A Case Study On ACC Limited In India Finance Essay
ACC Limited is India's foremost cement manufacturer with a countrywide network of factories and marketing offices. Established in 1936, ACC has been a pioneer and trend-setter in cement and concrete technology. Among the first companies in India to include commitment to environment protection as a corporate objective, ACC has won accolades for environment friendly measures taken at its plants and mines, and has also been felicitated for its acts of good corporate citizenship.
ACC's brand name is synonymous with cement and enjoys a high level of equity in the Indian market. Our range of cements and blended cements is marketed through a network of 19 Sales Units, 54 Area Offices, and 194 warehouses. This is backed by a countrywide network of over 9,000 dealer who, in turn, are assisted by their sub-dealers.
ACC's marketing, sales and distribution processes are industry standards. Although they take immense pride in having supplied some of India's most admired projects, ACC is essentially a people's brand of cement with more than 80% of sales made through an extensive dealer network that covers every state in India. Its customer base represents the masses of India- individual homebuilders in small towns, rural and semi-urban India. ACC Cement enjoys an image of assuring consistency and of high quality backed by in-house research and expertise.
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Complementing this is a unique customer services cell comprising qualified civil engineers, who assist and advise customers with prior and post sales service. This service begins with selection of type and grade of cement (where applicable) to troubleshooting and on-site assistance.
ACC manufactures the various kinds of Portland Cement for general construction and special applications. In addition to this, ACC offers two value added products namely, Bulk Cement and Ready Mix Concrete.
Incorporation of The Associated Cement Companies Limited on August 1, 1936.
First Board Meeting of The Associated Cement Companies Limited held at Esplanade House, Mumbai on November 10, 1936.
With the transfer of the 10th company to ACC, viz. Dewarkhand Cement Company, the formation of ACC is complete on October 23, 1937.
ACC's first community development venture near Bombay
India's first entirely indigenous cement plant established at Chaibasa in Bihar
Village Welfare Scheme launched
Sindri cement works used the waste product calcium carbonate sludge from fertilizer factory at Sindri.
Bulk Cement Depot established at Okhla, Delhi
Technical training institute established at Kymore, Madhya Pradesh.
Blast furnace slag from TISCO used at the Chaibasa Unit to manufacture Portland Slag Cement for the first time in India.
Manufacture of Accocid Cement, which resists the corrosive action of acids and chemicals.
Oilwell Cement manufactured at ACC Shahabad Cement Works in Karnataka for cementation of oilwells upto a depth of 6,000 feet.
Manufacture of Hydrophobic (waterproof) cement at ACC Khalari Cement Works in Bihar.
Manufacture of Accoproof, a waterproofing additive.
ACC's Central Research Station (CRS) established at Thane
Manufacture of Portland Pozzolana Cement.
Manufacture of Calundum, a High Alumina Binder; Firecrete, Low Density Alumina Castables and High Alumina Refractory Cement.
Advent of computers in ACC for data processing and designing management information and control systems.
ACC supplied and commissioned one-million-tonne iron ore pelletising plant ordered by TISCO
Manufacture of Whytheat Castables A, K, C and Cal-Al-75
Take-over of The Cement Marketing Company of India (CMI)
ACC receives ASSOCHAM first national award for the year 1976 instituted for outstanding performance in promoting rural and agricultural development activities.
Introduction of the energy efficient precalcinator technology for the first time in India. Full scale commercial production based on MFC technology at Wadi in 1979.
ACC wins international contract for operation and management of a new one million tonne cement plant at Yanbu-Ras Biridi in Saudi Arabia.
Commissioning of the first 1 MTPA plant in the country at Wadi, Karnataka.
ACC achieves a breakthrough in import substitution by developing and supplying a special G type of oil well cement to ONGC.
ACC develops a new binder for use at sub-zero temperatures, which is successfully used in the Indian expedition to Antarctica.
Incorporation of Bulk Cement Corporation of India, a joint venture with the Government of India.
ACC starts the commercial manufacture of Ready Mixed Concrete at Mumbai.
ACC selected as Most Respected Company in India by Business India.
Commissioning of the 0.6 MTPA cement grinding unit at Tikaria, Uttar Pradesh.
Commissioning of captive power plants at the Jamul and Kymore plants in Madhya Pradesh.
Tata group sells 7.2% of its stake in ACC to Ambuja Cement Holdings Ltd, a subsidiary of Gujarat Ambuja Cements Ltd. (GACL)
Tata Group sells their remaining stake in ACC to the GACL group, who with 14.45% now emerge as the single largest shareholder of ACC.
Commissioning of the new plant of 2.6 MTPA capacity at Wadi, Karnataka plant, the largest in the country, and among the largest sized kilns in the world.
ACC wins PHDCCI Good Corporate Citizen Award
IDCOL Cement Ltd becomes a subsidiary of ACC
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IDCOL Cement Limited is renamed as Bargarh Cement Limited (BCL).
ACC raises US $ 100 million abroad through Foreign Currency Convertible Bonds (FCCB's) for US$ 60 million and Global Depository Shares (GDS's) for US $ 40 million. Both offerings are listed on the London Stock Exchange.
ACC named as a Consumer Superbrand by the Superbrands Council of India, becoming the only cement company to get this status.
GreenTech Safety Gold and Silver Awards awarded to Madukkarai Cement Works and Katni Refractory Works by Greentech Foundation for outstanding performance in Safety Management System.
ACC receives the CFBP Jamnalal Bajaj Uchit Vyavahar Puraskar Certificate of Merit - 2004 from Council For Fair Business Practices.
Holcim group of Switzerland enters strategic alliance with Ambuja Group by acquiring a majority stake in Ambuja Cements India Ltd. (ACIL) which at the time held 13.8 % of the total equity shares in ACC. Holcim simultaneously makes an open offer to ACC shareholders, through Holdcem Cement Pvt. Limited and ACIL, to acquire a majority shareholding in ACC. Pursuant to the open offer, ACIL's shareholding in ACC increases to 34.69 % of the Equity share capital of ACC.
Commissioning of Modernisation and Expansion project at Chaibasa in Jharkhand, replacing old wet process technology with a new 1.2 MTPA clinkering unit, together with a captive power plant of 15 MW.
Financial accounting year of the company changed to calendar year January-December
Subsidiary companies Damodhar Cement & Slag Limited, Bargarh Cement Limited and Tarmac (India) Limited merged with ACC
ACC announces new Workplace policy for HIV/AIDS
Change of name to ACC Limited with effect from September 1, 2006 from The Associated Cement Companies Limited.
ACC receives Good Corporate Citizen Award 2005-06 from Bombay Chamber of Commerce and Industry
New corporate brand identity and logo adopted from October 15, 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.
ACC partners with Christian Medical College for treatment of HIV/AIDS in Tamil Nadu
Sumant Moolgaokar Technical Institute completes 50 years and reopens with new curriculum
Ready mixed concrete business hived off to a new subsidiary called ACC Concrete Limited.
ACC Cement Technology Institute formally inaugurated at Jamul on July 7.
First Sustainable Development Report released on June 5.
ACC wins CNBC-TV18 India Business Leader Award in the category India Corporate Citizen of the year 2008
Project Orchid launched to transform our Corporate Office, Cement House into a green building.
ACC received the Jamanalal Bajaj "Uchit Vyavahar Puraskar" of Council for Fair Business Practices
ACC is allotted coal blocks in Madhya Pradesh and West Bengal.
ACC's new Grinding plant of capacity 1.60 million tonnes inaugurated at Thondebhavi in Karnataka.
Kudithini Cement Grinding Plant inaugurated in Karnataka on January 4, 2010 with a capacity of 1.1 MTPA of Portland Slag Cement.
ACC acquires 100 percent of the financial equity of Encore Cements & Additives Private Limited which is a slag grinding plant in Vishakhapatnam in coastal Andhra Pradesh. This company became a wholly-owned subsidiary of ACC in January 2010.
Sales Volume and Growth:
Net Sales, Operating EBITDA & Operating EBITDA Margin:
Profits Before Tax and Profits After Tax:
Net worth and Return on Net Worth
Highlights of Performance/Events (2009)
Total Consolidated Income for the year 2009 was Rs. 8275 crore, an increase of 9% as compared to Rs.7974 crore in 2008.
Consolidated Profit before exceptional items and tax for the year 2009 was Rs. 2251 Crore against Rs. 1582 crore in the year 2008.
Consolidated Profit after Tax for the year 2009 was Rs. 1564 crore as against Rs. 1100 crore in 2008, an increase of 42%.
The expansion project of the Bargarh Plant was substantially completed during the year. The Satellite grinding units which were set up as a part of Wadi expansion programme at Thondebhavi in Chikballapur district and Kudithini in Bellary district in Karnataka were also partly commissioned during the last quarter of 2009.
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There were substantial progress during the year under review in the Company's on-going projects at Wadi and Chanda, which are slated for completion in the first half of 2010.
Work was started on a project to set up a 2.5 MW wind energy farm in Maharashtra.
Capital Market and Fund Raising:
ACC Limited which is a part of the Cement and Cement Products sector has a weightage of 0.64% in the Nifty50 as per the National Stock Exchange.
All in Crores INR
Sale of products and services (net of excise duty) and other income
Profit after exceptional items and before tax
Provision for tax
Profit after tax
Balance brought forward from last year
Profit available for appropriations
Dividend Distribution Tax
Debenture Redemption Reserve
Previous Year Dividend
Balance Carried forward to the next year's account
In August 2009, the Company had paid an interim dividend or Rs. 10 Crore per equity share, involving an outgo (Including the dividend distribution tax) of Rs.219.60 crore. The directors are now pleased to recommend a final dividend of Rs. 13 per equity share of Rs.10 each. The total dividend for the year 2009 would accordingly be Rs.23 per equity share as against Rs.20 per equity share for the year ended December 31, 2008.
The total dividend outgo for the current fiscal would amount to Rs. 505.14 crore, including dividend distribution tax of Rs. 73.38 crore, as against Rs. 439.12 crore, including dividend tax of Rs.63.79 in the previous year.
Economic scenario and Outlook
After the global financial slowdown witnessed in 2008, culminating in the expensive bailout for banks and insurance companies notably in USA, there has been a perceptible improvement in the outlook for the global economy. The expansion of output in emerging market economies, particularly Asia, was the principal driver of this development. Trade is recovering and financial market conditions are improving. Notwithstanding the confidence exuded by the financial sector, there are concerns that the recovery may as yet be fragile, as the economies of developed countries, particularly USA, continues to lag with high unemployment, low consumer spending and depressed housing markets.
The Indian economy fared better than most developed economies, although its growth was a bit muted. The performance of the industrial sector has markedly improved. Funding constraints eased with ample liquidity and a benign interest regime prevailed during a major part of the year. Capital inflows revived as India became a preferred destination for both portfolio and direct investment. The country is now exhibiting signs of resurgence despite contraction in exports and a subnormal monsoon in 2009. Government expects the GDP growth to be around 7% in the financial year 2009-2010 which is an improvement over the forecast of 6-6.5% growth made in the beginning of the fiscal year.
However, there are still areas that cause concern. Agricultural output may decline as a result of the weak monsoon and inflationary pressures, particularly of food prices, could hamper growth prospects in 2010. Bank credit growth continues to be sluggish. Government fiscal deficit is expected to reach record levels. Nevertheless, the overall economic outlook is generally favorable, though mixed, with some concern of an escalating inflationary pressure.
With a view to enhance its limestone reserves in Rajasthan, ACC Limited acquired a 100% equity stake in National Limestone Company private limited (NLCPL) making it a wholly owned subsidiary of the Company. NLCPL has limestone leases and reserves in Sikar district in Rajasthan.
The Company also acquired 100% equity stake in Encore Cements and Additives Private limited (ECAPL). Consequently, ECAPL has become a wholly owned subsidiary of ACC limited with effect from Jan 28th, 2010. ECAPL has a slag grinding unit in Vishakapatinam which will help ACC strengthen its market presence in Coastal Andhra Pradesh.
ACC limited also entered into an agreement with the promoters of Asian concrete & Cement private limited. Asian Cement to acquire a 45% equity share in that company. This transaction was completed in the first quarter of 2010. Asian Cement has a 0.3 million tonne cement grinding plant in the Solan district of Himachal Pradesh and is in the process of setting up an additional 1 million tonne grinding facility adjacent to the existing plant.
The Company retained its "AAA" rating by CRISIL for its long term non convertible debenture and bank loan for working capital. In October 2009, the company borrowed Rs. 300 crore through non convertible debentures having a five-year maturity at an all inclusive cost of 8.45% per annum.
As on 31st December 2009, the company's debit equity ratio stood at a comfortable level of 0.9:1
During the year, ACC limited allotted 58,473 equity shares of the face value of Rs.10 each, consequent to the exercising of Stock options by its employees. EBITDA losses of this business were considerably reduced by 65% from Rs.74 crore to Rs. 26 crore, through systematic management of overhead costs and productivity.
ACC concrete limited is well placed to grow and add value to the group, going forward as the market regains momentum as a result of Government's infrastructure programme and renewed confidence in the real estate sector.
ACC Share Price vis a vis BSE Sensex January - December 2009
BSE Sensex Close
ACC Share Price (on BSE) In rs.
No. of shares traded during the month(on BSE)
Turnover (Rs.crore) on BSE
ACC Share Price on NSE vis a vis S&P CNX Nifty January - December 2009
S&P CNX Nifty Close
ACC Share Price (on BSE) In rs.
No. of shares traded during the month(on BSE)
Turnover (Rs.crore) on BSE
Share transfer system
The share transfers in physical form are presently processed and the share certificates
are generally returned within a period of 15 days from the date of receipt.
Nomination facility for shareholding
As per the provisions of the Companies Act, 1956, facility for making nomination is
available for shareholders in respect of shares held by them. Those shareholders who
hold shares in physical form may obtain nomination forms from the Share Department
of the Company.
Payment of dividend through Electronic Clearing Service
The Securities and Exchange Board of India (SEBI) has made it mandatory for all
companies to use the bank account details furnished by the depositories for depositing
dividends. As per the recent RBI guidelines, effective from September 30, 2009, ECS
credit will be moved completely on National Electronic Clearance System (NECS)
platform through core banking system. Accordingly, dividend will be credited to the
shareholders' bank account through NECS where complete core banking details are
available with the Company. In the event any branch of a bank has not migrated to
core banking system, or where the core banking account number is not furnished by
the shareholder to the Depository/Company as the case may be, the Company will
print the details available in its records on the dividend warrants to be issued to the
shareholders. The Company is complying with SEBI's directive in this regard.
The Company is required to transfer dividends which have remained unpaid /unclaimed
for a period of seven years to the Investor Education & Protection Fund established by
the Government. The Company will accordingly be required to transfer in August
2010, the dividend for the year ended March 31, 2003 which have remained unclaimed
As in the past, the Company will send intimation to shareholders whose dividend
warrants have not been encashed. Shareholders are requested to revert to the Company
if they have not received / encashed their dividend warrants.
Subdivision of shares
The Company had subdivided the face value of its shares from Rs. 100 each to Rs. 10
each in 1999. The old shares having face value of Rs. 100 are no longer tradable in the
Stock Exchanges. Despite reminders, many shareholders are yet to exchange their old
share certificates of face value Rs. 100 with the new share certificates having face
value of Rs. 10. Shareholders holding share certificates of the face value of Rs. 100
each are requested to send the certificates to the share department of the Company
Pending Investors' Grievances
Any shareholder, whose grievance has not been resolved satisfactorily, may kindly
write to the Company Secretary at the Registered Office with a copy of the earlier
Dematerialisation of shares and Liquidity
Equity Shares of the Company dematerialized as on December 31, 2009 is 94.13%
The Company has entered into agreements with both National Securities Depository
Limited (NSDL) and Central Depository Services (India) Limited (CDSL) whereby shareholders have an option to dematerialize their shares with either of the depositories.
Global Depository Receipts (GDRs) or any Convertible instruments, Conversion Dates and likely impact on Equity
64, 62,000 Global Depository Receipts (GDRs) were issued in March / April 2004 at a
share price of U.S. $6.19 (equivalent to Rs. 280.05) per GDR at about 1% premium on
closing share price of Rs. 277.35 on March 8, 2004 on the Bombay Stock Exchange
Limited (BSE) representing 64, 62,000 Equity Shares. The Company has terminated the
Depository Agreement with effect from October 15, 2008 and the GDRs have been
delisted from the London Stock Exchange. The GDR holders were given time to
surrender their GDR's in exchange for Equity Shares up to April 15, 2009. Citibank
who were the depository for the GDRs have recently sold the underlying shares and the GDR's stand extinguished.
The Company has made high profits and holds high percentage of share in the market.
Awards & Accolades:
ACC was the first recipient of ASSOCHAM's first ever National Award for outstanding performance in promoting rural and agricultural development activities in 1976. Decades later, PHD Chamber of Commerce and Industry selected ACC as winner of its Good Corporate Citizen Award for the year 2002. Over the years, there have been many awards and felicitations for achievements in Rural and community development, Safety, Health, Tree plantation, afforestation, clean mining, Environment awareness and protection.
Awards received in 2010
9th Annual Greentech Safety Platinum Award to ACC Tikaria, Gold Award to ACC Jamul and Sindri ; Silver Award 2010 to ACC Lakheri, Madukkarai and Wadi Expansion Project
Institute of Cost and Works Accountants of India (ICWAI) Good Performance Award by Institute of Cost and Works Accountants of India
Institute of Chartered Accountants of India (ICAI) award for Excellence in Financial Reporting for Annual Report 2008
Financial Express-Emergent Ventures India (EVI) Green Business Leadership award
9th Greentech Safety Gold Award in cement sector to ACC Jamul
Awards received in 2009
Indian Merchants' Chamber Ramkrishna Bajaj National Quality Trophy - 2009 to ACC Gagal
Indian Merchants' Chamber Ramkrishna Bajaj National Quality Commendation Certificate 2009 to ACC Sindri
8th Greentech Safety Award 2009 in Gold category in cement sector to ACC Tikaria
8th Greentech Safety Gold Award in cement sector Jamul
10th Greentech Environment Excellence award - Gold category - cement sector to Tikaria
Srishthi Good Green Governance Award by Srishthi Publications, Delhi to ACC Madukkarai
International Safety Award 2008 by British Safety Council to ACC Gagal Sindri and Tikaria
State Safety Award for 2007 from Government of Orissa to ACC Bargarh
Federation of Indian Mineral Industries (FIMI) National Environment Award to ACC Wadi Limestone Mines
Safety Innovation Award by Institution of Engineers to ACC Wadi (Expansion Project)
Energy Conservation Award by Rajasthan Renewable Energy Corporation to Lakheri
National Award for Excellence in Water Management from Confederation of Indian Industry (CII) to ACC Wadi
Other prominent awards won by us over the years comprise some coveted ones conferred by organisations of repute.
Indira Priyadarshini Vrikshamitra Award --- by The Ministry of Environment and Forests for "extraordinary work" carried out in the area of afforestation.
FICCI Award --- for innovative measures for control of pollution, waste management & conservation of mineral resources in mines and plant.
Subh Karan Sarawagi Environment Award - by The Federation of Indian Mineral Industries for environment protection measures.
Drona Trophy - By Indian Bureau Of Mines for extra ordinary efforts in protection of Environment and mineral conservation in the large mechanized mines sector.
Indira Gandhi Memorial National Award - for excellent performance in prevention of pollution and ecological development
Excellence in Management of Health, Safety and Environment : Certificate of Merit by Indian Chemical Manufacturers Association
Good Corporate Citizen Award - by PHD Chamber of Commerce and Industry
FIMI National Award - for valuable contribution in Mining activities from the Federation of Indian Mineral Industry under the Ministry of Coal.
Rajya Sthariya Paryavaran Puraskar - for outstanding work in Environmental Protection and Environment Performance by the Madhya Pradesh Pollution. Control Board.
National Award for Fly Ash Utilisation - by Ministry of Power, Ministry of Environment & Forests and Dept of Science & Technology, Govt of India - for manufacture of Portland Pozzolana Cement.
ACC in the news
Financial Results for the year 2009:
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