am deeply indebted to all those employees of J.K. Cement who helped me in successful completion of the project.

I would express my gratitude towards my Teacher & Guide who helped and educated me as to the way in which the Project should be handled and report presented.

Last but not the least I would like to acknowledge my parents who provided me the required encouragement and support.

Pankaj verma Student-MIGS College(ajmer) `

Page 3: final report

EXECUTIVE SUMMARY

The main focus of research conducted by me was

To analyse the financial statements of the concern. To identify the risk involved in effective functioning

and to find their mitigation strategies.. To conduct the S.W.O.T analysis in order to throw light

on various aspects.The Data was collected from Accounts Depatment at

JKCW ,Nimbahera ,Rajasthan. Several questions were raised to accounts department in order to reach at meaningful conclusions.

All employees at Accounts Depatment responded and gave their observations.

On the basis of the study I found that the present system of Finance is working efficiently & does not warrant any change. Moreover the company has registered a remarkable growth and carries a respectable name in cement industry.

Page 4: final report

Table of contents

1. Objective of the Study

2. Company Profile

3. Management Board - Board of directors -Key personnel

4. Products & Manufacturing process

5. Financial Analysis 6. Risk Management - Risk types - Mitigation Straregies

7. S.W.O.T. Analysis

8. Conclusion

9. Recommendations

10. Bibliography

11. Annexure - Questionnaire - Other Information

Page 5: final report

1 – OBJECTIVE OF THE STUDY

Page 6: final report

OBJECTIVE

1. To analyse the financial statements of the concern.

2. To identify the risk involved in effective functioning and to find their mitigation strategies..

3. To conduct the S.W.O.T analysis in order to throw light on various aspects.

Page 7: final report

COMPANY PROFILE -INTRODUCTION -VISION, MISSION, AND VALUES -MANAGEMENT POLICY -INFRASTRUCTURE

INTRODUCTION

J.K. Cement is an affiliate of the J.K. Organization, which was founded by Lala Kamlapat Singhania. The J.K. Organization is an association of

Page 8: final report

industrial and commercial companies and has operations in a broad number of industries.

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

We commissioned a second grey cement plant at our Mangrol plant in 2001, with a production capacity of 0.75 million tons. As of September 30, 2005, we had an aggregate production capacity of 3.55 million tons per annum of grey cement. Our white cement plant was completed in 1984 with a capacity of

50,000 tons. Our continuing modifications to the plant haveincreased its production capacity to 300,000 tons as of September 30, 2005.

Today, J. K. Cement Ltd. is one of the largest cement manufacturers in Northern India. We are also the second largest white cement manufacturer in India by production capacity. While the grey cement is

Page 9: final report

primarily sold in the northern India market, the white cement enjoys demand in the export market including countries like South Africa, Nigeria, Singapore, Bahrain, Bangladesh, Sri Lanka, Kenya, Tanzania, UAE and Nepal.

Our access to high quality limestone reserves that are suitable for production of white cement provides us with a competitive advantage. Based on geological surveys conducted by independent agencies on our mines between 1996 and 2001, our limestone reserves for both grey and white cement are expected to meet our existing and planned limestone requirements of 4.0 MnTPA of grey cement and 0.4 MnTPA of white cement, for approximately 40 years.

Backed by state-of-the-art technology and highly skilled manpower against the backdrop of India’s infrastructural growth in an overdrive, we are upbeat about the future. We are confident of contributing heavily in India’s journey of development. We see a world of concrete ideas on the horizon.

History behind J K Cement

The initial “ J.K.” stands for a father –son team namely: Juggila Kamalapath Singhania.

J.k. organization started in the year 1884 at Calcutta. J.K. started their business as a Financier, Investor, Trading Supplier of cotton

Page 10: final report

belts and manufacturer of small machinery parts like ‘V’ belts, etc. they established few small cotton textile industries also.

In the year 1914 they shifted their business from Calcutta to Kanpur where they established many big industries like J.K. cotton Mills, Straw product Co., Lohia Mach, J.K. Pulp and Raymond’s Woolen, etc.

In the year 1934 J.K. organization started one more division, as J.K. Synthetics Ltd. They established various big plants of nylon, Acrylic fiber, etc. at Kota and Tyre Cord, Chemical and Pesticides at Jhalawar.

In the year 1974 under the same division one more unit was started for manufacturing og Grey Cement at Nimbahera.

The present cement factory was commissioned in 1974.The plant started its production from 27th Dec 1974.

Ist palnt / kiln was commissioned in1974 and capacity of this plant was 900 tonne per day and 3 lakh tonne per year. After modification in Preheater its present capacity is 1200 TPD.

Expansion of this plant took place in the year 1979, whan 2nd kiln was commissioned with a capacity of 1200 tonne per day and 7 lakh tonne per year. After modification its present is 1800 TPD.

Again in the third phase, a kiln was erected in the year 1982 and production of this kiln was 1350 tonne per day. In the year 1988 a new technology was introduced in the 3 rd kiln

yhat consistes of precalcination pocess, which raised the capacity of this plant to 3400 tonne per day, which was earlier 1350 TPD. In Aug -2003 after again some modification on Preheater and Forex cooler its capacity is increased to 5000 TPD.

Page 11: final report

Besides J.K. cement plant is having its own diesel generaor sets, producing power to meet the power energy requirements.

J.K. Cement erected one more plant from Jan. 2001 with a capacity of 1400 tonne per day at village Mangrol. In Nov. 2003 after modification in pre heater and installation of Mechanical elevator its capacity increased to 2200 TPD.

Due to power shortage as imposed by Ajmer electricity supply board J.K. established its own Thermal Power Plant at village Bamania, near Shambhupura, which is generating 15 M.W, power every day, which is consumed by J.K. Cement Plant.

VISIONTo be a premium conglomerate with a clear focus on each business.

MISSIONTo deliver superior value to

Customers Shareholders Employees Society

Page 12: final report

VALUESRespect for individual integrity, speed, simplicity, self-assuredness and 100% commitment are the values we value.

MANAGEMENT POLICYTechnologies change, needs change, and in turn products change. What remain unchanged, are values and ideas that propel any entity forward. Ideas that are concrete and unwavering, just like their outcome. At JK Cement we are crossing milestones, one after another, propelled by the following concrete ideas:

To provide products that fully comply with technical specifications committed to our customers, at the most competitive price.

To ensure complete reliability in our dealings with customers, distributors, suppliers & other partners.

Page 13: final report

To operate our manufacturing facilities in such a way, that they help sustain the environment & provide new opportunities for the underprivileged in that region.

To ensure that every department of our every office encourages new & better ideas and freedom of expressing the same, and cultivate a work environment that rewards excellence in every employee’s chosen area of work leading to a harmonious & fulfilling atmosphere.

To motivate every team member to challenge his last best performance and out do it continually.

To remain abreast and imbibe the latest technological trends for the benefit of our customers.

INFRASTRUCTURE

Company has following plants (All located in Rajasthan): Plant Plant LocationGrey Cement Plants Kailash Nagar, Nimbahera, Distt. . Chittorgarh Mangrol, Distt. Chittorgarh , Gotan Distt Nagaur

White Cement Plant Gotan, Distt. Nagaur

Page 14: final report

Thermal Power Plant Bamani, Shambhupura, (For captive consumption) Distt. Chittorgarh

Thermal Power Plant Kailash Nagar, Nimbahera, (For captive consumption) Distt. Chittorgarh, Waste Heat Recovery Kailash Nagar, Nimbahera,Power Plant Distt. Chittorgarh(For captive consumption)

MANAGEMENT BOARD -BOARD OF DIRECTORS

Page 15: final report

-KEY MANAGEMENT PER SONNEL

MANAGEMENT BOARD

BOARD OF DIRECTORS Dr. Gaur Hari Singhania, Chairman Yadupati Singhania, Managing Director & CEO Ashok Sharma Achintya Karati D Jyoti Prasad Bajpai Kailash Nath Khandelwal Raj Kumar Lohia Suparas Bhandari Jayant Narayan Godbole Dr. K. B. Agarwal

Page 16: final report

KEY MANAGEMENT PERSONELR A. K. Saraogi, President (Corporate Affairs) & CFO.

G. Bagla, Group Executive President

M. P. Rawal, President (T & MS) .

Ravishanker, President (Works) – Grey Cement

B. K. Arora, President (Works) – White Cement

Ashok Ghosh, President (H.R.) & New Initiatives

V . P. Singh, President (Marketing) – White Cement

R. C. Shukla, Sr. Vice President (Marketing) – Grey Cement

Anil Kumar AgarwalSr . Vice President (Finance & Tax) and Compliance Officer

Page 17: final report
Page 18: final report

PRODUCTS& MANUFACTURING PROCESS

Page 19: final report

They produce grey cement and white cement. Grey cement produced by them consists of Ordinary Portland Cement (“OPC”) and Portland Pozzolana Cement (“PPC”). OPC has three principal grades that are differentiated by their compressive strengths, and consist of 53-grade, 43-grade and 33-grade OPC.

All their products comply with the quality standards specified by the Bureau of Indian Standards (“BIS”). Their cement products are marketed under the brand names J.K. Cement and Sarvashaktiman for OPC products, J.K. Super for PPC products and J.K. White and Camel for white cement products, which they believe are well known brands.

J.K. Wall Putty

White cement based putty for luxurious and silky interior/exterior finish of your dream home.

Types of Cement

1.Grey Cement

Grey cement produced by them consists of OPC and PPC..

Page 20: final report

2.White Cement

They manufacture white cement under the brand names J.K. White and Camel.

3. Water Proof

JK Water proof is another product from JK Cements Ltd. which is ISI approved. It has a water repellent properties.

Page 21: final report

Manufacturing Process

The production process for cement consists of drying, grinding and mixing limestone and additives like bauxite and iron ore into a powder known as “raw meal”. The raw meal is then heated and burned in a pre-heater and kiln and then cooled in an air cooling system to form a semi-finished product, known as a clinker. Clinker (95%) is cooled by air and subsequently ground with gypsum (5%) to form Ordinary Portland Cement (“OPC”). Other forms of cement require increased blending with other raw materials. Blending of clinker with other materials helps impart key characteristics to cement, which eventually govern its end use.There are two general processes for producing clinker and cement in India : a dry process and a wet process.The basic differences between these processes are the form in which the raw meal is fed into the kiln, and the amount of energy consumed in each of the processes. In the dry process, the raw meal is fed into the kiln in the form of a dry powder resulting in energy saving, whereas in the wet process the raw meal is fed into the kiln in the form of slurry. There is also a semi-dry process, which consumes more energy than the dry process but lesser than the wet process.

Page 22: final report

Dry process

The basic steps involved in the production process is set out below:

All J.K. Cement plants are dry process plants. Limestone is crushed to a uniform and usable size, blended with certain additives (such as iron ore and bauxite) and discharged on a vertical roller mill, where the raw materials are ground to fine powder. An electrostatic precipitator dedusts the raw mill gases and collects the raw meal for a series of further stages of blending. The homogenized raw meal thus extracted is pumped to the top of a preheater by air lift pumps. In the preheaters the material is heated to 750°C. Subsequently, the raw meal undergoes a process of calcination in a precalcinator (in which the carbonates present are reduced to oxides) and is then fed to the kiln. The remaining calcination and clinkerization reactions are completed in the kiln where the temperature is raised to between 1,450°C and 1,500°C. The clinker formed is cooled and conveyed to the clinker silo from where it is extracted and transported to the cement mills for producing cement. For producing OPC, clinker and gypsum are used and for producing Portland [Pozzolana] Cement (“PPC”), clinker, gypsum and fly ash are used. In the production of Portland Blast Furnace Stag Cement (“PSC”), granulated blast furnace slag from steel plants is added to clinker.

Page 23: final report
Page 24: final report

Diagrammatic representation of manufacturing of cement at J.K. Cement.

FINANCIAL ANALYSIS

Page 25: final report

FINANCIAL RESULTS(Rs.in Lacs) 2009-10 2008-09Gross Turnover 181284.60 152966.52Profit before depreciation and tax 38763.81 30513.97Less: Depreciation 4106.92 3315.77Profit Before Tax 34656.89 27198.20Provision for Tax:Fringe Benefit Tax 210.00 200.00Current Tax 7150.00 6984.39Deferred Tax 780.30 2152.14Profit After Tax 26516.59 17861.67Add: Balance brought forward from the previous year 5692.45 694.30 Less: Transfer to General Reserve 15000.00 10000.00Less: Proposed Dividend on 4090.57 2863.52Equity Shares (including tax thereon) Balance to be carried forward 13118.47 5692.45

Page 26: final report

COMPARISON OF CURRENT YEAR’S PERFORMANCE WITH LAST YEAR 2008-09 2009-10 INC/DEC G

Gross Sales 159267 181285 13.9% (Rs. in Lacs)

Net Sales 123333 145825 18.3% (Rs. in Lacs)

PBIDT 33986 42352 24.6% (Rs. in Lacs)

Profit after Tax 17862 26517 48.5% (Rs. in Lacs)

Networth 81838 105138 28.4%(Rs. in Lacs)

Earning per share (Rs.) 25.54 37.92 48.4%

Book Value per share (Rs.) 117.03 150.36 28.4%

Dividend (%) 3.5 5.00 42.8%

Page 27: final report

Performance

Performance review StatementGross sales has been increased by 13.9% for the year ended march 31’2008.While the Net sales have by 18.3% reaching 1458 crores comparing to last year net sales which was 1233 crores.PBIDT rose by 24.6%, Rs. 423.52 crores vs 339.86 in previous year.Profit after tax increased by 48% as it reached 265.17 crores.

The Earning per share increased to Rs. 37.92 against Rs. 25.54 of 2008-09.The Board of Directors recommended a dividend of Rs. 5 per share this year. Last year the dividend was Rs. 3.5 per share.Net worth increased to 1051.38 crores as it was 818.38 crores in the year 2008-09.Book value per share increased to 150.36 vs 117.03 in 2008-09.All in all there was an all-round development in financial performance.

Page 28: final report

Consolidated Financial Overview

FJK Cement’s consolidated net sales went up from Rs. 1,233.33 crores in 2008-09 to Rs. 1,458.25 crores in 2009-10, recording a growth of 18.24 per cent. The net profit moved up from Rs. 178.62 crores in 2008-09 to Rs. 265.17 crores representing a growth of 48.46 per cent. This growth was achieved through the continued investment in the business for reducing costs and creating greater value, such as modernization of the facilities and introducing newer technology to achieve better operational results. Moreover, to enhance shareholders value, the work on brownfield facility of Nihon Nirmaan and on a greenfield facility at Mudhol, Karnataka is well under way.

1. Balance sheet analysis

Sources of Funds Reserves and surplus

The Company’s reserves and surplus increased by 31.09 percent from Rs 750.18 crores in 2008-09 to Rs. 983.41 crores in 2009-10.

Loan funds The total loan funds increased 10.55 percent Rs. 557.71 crores to Rs. 616.57 crores.

Page 29: final report

Application of Funds Fixed assets

The Company’s gross block increased 22.06 percent from Rs. 1030.82 crores in 2008-09 to Rs. 1258.23 crores. Its capital work in progress, on the other hand, went up 96.07 percent, from Rs. 229.47 crores in 2006-07 to . Rs.449.91 crores

Inventories Inventories increased from Rs. 110.01 crores in 2006-07 to Rs. 114.53 crores in 2009-10, a 4.11 percent growth.

Sundry DebtorsThe Company’s debtors decreased 8.56 percent fromRs. 62.16 crores in 2008-09 to Rs. 57.26 crores.Current liabilitiesThe Company’s current liabilities increased 44.35percent, from Rs. 173.03 crores in 2008-09 to Rs.249.78 crores in 2007-08.

in2. Profit and loss statement analysis Net sales

Net sales increased from Rs. 1,233.33 crores in 2008- 09 to Rs.1,458.25 crores, growing by 18.24 percent.

Other IncomeThe Company’s other income decreased 36.00 percent from Rs.10.69 crores in 2008-09 to Rs. 7.86 crores.

Total expenses

Page 30: final report

The total expenses of the Company went up 14.87 percent from Rs.938.89 crores in 2008-09 to Rs. 1078.47 crores in 2009-10.

ProfitsThe Company’s profit before tax has recorded a growthof 27.42 percent, rising from Rs. 271.98 crores in 2006-07 to Rs. 346.57 crores in Rs. 2009-10. The profit aftertax increased by 48.46 percent from Rs. 178.62 croresin 2008-09 to Rs. 265.17 crores in 2009-10.

Earnings per ShareThe Company’s earnings per share increased 48.47percent from Rs. 25.54 in 2008-09 to Rs. 37.92 in 2009- 10.

OVERAL PERFORMANCEThe Company during the year under review recorded growth on all the fronts. Its gross turnover increased by 18.5%. The operating profit rose

Page 31: final report

to Rs.423.5 crores from Rs.339.9 crores in 2008-09. Earning per share increased to Rs.37.92 from Rs.25.57 in previous year.

DIVIDENDYour Directors are pleased to recommend the dividend @ Rs.5/- per share on Equity Shares for the financial year ended 31.3.2008 (previous year Rs.3.50 per share).

OPERATIONSGrey CementDuring the year under report, the production and sales volume ofGrey cement at Nimbahera and Mangrol plants was slightly higherthan the previous year. Higher realizations during the current year resulted in higher turnover and higher profits despite setting offsubstantial escalation in power, fuel and other costs.White CementDuring the year both production and sales volume of white cementhas been lower due to restricted growth in demand which resultedin lower profitability. However, additional contributions fromhigher putty production and sales compensated to some extent.

PROJECTS IN PROGRESSAll the Schemes as envisaged in the prospectus for the IPO havebeen completed Green Field Cement Plant at Mudhol KarnatakaAs reported earlier, a green field grey cement plant is being set up

Page 32: final report

by Jaykaycem Ltd. (wholly owned subsidiary company) at Mudholin the state of Karnataka. The cost as assessed by IDBI for 3MTPA capacity (including captive power plant) is Rs.1000 croresand is proposed to be financed by rupee Term Loan of Rs.525 crores(already tied up) and balance is to be arranged by J.K cement ltdout of its internal accruals (Rs.263 crores already invested. Land hasalready been acquired to meet the requirement of plant and colony. Civil work is in full swing. Orders for long delivery items of plant& machinery have already been placed and deliveries are beingreceived at site as per schedule. EPC contract has been awarded toM/s.Thermax for setting up Captive Power Plant. Rs.328.35 cores hasalready been spent on the project upto 31.3.2008.Barring unforeseen circumstances, project is likely to becommissioned in March,2009.

J.K.Cement, GotanAs reported last year, the Company was in process of revampingfacilities at J.K.Cement Works at Gotan. The said revamping is inadvance stage of completion. The plant with capacity of 0.40 MTPAat investment of Rs.125 crores is likely to be commissioned insecond quarter of 2008.

Power plant at GotanSubstantial progress has been made in respect of implementationof Captive Power plant of 7.5 MW at Gotan for captive use. The projectis likely to be commissioned in June / July, 2008.

FINANCEa) Term Loan of Rs.37.50 crores availed from Allahabad Bank

Page 33: final report

during the previous year have been replaced by Term Loan ofRs.40 crores from Canara Bank.b) During the year, Company’s Working Capital Facilities (bothfund based and non-fund based) have been increased from Rs.70crores to Rs.105 Crores.

MERGERThe Board of Directors have approved the merger of JaykaycemLtd., wholly owned subsidiary Company with the Company w.e.f.1.4.2008. Necessary formalities and approvals are being obtained.

PERSONEL1. Industrial RelationsThe industrial relations during the period under review generallyremained cordial at all Cement plants.2.Particulars Of EmployeesList of employees getting salary in excess of the limits as specifiedunder the provisions of sub-section (2A) of Section 217 throughout

or part of the financial year under review is annexed. However, in terms of provisions of section 219(1)(b)(iv) of the Act, the Annual Report excluding the aforesaid information is being sent to all themembers of the Company. Any member interested in obtainingsuch particulars may send the request to the Company at its Registered Office.3. PUBLIC DEPOSITSYour Company has not invited any deposits from public / shareholdersin accordance with the Section 58A of the Companies Act, 1956.

Page 34: final report

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGOParticulars with regard to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and out go in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Boardof Directors) Rules, 1988 in respect of Cement plants are annexed andform part of the Report.

COST AUDITCost Audit records have been maintained in respect of Grey Cementand White Cement for the year 2009-10 and cost audit would becompleted in respect of these units.

DIRECTORSa) During the year under the report Dr. K.B.Agarwal has beenappointed as Additional Director on the Board of Directors ofthe Company and he holds the office up to the ensuing AnnualGeneral Meeting. The Company has received notice u/s 257 ofthe Companies Act, 1956 from a shareholder, proposing hiscandidature for the office of Director of the Company alongwith the requisite fees.b) Three of your Directors namely Sri R.K.Lohia, Sri A.Karati andSri Ashok Sharma will retire by rotation at the ensuing AnnualGeneral Meeting and being eligible, offer themselves for

Page 35: final report

reappointment.c) Mr.Alok Dhir ceased to be the Director of the Company w.e.f.12.5.2008.Your Directors wish to place on record their warmappreciation for the valuable services and advice rendered byhim during the tenure of his office.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm that:i) in the preparation of the annual accounts, the applicableaccounting standards have been followed and that no material departures have been made from the same.ii) they have selected such accounting policies and appliedthem consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that year;iii) they have taken proper and sufficient care for maintenanceof adequate accounting records in accordance with theprovisions of the Companies Act, 1956 for safeguarding the

Page 36: final report

assets of the Company and for preventing and detecting fraudand other irregularities; andiv) they have prepared the annual accounts on a going concernbasis

ACCOUNTING POLICIES

1. Accounting Concepts: The financial statements are prepared under the historical cost convention (except for fixed assets which are revalued) on an accrual basis and in accordance with the applicable mandatory Accounting standards.

2. FIXED ASSETS: Fixed assets are stated at cost (including expenses related to acquisition and installation) adjusted by revaluation of fixed assets.

3. Investments: Current investments are stated at lower of cost or fair market value. Long term investments are stated at cost after deducting provisions made for permanent dimunition in the value, if any.

4. Inventories: Inventories are valued at “cost or net realizable value, which is ever is lower”. Cost comprises all cost of purchase, cost

Page 37: final report

of conversion and other costs incurred in bringing the inventories to their present location and condition. ‘First-in-First-out’ or ‘Average cost’ method is followed for determination of cost.

5. Depreciation: i) Depreciation is provided on straight line method at the rates specified in the schedule XIV to the Companies Act,1956.

ii) Depreciation on additions/deductions to fixed assets is being provided on pro-rata basis from/to the month of acquisition/disposal. iii) Depreciation on additional value of revalued assets is provided on

the basis of life determined by the valuers. An amount equivalent to depreciation on additional values resulting from revaluation is withdrawn from Revaluation Reserve and credited to Profit & Loss Account. iv) Goodwill is amortized over a period of ten years. v) Leasehold land is amortized over the period of lease.6. Retirement Benefits: The Company’s contributions to Provident Fund and Superannuation Fund are charged to Profit & Loss Account.7. Foreign Exchange Transactions: Foreign currency transactions are accounted at equivalent rupee value earned/incurred. Year end balance in current assets/liabilities is accounted at applicable rates. 8. Borrowing Cost: Interest and other costs in connection with the borrowings of the funds to the extent related/attributed to the acquisition/construction of qualifying assets are capitalized upto the date when such assets are ready for its intended use and other borrowing costs are charged to Profit & Loss Account.

Page 38: final report

9.Provision for Current and Deferred Tax: Provision for current Tax is made on the basis of estimated taxable income for the current accounting period and in accordance with the provisions as per Income Tax Act, 1961. Deferred tax resulting from “timing difference” between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. The deferred tax is recognized and carried forward only to

the extent that there is a reasonable certainity that the assets will be adjusted in future. 10. Miscellaneos Expenditure: Preliminary expenses are amortized over a period of five years from the year of commencement of manufacturing activity.Deferred Revenue Expenses: Expenses on mines development /overburden removal is deferred and amortized over a period of Lease/extraction from Mines11. Contingent Liabilities: Contingent liabilities are not provided and are disclosed in notes on accounts.

Page 39: final report

FFinancial Highlights

2005-06 2006-07 2007-080

20000400006000080000

100000120000140000160000180000200000

Gross Sales(Rs. In lacs)

2005-06 2006-07 2007-080

5000

10000

15000

20000

25000

30000

Profit after tax(Rs. In lacs)

Page 40: final report

2005-06 2006-07 2007-080

20000

40000

60000

80000

100000

120000

2005-06 2006-07 2007-080

20

40

60

80

100

120

140

160

Book Value(per share)

Page 41: final report

2005-06 2006-07 2007-080

5

10

15

20

25

30

35

40

EPS Dividend

Page 42: final report

Milestones

1975: Commencement of operations Nimbahera facility comes into being with initial capacity of 0.30 MTPA.1979: Capacity expansion at Nimbahera, capacity more than doubled from 0.30 MTPA to 0.72 MTPA by adding a second line.1982: Third production line added at Nimbahera, with increase in capacity from 0.72 MTPA to 1.14 MTPA.1984: Commencement of lime-based white cement plant at Gotan, witha capacity of 0.05 MTPA1987: Installation of captive thermal power plant at Bamania1988: A pre-calciner installed at Nimbahera, capacity enhanced to 1.54 MTPA1990: The “Architect of the Year” award instituted1994: The “Regional Training Centre”for Northern India, established at the Nimbahera plant with aid from the World Bank and the Danish International Development Agency, commenced service

2001: Establishment of a new Grey Cement plant with a capacity of0.75 MTPA at Mangrol2004: Capacity at Nimbahera expanded to 2.8 MTPA2006: • Capacity of White Cement at Gotan enhanced to 0.35 million

Page 43: final report

tonnes• Public issue 20 million Equity Shares of Rs. 10/- each at a price of Rs.148/- per share, following the book-building route• Grey Cement capacity at Nimbahera increased to 4 million tonnes• Jaykaycem Ltd. became a wholly owned subsidiary of the Company

and acquired land to set up a Greenfield Grey Cement plant at Mudhol, Karnataka

2007:• Acquired assets of M/s. Nihon Nirmaan Ltd. to produce an expected 0.50 million tonnes of Grey Cement• Capacity of white cement at Gotan enhanced to 0.40 million tones 5

Page 44: final report
Page 45: final report

RISK MANAGEMENT - Types & Mitigation Strategies

Page 46: final report

RISK MANAGEMENT AT J.K.

Risks are integral to virtually all business activities, which may have a financial or reputational impact on the Company. At J K Cement, possible business risks are estimated; controlled, quantified and proper measures are taken to mitigate the same.Key risks are identified for 2007-08 and their respective mitigation strategies have beensummarized below.1. Industry risk: A slowdown in the cement industry may impact the Company’s future revenue and profit generating capability.Risk mitigation: Cement is an indispensable part of any construction. With the thrust on infrastructure, capacity expansions by the private sector and real estate boom in India, industry’s growth is secured further ensuring an optimistic rise. 2. Input risk: Inadequate availability of good quality raw material could impact production or raise logistics cost.Risk mitigation: Limestone is the primary input for cement manufacturing; The Company has access to large reserves of high quality mines in close proximity, and leverages this advantage efficiently. Other raw materials are also available in abundance in the local market.

3. Quality risk: For a Company that manufactures the largest cement assortment, any quality inconsistency could harm reputation and off take.

Page 47: final report

Risk mitigation: Cement builds a country, cement secures dreams. Hence the “quality” works as a differentiator. The Company adopted the best technology and practices and has acquired ISO 9001 certification for all facilities assuring delivery of quality products. This has ensured customer satisfaction for years. 4. Low product differentiation risk: In a commodity business marked by low product differentiation, the Company’s product may suffer reduced off-takes in the clutter of other available products of similar type.Risk mitigation: The contemporary product basket created by the Company to meet the changing demand proves its product development capabilities. This ensures effective product differentiation resulting in the market shares consolidation and growth in realizations.

5. Brand risk: Brand clutter in the minds of consumers may stagger off take.Risk mitigation: The Company has carefully nurtured the brands, and enjoys high awareness among dealers, distributors and customers. Aggressive marketing strategies for white cement products have served to enhance the Company’s brand recall.The brand portfolio includes:Grey Cement White CementSarvashaktiman (43 Grade OPC) J.K. White CementJ K Super (Blended Cement or PPC) J K Wall Putty

Cement Whit cement

Page 48: final report

7. Distribution risk: On time distribution of finished product among the end-users through efficient dealer network upholds Company reputation hence positively affecting realizations.Risk mitigation: To ensure on time delivery of products, the Company has developed smooth and quick distribution network spanning more than 4000 retailers, providing efficient services to customers. Further, the Company is implementing SAP across the board to enhance communication with various sales destinations.

8.Product substitution risk: The exponential growth of substitute product for cement may virtually pose a problem for the industry and the Company.Risk mitigation: Cement is a non-substitutable product vital for any construction facility

9. Power cost risk: The manufacturing process of cement is highly power intensive non-availability or interrupted supply may lead to lossesRisk mitigation: The Company commissioned a 13.2 MW waste heat recovery plant and 20 MW coal-based power plant over 2007-08. Further a replacement of the 7.5 MW turbine with a 10 MW turbine at the power plant in Bamania will help meet energy requirements. Another 7.5 MW power plant is in the process of being set up in Gotan. These together, will provide 100% Captive Power Backup and huge power cost benefits.

HIGHLIGHTS OF LAST YEAR

Page 49: final report

August, 2007: Commissioning of the 20 MW Captive Power Plant at Nimbahera.September, 2007: Replacement of a 7.5 MW turbine with a 10 MW turbine at the power plant in Bamania. 3.2 MW of the Waste Heat Recovery Power Plant Commissioned at Nimbahera.November, 2007: Signed MOU with Fujairah Government for setting up 2.25 MTPA cement plant.March 2008: 10 MW of the Waste Heat Recovery Power Plant commissioned at Nimbahera.31st March, 2008: Production and sales of grey cement touched an all-time high of 3.77 million tonnes and 3.76 million tonnes, respectively, during the year. Further, production of Putty (a value added product of white cement) increased by 39%.

Page 50: final report
Page 51: final report

S SWOT ANALYSYS

-Strength -Weakness -Opportunities -Threat

Page 52: final report

J.K.’S STRENGTHS

Leading position in attractive Northern India grey cement

market.

One of the leading white cement producers in India

Proximity and access to large reserves of high quality limestone

Extensive marketing and distribution network

Quality of products and strong brand name.

WEAKNESSES

Ineffective promotional activities in case of white cement.

Low sales as compared to market potential.

Fail to finish the monopoly of dealers.

Still not achieving full installed capacity utilization.

OPPERTUNITIES

Page 53: final report

White Cement is still rarely used in Indian construction activites.

This opportunity could be exploited in effective manner which

could create monopoly in the Cement Industry,

Attractive prices and other schemes could attract more dealers

as well as dealers.

Per capita consumption of cement is very low as compared to

other developing countries.

Explosion of quality yet to be displayed to capture large

customers.

THREATS

White Cement applications face major threats from

competing products, thereby threatening the very

existence of such industries.

Price fluctuations and price war is general phenomena in

the cement industry.

Cement demand is directly related to economy, so a slow

down in an economy could adversely affect the prices of

cement.

Page 54: final report
Page 55: final report

Conclusions

Page 56: final report

CONCLUSION

In the end, it may be concluded that: -

1. The Company has a sound financial position.

2. The present financial system is working efficiently and does

warrant any change.

3. The employees of the Company are aware what Company is

expecting from them and they are contributing fully to

company’s interest.

4. Presently, the usage of white cement is very less, J.K. cement is

acting as a trend setter by providing white cement to their

customers.

Page 57: final report

RECOMMENDATIONS

RECOMMENDATIONS

1. The present financial system is working efficiently, and does

warrant any change right now. But keeping in mind the future

Page 58: final report

needs of the organization changes should be incorporated to

maintain the level of efficiency and effectiveness.

2. J.K. Cement company should revive its financial policies in the

above context and should be active regarding unnecessary

expenditures that may lead to financial burden of the company.

3. The marketing strategies should be revived in respect to the

white cement which is still unknown to the large part of the

country.

4. Training and fresher course to be inducted for the employees to

improve the skills.

5. Need to introduce improve means of research and development

process.

6. Latest technologies should be introduced, introduction of ‘SAP’

is a step towards it.

Page 59: final report

Bibliography

Bibliography

Khan & Jain ,Finanial Management, Tata Macgraw Hill,

1999,NewDelhi.

R.L. Gupta. V.K. Gupta, Principles and Practices of

Accounatancy, Sultan Chand & Sons,2004, NewDelhi.

www.JKcement.com

www.jkwhite.com

www.yourpeoplemanager.com/cmn/ view.doc

Page 60: final report

www.tradechakra.com/cementindustry

www.mapsofindia.com

QUESTIONNAIRE

Page 61: final report

QUESTIONNAIRE

1. What are the relevant accounting policies being followed while

preparing financial statement of the company?

2. What are the sources of funds and steps to increase funds for the

company?

3. Name the bankers involved in functioning of the company.

4. What is the duration of performance appraisal in the organization

and what factors you consider while promoting an employee?

5. What are the upcoming projects and their progress status?

6. What is the net worth of the company?

Page 62: final report

7. What system is used in handling inventories?.

OTHER INFORMATION

Project prepared by: pankaj verma

Project Title: Assessment of financial status Of J.K.

Cement Ltd….

College: Management and commerce institute

of

Of global synergy(ajmer.)

Project Duration: 45 Days(17-06-2010 to 01-07-2010)

Project Region: J.K. Cement Works (JKCW) Nimbagera, Distt. Chittorgarh Rajasthan