2010VP23 Madras Cements

Madras Cements, a Ramco Group company is from South India started in 1987,
As on 31 march 2010 it is the sixth largest cement producing company in India having the capacity to manufacture 10.49 million tons per annum.

R R Nagar, Tamil Nadu (1.5 MTPA), Jayanthipuram, Andra Pradesh (3.65 MTPA), Alathiyur, Tamil Nadu (3.05 MTPA), Ariyalur, Tamil Nadu (2.0 MTPA), Mathod, Karnataka (0.29 MTPA)http://www.madrascements.com/mcl/Fact1.htm

It also generates revenue from Wind Mills the capacity of the Wind Farms owned by madras cements situated at Muppandal, Poolavadi, Pushpathur, Oothumalai and Mathodu has risen to 185.59 MW, comprising of 262 Wind Energy Generators http://www.madrascements.com/mcl/History.htm


The company uses the most advanced technology to manufacture cement. Madras Cements is mainly involved in the manufacture of Portland cement. Other than this, the company also produces dry mortar products and ready mix concrete. Madras Cements uses the modern dry process technology for all its expansion projects while the dust extraction and suppression system is used to control the fugitive emissions.

 
Future expansion plans in implementation
 
The company is setting up a 2 MTPA cement unit at Ariyalur, Tamilnadu at an

estimated cost of Rs 630 crore (for plant alone) which is slated to be commissioned by June 2011
The company has decided to invest in captive thermal power plants in cement plants to meet the plants’ electrical energy requirements. it has been decided to put up a 60 MW thermal power plant costing Rs.200 crores at Ariyalur and a 25 MW thermal power plant costing Rs.110 crores. at R R Nagar.

Financials as on 31 03 2010
The total paid up capital is Rs 23.80crore consisting shares of Re 1 each
the book value of share is Rs 65.5 per share (P/BV of 1.77)
as against the net worth of Rs 1558 crore the company has long term borrowing of Rs 2566 crore

The performance during the year 2009-10 was as follows
Turnover Rs.2825 crore
EBIDTA Rs.878 crore ( OPM 31.1 pc)
Interest Rs. 151 crore
Depreciation  Rs.196 crore
Income Tax Rs.177 crore
N PAT Rs 354 crore (NPM 12.5 pc)
EPS 14.87 (PE 7.56 at CMP 112.5)

Valuation

The valuation of madras cements is as follows

the current replacement value  for 10.5 MTPA installed capacity of cement is Rs 5512 crore
 (Rs 525 cr a MTPA )
the current replacement value for 186 MW wind farm is around Rs 930 crore
( Rs 5 cr a MW value realised by madras cement in recent sale )
the market price of investment in group companies is Rs120 crore
making a gross valuation of Rs 6562 crore as reduced by debt Rs 2566 crore
give a net valuation of Rs 3996 crore and further the company is adding investment worth Rs 950 crore
as against which the market capital is Rs 2678 crore

at the current market price of Rs. 112.5
the stock is trading at a discount of 33 percent to current intrinsic value of Rs 3996crore
and at discount of ** percent on the value ** on the capacity of cement and power under expansion
and at PE of  7.56 (2009-10)
leaving room for futher appreciation

Check out the interest of smart investors in stock


Promotors hold 42 percent of which 5 percent is encumbered / pledged
of the promotors Rajapalyam Mills Limited hold 13.83 percent ( valued Rs 370 crore)
and Ramco Industries Limited hold 20.72 percent ( valued Rs 554 crore)

Mutual funds & financial institutions hold 7.42 per cent of paid up capital
Government of Tamilnadu holds 3.36 per cent of paid up capital
Insurance companies holds 9.71 per cent of paid up capital
Foreign financial institutions holds 8.15 per cent of paid up capital
Bodies corporates holds 7.78 per cent of paid up capital
HNI holds 6.36 per cent of paid up capital

leaving 15.19 per cent with General public
who constitutes 97 percent of number of total no of shareholders 30160

tail lamp :
promotors is likely to make a preferential allotment of Rs 300 crore to meet the capital requirments of Rs 950 crore