PROFITABILITY ANALYSIS OF CEMENT COMPANIES IN INDIA: A COMPARATIVE STUDY OF ACC LTD, AMBUJA CEMENT AND ULTRATECH CEMENT COMPANIES

Abstract

Profitability determines the performance of any industry with respect to different variables like operating profit, Profit before interest and tax (PBIT), gross profit, cash profit and net profit etc. On the other hand, profitability analysis helps the business decision makers to forecast the profitability of any investment proposal on the basis of different analytical tools like ratio analysis, correlation and regression analysis, co-efficient of variation etc. It also helps to review the present performance with respect to past trends of any industry on the basis of above parameters and make decisions for the future. The present scenario of cement industry in India is quite different. Hence, it is of paramount importance to analyze the profitability of the cement industry of India since it accounts for 5.37 per cent in the Index of Industrial Production i.e.; IIP. Taking into consideration the above need, the present paper focuses on the profitability analysis of ACC, Ambuja Cements and UltraTech Cement companies of India on the basis of operating profit ratio, PBIT ratio, gross profit ratio, cash profit ratio and net profit ratio for the period 2004-05 to 2018-19 i.e.; 15 years. The study found no significant difference in the overall profitability of the sample companies except in cash profit and net profit during the period under study.