ASSIGNMENT 2 CASH FLOW ANALYSIS

SUBMITTED BY GROUP - 8

CASH FLOW ANALYSIS

CASH FLOW ANALYSIS

ACC Ltd Cash and Cash Equivalents at Beginning of the year Net Cash from Operating Activities Net Cash from Operating Activities Net Profit before Tax & Extraordinary Items Adjustment for Depreciation Interest (Net) Dividend Received P/L on Sales of Assets P/L on Sales of Invest Prov. & W/O (Net) P/L in Forex Fin. Lease & Rental Chrgs Others Total Adjustments (PBT & Extraordinary Items) Op. Profit before Working Capital Changes Adjustment for Trade & 0th receivables Inventories Trade Payables Loans & Advances Others Total (OP before Working Capital Changes) Cash Generated from/(used in) Operations Interest Paid(Net) Direct Taxes Paid Total-others Cash Flow before Extraordinary Items Extraordinary Items Gain on Forex Exch. Tran Net Cash Used in Investing 2009 984.24 2397.94 2294.39 1803.3 AMBUJA CEMENT 2009 949.11 2129.15 531.32 INDIA CEMENTS 85.2 208.75 2381.67 JAI PRAKASH ASSO. 2908.59 185.32

342.09 7.7 0 3.24 -0.81 -19.04 0 0 14.01 347.19 2641.58

296.99 -49.82 -2.32 5.15 -7.39 -23.42 -2.09 0 -59.06 158.04 1961.34

233.12 118.05 -2.81 1.01 0 2.97 -57.39 0 13.55 308.5 839.82

456.06 935.79 -30.9 0.98 -1324.84 9.48 0 0 207.95 254.52 2636.19

45.94 14.29 189.62 0 0.56 250.41 2891.99 0 -494.05 -494.05 2397.94

116.83 255.48 98.9 0 0 471.21 2432.55 0 -305.49 -305.49 2127.06

-587.73 -77.26 178.26 0 0 -486.73 353.09 0 -144.34 -144.34 208.75

-1262.99 -325.01 544.62 -506.83 -629.98 -2180.19 456 0 -270.68 -270.68 185.32

0 -2181.22

2.09 -

0 -461.68

0 -

Activities Cash Flow from Investing Activities Investment in Assets : Purchased of Fixed Assets Sale of Fixed Assets capital WIP Capital Subsidy Recd Financial/Capital Investment : Purchase of Investments Sale of Investments Investment Income Interest Received Dividend Received Invest.InSubsidiaires Others Net Cash Used in Financing Activities Cash Flow From Financing Activities Proceeds: Proceeds from Issue of shares (incl share premium) Proceed from Issue of Debentures Proceed from 0ther Long Term Borrowings Payments: Of the Long Tem Borrowings Dividend Paid Others Net Cash Used in Financing Activities Net Inc/(Dec) in Cash and Cash Equivalent Cash and Cash Equivalents at End of the year

1196.13

2949.12

-1523.23 7.84 0 0 -4711.48 4036.87 0 85.72 0 -121.14 44.2 -454.58

1347.54 11.44 0 0 0 52.29 0 87.36 2.32 0 -2 -466.66

-296.25 0.11 0 0 -155 0 0 30.68 2.81 0 -44.03 221.55

-3084.73 8.21 0 0 -2958.86 3172.64 0 102.44 30.9 0 -219.72 3734.39

1.9 0 300

7.38 0 49.94

283.09 0 771.18

86.59 0 4802.54

-215.11 -435.93 0 -454.58 -237.86 746.38

-113.64 -390.04 -0.03 -466.66 466.36 1415.47

-583.34 -66.08 0 221.55 -31.38 53.82

0 -175.51 1.36 3734.39 970.59 3879.18

BALANCE SHEET
ACC Ltd Ambuja Cements Ltd India Cements Ltd Mar 10 307.17 3,828.65 0 0 4,135.82 866.64 1,266.09 2,132.73 6,268.55 5,710.21 1,791.59 0 3,918.62 0 702.89 313.97 468.19 485.26 53.81 1,869.19 2,876.45 1,164.19 109.91 1,274.10 1,602.35 0 20.63 289.91 -269.28 6,268.55 825.35 JaiprakashAssosiate (Rs in Crs) Mar 10 424.93 8075.79 0 0 8500.72 11358.01 6550.7 17908.71 26409.43 12847.14 2228.46 0 10618.68 0 3891.64 5576.26 2909.68 2285.03 3879.18 4025.1 13098.99 5201.43 651.46 5852.89 7246.1 0 32.83 956.08 -923.25 26409.43 4181.61

Year SOURCES OF FUNDS : Share Capital Reserves Total Equity Share Warrants Equity Application Money Total Shareholders Funds Secured Loans Unsecured Loans Total Debt Total Liabilities APPLICATION OF FUNDS : Gross Block Less : Accumulated Depreciation Less:Impairment of Assets Net Block Lease Adjustment Capital Work in Progress Investments Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off Deferred Tax Assets Deferred Tax Liability Net Deferred Tax Total Assets Contingent Liabilities

Dec 09 187.94 5828.2 0 0.08 6016.22 550 16.92 566.92 6583.14 6826.27 2667.98 0 4158.29 0 2156.21 1475.64 778.98 203.7 746.38 565.41 2294.47 2060.34 1091.88 3152.22 -857.75 0 149.14 498.39 -349.25 6583.14 359.25

Dec 09 304.74 6166.16 0 0.15 6471.05 100 65.7 165.7 6636.75 6224.13 2784.09 0 3440.04 0 2714.43 727.01 683.24 152.2 880.68 263.22 1979.34 1066.9 674.04 1740.94 238.4 2.71 29.43 515.27 -485.84 6636.75 419

PROFIT AND LOSS ACOUNT

ACC Ltd Ambuja Cements Ltd (Rs in Crs) Dec 09(12) 7721.42 680.72 7040.7 255.84 -49.44 7247.1 945.1 1422.75 266.88 776.63 1460.43 252.59 0 5124.38 2122.72 22.43 2100.29 296.99 1803.3 479 0.84 105.09 1218.37 1.52 1216.85 India Cements Ltd Jaiprakash Associates Ltd Mar 10(12) 10497.25 408.34 10088.91 1582.87 -105.44 11566.34 240.99 474.95 657.72 4977.59 957.91 271.26 0 7580.42 3985.92 1148.19 2837.73 456.06 2381.67 439.69 0 233.62 1708.36 724.18 984.18

Year INCOME : Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income EXPENDITURE : Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Administration Expenses Miscellaneous Expenses Less: Pre-operative Expenses Capitalized Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Tax Fringe Benefit tax Deferred Tax Reported Net Profit Extraordinary Items Adjusted Net Profit

Dec 09(12) 8724.24 781.58 7942.66 261.44 28.74 8232.84 984.67 1539.65 363.75 654.06 1653.63 295.97 0 5491.73 2741.11 104.63 2636.48 342.09 2294.39 673.3 0.9 13.46 1606.73 -1.71 1608.44

Mar 10(12) 4100.7 413.44 3687.26 164.57 15.24 3867.07 495.14 999.85 249.97 144.59 1046.31 24.13 0 2959.99 907.08 142.64 764.44 233.12 531.32 163.32 0 13.66 354.34 28.39 325.95

ANALYSIS OF CASH FLOW STATEMENT OF THE COMPANIES

There is positive cash flow from operating activities of the four companies ( ACC, Ambuja cement, India cement and Jai Prakash Associates) Although ACC has shown higher inflow of cash but Ambuja cement has shown better operating efficiency because its net cash from operating activities is more with respect to net sales turnover as compared to the other three companies. The ratio of net cash from operating activities to net profit is greater than one in case of Ambuja(1.18) and ACC (1.04) but less than one for India cement (0.39) and Jai prakash(0.07). This showACC and Ambuja have more cash sales while Jai prakash and India have more credit sales. Depreciation of Jai prakash is much higher than the other three because they have large amount of fixed assets also they have purchased more assets. All the companies have invested heavily this is shown in increased cash spent in investing activities. All of them are in an expansion mode, much of the investments have been made to purchase new assets as is shown in the cash flow statements of these companies. Sale of fixed assets has been made too but it is negligible as compared to the purchases made by the corresponding companies. ACC and Jai Prakash have generated huge amount of money by the same of investments which they have again reinvested in new investments. While the other two companies have done negligible purchase and sales of investments. Only ACC has invested in its subsidiary while there has been no investment from the other three. Cash has been used in financing activities by the two companies ACC and Ambuja Cement in long term borrowings and dividend paid. Cash has been generated mainly from the operating activities of the company in the case of all the four companies (ACC, Ambuja, India and Jai Prakash). Since the main cash flow is from the operating activity of the business there is good availability of funds available with the companies for running its day to day operations and also for its expansion and investing activities and financing activities. The companies India cement and Jai Prakash Associates have generated cash from investing activities by the issue of share capital and from other long term borrowings. Sales turnover of Jai prakash is the highest among the four companies but the cash generated from the operating activities by the company is quite less. The companies ACC and Ambuja enjoy a strong financial position because the amount of cash they have generated from operating activities is enough to run their day to day operations. The other two companies India Cement and Jai Prakash Associates dont have huge amount of

cash generated from operating activities so they have used financing activities to generate cash.

PART II AREA OF CONCERN AREA OF CONCERN FOR ACC LTD

ACC has advanced loan to its subsidiary unit. This shows it has enough amount of cash available to invest and it is in expansion mode Company has paid good amount of dividend to its share holders showing it has a strong financial position No cash losses in the year also no accumulated losses ACC has invested in its subsidiaries ACC concrete limited, ACC mining resource limited in their equity share capital and preference share capital. During the previous year, the Company subscribed to 9,99,50,000 equity shares for a total consideration of Rs. 99.95 Crore in its wholly owned subsidiary ACC Concrete Limited. During the year, the Company subscribed to 100,000,000 1% Cumulative Redeemable Preference Share for a total consideration of Rs. 100 Crore (Previous year Rs. Nil) in its wholly owned subsidiary ACC Concrete Limited

During the year, the Company subscribed to 4,90,000 equity shares for a total consideration of Rs. 4.90 Crore (Previous year Rs. Nil) in its wholly owned subsidiary ACC Mineral Resources Limited (Formerly Known as The Cement Marketing Co. of India Ltd.).

AREA OF CONCERN OF AMBUJA CEMENTS

OPERATING ACTIVITY
Cash inflow from operating activity is higher than net profit before tax which shows company has good cash sale. As well as company has recovered its
In view of good growth in domestic demand and fall in international demand and prices, the Company has reducedits exports to 7.46 lacstonnes of cement as against 8.32 lacstonnes in the previous year. In terms of value, the exportsduring this year amounted to Rs.170.72 crores (FOB) as against Rs. 232.09 crores (FOB) in the previous year. This caused FOREX to effected by 2.09 crore During the year the Company has written off pre-operative expenses incurred on certain capital projects and temporary structures amounting toRs. Nil (31.12.2008 - Rs. 8.11 crores).

INVESTING ACTIVITY
Companys cash flow suggests they are in expansion mood. They have utilized there fund in following area: The new clinker production line at Rauri (HP), also with 2.2 million tonnes capacity, has commenced production trials during January 2010 and is expected to get fully stabilised during thefirst quarter of 2010. The associated cement grinding facilities at Dadri (UP) and Nalagarh (HP), eachwith 1.5 million tonnes capacity, will also be commissioned during this quarter.The total cost of these two projects will be approximately Rs. 2,700 crores.
The Company has transferred a sum of Rs. 0.27 crore during the financial year 2009 to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 205C of the aCompanies Act, 1956 Efforts, in brief, made towards Technology Absorption, Adaption and Innovation: a) Installation of refractory bricks at kiln outlet to achieve better life (Darlaghat). b) Installation of online kiln shell scanner for improvement in monitoring of kiln, refractory management and tyre slip(Darlaghat, Ambujanagar, Rabriyawas). c) Conversion of electro static precipitator into hybrid ESP to reduce cement mill stack emission (Bhatapara). d) Installation of wireless remote control system (range-50 km) to monitor/access the fly ash loading unit from Marathaplant. e) Installation of improved fine coal feeding system (Coriolis make) for very accurate control of kiln operation (Rabriyawas,Ambujanagar).

f) Installation of DALOG System for raw mill & coal mill gear box to improve gear box health monitoring (Ambujanagar,Rabriyawas). g) Installation of continuous emission monitoring system (CEMS) for online monitoring of kiln stack emission (Ambujanagar). h) Installation of upgraded X-ray analyzer to determine all elements (Ambujanagar). i) Installation of mechanical kiln monitoring (MKM) system for online monitoring kiln tyre stress (Rabriyawas). j) Installation of fuzzy control for cement mills to improve operation & grinding efficiency (Rabriyawas). k) Enhancement in powder factor (T/Kg of explosive) by using new techniques Rabriyawas). l) In-house development of fuzzy logic foroptimization of cement mill no. 4 (Maratha). m) Coal fired hot air box made to improve production rate by removal of excessive moisture from clinker (Farakka).

During the previous year, the Company has sold its investments in :
a) Ambuja Cement India Private Limited for a sale consideration of Rs. 588.91 crores and has recognized a profit of Rs. 303.20 crores. b) Ceylon Ambuja Cements Private Limited for a sale consideration of Rs. 0.42 crore and has recognized a loss of Rs. 5.86 crores.

FINANCING ACTIVITY
The Employee Stock Option Scheme has proved to be a good instrument for employee motivation and talentattraction. The Company therefore, like in the previous years continued granting stock options to its employees. The Managing Director, the Whole-time Directors and the eligible employees were granted 7499600 stockoptions from ESOS 2009. They are entitled to subscribe for one equity share for each option at an exerciseprice of Rs. 96/- per share. This exercise price has been computed by averaging the daily closing price ofequity shares of the Company during the 7 days immediately preceding the date on which the options were granted. Non-Executive Directors are not entitled to the Stock Options as per the scheme. Dividend Policy: The first issue of shares was made by the Company in the year 1985-86 at Rs.10/- per share. Company is paying dividend from its very first full year of operation. From a modest dividend of 11% in 1987-88, Companyhas been increasing dividend almost every year. This year, the Board has recommended total dividend of 120%(Rs. 2.40 per share) including 60% (Rs.1.20 per share) paid as interim dividend. As a future policy for paymentof dividend, Company shall endeavour to follow a pay-out ratio of about 35% in the ordinary circumstances

AREA OF CONCERN FOR INDIA CEMENTS

1:-The company had issued USD 75 Million Zero Coupon Foreign Currency 2011. The bonds will not bear any interest and are convertible by holders into shares, subject to certain conditions. The net proceeds were used by the company for the purpose of Capital Expenditure and other purposes, including the repayment of existing debt, as permitted under the applicable law or regulations 2:-The company pay royalty charge much more (4235.65 to 6595.54 lakhs). 3:- Expenditures and outlays of money on uncompleted projects of a capital nature are shown as capital works-in-progress until such time these projects are completed and commissioned it shows most of the company funds involve in business.

4:-Company investing more in capital expenditure i.e from 8766.98 to 21669.22 lakhs to purchase plant and machinery. 5:-Company purchased less fixed asset because company purchased more raw material and equipment.

6:-The Board of Directors has recommended a dividend of Rs.2/- per equity share of Rs.10/- each on 30,71,72,765 equity shares of Rs.10/- each outstanding as on date. The Board has also recommended payment of such dividend reduced proportionately to the amount paid up on shares on which there are calls in arrears.

7:-The paid up equity share capital of the Company has increased to Rs.307.18 crore as on 31st March, 2010 comprising of 30,71,75,657 equity 8;-Increase in Excise Duty on cement to 10% from 8%.

AREA OF CONCERN FOR JAIPRAKASH ASSOCIATES DIVIDEND For the financial year 2008-09, Dividends is of 15% each (aggregating 30%) on October 21, 2008 & April 27, 2009. The final dividend will absorb an amount of Rs. 56.07 Crores (excluding dividend tax of Rs. 9.53 Crores). The total dividend payout for the year aggregating Rs. 127.09 Crores (excluding tax on dividend of Rs. 15.57 Crores), represents 50% of the Companies paid-up equity capital, the Company had issued 5,00,00,000 (five crore) Warrants on preferential basis to a Promoter Group Company, entitling the holder to apply for allotment of one Equity share of Rs.2 at a premium of Rs.395 on full payment, per Warrant, in one or more tranches. Out of the 5,00,00,000 (five crore) Warrants, 1,00,00,000 (one crore) Warrants were converted into 1,00,00,000 (one crore) Equity

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs) 165.12 crores (2009) and 36.82 crores (2008)

SHARE CAPITAL The paid-up capital of the Company on March 31, 2008 stood at Rs. 2,34,30,44,834. During the year ended March 31, 2009, 2,278,162 Equity Shares of Rs. 2 each were allotted on conversion of FCCBs & 1,00,00,000 (one crore) Equity shares of Rs. 2 each were allotted on conversion of 1,00,00,000 (one crore) outstanding Warrants, thereby raising the paid-up capital of the Company to Rs.2,36,76,01,158. Depreciation - is 308.97crores (2008) and 203.30 crores (2009)

Indian economy has been witnessing a phenomenal growth since the last decade. After seeing a growth rate in excess of 9 per cent for the last 3 years, the company is still holding its ground in the midst of the current global financial crisis.

The Profit before has been increased from rs.843.35 crore to Rs. Crore 1250.98 Resulting in reducing volatility of regional demand-supply factors besides Achievement of economies of scale and management efficiency, reduction in administrative cost, optimization of resources, enhanced flexibility in funding of expansion plans, expansion of asset base, improvement in profitability and Stronger Balance Sheet of the merged entity, etc.

Net sales have increased which tremendous growth is seeing that current assets are also increasing.

PART III Ambuja cements has generated good amount of cash from its operating activities. It hass also shown an increase in its cash and cash equivalent by 466.36. Also the company has invested heavily in new projects and it has more chances of generating more cash on its investments than the other three companies. The cash generated from operating activities of Ambuja Cement is 118% of net profit. Also the time interval between borrowing of loan and its repayment is very short as compared to the other three companies. These indicate that Ambuja Cement will be a preferred choice for lending. ACC and ambuja both are running on profit and expanding their business. But the dividend paid in ACC is higher as compared to Ambuja so it will be profitable to invest in ACC cements. It is a little dicey condition to choose between ACC and Ambuja as both the companies are able to generate huge amounts of cash. Also both these companies are in expansion mode so the job opportunities in both these companies are more. But to work as an employee we need to know the pay scale of these companies of the post which we are applying which is not available. The less number of debtors of Ambuja shows that they have purchased more on cash and also they have paid their dues on regular basis. So as a supplier of raw materials I will supply to Ambuja cements.