Pag1e | 1 Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka Internship Report of ‘Analysis of Financial Statement of ACC ltd at Wadi-Karnataka, Submitted to the Central University of Karnataka In partial fulfilment of the requirements for the award of MBA Degree By Mr. Laxmikanth S J (Register No.2011-15) Under the guidance of Mr. Kasif Mohmed Shaikh GM of Finance Wadi ACC Limited and Mr. Ganapati Sinnoor Assistant Professor of Management Central University of Karnataka, Gulbarga Department of Business Studies Central University of Karnataka at Gulbarga ( www.Cuk.ac.in ) 1
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Pag1e | 1
Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
Internship Report of ‘Analysis of Financial Statement of ACC ltd
at Wadi-Karnataka,
Submitted to the Central University of KarnatakaIn partial fulfilment of the requirements for the award of
MBA DegreeBy
Mr. Laxmikanth S J(Register No.2011-15)
Under the guidance ofMr. Kasif Mohmed Shaikh
GM of Finance WadiACC Limited
andMr. Ganapati Sinnoor
Assistant Professor of ManagementCentral University of Karnataka, Gulbarga
Department of Business StudiesSchool of Business Studies
Central University of Karnataka, GulbargaJuly 2012
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
DECLARATION
I hereby declare that the Report on Internship of ‘Analysis of Financial Statement of ACC Ltd at Wadi-Karnataka, is prepared by me under the guidance of Mr. KASHIF MOHMED SHAIKH GM Finance Wadi ACC Ltd and Prof. GANAPATI SINNOOR Assistant Professor of CUK is a bonafide work undertaken by me and during 07 July to 30 June and submitted to the Department of Business Studies, Central University of Karnataka in partial fulfilment of the requirements of the MBA Degree. It is not submitted to any other University or Institution for the award of any degree/ diploma.
Date: __________ Mr. Laxmikanth S J
Gulbarga
Central University of Karnataka at Gulbarga ( www.Cuk.ac.in )
Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
Acknowledgement
It is difficult to acknowledge precious a debt as that of learning as it is the only debt that is difficult to repay except through gratitude. It is my profound privilege to express my sincere thanks to Mr. B D Daler, Head HR of ACC Ltd, Wadi-Karnataka, for giving me an opportunity to work on the project. Who gave me an opportunity to carry out this project and had been a constant inspiration.
I would like to thank to Mr. KASHIF MOHMED SHAIKH GM Finance Wadi plant ACC Ltd, for their constant support and guidance throughout the tenure of this project without their cooperation it would have been a difficult task to accomplish this project.
I am also thankful to my faculty guide Prof. GANAPATI SINOOR Assistant Professor of Management CUK who has provided their valuable time and effort
for guiding me for the completion of this report.
(Laxmikanth S J)Place: - GulbargaDate: -
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
producing countries, behind the USA, China and Japan the year 1990-1992
was best for the cement producers.
But in 1992-1993, it has bad fortunes the demand for cement was 8%
in1991 declaimed to zero in 1992-1993.
The cement has been decontrolled from price and distribution on 1st
March, 1989 and delicensed on 25th July, 1991. However, the performance
of the industry and prices of cement are monitor regularly. The constraints
faced by the industry are reviewed in the Infrastructure Coordination
Committee meetings held in the Cabinet Secretariat under the Chairmanship
of Secretary. The Cabinet Committee on Infrastructure also reviews its
performance.
Cement is an essential item of modern development owing to its vigorous use in building and construction works. So much so that its production and consumption may be used as an index of country's progress and prosperity.
The industry has made sufficient progress in recent years and India is at present the seventh largest producer of cement in the world. The installed capacity of die industry has risen from 3.3 million tons on the morrow of Independence to 109.56 million tons in 1997-98. Over 2.5 lakli persons are employed in die industry.
Development
The first attempt to manufacture cement using sea-shell was made at Chennai in 1904, which was unsuccessful. Another attempt was made in 1912-13 when dies Indian Cement Company put up its plant at Porbandar. Later on the Katni Cement and Industrial Company Ltd. set up its cement
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
factory at Katni in January 1915 and the Killick Nixon's Bundi Portland Cement Co. at Lakheri (Rajasthan) in 1916.
The World War I gave boost up to the industry and six new plants were installed during 1922-23 at Japla (Bihar), Dwarka (Gujarat), Mehgaon, Banmore and Kymore (Madhya Pradesh), and Shahabad (Karnataka). These factories togedier had a total installed capacity of 5, 59,000 tons.
A turning point came to the history of die industry in 1934 when 10 out of 11 cement companies merged into die Associated Cement Co. Ltd. (ACC). The Dalmia Cement Group, formed in 1937, installed its plants at Dalmianagar (Bihar), Dalmiapuram (Tamil Nadu), and Dalmia Dadri (Pun- jab). By 1947 there were 18 cement factories with total installed capacity of 21.15 lakh tons. After independence three new factories were installed at Talaiyudiu (Tamil Nadu), Kottayam (Kerala) and Sikka (Gujarat).
The massive construction activities during die plan period generated huge demand for the cement and consequent laying down of more factories and increase in the installed capacity and the production. Consequently, the industry raised its capacity to 29.3 million tons by the end of the seventies. It was after this period that there was quantum jump in die installed capacity during the Sixtii and Seventh Plans.
This led to partial decontrol of the cement in February, 1982 and total decontrol in March 1989. The total installed capacity rose to about 65 million tons by 1991-92. The addition to capacity took place through expansions by established producers (like ACC, India Cements, Madras Cements, Dalmia Cements and Orissa Cements) and entry of several big houses (Birlas, Larsen and Toubro, Modis, TlSCO and Raymond Woolen).
At present (2004-05) there are 128 large cement plants with an installed capacity of 152.09 million tons per annum and about 332 mini cement plants with an estimated capacity of 11.10 million tons per annum. The industry had achieved growth rate of 8.15 per cent in 2004.05. With the
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
assimilation of latest technology, the cement industry has improved both in terms of quality and overall capacity utilisation.
Raw Materials
The raw materials of die cement industry include limestone (about 45 per cent CaO content), slag from steel plants, sludge from fertilizer India's per capita consumption of paints is very low at 0.23 kg as compared to the US (25 kg), France (15 kg), Japan (8 kg), Malaysia (4.8 kg), and Thailand (1.0 kg). Hence, there are good prospects for the industry. The Ministry of Environment and Forests has selected three groups of paints for eco- friendly labels. These are water-based coatings, high solids coatings and powder coatings.
Manufacturing Process
There are two methods which are used for making Portland cement-the wet method, and dry method. Use of either of the two methods depends upon the moisture content of the limestone used in making cement. The wet process is used when the moisture content of the raw material is less than 10 per cent and the cost of fuel is higher. Here more water is added during grinding to increase the moisture content to 35, 40 per cent. In dry process the moisture content of the limestone is more than 10 per cent. Here grinding is done without adding extra water. The ground matter is roasted in rotary kilns at temperature between 2500-3000°C to form clinkers. These clinkers are added with gypsum and are ground to form cement.
Distribution
Although there is hardly any state of the country which is devoid of cement plant but the localisation of the industry is largely controlled by the distribution of raw material, i.e., limestone. That is why the spatial distribution of cement plants very well coincides with the occurrence of
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
limestones in the Vindhyan and Cuddapah rocks. Seven states (Madhya Pradesh, Andhra Pradesh, Tamil Nadu, Rajasthan, Gujarat, Karnataka and Bihar) mostly belonging to this belt account for about three- fourth of the installed capacity and production of cement in the country. Table 22.IX shows state-wise installed capacity, production and number of cement factories.
GROWTH AND DEVELOPMENT OF THE CEMENT
INDUSTRY IN INDIA
Cement industries constitutes an important segment of the modern
industrial economy of India. Cement is one of the highly capital intensive
industries unlike most other mineral based industries. Location of cement
plants is widely spread throughout the country where the availability of the
basic raw materials like limestone. Limestone concentration is more in the
southern region. One of the most important developments immediately after
the independence was Indian standard specification for Portland cement by
the Indian Standard Institute in 1947. The installed capacity of the industry
rose to 2.2 million tones per annum. On partition 5 of the cement producing
units went to Pakistan and the total installed capacity of 18 units that
remained in India was 1.5 million tones per annum. In 1951 for the first time
target of the cement production were planned as a part of the first Five year
plans.
As a result the production of cement increased from 2.69 million to 4
million tones. By the end of the first Five year plan were about 27 units with a
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
technology, it is very difficult to stay ahead in the present day. Competitive
environment in terms of quality, commercial viability and demanding
ecological factors.
At present ninety three percent of the total capacity in the industry is
based on modern and environment-friendly dry process technology and only
seven percent of the capacity is based on old wet and semi-dry process
technology. One project for co-generation of power utilizing waste heat in an
Indian cement plant is being implemented with Japanese assistance under
Green Aid Plan.The induction of advanced technology has helped the industry
immensely to conserve energy and fuel and to save materials substantially.
Types of cement in India
India is also producing different varieties of cement like
The booming cement industry in India is well recognized for producing vast varieties of cement that conform to Bureau of Indian Standards (BIS). Some of the types of cement in India that boast of good demand in the market are:
There are some varieties in cement that always find good demand in the market. To know their characteristics and in which area they are most required, it will be better to take a look at some of the details given below.
Portland Blast Furnace slag cement (PBFSC): The rate of hydration heat is found lower in this cement type in comparison to PPC. It is most useful in massive construction projects, for example - dams.
Sulphate Resisting Portland cement: This cement is beneficial in the areas where concrete has an exposure to seacoast or sea water or soil or ground water. Under any such instances, the concrete is vulnerable to sulphates attack in large amounts and can cause damage
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
to the structure. Hence, by using this cement one can reduce the impact of damage to the structure. This cement has high demand in India.
Rapid Hardening Portland cement: The texture of this cement type is quite similar to that of OPC. But, it is bit more fine than OPC and possesses immense compressible strength, which makes casting work easy.
Ordinary Portland cement (OPC): Also referred to as grey cement or OPC, it is of much use in ordinary concrete construction. In the production of this type of cement in India, Iron (Fe2O3), Magnesium (MgO), Silica (SiO2), Alumina (AL2O3), and Sulphur trioxide (SO3) components are used.
Portland Pozolona Cement (PPC): As it prevents cracks, it is useful in the casting work of huge volumes of concrete. The rate of hydration heat is lower in this cement type. Fly ash, coal waste or burnt clay is used in the production of this category of cement. It can be availed at low cost in comparison to OPC.
Oil Well Cement: Made of iron, coke, limestone and iron scrap, Oil Well Cement is used in constructing or fixing oil wells. This is applied on both the off-shore and on-shore of the wells.
Clinker Cement: Produced at the temperature of about 1400 to1450 degree Celsius, clinker cement is needed in the construction work of complexes, houses and bridges. The ingredients for this cement comprise iron, quartz, clay, limestone and bauxite.
White cement: It is a kind of Ordinary Portland Cement. The ingredients of this cement are inclusive of clinker, fuel oil and iron oxide. The content of iron oxide is maintained below 0.4% to secure whiteness. White cement is largely used to increase the aesthetic value of a construction. It is preferred for tiles and flooring works. This cement costs more than grey cement.
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
The first success came in a move towards cooperation in the country’s
young cement industry and culminated in the historic merger of ten
companies to form a cement giant. These companies belonged to four
prominent business groups – Tatas, Khataus, Killick Nixon and F E Dinshaw
groups. ACC was formally established on August 1, 1936. Sadly, F E Dinshaw,
the man recognized as the founder of ACC, died in January 1936. Just months
before his dream could be realized.
F.E. Dinshaw The founder of ACC
ACC stands out as the most unique and successful merger in Indian business history, in which the distinct identities of the constituent companies were melded into a new cohesive organization – one that has survived and retained its position of leadership in industry. In a sense, the formation of ACC represents a quest for the synergy of good business practices, values and shared objectives. The use of the plural in ACC’s full name, The Associated Cement Companies Limited, itself indicates the company’s origins from a merger. Many years later, some stockbrokers in the country’s
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
leading stock exchanges still refer to this company simply as ‘The Merger Over the years, ACC realized that people are as different as they are similar. Different needs, different lives, different dreams.
With its depth of knowledge and width of experience ACC, today, is poised to fulfill the hopes and aspirations of people across the length and breadth of the country.
HERITAGE
The house of Tata was intimately associated with the heritage and history of ACC, right from its formation in 1936 upto 2000. Between the years 1999 and 2000, the Tata group sold all 14.45 per cent of its shareholding in ACC in three stages to subsidiary companies of Gujarat Ambuja Cements Ltd (GACL), who are now the largest single shareholder in ACC.
This has enabled ACC to enter into a strategic alliance with GACL; a company reputed for its brand image and cost leadership in the cement industry.ACC's First Board Meeting in 1936 at The EsplanadeSir Nowroji B Saklatvala was the first chairman of ACC.
The first Board included distinguished luminaries of the Indian business world of the time – names like J R D Tata, Ambalal Sarabhai, Walchand Hirachand, Dharamsey Khatau, Sir Akbar Hydari, Nawab Salar Jung Bahadur and Sir Homy Mody among others.
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
2006 New corporate brand identity and logo adopted from October 15, 2006
2006 ACC establishes Anti Retroviral Treatment Centre for HIV/AIDS patients at Wadi In Karnataka- the first ever such project by a private sector company in India.
2007 ACC partners with Christian Medical College for treatment of HIV/AIDS in Tamil Nadu.
2008 ACC wins CNBC-TV18 India business Leader Award in the category India Corporate Citizen of the year 2008.
2008 The institute of Charted Accountants of India (ICAI) Conferred on ACC its gold shield For being best in the ‘ICAI Award for Excellence in Financial reporting for 2008.
2009 Federation of Indian mineral industries(FIMI) National Environment Award to ACC wadi Limestone Mines.
2009 Safety Innovation Award 2009 by Engineers to ACC Wadi (Expansion Project).
2009 National Award for Excellence in Water Management from Confederation of Indian Industry(CII) to ACC Wadi.
2010 Confederation of Indian Industry (CII) Energy Award to ACC Wadi. Confederation of Indian Industry (CII) Environmental Best Practices Award to ACC Damodhar.
2011 India Manufacturing Excellence Awards 2011 - Gold Certificates of Merit to ACC Lakheri, Gagal, Wadi and Silver to Jamul by The Economic Times and Frost & Sullivan.
2012 Performance Excellence Trophy to DAV ACC Gagal Sr Secondary School
2012 Best in Class Manufacturing Awards 2011-12 - Manufacturing Leadership in Cement by Indira College of Engineering & Management, Pune
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
Management is the planning, organizing, directing, and controlling of the
procurement, development, compensation , integration ,maintenance and
separation of human resource to the end that individual ,organizational, and
social objectives are accomplished. Thus HRM refers to a set of programmes,
functions and activities designed and carried out in order to maximize both
employees as well as organizational effectiveness.
ACC has a large workforce of about 9,000 people, comprising experts in various
disciplines assisted by a dedicated workforce of skilled persons. ACC
employees, referred to as the ACC Parivar, come from all parts of the country
and belonging to a variety of ethnic, cultural and religious backgrounds. ACC
employees display a strong sense of loyalty to the Company and their special
stellar qualities as ‘value-adding’ human capital are well known in the industry
ACC has clearly stated guidelines concerning recruitment, termination, career advancement, performance appraisal, professional and employee ethics and code of conduct. The Company’s personnel policies and processes enshrine equal opportunities to all and non-discrimination with regard to gender, caste, creed, ideology or other opinion, whether social, political or religious. Also ensured is a due process for employee consultation and participation in organizational development and policy formulation.
Recruitment
Recruitment in ACC is a very fair and transparent process with adequate opportunities to look for suitable candidates internally as well as from outside. Applicants are generally invited on the basis of specific advertisements in newspapers and websites. A Committee of officers called the Central Recruitment Committee handles the entire recruitment process comprising screening of applications, preliminary short-listing, interviews and final selection. Every attempt is made to make the selection process as objective as
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
possible by incorporating tests of competence. In some cases, outside consultants are retained. All decisions of the recruitment committee are recorded in respect of each candidate. Candidates are informed of their short-listing and selection immediately after the interview or at the earliest thereafter.
Performance management
The Company’s performance management system is in itself a benchmark that provides ample opportunities and motivational incentives to employees so as to reward and retain good talent within the Company. These incentives include Performance Linked Incentives, Good Work Awards, Letters of Appreciation, Special Increments, and Promotions, Nomination to external training programmes in India and abroad, public felicitation and appreciation. Some plants have Best Employee and Employee of the Month Awards and recognition. Competent employees and those who display aptitude are invited to become Trainers themselves and receive Train the Trainer facilitation
Training & Development
Our new Performance Management System incorporates a process called Competency Assessment and Training and Developmental Needs wherein appraisers are specifically called upon to identify and assess training needs of employees at specific intervals that do not coincide with Performance Appraisals. This is so that training needs can be assessed objectively. Training is imparted to take care of an individual’s career development as well as functional and skill enhancement. Competency and Development training inputs include Skill and general performance enhancement, communication skills and Career development. Functional training needs are identified and conducted by functional departments while Corporate HR organizes competency and developmental inputs.
Employee welfare & perquisites
Employee welfare receives prime attention at ACC. We have several schemes for general welfare of employees and their families. These cover education,
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
healthcare, retirement benefits, loans and financial assistance and recreation facilities.
ACC townships have excellent schools that are often the best in the district. Education at these schools is subsidized for employees’ wards. We offer attractive scholarship allowances for children studying at places away from their parents, merit scholarships for outstanding children and financial assistance for employees’ children to pursue higher professional education.
Liberal medical benefits are made available to employees and their family members by way of reimbursements towards normal medical treatment, domiciliary treatments and special sanctions for serious illness. Each of our townships has well-equipped health care centres with qualified medical staff and facilities, ambulance, referrals and tie-ups with reputed hospitals for specialised treatment. In addition, there are regular health checkups, camps and programmes
Employees are eligible to apply for loans and financial assistance for various purposes such as purchase of assets, residential premises as well as a scheme that provides for supply of cement at subsidized rates to those building their own houses. At our cement plants and factories, employees are provided furnished and unfurnished accommodation based on their entitlements. At many locations, the employees are given free electricity, free water supply and free bus facility for nearby places and schools. These houses are well-maintained and periodically upgraded.
Employee SatisfactionIn addition to periodic internal Employee Satisfaction Surveys, we participate in Employee Satisfaction and Work Places Surveys conducted by reputed external agencies and organisations like Hewitt Associates Grow Talent. And from time to time, ACC has also retained reputed firms to study our internal work environment and employee policies and suggest areas of improvement. We share below salient points of the latest survey of employees:
People are treated fairly regardless of religion and gender ACC is a safe place to work Management is competent in running business Employees feel good about what we do for society
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Analysis Financial Statement of ACC Ltd. at Wadi-Karnataka
Proud to tell others I work here Management thinks positively
The overall findings show significant job satisfaction at all levels as also deep respect for the company, its performance management system and its overall business performance.
OBJECTIVES OF THE STUDY:
1. To study the liquidity position of the Associated Cement company Ltd,
WADI.
2. To know the operating efficiency of the Associated Cement Company
Ltd, WADI.
3. To evaluate the Various ratios of Associated Cement Company Ltd,
WADI
4. To high light the overall financial performance of Associated Cement
Company Ltd, WADI
5. To compare the actual ratios with the standards or ideals of Associated
Cement Company LTD, WADI
6. To study and compare present performance with past performance
SCOPE OF THE STUDY:
The study will help in analyzing the ratios for a period of five years i.e.
from Dec 2007 to Dec2011 of ACC limited Ratios may prescribe as practical
standards, as they are several in numbers for each element of study. The study
helps us in finding out how well the organization is managing them.
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