“RISK PROFILE OF TWO LEADING

COMPANIES OF CEMENT INDUSTRY- ACC

AND ULTRATECH”

PRESENTED TO :

DR. NEERAJ SANGHIFACULTY FINANCE

PRESENTED BY :

SAPM - GROUP 1

Objective

• To study the stock return in accordance with the market

return.

• To check the relative volatility of the two stocks been taken

up for the study.

• To check the risk profile of the stocks on the basis of beta

value been calculated.

Industry Profile

Cement Industry in India

•India, being the second largest cement producer in the world after

China with a total capacity of 151.2 Million Tones (MT) .

•More growth in the Indian cement industry is expected in the coming

years.

•The cement industry in India is dominated by around 20 companies,

which account for almost 70% of the total cement production in India .

•The Indian cement companies have produced 11 MT cement during

April-September 2009.

Industry Background

• The history of the cement industry in India dates back to

the 1889 when a Kolkata-based company started

manufacturing cement from Argillaceous.

• In 1914, India Cement Company Ltd was established in

Porbandar .

• The World War I gave the first initial thrust to the cement

industry in India .

• In 1927, Concrete Association of India was set up .

Cont.……

• The cement industry in India saw the price and

distribution control system in the year 1956 .

• Later in 1977, government authorized new manufacturing

units .

Cement Company• India, world's second largest cement producer after China .

• Cement industry in India was under full control and supervision of

the government .

• India falls in the list of lowest per capita consumption of cement

with 125 kg .

• Cement Industry in India is growing at the rate of 8% per annum .

• India at present is house to 120 large cement plants and about 300

mini cement plants .

Cont.……

• The capacity of Indian cement industry is 151.2 Million

Tones (MT) .

• The top 20 cement companies account for almost 70% of

the total cement production of the country .

Top ten cement companies of India

Top Contributor States in Cement Production

• The major contributor to the cement industry of India is the

state of Madhya Pradesh .

• Andhra Pradesh has the maximum number of cement

plants .

• Rajasthan, Gujarat and Tamil Nadu are also contributing to

the cement industry .

• India now is not only self-sufficient but also export large

quantities of cement to the countries .

Companies Profile

ACC Limited

•ACC (ACC Limited) is India's foremost manufacturer of cement and

concrete .

•ACC has rich experience in mining, being the largest user of limestone .

•ACC plants, mines and townships visibly demonstrate successful

endeavors in quarry rehabilitation, water management techniques and

‘greening’ activities .

•ACC has made significant contributions to the nation building process .

Cont.…

UltraTech Cement Limited

•It is India's 2nd biggest cement company and India’s largest exporter

of cement clinker based in Mumbai, India. The company is part of Aditya

Birla Group.

•The company's production facilities are spread across eleven integrated

plants .

•UltraTech Cement Limited has an annual capacity of 52 million tonnes .

•UltraTech's subsidiaries are Dakshin Cements Limited, Harish Cements

Limited, UltraTech Ceylinco (P) Limited and UltraTech Cement Middle East

Investments Limited .

Cement performance for October 2011

• For the month of October 2011, cement production and

dispatches are 32.72-lakh MT and 31.87-lakh MT as

against 34.67-lakh MT and 34.19 lakh MT respectively in

the corresponding period last year.

Data Collection & Methodology

• In this report, the data is taken up from secondary

resources. We have used REGRESSION MODEL to in

support to our findings.

The data was mainly collected through

• Internal Sources: Company sites, records, annexure, NSE

site.

• External Sources: Other information’s are taken up from

reliable websites, magazines and newspapers.

Data Analysis

• For the analysis, the following hypothesis has been

assumed:

• Ho= stock return of ACC & ULTRATECH is not

dependent on market return.

• H1=stock return of ACC & ULTRATECH is dependent on

market return.

NIFTY

ACC

ULTRATECH

COMPARISON BETWEEN INDEX AND STOCK RETURNS

Findings & Conclusion

• It is been concluded that the stocks return is not at all

associated with the market return .

• It is been suggested to do different statistical modeling to

get the R square close to 1.

• Our both the stocks (ACC and ULTRATECH) are proved

to be low beta stocks and dots are not scattered and thus

proving insignificant difference .

Cont.….

• Since value of Alfa is equal to 0 that means stocks are

fairly valued and Alfa is insignificant.

• We conclude that risk profile of the two stocks are proving

very much less risky .