AMBUJA CEMENTS GUJARAT

PROFILE OF GUJARAT AMBUJA CEMENTS

Gujarat Ambuja cements was set up in 1986. In the last decade the company has grown tenfold with the commercial production at its 2mn tonne plant in Chondrapur, Maharastra, Ambuja will become India’s 3 target cement company with a capacity of 12.5mn tonnes and revenues in excess of 2,500 crores. The 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 distinctions attribute, however, is its approach to the business. Ambuja 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 efficiently. And has proved to be a powerful engine of growth for the company. As a result, Ambuja is the most profitable Cement Company in India, and the lowest cost producer of cement in the worlds.

Strength of Gujarat Ambuja Cement is its kiln at Ambuja Nagar plant, it is 15 years old. Yet it keeps increasing productively year after year. In Himachal, for instance, they have managed to push up production and bring down power costs. At the same time they have managed to cut stabilizing time (a critical task in a cement plant) from up to 18 months to a mere 3 months.

Cement Shipping terminals in Gujarat, with a few minor modifications, they have succeeded in exploding clinker, and imparting higher quality and far cheaper coal and furnace oil for captive power plants. It is found that at Mumbai terminal meanwhile, they have increased the handling capacity to 1,00,000 tonnes as against the terminals stated capacity of 60,000 tonnes with no additional capital expenditure.

ACHIEVEMENTS:

Cement is a simple business, unlike other industries it does not suffer rapid technological obsolescence of shifting consumer trends. Therefore, it constantly attracts new investments. Which results in surplus capacity. This means only the very efficient players can prosper. And it is recognized by Gujarat Ambuja Cement with the efforts to constantly raise efficiency has not only raised the bar at Ambuja, but across the industry as well. Environment protection measure that conforms to the worlds best, It is found that the pollution levels at all its cement plants are even lower than the rigorous Swiss standards of 100 Mg/Nm. The air is so clean that a rose garden flourishes right next to the main plant. Ambuja has received the highest quality award that is the National quality Award. The only cement Company to do so. It is also the first to receive the ISD 9002. Quality certification. Almost 90% of Cement in India travels by rail or road, and in bags. Ambuja realizes that the only way to speed up transportation was a completely different system via. The sea making the first Company to introduce the concept of bulk cement movement by sea in India.

The tables showing changes in working capital and fund flow statement with analysis and interpretation.

(Rs. in crore)

Particulars	Financial year 2003	Financial year 2004	Changes in current Assets and current liabilities
			(Amount in Rs.)	(%)
Current Assets (A)
Cash & Bank Balance	56.76	158.35	101.59	179%
Sundry Debtors	622.88	616.46	(6.42)	1.03%
Inventories	643.59	725.91	82.32	13%
Loan and advance	437.15	408.27 -	(28.88)	6.6%
Accrued income	0.03	0.17	0.14
Total Current Assets	1760.51	1909.16	148.75	8.5%
Current Liabilities (B)
Current Liabilities	637.69	747.31	109.62	17%
Provision	155.58	171.02	15.44	10%
Total Current Liabilities	793.27	918.33	125.06	16%
Working Capital (A-B)	967.24	990.83	-	-
Increase in working capital	23.59			2.4%
	990.83	990.83

Statement of changes in working capital for the year ended 2006-2007

(Rs. in crore)

Particulars	Financial year 2006	Financial year 2007	Changes in current Assets and current liabilities
			(Amount in Rs.)	(%)
Current Assets (A)
Cash & Bank Balance	110.11	227.48	117.37	107%
Sundry Debtors	429.65	484.63	54.98	13%
Inventories	539.95	459.46	(80.49)	15%
Loan and advance	415.90	324.44	(91.46)	22%
Total Current Assets	1495.61	1496.01	0.4	0.026%
Current Liabilities (B)
Current Liabilities	752.49	752.10	(0.39)	0.051%
Provision	130.38	194.27	63.89	49%
Total Current Liabilities	882.87	946.37	63.50	49%
Working Capital (A-B)	612.74	549.64
Increase in working capital	-	63.10		10.3%
	612.74	612.74

Comparatives statement of changes in working capital during two financial year respectively 2006 and 2007. Again the trend shows decrease in the amount of working capital by 10.3% (63.10 crores).

Increase in current assets leads to decrease in working capitol. The statement well explained by the above table. Which shows there is an increase in current liabilities by 7.2% (63.50 crores) and observed a very minor changes with respect to total current assets which is increased by 0.02% (only 4 lacks). Thus the situation leads to decrease in working capital.

The reason for increasing in current liabilities is because of more processions made during the financial year 2007, which stands 49% (63.50 crores) higher then the previous year balance.

Statement of changes in working capital over a period of five years

(Rs. in crore)

Particulars	Financial year 2003	Financial year 2004	Financial year 2005	Financial year 2006	Financial year 2007
Total Current Assets	1760.15	1909.16	1558.97	1495.61	1496.01
Total Current Liabilities	793.27	918.33	826.10	882.87	946.37
Working Capital	967.24	990.83	732.87	612.74	349.64
Increase or Decrease in working capital	-	23.59	(257.96)	(120.13)	(63.10)
		2.4%	(26%)	(16%)	(10.3%)

During the financial year 2007 larger amount of provisions and transfers are made in various non-fund items such as transfers to General reserve Rs=275 (crores) which is 175% more than previous year balance. Transfer to debenture redemption reserve is Rs= 130.00 crores which is nearly 4 times of the previous year balance. Interim divided amounts to Rs.99.56 which is nearer to doubles the previous year balance, provisions for taxation made 4.71 crores which is 48% more than the previous year balance.

SOURCES OF FUNDS OF GUJARAT AMBUJA CEMENT LTD.

Funds from operation is a major source of any organization. The Comparative statement study reveals that in both the financial years 2006 and 2007, funds from operation are the major. Sources of fund. During 2006 it was 517.61 4 (crores) and in 2007 it is increased to 908.15 which shows 75% higher than previous year balance.

Loan profile of Gujarat Ambuja Cements shown increasing trend of unsecured loans, which shows the financial confidence of others in the company. i.e. it is also positive point for the company.

Non operating income such as interest, dividends, and other varieties have shown increasing trend, this also contributes to profitability for the efficiency of fund management by way of making efficient investments in other securities.

Decrease in working capital is more in first year (2006) when compared to second year (2007) as per our study year. Generally the company should used its funds for routine activities if it is using in other routine activities it results in decrease in working capital, by observing the above table it is clear that funds collected from activities have been used up for fixed assets which is not a good sign but, if it generates funds from operation heavily give to its the best operations it could be used to expand either through organic or inorganic method. But company as taken organic way of growth by constructing and acquiring of fixed assets.

APPLICATIONS OF FUNDS OF GUJARAT AMBUJA CEMENTS LTD

Funds generated from various sources by Gujarat Ambuja cement is utilized in various segments.

By observing the above statements it is clear that treasury operation like investments in shares and securities by Gujarat Ambuja Cement as improved. this is a good sign especially in improving capital market condition.

In fine, overall efficiency of Gujarat Ambuja Cements in managing its funds was very good. however we felt that what ever the strategies and tools that have been adopted to manage the working capital. Same strategies and tools must be adopted in subsequent years. And also the feasibility of this be seen with the length of operating cycle of Gujarat Ambuja Cement which was not here.

The above funds show statement of Gujarat Ambuja Cement, reveals that major sources of funds are funds from operation and long-term borrowing such as unsecured loan. And the major amount is utilized in investment activity and purchasing of fixed assets.