1.1.

Definition of Financial performance :

Financial performance is a subjective evaluation of a company's ability to employ assets
from its principal method of operation to create revenue. The phrase is frequently employed
as a broad indicator of a company's overall financial health over time.
Investors can learn about a company's overall health by looking at its financial
performance. It's a snapshot of the company's financial health and management. The
balance sheet, income statement, and statement of cash flows are all financial statements
that are used to evaluate overall financial performance.
1.2. Financial performance analysis :
Financial performance analysis is a process conducted on organizations by internal
and external parties to gain a better understanding of how a company is performing. The
process consists of analyzing four critical financial statements in a business.
The three statements that are extensively studied are a company’s balance sheet,
income statement, cash flow statement,
i. Balance Sheet : In financial statement analysis, an organization’s balance
sheet is looked at to determine the operational efficiency of a business.
Firstly, asset analysis is conducted and is primarily focused on more important
assets such as cash and cash equivalents, inventory, and PP&E, which help predict future
growth.
Next, long-term and short-term liabilities are examined in order to determine if
there are any future liquidity problems or debt-repayment that the organization may not be
able to cover.
Lastly, a company’s owner’s equity section is inspected, allowing the user to
determine the share capital distributed inside and outside of the organization
ii. Income Statement : The income statement of a company is examined in
financial statement analysis to determine overall present and future
profitability.
Examining a company's income statement from prior and current fiscal years allows
the user to see if there is a pattern in sales and expenses, which indicates the potential for
future profitability.

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 iii. Cash Flow Statement : In a financial statement analysis, a cash flow
statement is essential for determining where money is earned and spent by
the company.
If one of the business’s segments is experiencing big outflows, the company needs
generate inflows through finance or asset sales in order to stay afloat.
1.3. Parties interested in financial analysis :
The users of financial analysis can be divided into two broad groups.
a) Internal users
i. Financial executives
ii. Top management
b) External users
i. Investors
ii. Creditor.
iii. Workers
iv. Customers
v. Government
vi. Public
vii. Researchers

1.4. Methods of financial performance analysis:

Specific financial formulas and ratios are calculated as part of a financial performance
study, which, when compared to historical and industry measurements, provide insight
into a company's financial state and performance. A financial analyst can adopt the
following tools for analysis of the financial statements. These are
1.4.1 Comparative statement analysis
The most frequent method for examining financial statements is to prepare comparative financial
statements. This method compares financial accounts for two or more time periods to determine
a company's profitability and financial situation. As a result, this method is also known as
Horizontal Analysis. To conduct such an examination, income statements and balance sheets are
often created in a comparative format.
A comparative balance sheet showcases:
• Assets and liabilities of business for the previous year as well as the
current year

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 • Changes (increase or decrease) in such assets and liabilities over the year
both in absolute and relative terms
1.4.2 Common-size statement analysis
A common-size analysis is a strategy used by financial managers to gain a better
understanding of a firm through time. A common-size analysis, also known as vertical
analysis, expresses each line item in a financial statement as a percentage of a base
amount for the time period in question. As a result, the financial manager will have a
greater understanding of the impact each line item has on the company.
Financial managers can also use the common-size analysis to quickly examine
financial statements. However, rather than providing an in-depth review of financial
parameters, this form of research just provides a fast overview. This is especially
beneficial if you want to compare your financial statements to those of other
organisations or past years.
1.4.3 Funds flow analysis
The money flow analysis identifies the sources of funds and the purposes for
which they are used in an organisation. In other words, a money flow statement is an
analysis that shows the sources, uses, and applications of funds.
It allows you to compare the inflow and outflow of funds over two separate time
periods. It also analyses working capital, operational profit, and changes in long-term
assets and liabilities to indicate how an organization's financial situation has changed.
1.4.4 Ratio analysis
Financial ratios assist you in interpreting raw financial data to obtain practical
insights into a company's overall performance. To evaluate a company's valuation, rates of
return, profitability, growth, margins, leverage, liquidity, and other factors, you can use the
ratios from its financial statements.
Simply said, a financial ratio is calculated by dividing one statistic from a
company's financial records by another. The metric you get as a result can be used to
compare firms and assess investment opportunities.
This study focuses mainly on ratio analysis

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1.5. The principal advantages of ratio analysis:
• Forecasting and planning: Computing ratios of significant accounting
numbers over the previous few years can reveal trends in costs, sales,
profits, and other facts. This ratio-based trend analysis could be helpful in
forecasting and planning future business actions.
• Budgeting: A budget is a forecast of future actions based on previous
experience. Accounting ratios aid in the estimation of budgeted numbers.
For example, a sales budget could be created using data from previous sales.
• Controlling Performance and Costs: Ratios can be used to monitor the
performance of various divisions or departments within an organisation, as
well as control costs.
• Inter-firm comparison: comparing the performance of two or more firms
exposes which firms are efficient and which are inefficient, allowing
inefficient firms to take appropriate actions. The best way of inter-firm
comparison is to compare the relevant ratios of the organisation with the
average ratios of the industry.
• Indication of Liquidity Position: Ratio analysis is used to examine a
company's liquidity status, or its capacity to pay short-term debt. Liquidity
ratios reflect a company's ability to pay and aid credit analysis by banks,
creditors, and other short-term loan providers.
• Long-term Solvency Position Indicator: Ratio analysis is also used to
examine a company's long-term debt-paying capacity. Long-term creditors,
security experts, and current and potential firm owners are all concerned
about a borrower's long-term solvency status. The leverage/capital structure
and profitability ratios, which show earning capacity and operating
efficiency, are used to calculate it. Ratio analysis reveals a company's
strengths and weaknesses in this regard.
• Overall Profitability Indicator: The management is always concerned
with the firm’s overall profitability. They want to know if the company can
pay its creditors’ short- and long-term obligations, as well as assure a decent
return to its owners and the most efficient use of the company’s assets. This
is conceivable if all of the ratios are taken into account.

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 • Signal of Corporate Sickness: A corporation is sick when it is unable to
create profit on a consistent basis and is experiencing a significant financial
issue. Proper ratio analysis can detect the onset of corporate disease in
advance, allowing for proactive steps to be done to prevent it.
• Aid to Decision-making: Ratio analysis assists in making judgments such
as whether to supply items on credit to a corporation, if bank loans will be
made available, and so on.
• Financial Statements Simplified: Ratio analysis simplifies the link
between distinct components and aids in the understanding of financial
statements.
1.6. Types of ratio :
Management is interested in evaluating every aspect of firm’s performance. In view of the
requirement of The various users of ratios, we may classify them into following four
important categories:
1.6.1 Liquidity Ratio :
Liquidity ratios determine how quickly a company can convert the assets and use them for
meeting the dues that arise. The higher the ratio, the easier is the ability to clear the debts
and avoid defaulting on payments.
There are following types of liquidity ratios:
• Current Ratio or Working Capital Ratio
The current ratio is a measure of a company’s ability to pay off the obligations
within the next twelve months. This ratio is used by creditors to evaluate whether a
company can be offered short term debts
Current ratio = Current Assets / Current Liabilities
• Quick Ratio also known as Acid Test Ratio
Quick ratio is also known as Acid test ratio is used to determine whether a company
or a business has enough liquid assets which are able to be instantly converted into cash to
meet short term dues
Quick Ratio = (Cash + Marketable securities + Accounts receivable) /
Current liabilities

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 • Cash Ratio also known Cash Asset Ratio or Absolute Liquidity Ratio
Cash ratio is a measure of a company’s liquidity in which it is measured whether
the company has the ability to clear off debts only using the liquid assets (cash and cash
equivalents such as marketable securities
Cash ratio = Cash and equivalent / Current liabilities
1.6.2 Leverage Ratio :
Leverage ratio is one of the most important of the financial ratios as it determines how
much of the capital that is present in the company is in the form of debts. It also analyses
how the company is able to meet its obligations.
Types of leverage ratio
• Equity Ratio
This is used to calculate the amount of assets that are funded by the owners
investments. It shows what portion of the assets of the company is being financed
by investors and how much leveraged a company is by using debt.
Equity Ratio = Total Equity/ Total Assets
• Debt Ratio
Debt ratio is a type of financial ratio that is useful in calculating the extent
of financial leverage a firm is utilising.
Debt Ratio = Total Debt / Total Assets
• Debt to equity ratio
This ratio calculates the proportion of debt and equity that a company uses
for funding the operations of the business. It is an important financial ratio that
shows how a company is funding its operations.
Debt to equity ratio = Total Debt/ Shareholders Fund
• Interest coverage ratio
Interest coverage ratio is a financial ratio that is used by investors to
determine how easily a company is able to clear off the interest
Interest Coverage Ratio = EBIT / Interest Due

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 • Capital gearing ratio
Capital gearing ratio is a critical ratio that helps in evaluating the financial
health of the company. This ratio calculates the capital structure of the company
and analyses the proportion of debts and equity.
Capital gearing ratio = Common stockholders equity / Fixed cost
bearing funds
1.6.3 Activity Ratio :
Turnover ratios also referred to as activity ratios or asset management ratios, measure how
Efficiently the assets are employed by a firm. These ratios are based on the relationship
between the level Of activity, represented by sales or cost of goods sold and levels of
various assets.
Types of activity ratio
• Net assets turnover ratio
Net assets Turnover Ratio is related to the sales taking place in the business and the
net assets or the capital employed. It determines the ability of the business to generate sales
revenue by the use of net assets of the business
Net assets turnover ratio = Net Sales/ Capital Employed
• Working capital turnover ratio
This ratio is helpful in determining the effectiveness with which a company
is able to utilise its working capital for generating sales of its goods.
Working capital turnover ratio = Sale or Costs of Goods Sold / Working
Capital
• Stock turnover ratio
This is one of the most important turnover ratios which highlights the
relationship between the inventory or stock in the business and cost of the goods
sold. It shows how fast the inventory gets cleared in an accounting period or in other
words, the number of times the inventory or the stock gets sold or consumed
Stock Turnover Ratio = Cost of Goods Sold / Average Inventory
1.6.4 Profitability Ratio :
Profitability ratios are a type of accounting ratio that helps in determining the financial
performance of business at the end of an accounting period. Profitability ratios show how
well a company is able to make profits from its operations.
Types of profitability ratios are

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 • Gross Profit Ratio
Gross Profit Ratio is a profitability ratio that measures the relationship between the
gross profit and net sales revenue. When it is expressed as a percentage, it is also known as
the Gross Profit Margin.
Gross Profit Ratio = Gross Profit/Net Revenue of Operations × 100
• Net Profit Ratio
Net profit ratio is an important profitability ratio that shows the relationship
between net sales and net profit after tax. When expressed as percentage, it is known as net
profit margin
Net Profit Ratio = Net profit ×100/Revenue from Operations
• Return on Investment (ROI)
Return on capital employed (ROCE) or Return on Investment is a profitability ratio
that measures how well a company is able to generate profits from its capital. It is an
important ratio that is mostly used by investors while screening for companies to invest
ROI = EBIT ×100 / capital employed
• Earnings per share
Earnings per share or EPS is a profitability ratio that measures the extent to which
a company earns profit. It is calculated by dividing the net profit earned by outstanding
shares.
Earnings per share = Net Profit / Total no. Of shares outstanding
1.7. Objectives if the study
i. To study and analyse the financial position of the Company through ratio
analysis.
ii. To suggest measures for improving the financial performance of organization.
iii. To analyse the profitability position of the company.
iv. To determine the solvency position of company.
1.8. Need of the study
Ratio-analysis is a concept or technique which is as Old as accounting concept.
Financial analysis is a scientific Tool. It has assumed important role as a tool for Appraising
the real worth of an enterprise, its performance during a period of time and its pit falls.
Financial analysis is a vital apparatus for the interpretation of financial statements. It also
helps to find out any cross-sectional and time series linkages between various ratios.

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 They provide in a summarized and concise form of fairly good idea about the
financial position of a unit. They are important tools for financial analysis.
company needs the financial analysis for carrying out the following
• Technical Appraisal
• Commercial Appraisal
• Financial Appraisal
• Economic Appraisal
• Management Appraisal
1.9. Scope of the study
The study is done to analyse the financial performance of fine organics Industries
limited to help us understand the profitability, liquidity, and solvency of Shree cements
limited and providing a more in depth look at how well it operates internally. . The research
approach used to achieve the objectives of this study is Quantitative method in form of ratio
analysis done from data collected from annual return published by the company from
financial year . 2017 -2018 to 2020 – 2021
1.10. Limitations of the study
i. The study is purely based on secondary data therefore has all the inherent limitations
of secondary data
ii. There is no set industry standard for comparison and hence the inference is made on
general standards.
iii. The ratio is calculated from past financial statements and these are not indicators of
future
iv. Due to time constraint there are chances that some information might have been left
out, however due care is taken to include all the relevant information needed.
1.11. Research methodology
Research methodology is the specific procedures or techniques used to identify,
select, process, and analyse information about a topic. In a research paper, the methodology
section allows the reader to critically evaluate a study’s overall validity and reliability.
1.11.1. Research Design
In this project the research type is analytical research where in The researcher used
the secondary data for financial Ratio analysis. To know the various aspects of financial
Accounting being done at fine organics Industries limited, the data has been Collected from
the company as well as external sources.

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1.11.2. Period of the study
Period of the study refers to the duration in which the research is being conducted.
The study was conducted for a period from 2018 to 2021
1.11.3. Data Collection
Sources of information were collected through primary data and Secondary data
during the course of research.
• Primary data
Information collected from internal guide . Primary data is first hand Information.
• Secondary Data
Annual return of four years published by the company from financial year . 2017 -
2018 to 2020 – 2021. secondary data is second hand information.

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 2. REVIEW OF LITERATURE
Padmaja Manoharan (2002) through the analytical study on “Profitability of
Cement Industry in India” has revealed the variation in profitability of Indian cement
companies depending on age, size and region. The study identified that quality of earning
depends on management and leverage management. Further, the analysis concludes that
the profitability and quality of earnings is influenced by the liquidity factor.
Bagla, Sudha (2003) in his study “Cement industry in India From monopoly to
competition” he found that the real growth in the cement industry Came when the
Government announced a reasonable return of about 12% post Tax on investment in the
beginning of 1979. The Government of India further Released the industry from the total
distribution and price control of partial Decontrol in price and distribution on 01/03/1982
and the industry was totally Decontrolled on 01/03/1987 when Mr.Rajiv Gandhi presented
his 1st budget as Finance Minister. These were the three mileage stones in the Indian
Cement Industry, which gave it the great push it required .He also found that The industry
also suffers because of the high labour complements,which was employed at a time when
labour was cheap and there was shortage of cement in the industry. And suggested that
planned investment in the housing and Infrastructure development sectors like roads, ports,
airports, housing and canalLining, there is huge scope of increase in cement production.
Manjula, G (2006) conducted a study on “ Financial performance of cement
industry in Andhra Pradesh” and suggested that To provide greater coverage to fixed assets,
the proportion of Long term funds has to be increased considerably. Further, as Already
explained long term funds in these units should be made Adequate enough to finance both
the fixed assets and core current Assets. Enables these units to overcome the problems of
deficit Working capital and Fixed assets should be utilised more effectively so as to
generate More sales because the quantum of sales in relation to the size of Investment in
fixed assets is mismatched at present. At the same Time the operating costs should be
controlled and kept at the Minimum possible level so that the increased sales due to better

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 Kalyanasundaram, M (2006) in his study of “Performance analysis of cement
companies in Tamil Nadu” concluded that Debt-net worth ratio analysis shows that the
ratio in Chettinad cements in 1996 is 1.41 and it has increased to 1.60 in 2000. It has
increased to 2.22 in the year 2005. It is inferred that there is increase in the ratio during the
study period. In Dalmia cements, the debt-net worth ratio in 1996 is 0.74 and it has
increased to 1.11 in the year 2000. It has again increased to 1.39 in the year 2005. There is
increase in debt-networth ratio during the study period and also suggested that Bulk Supply
without packing in bags may be resorted to decrease the level of stock Of cement in the
companies and Transportation methods are to be modernized so that transportation of
Cement from one place to another is done quickly and the cost of retention of Cement is
least for the companies and since Installed capacity has increased significantly the
utilization capacity Should also increase in an accelerated manner in all the cement
companies to Increase production of better quality of cement.
Vijayaragavan, T (2007) conducted “A study on the financial management of
Madras cements limited” and concluded that India stands in the second position in the
production of cement. Hence, the Government of India should encourage both the public
and private sectors to produce optimum cement by using innovation and Government of
India should provide incentives to the cement industries to promote export and also that
Cement industries require more energy for production. Hence, they should form solar plant
to generate electricity he aslo suggested that In order to get betterment in overall
productivity, the reduction in administration and selling and distribution expenses is very
essential. Over the study period, the said expenses have increased gradually year by year.
Therefore, MCL should concentrate to control these expenses and that The MCL should
use modern material handling and production techniques to get better productivity and
since cash has played an important role in all spectrum of efficient Management the
maintenance of optimum cash balance is pivotal in cash management. Therefore the MCL
should take steps to maintain the optimum cash balance through out the year.
Shanmugam, N (2008) conducted “A study of financial performance of select
Cement industries in Tamilnadu” and found that The select five cement industries, the
TANCEM, ICL and CCCL show higher mean value which indicates the outsiders' funds
utility higher than that of the other cement industries. Further, TANCEM shows higher
variation in the ratio during the study period and less variation accounts in Dalmia cement
and suggested that The loan fund utility should be reduced by TANCEM, ICL and CCCL,
to Reduce the payment of fixed interest and increase the profit and also that The cash to

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current assets ratio shows the mean value of the select Companies. MCL shows high mean
value due to high cash position and ICL shows low due to the insufficient cash position. In
the year 2006-07, The ratio of the ICL shows that very high current assets ratio due to
Idleness of the cash position which affects the profitability of the concern. The coefficient
of variation indicates high deviation in its cash position. Further the result of annual growth
rate is not significant for the growth Performance. On the other hand, slight deviation exists
in CCCL which Shows that the performance of the cash position is good.
Senthil Kumar, R K (2009 ) conducted a study on “Working capital management
of cement companies in Tamil Nadu “ and found that The installed capacity and production
of Chettinad cement Limited Increased from 600000 tonnes to l500000 tonnes in the year
2001-02. Again it Increased from 1500000 tonnes to 2000000 tonnes in the year 2005-06.
The Capacity utilized by the Chettinad cement in its production from its installed Capacity
is continuously increasing year after year during the study period except In the year 2001-
02. In all the years under study period the capacity utilized is More than 100 per cent except
in the year 2001-02 and also that Installed capacity of Dalmia cement increased from
591000 tones to 1034000 tonnes in the year 1997-98 and again it increased from 1034000
to 1234000 in the year 2000-01 and further increase from 1234000 to 3500000 to 2005-06.
It shows that the company grows steadily to increase its capacity. Production of Dalmia
Cement also increases continuously from 663010 to 2736570 tones from the year 1989-90
to 2006-07. The company is in very good position. Capacity utilized by Dalmia cement
from its installed capacity is increases up to 1995-96 from 1989-90 from 112.18 per cent
to 144.49 per cent.
Manohar, V (2009) in his study on “ inventory management in cement industry of
Tamil Nadu” said that the excessive procurement Of original equipment at initial stages,
non-matching of consumption With procurement, duplication of orders owing to non
standardisation, Long lead period and inadequate control system are some of the major
factors responsible for overstocking of spares and stores. By adopting Computer based
inventory control techniques like Material Requirement Planning (MRP), these deficiencies
can be solved at Least to the some extent. He also observed that during the study that the
spares and stores are not only Over stocked in the cement units in Tamilnadu but many of
them also Have become obsolete. The companies give insufficient attention to Initial
provision of spares, wrong codification followed by many Cement companies in the study
area lead to duplication of spares. Underutilization of machine capacity resulting in less
wear and tear Than anticipated may also lead obsolescence of spares and suggested that the

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obsolete Items should be disposed to reduce the overstocking of inventories. The obsolete
items may be sold either by following tender system or By auction to scrap dealers after
adhering to central excise and sales Tax formalities.
Somasundaram, A R (2010) conducted “A study on financial management of
Cement industry in Tamil Nadu” wherein he found that Inadequate and erratic supply of
Coal mainly due to poor availability of rail wagons, increase in coal prices Following partial
deregulation, poor quality of coal and frequent power cuts In major cement producing states
Has adversely affected the performance of cement industry and there by its Profitability to
which he suggested that To overcome this situation many encouraging and ambitious
cement industry which includes conservation of energy, adoption of latest Technology such
as pre heaters and pre calcinators, installation of pollution Control devices, frequent
replacement of bags for bag houses, water Sprinkling inside and outside the plant, setting
up of coal washeries and Captive power plants to solve the issues. Ways also to be devised
to use Alternates to coal where by coal consumption will also come down and the Industry
will be within the dust emission norms.
S. Prakash(2010) In his study On” Financial Performance Of The Cement Industry
In Tamil Nadu” found that lenient credit policy has manifested in excessive investment in
Accounts receivable. The investment in accounts receivable involves a Capital costs as
funds have to be raised by firms to finance them till Customers pay their dues. Further, the
excessive trade debt is fraught with The imminent risk of uncollectible which once again
dampen the operating Profit he also found that the practice of employing short term
obligations as a source of funds for financing fixed assets is a commonly pursued practice
of the industry. This has been supported by the higher debt equity ratio of these units.
Further, units have relied very heavily upon bank finance rather than funding through
bonds. It may not be out of place to point out that these units are highly geared. Proprietary
ratio also has revealed that a maximum of 40% of the total assets were financed by equity
and the rest by external sources. When the share of external equity is larger, the long term
solvency of these units cannot be considered to be satisfactory. Further, the long term ratios
do not differ significantly when an inter-firm comparison is made.

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 Moideen batcha, H (2011) in a study on “organizational climate in selected cement
units in Tamil Nadu” concluded that the organizational climate at private sector Units are
better than in public sector with regard to the cement industry. The Important factors
influencing the organizational climate at the cement units are job Content, supervisors‟
behavior, top management support, employees behavior and Communication system. The
existence of antecedents of organizational climate is Better in private sector units than in
public sector units. He also suggested in the same study that The units should appoint ethics
and culture officers and offer Employee training programmes in ethics and culture. It can
provide an effective Means of setting and communicating expectation among the
employees for their Actions and behavior. In addition, the officer can play a major role in
ethics and Culture training as well as the monitoring and enforcement of ethical behavioural
standards. These two can demonstrate and reinforce top management support For ethical
behavior and help to develop a favorable organizational climate and Culture in the
organization.
Chouksey shailendra (2012) in a study on “Cement industry in India perspectives
on demand forecasting customer perceptions and strategies for growth ”found that the
percentage of end customers who decide to purchase a particular brand is only about 40%
and as much as over 60% of the respondents get influenced by one or the other category of
influencers like dealers, masons, contractors/builders and engineers/architects. This
indicator has an important bearing on the communication strategies of the cement
manufacturers who in their race for visibility may have focused more on mass media rather
than tailor-made communication strategies for different sets of influencers and also said
that Indian cement industry having achieved the status of being the second largest cement
industry in the world is poised to grow further. As the industry grows the dynamics of its
concerns in the areas of raw material availability, logistics, environment, sustainability,
customer perception, capacity creation, etc. Is changing. The strategies which have held
so far need to be reviewed in the context of these challenges.
Khindri, Monika (2013) conducted a study on “Working capital management in
cement industry in India” and suggested that The cement companies should have proper
cash management in Order to sustain liquidity. Cash management of the companies can Be
put forward by proper planning and control of cash and the Companies must adopt methods
of cash forecasting in order to Regularize cash inflows and outflows. The companies found
to be Recording excess cash should invest surplus cash to earn profits in Different
opportunities such as bank deposits and marketable Securities etc. The ideal cash

15
management system depends upon The firms’ products, organization, structure,
competition, culture And options available. She also says that Inventory level should be
fixed up scientifically and introduction of JIT (just in time) is prescribed so that inventory
carrying cost can Be reduced to the minimum extent. No inventory should be allowed To
accumulate as the inventory is the graveyeird of business. Practising JIT reduces
inventories at all stages of purchasing JIT to Produce and producing JIT to sell. Traditional
practises call for Infrequent orders of large lots of materials and supplies, well in Advance
of when the same is needed for production. Such practices Intend to minimize ordering and
transportation costs and allows Time for late delivery and inspection of goods upon arrival.
The companies under study should produce goods continuously at roughly the same rate
the goods are sold thus if sales declines, production declines too in step to prevent
accumulation of inventories.
Kumar, Pardeep (2014) conducted a study on “Organisational development and
change in cement industry in India” and found that the companies do not prefer to have
either a too low or Too high number of directors on their boards. Therefore, though the
board Strength in companies surveyed ranges between 3 and 15, in majority of Cases, it
lies between 5 and 12. The most popular board sizes are 8 and 9Followed by six directors
on a board. The average number of directors in Companies studied turned out to be 8.38,
the minimum number of directors In cement companies was 3 (adopted by 95 per cent
companies) as per Articles of Association, which is also minimum required by law. The
Maximum number as per Articles of Association in majority of cases is 12(favoured by 62
percent companies). In some cases, it is 15 (in 21 percent Companies). Very few companies
have preferred a higher number in this Respect. Now after 1990% the majority ofthe
Company prefer to retain Maximum directors in their board, because corporate governance
became a major factor in 21st Century. The study suggest to retain maximum Number of
directors in their board. An important finding relates to the Number of vacancies on the
boards in Indian Cement Companies, so in Practice companies do not fill up all the births.
In the study 75 per cent Cement companies had vacancies on their boards ranging between
1 to 5 Directors in between 1990-2000. It’s suggested not to vacate the position Long.

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 Patel, Ankitd (2015) conducted a study on “Financial analysis of cement industry
of India a statistical approach” and found that The gross profit ratio of the cement industry
of India during the first half of The decade (2002-03 to 2008-09) improved, from 11.04 to
27.88 respectively And then the trend of gross profit ratio started declining. During the
second Half of the decade (i.e. 2007-08 to 2011-12) at declined from 29.32 to 13.37.First
year of the decade 2002-03 the ratio was 11.04 and the last year of the Decade the ratio was
13.38, it clearly indicate that the no trend in gross profit Ratio during the decade and also
The operating profit ratio of the cement industry of India during the first half Of the decade
(i.e. 2002-03 to 2007-08) improved from 1.90 to 24.32 Respectively and then the tiend of
operating profit ratio started declining. During the second half of the decade (i. E. 2008-09
to 2011-12) at declining From 23.03 to 7.65. First year of the decade 2002-03 the ratio was
1.9 and the Last year of the decade the ratio was 7.65, it clearly indicate that there is no
trend in Operating profit ratio.
Purendra, Prasad V (2015) conducted a study on “Contemporary human resource
practices in Indian cement industry a comparative study of ultratech cement ltd and bharathi
cement ltd” and observed that in Ultratech cement Ltd is Following the e-recruitment policy
extensively but in Bharathi cement Ltd is being Extensively followed but not to that extent
. E-recruitment system may potentially save The employer time as usually they can rate the
candidate and several persons in HR Independently review candidates and the study also
found that in Ultratech cement Ltd is providing awareness of human resource information
system which improves productivity. But in Bharathi cement Ltd is not providing
extensively to create awareness of human resource information system which improves
productivity. Human resource information system is an integrated approach to Recruiting
which facilitates requisition creation, routing, approval and posting of job Opening.
Bhatia, Shweta Pradip ( 2016) conducted a study on “Cost analysis of cement
companies” wherein it was found that factory overheads alone was 41.24 Percent (on an
average) of the total cost. It is imperative to note that all The selected companies showed
the same pattern. The percent of factory Overheads of ACC, Shree, Birla, JK and Ambuja
were 41.88 percent, 46.44 percent, 41.20 percent, 41.44 percent and 35.25 percent
Respectively. In order to reduce the factory overheads, it was important to find the Major
cause of the raise. It was found that power and fuel alone Accounted to 65.02 percent of
the total factory overheads. The Percentage of power and fuel expenses of these companies
were 68.19, 55.72, 62.88, 71.43 and 66.86 respectively These industries are being affected
by the raising costs year after year of the power and fuel required by them for their

17
manufacturing. The problem aggravates further due to diminishing quality of power
supplied by the state electricity board, frequent voltage fluctuations, power cuts and
interruptions.
Chakrakirti, Samvedi (2017) conducted a study on “Pricing strategies of cement
industries A case study of Rajasthan” and concluded that The single biggest influencer of
input cost and prices of cement in Rajasthan And in fact all over India is Government
policies. These policies, which change or Take twists and turns due to changing government
plans and priorities of central Government, inter-state relations, political pressures, policies
of banking sector, Labour reforms and rail and road transport system, directly and very
significantly Impact cement prices for both the manufacturer and the consumer.
Government policies that are favorable towards the cement industry are Largely centered
around monetary incentives offered in the shape of reimbursement Of VAT, transport
subsidy, exemption from income-tax and excise duty etc. In Addition to these incentives,
government policies concerning housing, infrastructure, Transport, electrification and
captive power generation too have a drastic effect on The monetary performance of cement
companies.
Shweta Pradip Bhatia ( 2017 ) in the study on “ Cost Analysis of Cement
Companies” found out that the major share Of the cost is factory overheads & selling and
distribution overheads. The Selected companies are preferring techniques such as Standard
Costing, Marginal Costing, Budgetary Control, Value Engineering and Quality Control,
For the purpose of Cost Reduction. It was observed that these techniques failed To fulfill
the basic objective of the companies i.e. ‘Low Cost Manufacturing’. Contrary to the popular
belief that material cost and labour cost make up for a Major share of the total cost, it was
observed that the companies selected for the study had control portions for material and
labour cost. There was no anomaly noticed and that the actual reason for the inflated cost
was something else.Upon further study it was deduced that power and fuel expenses under
factory Overheads and freight charges under selling and distribution overheads captured
The major chunk of the overall cost
Lagariya, Markhi Nathabhai (2018) in the study “Analysis of capital structure of
cement industry of Gujarat” suggested that the reduction in operating expenses would go a
long way to help The public enterprises increase profitability. This would be more Pertinent
in the context that most of the public enterprises earn Gross profit, but that is siphoned off
by the heavy operating Expenses resulting in net losses. This is possible by committing the
Employees to the success of the enterprises like the scheme of Memorandum of

18
understanding reached between the Government Of India and the employees of the Central
Public sector enterprises. This may help to build up high morale which is essential for the
Success of any organization and also concluded that For a long term success of cement
industries to require effective Management of credit risk and diversified into fee based
activities. Non-traditional activities of cement industries are more Sophisticated and
versatile instrument for risk assessment.
Priya Rathna R (2020) in the study “ Profitability and liquidity position of cement
industry in India” concluded that The compounded annual growth rate of cement
companies shows Negative values, hence the profitability of the cement companies are not
found To be in satisfactory condition. Liquidity position of the cement companies are Also
found to be in unsatisfactory condition. In the case of profitability trend, it Shows that there
is a significant relationship involving actual and trend values Of the selected cement
companies in India. Similarly, the profitability and Liquidity position of the company is
influenced by several factors. This study Also established the direct association concerning
trade-off between Profitability and liquidity of the cement companies. This study concluded
that The profitability and liquidity position of cement companies are in unstable Position.
Hence, the companies should establish a proper profitability and Liquidity management in
order to attain maximum profit. This study concludes That all the cement companies should
concentrate on proper fund management, Creation of low cost capital, modern techniques
of production, procurement of Raw materials at constant price, diversifying marketing
strategies, and Capturing sizeable market to increase their profitability and liquidity

19
3.1. Industrial profile
3.1.1. CEMENT
In the most general sense of the word, cement is a binder, a substance that sets and
hardens independently, and can bind other materials together. The word "cement" traces to
the Romans, who used the term opus caementicium to describe masonry resembling
modem concrete that was made from crushed rock with burnt lime as binder. The volcanic
ash and pulverized brick additives that were added to the burnt lime to obtain a hydraulic
binder were later referred to as cementum, cimentum, cament, and cement.
Cement used in construction is characterized as hydraulic or non-Hydraulic.
Hydraulic cements {e.g., Portland cement) harden because of Hydration, chemical
reactions that occur independently of the mixture’s Water content; they can harden even
underwater or when constantly Exposed to wet weather. The chemical reaction that results
when the Anhydrous cement powder is mixed with water produces hydrates that are Not
water-soluble. Non-hydraulic cements {e.g. gypsum plaster) must be Kept dry in order to
retain their strength.
The most important use of cement is the production of mortar and Concrete—the
bonding of natural or artificial aggregates to form a strong Building material that is durable
in the face of normal environment
3.1.2. Cement industry in India
India is the second largest producer of cement in the world. It accounts for more
than 7% of the global installed capacity. India has a lot of potential for development in the
infrastructure and construction sector and the cement sector is expected to largely benefit
from it. Some of the recent initiatives, such as development of 98 smart cities, is expected
to provide a major boost to the sector.
Aided by suitable Government foreign policies, several foreign players such as
Lafarge-Holcim, Heidelberg Cement, and Vicat have invested in the country in the recent
past. A significant factor which aids the growth of this sector is the ready availability of
raw materials for making cement, such as limestone and coal.
India’s overall cement production accounted for 294.4 million tonnes (MT) in FY21
and 329 million tonnes (MT) in FY20.

20
 • Market Size
Cement production reached 329 million tonnes (MT) in FY20 and is projected to
reach 381 MT by FY22. However, the consumption stood at 327 MT in FY20 and will
reach 379 MT by FY22. The cement production capacity is estimated to touch 550 MT by
2020. As India has a high quantity and quality of limestone deposits through-out the
country, the cement industry promises huge potential for growth.
As per ICRA, in FY22, the cement production in India is expected to increase by
~12% YoY, driven by rural housing demand and government’s strong focus on
infrastructure development.
As per Crisil Ratings, the Indian cement industry is likely to add ~80 million tonnes
(MT) capacity by FY24, the highest since the last 10 years, driven by increasing spending
on housing and infrastructure activities.
Higher allocation for infrastructure–34.9% in roads, 8.7% in metros and 33.6% in
railways in budget estimates of FY22, over FY21, is likely to boost demand for cement.
According to CLSA (institutional brokerage and investment group), the Indian
cement sector is witnessing improved demand. Key players reported by the company are
ACC, Dalmia and Ultratech Cement. In the second quarter of FY21, Indian cement
companies reported a sharp rebound in earnings and demand for the industry increased,
driven by rural recovery. With the rural markets normalising, the demand outlook remained
strong. For FY21, CLSA expects a 14% YoY increase in EBITDA in the cement market
for its coverage stocks.
• Road Ahead
The eastern states of India are likely to be the newer and untapped markets for
cement companies and could contribute to their bottom line in future. In the next 10 years,
India could become the main exporter of clinker and gray cement to the Middle East,
Africa, and other developing nations of the world. Cement plants near the ports, for instance
the plants in Gujarat and Visakhapatnam, will have an added advantage for export and will
logistically be well armed to face stiff competition from cement plants in the interior of the
country. India’s cement production capacity is expected to reach 550 MT by 2025.
Due to the increasing demand in various sectors such as housing, commercial
construction and industrial construction, cement industry is expected to reach 550-600
million tonnes per annum (MTPA) by the year 2025.

21
 A number of foreign players are also expected to enter the cement sector owing to
the profit margins and steady demand.
3.2. Company profile

SHREE CEMENT PUBLIC LIMITED

22
3.2.1. Introduction to Shree cements
Shree Cement engaged in the cement and power sector, is an energy efficient,
environment friendly and sustainable company. Shree is ranked among the top five
cement manufacturing groups in the country and is the largest cement manufacturer in
North India.
Shree follows a triple bottom-line approach of measuring performance i.e.
Performance against the benchmarks of economical, social and environmental benefits.
it has received various awards and accolades at the national and international level for
excellence in energy efficiency, environment management and sustainability.
Shree is an active participant at climate change forums and is the first Indian
cements company to join the Cement Sustainability Initiative (CSI) of the World
Business Council for Sustainable Development, Switzerland. It has made the well-
being of people living in regions surrounding its operations an Integral part of all its
decision making processes and actions.
Shree recognizes its people as its greatest asset. It ensures that its HR initiatives
employ right systems and processes for appropriate manpower planning, recruitment,
orientation, training & development and employee benefits. These initiatives have
created a workforce that is happy and driven to continually improve upon their standard
of performance.
3.2.2. VISION
To drive and sustain industry leadership of the company within a global context-
by developing individual Leadership competencies at every level, through a robust
backbone of trust, support, innovation and reward
3.2.3. MISSION
• To harness sustainability through low carbon philosophy
• To sustain its reputation as one of the most efficient manufacturers
Globally
• To continually have most engaged team
• To drive down cost through innovative practices
• To continually add value to its products and operations meeting
Expectations of all its stakeholders
• To continually build and upgrade skills and competencies of its Human
resource for growth

23
 • To be a responsible corporate citizen with total commitment to
Communities in which it operates and society at large
3.2.4. GUIDING PRINCIPLES
• Enforce good corporate governance practices
• Encourage integrity of conduct
• Ensure clarity in communication
• Remain accountable to all stakeholders
• Encourage socially responsible behaviour
3.2.5. POLICIES OF SHREE CEMENT LTD.
a) SUBSTAINABILITY POLICY
To produce quality cement in an eco-friendly, healthy & safe Working
environment in a socially responsible manner with continual Improvement in
performance and profitability to the satisfaction of all Stake holders by ensuring:
• Customer satisfaction
• Clean and green environment
• Sound health and safe working practices
• Compliance to the applicable laws and respecting the international Instruments
• Implementation of the systems and continually improving their Effectiveness
• Adoption of cost-effective technologies and practices for improved
Productivity and profitability
• Mutually beneficial stakeholders’ relationship
b) ENVIRONMENT POLICY
To ensure:
• Clean, green and healthy environment
• Efficient use of natural company’s energy, plant and Equipment
• Reduction in emissions, noise, waste and green house Gases
• Continual improvement in environment management
• Compliance of relevant environmental legislations
c) HEALTH & SAFETY POLICY
• To ensure Good Health and Safe Environment for all concerned by:
• Promoting awareness on sound health and safe working Practices

24
 • Continually improving health & safety performance by Regularly setting and
reviewing objectives and targets
• Identifying injury and health hazards by effective risk control measures
• Complying with all applicable legislations and regulations
d) HIV/AIDS POLICY
Being a socio-economic issue concerning stakeholders of the society Shree
Cement is committed to:
• Create awareness on HIV/AIDS and its prevention among all stakeholders of
the society Treatment of HIV/AIDS infected patient in the Company's
Dispensary without any discrimination
e) QUALITY POLICY
• To provide products conforming to national standards and meeting customers
requirements to their total satisfaction
• To continually improve performance and effectiveness of quality management
system by setting and reviewing quality objectives for Customer satisfaction
and Cost effectiveness
f) SOCIAL ACCOUNTABILITY POLICY
To operate in a socially responsible manner and focus on continual
improvement of workplace conditions by:
• Conforming to all the requirements of SA 8000 standard
• Respecting the international instruments for Social Accountability and
complying with all applicable laws
g) ENERGY POLICY
• To continue to ensure energy sustainability, shree cements are
committed to:
• Continual reduction of specific energy consumption
• Utilization of alternate and renewable energy company's especially to
produce green power
• Adoption of eco-friendly and more energy efficient technology
• Low carbon economy through regular energy audit and implementation
of corrective actions
• Data collection, analysis, monitoring and supporting system for
continual bench marking and improvement

25
 • Compliance of all applicable legal and other requirements
h) INFORMATION TECHNOLOGY POLICY
To create a robust IT platform that would focus on better efficiency &
transparency in a constantly changing and competitive business environment.
i) HUMAN RESOURCE POLICY
Shree Cement is committed to:
• Non discrimination in recruitment process
• Develop competency
• Employees shall be given enough opportunity for betterment
• None of the person below the age of 18 years shall be engaged to work
• Incidence of Sexual Harassment shall be viewed seriously
• Management will appreciate observance of Business ethics &
Professional code of conduct
j) WATER POLICY
To provide sufficient and safe water to people & plant as well as to Conserve
water, shree cements are committed to efficient water management Practices which is:-
• Develop means & methods for water harvesting
• Treatment of waste discharge water for reuse
• Educate people for effective utilization and conservation of Water
• Water audit and regular monitoring of water consumption
3.2.6. SUBSIDIARY COMPANIES
The Company has following subsidiaries:
a. Wholly owned subsidiary
• Shree Global FZE, Jebel Ali Free Zone, Emirate of Dubai, U.A.E.
Wholly Owned Subsidiaries 2. Raipur Handling and Infrastructure
Private Limited, Baloda Bazar, Chhattisgarh
• Shree Enterprises Management Ltd, Dubai International Financial
Centre, Emirate of Dubai, U.A.E.
b. Step-down Subsidiaries
• Shree International Holding Ltd, Dubai International Financial Centre,
Emirate of Dubai, U.A.E.
• . Union Cement Company, PrJSC, Emirate of Ras- Al-Khaimah, U.A.E.

26
 • . Union Cement Norcem Co. Ltd. LLC, Emirate of Ras-Al-Khaimah,
U.A.E.
c. Subsidiary Company
• Shree Cement East Bengal Foundation
(Incorporated under Section 8 Of the Companies Act, 2013)
3.2.7. COMPANY'S BRANDS
• Roofon Concrete Master Cement
Launched after extensive research, this innovative product Competes with
world’s best. It is designed to create strong lasting Concrete structures with high tensile
strength and is used for Roofs, foundations, columns and beams to give a denser
concrete Layer that is crack and rust resistant.
• Bangur Power Cement
The range marks an entry to the top most segment of the premium Quality
products– offering extra finesse, smoothness, high volume, Higher strength, and
resistance to corrosion. It is a specially Formulated cement for the discerning customer,
and meets all International standards.
• Shree Jung Rodhak Cement
An all-purpose cement it is the Preferred choice in the segment, For its strong
corrosion resistant
Property prolonging the life and Durability of the structure.
• Bangur Cement
Manufactured using German technology, it can be used for diversified
construction purpose. It has been developed for customers looking for superior quality
products which meet global standards.
• Rockstrong Cement
An extensively used cement offering excellent value at competitive pricing. It
is known for its strength and low setting time, enabling construction option in
exceptionally harsh environmental conditions.

27
3.2.8. Products
• Ordinary Portland Cement (OPC)
Ordinary Portland cement refers to the hydraulic binding material ground by
mixing
Portland cement clinker, blended materials and appropriate amount of gypsum.
The Bureau of Indian Standards (BIS) has specified to use OPC in pre-stress concrete
structures which are typically used in high rise buildings, foundation systems, bridge
and dam structures, silos and tanks, industrial pavements and nuclear containment
structures.
• Portland Pozzolana Cement (PPC)
Portland Pozzolana Cement is made by mixing OPC with pozzolanic (siliceous)
materials such as silica, volcanic ash, fly ash, pond ash, etc. PPC is believed to be the
product of the future, considering it various applications in the construction industry.
They are suitable to use in hostile environmental conditions. They can be reliably
utilised in the construction of marine structures, masonry mortars and plastering,
hydraulic structures
• Portland Slag Cement (PSC)
Slag cement is a hydraulic cement formed when granulated blast furnace slag
(GGBFS) is ground to suitable fineness and is used to replace a portion of Portland
cement. It is a recovered industrial by-product of an iron blast furnace. Molten slag
diverted from the iron blast furnace is rapidly chilled, producing glassy granules that
yield desired reactive cementitious characteristics when ground into cement fineness.
• Power
Shree also operates in the Power sector with an installed commercial power
capacity of 300 Mega Watts along with Captive and Green Power Capacity of 452
Mega Watts.
• AAC Blocks
The company produces Autoclaved Aerated Concrete (AAC) Blocks – a
lightweight, precast building material with high insulating capacities, in its plant in
Uttar Pradesh.

28
3.2.9. Competitors
• UltraTech Cement Ltd
UltraTech Cement Ltd. Is the largest manufacturer of grey cement, Ready Mix
Concrete (RMC) and white cement in India. It is also one of the leading cement
producers globally. Ultratech is the Largest among the top 5 cement companies in India
. Ultra tech is the subsidiary of Grasim Industries which is owned by Aditya Birla
Group.
• Ambuja Cements Ltd
Ambuja Cements Ltd, a part of the global conglomerate LafargeHolcim, is
among the Top 10 Cement Companies in India. It is the second-largest producer of
cement in India based on turnover.
• ACC Ltd
ACC Limited is one of India’s leading manufacturers of cement and ready-mix
concrete with 17 cement factories, 75 ready mix concrete plants, over 6,700 employees,
a vast distribution network of 50,000+ dealers & retailers and a countrywide spread of
sales offices. It is the 3rd leading cement companies in India
• Dalmia Bharat Ltd
Dalmia Bharat Ltd is Fifth Among the Top 10 Companies in Cement by Total
Revenue. The Company has cement manufacturing plants in southern states of Tamil
Nadu (Dalmiapuram & Ariyalur) and Andhra Pradesh (Kadapa), with a capacity of 9
million tonnes per annum. Dalmia Bharat cement is among the list of best cement brand
in India
• Birla Corporation Limited
Birla is the flagship Company of the M.P. Birla Group. Incorporated as Birla
Jute Manufacturing Company Limited in 1919, it was Late Mr. Madhya Prasad Birla
who gave shape to it. As Chairman of the Company, he transformed it from a
manufacturer of jute goods to a leading multi-product corporation with widespread
activities. It is one of the Top leading cement companies in India

29
 • India Cements Ltd
India cements Ltd was founded in the year 1946 by two men, Shri S N N
Sankaralinga Iyer and Sri T S Narayanaswami. They had the vision to inspire dreams
for an industrial India, the ability to translate those dreams into reality and the ability
to build enduring relationships and the future.
• The Ramco Cements Limited
The Ramco Cements Limited is the flagship company of the Ramco Group, a
well-known business group of South India. It is headquartered in Chennai. It is eight in
the list of top 10 cement company in India.
• Orient Cement Ltd
Established in 1979, Orient Cement was formerly, a part of Orient Paper &
Industries. It was demerged in the year 2012 and since then, it has emerged as one of
the fastest-growing and leading cement manufacturers in India.
• Heidelberg Cement India Ltd
Heidelberg Cement India Limited is a subsidiary of Heidelberg Cement Group,
Germany. The Company has its operations in Central India at Damoh (Madhya
Pradesh), Jhansi (Uttar Pradesh) and in Southern India at Ammasandra (Karnataka).

30
4.1. LIQUIDITY RATIOS
4.1.1. CURRENT RATIO
Current ratio = Current Assets / Current Liabilities
Table 4.1.1 Current Ratio
current assets(Rs. In current liability(Rs. In
year current ratio
crores) crores)
2018 5,700.16 2,967.14 1.92

2019 3,991.69 1,986.66 2.01

2020 6,825.57 3,808.66 1.79

2021 7,199.46 3,515.38 2.05

Source : secondary data

Chart 4.1.1 Current Ratio

current ratio

2.05
2.01

1.92

1.79

2018 2019 2020 2021

Interpretation : Current ratio is currently at its highest in the last four years showing
that the firm has the ability to meet all of it’s current liabilities. There is a dip in the
ratio in 2020 but this recovered in the next year itself

31
4.1.2. Quick Ratio
Quick Ratio = (Cash + Marketable securities + Accounts receivables/ Current
liabilities)
Table 4.1.2. Quick ratio

year quick assets current liabilities quick ratio

2018 580.15 2,967.14 0.195524984

2019 1040.18 1,986.66 0.523582294

2020 936.61 3,808.66 0.245915886

2021 695.65 3,515.38 0.197887568

Source : secondary data

Chart 4.2. Quick ratio

0.6

0.5

0.4
Axis Title

0.3
quick ratio

0.2

0.1

0
2018 2019 2020 2021

Interpretation : Ideal quick ratio for a company is 1: 1 . As it can be seen from the
above chart and table that the firm has very low quick ratio compared to the ideal ratio
and this can affect the liquidity of the firm

32
4.1.3. Cash Ratio
Cash ratio = Cash and equivalent / Current liabilities
Table 4.1.3. Cash ratio

Cash and equivalent (Rs. current liabilities

year cash ratio
in crores) (Rs. in crores)

2018 120.9 2,967.14 0.040746308

2019 307.78 1,986.66 0.154923339

2020 108.16 3,808.66 0.028398439

2021 209.76 3,515.38 0.059669225

Source : secondary data

Chart 4.1.3. Cash ratio

0.18

0.16

0.14

0.12
Axis Title

0.1

0.08 cash ratio

0.06

0.04

0.02

0
2018 2019 2020 2021

Interpretation : cash ratio has improved from 2020 to 2021 but it still yet to reach the
level it used to be in 2019 due to significant decrease in the ratio in the next financial
year

33
4.2. Leverage Ratio :
4.2.1. Equity Ratio
Equity Ratio = Total Equity/ Total Assets

Table 4.2.1 Equity Ratio

Total Equity (Rs. in Total Assets(Rs. in
year equity ratio
crores) crores)
2018 8,896.83 15,141.83 0.587566364
2019 9,597.39 15,193.25 0.631687756
2020 12936.42 19,337.87 0.668968196
2021 15250.07 21,038.77 0.724855588

Source : secondary data

Chart 4.2.1 Equity Ratio

equity ratio

0.724855588
0.668968196
0.631687756
0.587566364

2018 2019 2020 2021

Interpretation : As it can be seen from the above data majority of the assets of the
company is funded by equity and the share of fund raised by equity to finance the assets
have shown a steady increase year by year

34
4.2.2. Debt Ratio
Debt Ratio = Total Debt / Total Assets
Table 4.2.2 Debt ratio
Total debts (Rs. in Total Assets (Rs. in
year debt ratio
crores) crores)

2018 6,245.00 15,141.83 0.412433636

2019 5,595.86 15,193.25 0.368312244

2020 6,401.45 19,337.87 0.331031804

2021 5,788.70 21,038.77 0.275144412

Source : secondary data

Chart 4.2.2 Debt ratio

0.45
0.412433636
0.4 0.368312244
0.35 0.331031804

0.3 0.275144412

0.25

0.2

0.15

0.1

0.05

0
2018 2019 2020 2021

debt ratio

Interpretation: Debt ratio of the company is showing a continuous decline. It went

down from 0.41 to 0.27 within a span of four years. This is due to the increase in funds
raised by way of equity

35
4.2.3. Debt to equity ratio
Debt to equity ratio = Total Debt/ Shareholders Fund
Table 4.2.3 Debt to equity ratio
Shareholders
Total debts (Rs. in Debt to
year Fund(Rs. in
crores) equity ratio
crores)
2018 6,245.00 8,896.83 0.701935408
2019 5,595.86 9,597.39 0.583060603
2020 6,401.45 12936.42 0.494839376
2021 5,788.70 15250.07 0.379585143

Source : secondary data

Chart 4.2.3 Debt to equity ratio

0.8
0.7
0.6
0.5
Axis Title

0.4
0.3
0.2
0.1
0
2018 2019 2020 2021

Debt to equity ratio

Interpretation : ideal debt equity ratio is 2:1 . The firm has very low debt to equity
ratio and it’s showing a decline from 0.70 to 0.38 within a span of four years. This is
due to the fact that company is financing it’s asset using equity oriented funds rather
than debt oriented funds

36
4.2.4. Interest coverage ratio
Interest Coverage Ratio = EBIT / Interest
Table 4.2.4 Interest coverage ratio

Interest(Rs. in Interest
year EBIT(Rs. in crores)
crores) coverage ratio

2018 1,691.89 135.27 12.50750351

2019 1,012.58 246.98 4.099846141

2020 1,673.69 286.52 5.841442133

2021 2,778.62 247.1 11.24492108

Source : secondary data

Chart 4.2.4. Interest coverage ratio

Interest coverage ratio

14

12

10

0
2018 2019 2020 2021

Interpretation : Interest coverage ratio went down from 12.5 in 2018 to 4.1 in 2019 .
This is due to increase in interest which is not supported by enough increase in EBIT.
The company has almost returned to it’s interest coverage ratio which it had in 2018 ,
by 2021

37
4.2.5. Capital gearing ratio

Capital gearing ratio = Common stockholders equity / Fixed cost bearing funds
Table 4.2.5. Capital gearing ratio
Fixed cost bearing
Common stockholders Capital
year funds(Rs. in
equity(Rs. in crores) gearing ratio
crores)
2018 8,896.83 4,538.69 1.960219799
2019 9,597.39 4,132.79 2.322254458
2020 12936.42 4,511.20 2.867622805
2021 15250.07 4,169.37 3.657643721

Source : secondary data

Chart 4.2.5. Capital gearing ratio

3.5

2.5

1.5

0.5

0
2018 2019 2020 2021

Capital gearing ratio

Interpretation : it can be seen from the above data that capital gearing ratio is showing
a steady increase year by year. This is due to the fact that company’s common
stockholders equity has been increasing every year whereas the fixed cost bearing funds
almost remain the same remain almost

38
4.3. Activity Ratio :
4.3.1. Net assets turnover ratio
Net assets turnover ratio = Net Sales/ Capital Employed
Table 4.3.1. Net assets turnover ratio
Capital
Net assets
year Net Sales(Rs. in crores) Employed(Rs. in
turnover ratio
crores)
2018 10,159.53 12,174.69 0.834479564
2019 11,722.00 13,206.59 0.887587182
2020 11,904.00 15,529.21 0.766555414
2021 12,588.39 17,523.39 0.71837641

Source : secondary data

Chart 4.3.1. Net assets turnover ratio

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2018 2019 2020 2021

Net assets turnover ratio

Interpretation: net assets turnover ratio is showing a steady decline from 0.83 in year
2018 to 0.72 in 2021 with only exception being year 2019 where it increased to 0.88
from 0.83 but the trend continues in 2020 where in it reduces to 0.76

39
4.3.2. Working capital turnover ratio
Working capital turnover ratio = Sale / Working Capital
Table 4.3.2. Working capital turnover ratio
Working Capital(Rs. Working capital
year Sale(Rs. in crores)
in crores) turnover ratio

2018 10,159.53 2,733.02 3.717327352

2019 11,722.00 2,005.03 5.846296564

2020 11,904.00 3,016.91 3.945759071

2021 12,588.39 3,684.08 3.416969773

Source : secondary data

Chart 4.3.2. Working capital turnover ratio

7
6
5
4
Working capital turnover
3 ratio
2
1
0
2018 2019 2020 2021

Interpretation: from the above data it can be seen that working capital turnover ratio
of thee comany remains almost in the same level except for the year of 2019 where it
went from 3.72 in 2018 to 5.85 . After 2019 the ratio declines to 3.94

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4.3.3. Stock turnover ratio
Stock Turnover Ratio = Cost of Goods Sold / Average Inventory
Table 4.3.3. Stock turnover ratio
Average
Stock turnover
year COGS(Rs. in crores) inventory(Rs. in
ratio
crores)

2018 6,189.37 1441.76 4.292926701

2019 7,151.16 1579.035 4.528816651

2020 6,453.00 1508.45 4.277901157

2021 10,035.94 1452.51 6.90937756

Source : secondary data

Chart 4.3.3. Stock turnover ratio

Stock turnover ratio

0
2018 2019 2020 2021

Interpretation : it can be seen from the above chart and table that the stock turnover
ratio remains almost in the same level except for 2021 where in the ratio increased from
4.277 to 6.9 within a span of one year

41
4.4. Profitability Ratio :
4.4.1. Gross Profit Ratio
Gross Profit Ratio = Gross Profit/Net Revenue of Operations × 100
Table 4.4.1. Gross Profit Ratio
Net Revenue of
Gross profit(Rs. in Gross Profit
year Operations(Rs. in
crores) Ratio(%)
crores)
2018 3,970.16 10,159.53 39.0781857
2019 4,570.84 11,722.00 38.99368708
2020 5,451.00 11,904.00 45.79133065
2021 5,882.47 12,588.39 46.72932758

Source : secondary data

Chart 4.4.1. Gross Profit Ratio

48

46

44

42

40

38

36

34
2018 2019 2020 2021

Gross Profit Ratio(%)

Interpretation: Gross profit of the company is showing a steady increase over past
year with highest gross profit ratio over last four years being recorded as 46.73 % in
the year 2021 . The ratio only declines in the year of 2019 from 39.07% in 2018 to
38.99%

42
4.4.2. Net Profit Ratio
Net Profit Ratio = Net profit ×100/Revenue from Operations
Table 4.4.2. Net Profit Ratio

Revenue of
Net Profit
year Net profit(Rs. in crores) Operations(Rs. in
Ratio (%)
crores)
2018 1,384.18 10,159.53 13.62444916
2019 951.05 11,722.00 8.113376557
2020 1,570.18 11,904.00 13.19035618
2021 2,311.93 12,588.39 18.36557336

Source : secondary data

Chart 4.4.2 Net profit Ratio

20
18
16
14
12
10
8
6
4
2
0
2018 2019 2020 2021

Net Profit Ratio (%)

Interpretation : net profit ratio shows a similar trend to gross profit ratio where in there
is a decline in the year of 2019 but it again increases at 2020 and reaches its highest
recorded rate at last four years in the year of 2021 where in the ratio is 18.36

43
4.4.3. Return on Investment (ROI)
ROI = EBIT ×100 / capital employed
Table 4.4.3. Return on Investment (ROI)

Capital Employed(Rs.
year EBIT(Rs. in crores) ROI(%)
in crores)

2018 1,691.89 2,733.02 61.90551112

2019 1,012.58 2,005.03 50.5019875

2020 1,673.69 3,016.91 55.47696153

2021 2,778.62 3,684.08 75.42235782

Source : secondary data

Chart 4.4.3. Return on Investment (ROI)

80

70

60

50

40

30

20

10

0
2018 2019 2020 2021

ROI(%)

Interpretation : From the above chart and table it can be seen that the ROI is at the
highest every recorded in the four years in 2021 and lowest at 2018 . There is generally
an upward trend with the ROI except for the year of 2019 where it reduced

44
4.4.4. Earnings per share
Earnings per share = Net Profit / Total no. Of shares outstanding
Table 4.4.4. Earnings per share

Total no. Of shares Earnings per

Net profit(Rs. in
year outstanding(nos.in share(in
crores)
crores) rupees)

2018 1,384.18 3.484 397.2962113

2019 951.05 3.484 272.9764638

2020 1,570.18 3.608 435.1940133

2021 2,311.93 3.608 640.7788248

Source : secondary data

Chart 4.4.4. Earnings per share

700

600

500

400

300

200

100

0
2018 2019 2020 2021

Earnings per share(in rupees)

Interpretation: As show in the above data the company has attained it’s best earnings
per share in the year of 2021 which is Rs. 640 . Earnings per share shows a steady
increase except for the year of 2019 wherein it declined compared to the earnings per
share in 2018

45
5.1. Findings
• Except in the year of 2020 and 2018 , the company is maintaining current ratio
as 2 and more, standard which indicates the ability of the firm to meet its current
obligations is more. It shows That the company is strong in working funds
management.
• Company has very low quick ratio which is rapidly declining year by year and
is currently now at 0.198 which is the all time low among the last 3 years
• Cash ratio had a huge decline from 0.15 in the year 2019 to 0.28 in the year
2020 . Even though it increased in 2021 to 0.06 it is yet to cover the decline in
ratio in the year 2019 to 2020
• Majority of assets of the company are financed through equity funds rather than
debt funds . Equity funds is also increasing year by year
• Debt ratio of the company is showing a declining trend. It is at 0.275 in 2021
which is it’s all time low in the past 4 years
• Company has debt equity ratio which varies hugely from the ideal ratio of 2:1
and it is rapidly decreasing and thereby making the difference between ideal
ratio more
• Company has an interest coverage ratio of 11.245 in the year of 2021 which is
it’s highest from the past three years
• Capital gearing ratio of the company is at 0.72 which is at its all time high In
the last four years
• Company’s net assets turnover ratio is showing a declining trend and currently
is at 0.72 which is it’s lowest in the last 4 years
• Stock turnover ratio is at 6.9 which is it’s highest in the last four years. Every
year except 2021 the ratio remained almost constant
• Gross profit of the company is showing a steady increase over past 3 years with
highest gross profit ratio over last four years being recorded as 46.73 % in the
year 2021
• Net profit of the company is showing a steady increase over last three years and
is currently at 18.36%.
• There is generally an upward trend with the ROI except for the year of 2019
where it reduced from 61.90% in 2018 to 50.50 % in 2019 .

46
 • Earnings per share shows a steady increase except for the year of 2019 wherein
it declined compared to the earnings per share in 2018
5.2. Suggestions
• Company should have more quick assets to ensure liquidity of the company is safe
and sound
• The company should maintain sufficient cash and bank balances to ensure its cash
ratio is maintained at good levels
• Company should utilise it’s assets to it maximum use so that it can have high net
assets turnover
• Company should use borrowed funds to finance the assets of the company to
maximise wealth of the company
• Company should put in efforts to maintain and increase its high interest coverage
ratio for the financial well being of the company
• Company should fund more from debts to increase EPS of the company and
thereby increasing its value
• Company should procure more debt funds to be in ideal position of 2:1 which
currently company has not attained and has a long way to go
• Company should continue to maintain its current ratio at the same level as it is now
since it’s in an ideal position
• Company should continue to follow and maintain the increasing trend in gross
profit to be future market leaders
• Company should continue to follow and maintain the increasing trend in net profit
by reducing indirect expenses and overheads
• The company has to make efforts in increasing return on investments by reducing
its administration, selling and other expenses.
• The company should try to maintain the increase in stock turnover ratio in current
year and even make efforts to increase it

47
5.3. Conclusion
From the study it can be concluded that the company should work more to
increase its liquidity position and it should maintain its cash reserves to face any
sort of liquidity issues which may arise in the future. The company also needs
to procure more funds through debt to utilize it’s tax benefit and leverage
benefits to further increase the company’s EPS and thereby increasing wealth
of the shareholders . It needs to maintain its income and expenses so that it can
continue following it’s increasing trend when it comes to the profitability ratios
such as net profit, gross profit and return on investment . The company should
use it’s assets efficiently and reduce cost to maximise profit and be potential
market leaders in the future. Company should also try to increase its EBIT to
increase the interest coverage ratio and there by attracting outsiders to invest in
the company.

48
 ANNEXURE

BALANCE SHEET AS AT 31ST MARCH 2021

PARTICULARS 2021 2020

ASSETS
Non-Current Assets
Property, Plant and Equipment 3,790.74 3,959.30
Capital Work-in-Progress 970.96 962.11
Intangible Assets 26.97 19.37
Right of Use Assets 373.84 340.25
Financial Assets
Investments 7,271.28 5,829.17
Loans 60.67 52.7
Other Financial Assets 69.26 156.17
Deferred Tax Assets (Net) 785.5 743.78
Non-Current Tax Assets (Net) 102 110.76
Other Non-Current Assets 388.09 338.69
13839.31 12512.3
Current Assets
Inventories 1,477.17 1,427.85
Financial Assets
Investments 3,779.33 3,086.26
Trade Receivables 485.89 828.45
Cash and Cash Equivalents 14.97 15.33
Bank Balances other than Cash and Cash Equivalents 194.79 92.83
Loans 25.01 7.63
Other Financial Assets 149.44 204.18
Other Current Assets 1,072.86 1,163.04
7,199.46 6,825.57
Total Assets 21,038.77 19,337.87
EQUITY AND LIABILITIES
Equity
Equity Share Capital 36.08 36.08
Other Equity 15,213.99 12,900.34
15250.07 12936.42
LIABILITIES
Non-Current Liabilities
Financial Liabilities

49
Borrowings 1,331.55 1,638.70
Other Financial Liabilities 931.22 944.91
Provisions 10.55 9.18
2,273.32 2,592.79
current liabilities
Financial Liabilities
Borrowings 508.08 708.74
Trade Payables
Total Outstanding Dues of Micro and Small Enterprises 4.06 2.18
Total Outstanding Dues of Creditors other than Micro 781.73 525.84
and Small Enterprises
Other Financial Liabilities 752.99 1,288.53
Other Current Liabilities 1,398.52 1,218.85
Provisions 1.91 1.11
Current Tax Liabilities (Net) 68.09 63.41
3,515.38 3,808.66
Total Equity and Liabilities 21,038.77 19,337.87

PROFIT AND LOSS STATEMENT FOR YEAR ENDED 31 ST MARCH 2021

PARTICULARS 2021 2020

INCOME
Revenue from Operations 12,588.39 11,904.00
Other Income 458 271.62
Total Income 13,046.39 12,175.62
EXPENSES
Cost of Materials Consumed 833.59 763.27
Changes in Inventories of Finished Goods 42.05 4.97
and Work-in-Progress
Excise Duty on Sales 0 0
Employee Benefits Expenses 759.72 731.01
Power and Fuel 2,033.32 2,347.62
Freight and Forwarding Expenses 3,037.24 2,606.13
Finance Costs 247.1 286.52
Depreciation and Amortisation Expenses 1,139.90 1,699.42
Other Expenses 1,943.02 1,802.54
10,035.94 10,241.48
Captive Consumption of Cement -15.27 -26.07
Total Expenses 10,020.67 10,215.41
PROFIT BEFORE EXCEPTIONAL ITEMS AND TAX 3,025.72 1,960.21
Exceptional Items 0 0
PROFIT BEFORE TAX 3,025.72 1,960.21
Tax Expense
Current Tax 763.82 530.16
Tax Expense Relating to Earlier Years (Net) -10.27 -5.33

50
Deferred Tax (Credit) / Charge -39.76 -134.8
713.79 390.03
PROFIT FOR THE YEAR 2,311.93 1,570.18

BALANCE SHEET AS AT 31ST MARCH 2020

PARTICULARS 2020 2019

ASSETS
Non-Current Assets
Property, Plant and Equipment 3,959.30 4,465.04
Capital Work-in-Progress 962.11 1,121.11
Intangible Assets 19.37 10.63
Right of Use Assets 340.25
Financial Assets
Investments 5,829.17 4411.14
Loans 52.7 51.87
Other Financial Assets 156.17 22.72
Deferred Tax Assets (Net) 743.78 612.64
Non-Current Tax Assets (Net) 110.76 110.76
Other Non-Current Assets 338.69 395.65
12512.3 11,201.56
Current Assets
Inventories 1,427.85 1,589.05
Financial Assets
Investments 3,086.26 32.74
Trade Receivables 828.45 732.4
Cash and Cash Equivalents 15.33 35
Bank Balances other than Cash and Cash Equivalents 92.83 272.78
Loans 7.63 9.65
Other Financial Assets 204.18 101.45
Other Current Assets 1,163.04 1,218.62
6,825.57 3,991.69
Total Assets 19,337.87 15,193.25
EQUITY AND LIABILITIES
Equity
Equity Share Capital 36.08 34.84
Other Equity 12,900.34 9,562.55
12936.42 9,597.39
LIABILITIES
Non-Current Liabilities
Financial Liabilities
Borrowings 1,638.70 2,309.04
Other Financial Liabilities 944.91 734.19
Provisions 9.18 8.24
2,592.79 557.73
current liabilities
Financial Liabilities

51
Borrowings 708.74 467.95
Trade Payables
Total Outstanding Dues of Micro and Small Enterprises 2.18 2.11
Total Outstanding Dues of Creditors other than Micro 525.84 448.68
and Small Enterprises
Other Financial Liabilities 1,288.53 423.03
Other Current Liabilities 1,218.85 621.61
Provisions 1.11 1.03
Current Tax Liabilities (Net) 63.41 22.25
3,808.66 1,986.66
Total Equity and Liabilities 19,337.87 15,193.25

PROFIT AND LOSS STATEMENT FOR YEAR ENDED 31 ST MARCH 2020

PARTICULARS 2020 2019
INCOME
Revenue from Operations 11,904.00 11,722.00
Other Income 271.62 245.4
Total Income 12,175.62 11,967.40
EXPENSES
Cost of Materials Consumed 763.27 894.81
Changes in Inventories of Finished Goods and Work-in-Progress 4.97 -30.61
Excise Duty on Sales 0 0
Employee Benefits Expenses 731.01 677.82
Power and Fuel 2,347.62 2,745.04
Freight and Forwarding Expenses 2,606.13 2,864.10
Finance Costs 286.52 246.98
Depreciation and Amortisation Expenses 1,699.42 1,391.68
Other Expenses 1,802.54 1,955.96
10,241.48 10,745.78
Captive Consumption of Cement -26.07 -37.94
Total Expenses 10,215.41 10,707.84
PROFIT BEFORE EXCEPTIONAL ITEMS AND TAX 1,960.21 1,259.56
Exceptional Items 0 178.13
PROFIT BEFORE TAX 1,960.21 1,081.43
Tax Expense
Current Tax 530.16 220.41
Tax Expense Relating to Earlier Years (Net) -5.33 -2.69
Deferred Tax (Credit) / Charge -134.8 -87.34
390.03 130.38
PROFIT FOR THE YEAR 1,570.18 951.05

BALANCE SHEET AS AT 31ST MARCH 2019

PARTICULARS 2019 2018
ASSETS
Non-Current Assets
Property, Plant and Equipment 4,465.04 3,577.11
Capital Work-in-Progress 1,121.11 1,427.15

52
Intangible Assets 10.63 12.07
Right of Use Assets
Financial Assets
Investments 4411.14 3,123.29
Loans 51.87 48.81
Other Financial Assets 22.72 200
Deferred Tax Assets (Net) 612.64 513.05
Non-Current Tax Assets (Net) 110.76 100.28
Other Non-Current Assets 395.65 439.91
11,201.56 9,441.67
Current Assets
Inventories 1,589.05 1,569.02
Financial Assets
Investments 32.74 2,311.04
Trade Receivables 732.4 459.25
Cash and Cash Equivalents 35 51.7
Bank Balances other than Cash and Cash Equivalents 272.78 69.2
Loans 9.65 7.77
Other Financial Assets 101.45 92.99
Other Current Assets 1,218.62 1,139.19
3,991.69 5,700.16
Total Assets 15,193.25 15,141.83
EQUITY AND LIABILITIES
Equity
Equity Share Capital 34.84 34.84
Other Equity 9,562.55 8,861.99
9,597.39 8,896.83
LIABILITIES
Non-Current Liabilities
Financial Liabilities
Borrowings 2,309.04 2,208.13
Other Financial Liabilities 734.19 525.55
Provisions 8.24 7.61
557.73 536.57
current liabilities
Financial Liabilities
Borrowings 467.95 1,185.86
Trade Payables
Total Outstanding Dues of Micro and Small Enterprises 2.11 7.5
Total Outstanding Dues of Creditors other than Micro 448.68 719.77
and Small Enterprises
Other Financial Liabilities 423.03 411.67
Other Current Liabilities 621.61 619.15
Provisions 1.03 0.94
Current Tax Liabilities (Net) 22.25 22.25
1,986.66 2,967.14
Total Equity and Liabilities 15,193.25 15,141.83

53
 PROFIT AND LOSS STATEMENT FOR YEAR ENDED 31ST MARCH 2019
PARTICULARS 2019 2018
INCOME
Revenue from Operations 11,722.00 10,159.53
Other Income 245.4 389.05
Total Income 11,967.40 10,548.58
EXPENSES
Cost of Materials Consumed 894.81 769.06
Changes in Inventories of Finished Goods -30.61 1.29
and Work-in-Progress
Excise Duty on Sales 0 326.43
Employee Benefits Expenses 677.82 588.05
Power and Fuel 2,745.04 1,979.65
Freight and Forwarding Expenses 2,864.10 2,524.89
Finance Costs 246.98 135.27
Depreciation and Amortisation Expenses 1,391.68 899.4
Other Expenses 1,955.96 1,553.64
10,745.78 8,777.68
Captive Consumption of Cement -37.94 -56.26
Total Expenses 10,707.84 8,721.42
PROFIT BEFORE EXCEPTIONAL ITEMS AND TAX 1,259.56 1,827.16
Exceptional Items 178.13 0
PROFIT BEFORE TAX 1,081.43 1,827.16
Tax Expense
Current Tax 220.41 446.27
Tax Expense Relating to Earlier Years (Net) -2.69 0.3
Deferred Tax (Credit) / Charge -87.34 -3.59
130.38 442.98
PROFIT FOR THE YEAR 951.05 1,384.18

54
 BIBLIOGRAPHY

BOOKS

• I.M.Pandey : Financial Management

• M.Y.Khan & P.K.Jai : Financial Management
• S.P. Jain & K.L. Narang : Cost & Management accounting
• K.Rajeswara rao & G. Prasad : Accounting & Finance
• P.Kulakarni : Financial Management

WEBSITES

• https://shodhganga.inflibnet.ac.in/
• https://www.shreecement.com/
• https://www.constructionplacements.com/
• https://en.m.wikipedia.org/wiki/Shree_Cement
• https://www.ibef.org/industry/cement-presentation

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