Industry: Cement

Company: ACC Concrete

Ltd.

Submitted by:
Kshitij S. Gore
Pgdm-B , Roll No. 121

SIMSR, Mumbai
ACC Concrete Ltd.

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A Project Report on

Improving the Credit Control by developing a Credit

Evaluation Model and reducing the Average Collection
Period at ACC Concrete Ltd.
Project carried out at ACC Concrete Ltd., Mumbai

Submitted By

Kshitij S. Gore
Post Graduation Diploma in Management
SIMSR, Mumbai

Under the guidance of

Company Guide
Mr. Purnendu Dey
Regional Credit Control
ACC Concrete Ltd.

ACC Concrete Ltd.

Faculty Guide
Mr. Sunil Parmar
Professor
SIMSR, Mumbai

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EXECUTIVE SUMMARY
This project is an in depth research about receivables management, average collection
period, credit assessment and credit evaluation of ACC Concrete Ltd. The prime objective
of the report is to develop a model to evaluate the clients of the company and ascertain a
credit limit. The project is included as part of MBA Program and the project is done from
5th May to 30th June.
The study draws attention to the fact that the current average collection period for ACC is
increasing over the period of 6 to 7 months, which according to the industry average is
very high. This directly and indirectly reflects on the company as well as the creditors of
the company by increasing the average payment period to operate at a low working
capital.
After data collection regarding client transaction, invoice tracker, etc. it was analyzed
with different charts and graph, which is very important to find observation and findings.
On the basis of this work, suggestions were made which were very helpful for analyzing
project report and apparently a model was developed.
It was observed that the delay in receivables was mainly because of the market scenario
of the real estate industry which is more or less stagnant from past couple of years which
has reduced either the sales of the real estate developers or has increased their
receivables.
To regulate the average collection period and delays regarding the credit period certain
internal and external factors were considered and accordingly the scope of improvement
was suggested for ACC.
Here are some actions that were suggested for improvement:
Focus on top 30 clients who account for 87% of the revenue.
Convert complete billing process to work electronically.
Form a follow up team in synchronization with the marketing team and credit
control team.
Offer discounts for early payments on outstanding invoices.

ACC Concrete Ltd.

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CERTIFICATE

This is to certify that the Project Work titled

Improving the Credit Control by developing a Credit

Evaluation Model and reducing the Average Collection

Period at ACC Concrete Ltd.
has been successfully completed at ACC concrete Ltd. by Kshitij S.
Gore under my guidance, in partial fulfillment of the Post Graduate
Diploma in Management at K. J. Somaiya Institute of Management
Studies and Research, Mumbai.
I wish him a bright and prosperous future.

Sunil Parmar
Professor
SIMSR, Mumbai

ACC Concrete Ltd.

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ACKNOWLEDGEMENT
I take this opportunity to extend my sincere thanks to SIMSR, Mumbai and ACC Concrete
Ltd. for offering a unique platform to earn exposure and garner knowledge in cement
industry.
During the span of the project period, it was my great fortune to get inducted into Credit
Control department, ACC Concrete Ltd. I am especially thankful to my guide Mr. Purnendu
Dey, Regional Credit Controller, Mumbai Area Office, ACC Concrete Ltd. for his kind
support and guidance; he has been extending me throughout the project. I also express my
sincere thanks to Mr. Anurag Yadav, Area Marketing Head for constant encouragement
and support at each stage of project. I was fortunate to get Mr. Sameer Raul for helping me
with all the information and data required for successful completion of project.
I want to convey my sincere thanks to my college guide Mr. Sunil Parmar, Professor,
SIMSR, who has been guiding me throughout my project. He was there to help me out
whenever and wherever I needed.
Last but not the least I would like to express my profound gratitude to each and every
employee of the organization who contributed in their own ways in successful completion of
this project.

Kshitij S. Gore
PGDM- 121
SIMSR, Mumbai

ACC Concrete Ltd.

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Contents
EXECUTIVE SUMMARY ....................................................................................................... 3
CERTIFICATE .......................................................................................................................... 4
ACKNOWLEDGEMENT ......................................................................................................... 5
1. INTRODUCTION ................................................................................................................. 8
1.1Company Profile ............................................................................................................... 8
1.2 Major Milestones: ............................................................................................................ 9
1.3 About Accs RMC Business .......................................................................................... 11
1.4 ACC Concrete A Wide Range .................................................................................... 13
1.5 ACC Concrete Vision And Mission: ............................................................................. 14
2. BACKGROUND OF THE STUDY .................................................................................... 15
2.1 Statement Of Problem:................................................................................................... 15
2.2 Need Of Study: .............................................................................................................. 15
2.3 Scope Of Study: ............................................................................................................. 16
2.4 Objectives Of Study: ...................................................................................................... 16
3. LITERATURE REVIEW: ................................................................................................... 17
3.1 Rmc Industry.................................................................................................................. 17
4. ALL INDIA COMPETITORS INFORMATION ................................................................ 18
4.1 Ahlcon Ready Mix ......................................................................................................... 18
4.2 Ci Concrete India ........................................................................................................... 18
4.3 Godrej & Boyce Mfg. Co............................................................................................... 19
4.4 Ijm Concrete Products.................................................................................................... 19
4.5 India Cements ................................................................................................................ 20
4.6 Lafarge Aggregates & Concrete India ........................................................................... 21
4.7 Madras Cements............................................................................................................. 21
4.8 Rdc Concrete (India) ...................................................................................................... 22
4.9 Rmc Readymix India ..................................................................................................... 22
4.10 Ultratech Concrete ....................................................................................................... 23
4.11 Major Competitors In Mumbai: ................................................................................... 24
5. RECIPE ................................................................................................................................ 25
6. COST STRUCTURE ........................................................................................................... 26
6.1 Production Cost.............................................................................................................. 26
6.2 Distribution Cost ............................................................................................................ 26
7. PRODUCTION TO BILLING PROCESS .......................................................................... 28
7.1 Plant Wise POD ............................................................................................................. 29
7.2 Plant Name: .................................................................................................................... 29
7.3 Percentage Of Invoices: ................................................................................................. 30
ACC Concrete Ltd.

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7.4 Number Of Invoices:...................................................................................................... 30

8. TOP 30 CLIENTS................................................................................................................ 31
9. CREDIT EVALUATION MODEL ..................................................................................... 32
9.1 Interface Of The Model: ................................................................................................ 32
9.2 Solvency Parameters: ..................................................................................................... 33
9.3 Liquidity Parameters: ..................................................................................................... 34
9.4 Profitability Parameters: ................................................................................................ 34
Figure16 Profitability ........................................................................................................... 35
9.5 Client Trade History Parameters:................................................................................... 35
9.6 Market Reputation Parameters:...................................................................................... 35
10. CONCLUSION .................................................................................................................. 37
11. RECOMMENDATIONS TO THE COMPANY ............................................................... 38
12. REFERENCES AND BIBLIOGRAPHY .......................................................................... 40
13. GLOSSARY ...................................................................................................................... 41

ACC Concrete Ltd.

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1. INTRODUCTION
1.1Company Profile
Year of establishment: 1936
Shareholder pattern:
Figure1 Shareholder pattern
Holder's Name

No of Shares

% Share Holding

Promoters

93888120

50.01%

Foreign Institutions

37035581

19.73%

General Public

23834380

12.70%

Financial Institutions

17818906

9.49%

Other Companies

6851404

3.65%

Banks Mutual Funds

5947011

3.17%

Foreign NRI

772515

0.41%

Others

767724

0.41%

Foreign Promoter

541000

0.29%

Central Govt

287815

0.15%

Foreign Industries

900

0%

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's
operations are spread throughout the country with 17 modern cement factories, more than 40
Ready mix concrete plants, 21 sales offices, and several zonal offices. It has a workforce of
about 9,000 persons and a countrywide distribution network of over 9,000 dealers.
Since inception in 1936, the company has been a trendsetter and important benchmark for the
cement industry in many areas of cement and concrete technology. ACC has a unique track
record of innovative research, product development and specialized consultancy services. The
company's various manufacturing units are backed by a central technology support services
centre - the only one of its kind in the Indian cement industry.
ACC has rich experience in mining, being the largest user of limestone. As the largest cement
producer in India, it is one of the biggest customers of the domestic coal industry, of Indian
Railways, and a considerable user of the countrys road transport network services for inward
and outward movement of materials and products.
Among the first companies in India to include commitment to environmental protection as
one of its corporate objectives, the company installed sophisticated pollution control
ACC Concrete Ltd.

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equipment as far back as 1966, long before pollution control laws came into existence. Today
each of its cement plants has state-of-the art pollution control equipment and devices.
ACC plants, mines and townships visibly demonstrate successful endeavours in quarry
rehabilitation, water management techniques and greening activities. The company actively
promotes the use of alternative fuels and raw materials and offers total solutions for waste
management including testing, suggestions for reuse, recycling and co-processing.
ACC has taken purposeful steps in knowledge building. We run two institutes that offer
professional technical courses for engineering graduates and diploma holders which are
relevant to manufacturing sectors such as cement. The main beneficiaries are youth from
remote and backward areas of the country.
ACC has made significant contributions to the nation building process by way of quality
products, services and sharing expertise. Its commitment to sustainable development, its high
ethical standards in business dealings and its on-going efforts in community welfare
programmes have won it acclaim as a responsible corporate citizen. ACCs brand name is
synonymous with cement and enjoys a high level of equity in the Indian market. It is the only
cement company that figures in the list of Consumer SuperBrands of India.

1.2 Major Milestones:

1936

Incorporation of The Associated Cement Companies Limited on August 1,

1936.

1937

With the transfer of the 10th company to ACC, viz. Dewarkhand Cement
Company, the formation of ACC is complete on October 23, 1937.

1947

Indias first entirely indigenous cement plant established at Chaibasa in

Bihar

1956

Bulk Cement Depot established at Okhla, Delhi

1961

Blast furnace slag from TISCO used at the Chaibasa Unit to manufacture
Portland Slag Cement for the first time in India.

1961

Manufacture of Accocid Cement, which resists the corrosive action of acids

and chemicals.

1961

Manufacture of Hydrophobic (waterproof) cement at ACC Khalari Cement

Works in Bihar.

ACC Concrete Ltd.

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1962

Manufacture of Accoproof, a waterproofing additive.

1965

ACCs Central Research Station (CRS) established at Thane

1965

Manufacture of Portland Pozzolana Cement.

1968

ACC supplied and commissioned one-million-tone iron ore pelletizing plant

ordered by TISCO

1973

Take-over of The Cement Marketing Company of India (CMI)

1979

ACC wins international contract for operation and management of a new one
million tone cement plant at Yanbu-Ras Biridi in Saudi Arabia.

1982

Commissioning of the first 1 MTPA plant in the country at Wadi, Karnataka.

1992

Incorporation of Bulk Cement Corporation of India, a joint venture with the

Government of India.

1993

ACC starts the commercial manufacture of Ready Mixed Concrete at

Mumbai.

1999

Tata group sells 7.2% of its stake in ACC to Ambuja Cement Holdings Ltd,
a subsidiary of Gujarat Ambuja Cements Ltd. (GACL)

2000

Tata Group sells their remaining stake in ACC to the GACL group, who
with 14.45% now emerge as the single largest shareholder of ACC.

2002

ACC wins PHDCCI Good Corporate Citizen Award

2004

ACC named as a Consumer Superbrand by the Superbrands Council of

India, becoming the only cement company to get this status.

2004

GreenTech Safety Gold and Silver Awards awarded to Madukkarai Cement

Works and Katni Refractory Works by Greentech Foundation for
outstanding performance in Safety Management System.

2005

Holcim group of Switzerland enters strategic alliance with Ambuja Group

by acquiring a majority stake in Ambuja Cements India Ltd. (ACIL) which
at the time held 13.8 % of the total equity shares in ACC. Holcim
simultaneously makes an open offer to ACC shareholders, through Holdcem
Cement Pvt. Limited and ACIL, to acquire a majority shareholding in ACC.
Pursuant to the open offer, ACILs shareholding in ACC increases to 34.69
% of the Equity share capital of ACC.

ACC Concrete Ltd.

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2006

Change of name to ACC Limited with effect from September 1, 2006 from
The Associated Cement Companies Limited.

2006

ACC receives Good Corporate Citizen Award 2005-06 from Bombay

Chamber of Commerce and Industry

2006

New corporate brand identity and logo adopted from October 15, 2006

2008

Ready mixed concrete business hived off to a new subsidiary called

ACC Concrete Limited.

2008

ACC wins CNBC-TV18 India Business Leader Award in the category India
Corporate Citizen of the year 2008

2009

ACC received the Jamanalal Bajaj "Uchit Vyavahar Puraskar" of Council for
Fair Business Practices

2010

ACC acquires 100 percent of the financial equity of Encore Cements &
Additives Private Limited which is a slag grinding plant in Vishakhapatnam
in coastal Andhra Pradesh. This company became a wholly-owned
subsidiary of

1.3 About Accs RMC Business

ACC set up India's first commercial Ready Mix Concrete
(RMC or RMX) plant in Mumbai in 1994. ACC Concrete
is one of the largest manufacturers of RMX in India with
over 50 modern plants in major cities such as Mumbai,
Bangalore, Kolkata, Chennai, Delhi. Hyderabad, Goa,
Pune and Ahmedabad.

ACC's pioneering efforts in introducing RMX coupled with the promotion of bulk cement
handling facilities have been responsible for redefining the pace and quality of construction
activity in metropolitan cities and in mega infrastructure projects.
Numerous landmark structures in India's metro cities have been built using ACC Concrete mega housing projects, townships, commercial complexes, factories, bridges, flyovers, roads
and railways. Prestige projects such as the Mumbai-Pune Expressway, the Indore-Dewas
bypass, Kolkata and Delhi Metro Rail projects. Most of the new bridge and fly-overs in
Mumbai used ACC Concrete and could perhaps not have been completed on schedule
without it.
Concrete is basically a mixture of Portland Cement, water and aggregates comprising sand
and gravel or crushed stone. In traditional construction sites, each of these materials is
ACC Concrete Ltd.

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procured separately and mixed in specified proportions at site to make concrete. Ready Mix
Concrete, or RMX as it is popularly called, refers to concrete that is specifically
manufactured elsewhere and transported in a Transit Mixer for delivery to the customer's
construction site in a ready-to-use freshly mixed state. RMX can be custom-made to suit
different applications. Ready Mix Concrete is bought and sold by volume - usually expressed
in cubic meters.

Ready Mix Concrete is manufactured under computer-controlled operations and transported

and placed at site using sophisticated equipment and methods. RMX assures its customers
numerous benefits:

Uniform, consistent and assured quality of concrete

Flexibility in concrete design mixes
Easier addition of admixtures
Faster and speedier construction
Reduced inventories, material handling and storage of raw materials at sites
Savings in labour requirements, labour costs and supervision of labour
Reduced wastage of materials

The use of RMX is an environmental friendly practice that ensures a cleaner work place and
causes minimal disturbance to its surroundings. This makes its utility more significant in
crowded cities and sensitive localities.
In contrast to this, conventional methods of making, transporting and placing concrete at
most construction sites are somewhat labour-intensive and suffer from practices which may
be erratic and not very systematic.
Therefore the use of Ready Mix Concrete can prove to more cost effective in the longer term
while ensuring that structures are built faster and using concrete that comes with higher levels
of quality assurance.

ACC Concrete is manufactured at modern fully computerized plants which have state-of-theart machinery and equipment by machinery suppliers of global repute - fully automated
Batching Plants, well-equipped laboratories for testing raw materials and fresh concrete,
Transit mixers, Mobile and stationary pumps capable of discharging concrete at high
elevations and over long distances.
A large fleet of the latest models of Transit Mixers and Concrete Pumps to suit different
terrains and work sites ensures that our customers get timely and uninterrupted supply of
premium quality concrete as per their requirement as well as its efficient and timely
placement at the work site.
ACC Concrete is supplied in a variety of grades and compositions to meet specific demands
of customized applications - from simple requirements for small homes to High Performance
Concrete to meet the complex needs of mega projects.

ACC Concrete Ltd.

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Each of our plants has a fully equipped laboratory with the latest in testing machines to carry
out routine and detailed tests of raw materials as well as fresh finished concrete. These inplant laboratories are backed by the facilities of ACC's reputed Research centre at Thane
which serves as a focal research and testing laboratory centre for cement and concrete.
ACC Concrete customers can avail of a range of options in our testing and quality control
services - from simple tests and analyses of raw materials and concrete to non-destructive
testing of hardened concrete.

1.4 ACC Concrete A Wide Range

High Strength Concrete

High Performance Concrete
Self-leveling Concrete
Self-compacting Concrete
Coloured Concrete
Concrete made with binary and ternary blends of cements
Early strength Concrete
Fibre reinforced Concrete

ACC's fleet of Transit Mixers and Concrete Pumps helps ensure that our customers in cities
like Mumbai, Bangalore, Kolkata, Delhi, Chennai, Hyderabad, Goa and Pune now just a
phone call away from ACC Concrete - freshly blended premium quality concrete that is door
delivered and efficiently placed at site on the day of concreting.
For very large constructions or infrastructure works, we can consider dedicating an entire
RMX plant catering exclusively to the project sites.
In addition, our marketing team, which includes qualified and experienced engineers and
concrete technologists, can assist customers in defining and specifying quality standards,
designing specific concrete mixes to meet the most challenging of requirements as well as
sourcing reliable supplies of good quality raw materials.
If you wish to know more about ACC Ready Mix Concrete or have a specific requirement,
please send a mail to any of the following options which is nearest to you.

ACC Concrete Ltd.

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1.5 ACC Concrete Vision And Mission:

Figure2 Vision and Mission

ACC Concrete Ltd.

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2. BACKGROUND OF THE STUDY

Most firms have to provide their customers with trade credit. The aim of the internship was to
ensure that customers do not take advantage of willingness to provide this credit.
We will look at:

the problems caused by providing credit, including the consequences of bad

debt and late payments
how to assess whether your customers are credit worthy
how good credit control routines prevent customers from keeping your money
longer than necessary
where debt collection fails, we will see how to claim income tax and VAT relief
on the bad debt.

This unit wont make you an instant expert at credit control and debt recovery. However, it
will give you some useful guidelines to collecting debt efficiently. Good cash flow is
essential for business success. We hope that this unit will make the cash flow for you.
In later units of the course we will look at how you can supplement your experience and
knowledge by using specialist agencies and bodies to enable you to ensure payment from
your debtors.

2.1 Statement Of Problem:

To understand the payment behavior of ACCs clients and exploring the possible verticals for
improvement in reducing average collection period.

2.2 Need Of Study:

Staff involved in credit control and credit management at all levels who need to gain a
broad overview and understanding.
Staff about to take on more responsibility for credit management.
Staff newly appointed to these areas.
Anyone in business wanting to improve their cash flow and reduce bad debts
Affirmation of good credit control practices, including telephone collection techniques.
Appreciation of skills required to work closely with the sales department.
Understanding of the different customer trading types and the laws relating to them.
Ability to select credit reference agencies and interpret the information they supply.
Knowledge of how to effectively target and motivate a team to reduce your company
D S O.

ACC Concrete Ltd.

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Knowledge of the laws governing litigation on unpaid debt.

Update on legislation in relation to best practice compliance and the Financial Conduct
Authority.

2.3 Scope Of Study:

The study was restricted to the Mumbai area operations of ACC.

The study was carried on all the plants of ACC concrete Ltd. in and around Mumbai.
Study includes the tracker sheets of clients of ACC in Mumbai.
Complete analysis of fundamental and sentimental aspects of ACCs clients by using their
balance sheets and related news.
An additional of cost structure and contribution margin was carried out of personal interest
in the field of cost management.

2.4 Objectives Of Study:

To find the clients who are exceeding the credit period for payment
To develop attractive policies for the clients to tempt them to pay early
To convert the billing process to electronic means on pilot basis for top 5 customers.
To understand the degree of current credit analysis of ACC.

ACC Concrete Ltd.

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3. LITERATURE REVIEW:
3.1 Rmc Industry
The Ready Mix Concrete (RMC) industry is growing due to the superior technical properties
over normal concrete, but the potential is still huge

The Ready Mix Concrete (RMC) industry in India is in its early stages with cement
consumption of just 2-3 per cent of total production. This is evident from the fact that in the
West, the RMC consumes 60 per cent of total cement production. However, since the demand
for RMC is expected to grow exponentially, cement manufacturers in India such as Ultratech,
ACC, Madras Cements, India Cements, Ambuja Cements, among others, have forayed into
the business. As the industry grows, it will make aggregate distribution and production more
organized as large players are likely to venture into the aggregates business themselves or
have a long-term relationship with commercial aggregate companies.
The cement companies are able to leverage the RMC market in a better way since cement is
one of the essential ingredients in the manufacture of RMC. Of course, acquiring and
operating suitable aggregate quarries in India is a difficult task, but since cement companies
possess sufficient experience in limestone quarrying will have technical competency of
running such captive operations too.
The use of RMC is growing due to its superior technical properties than normal concrete. The
difference between normal concrete and RMC lies in the technology used for production,
transportation and placement. In the case of RMC, all the ingredients are proportioned in
accordance with the standard codes of practice to get the targeted strength and durability. The
quality of concrete depends on the way it is mixed, placed, compacted, finished, cured and
protected. RMC used in construction makes it possible to achieve speed with quality
The acceptability of RMC is certainly high in large cities and metros and as many as around
40 cities are currently using RMC for several infrastructure projects. Specifications in tenders
by municipal corporations, public works and other government bodies will play a big role in
growth of RMC.

ACC Concrete Ltd.

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4. ALL INDIA COMPETITORS INFORMATION

4.1 Ahlcon Ready Mix

B-4/205, Safdarjung Enclave, New Delhi- 110029

Tel: 011-4600 3600 Fax: 011-26714755 www.ahlconrmc.com
Vikas Ahluwalia, Managing Director.
Ahlcon Ready Mix Concrete (RMC) is amongst the largest RMC the company with a pan
India presence. The company was established in the year 2003 and has grown from a humble
beginning to one of the most respected RMC brands in India within a short span of time. Its
ERP software helps them to manage all the operations at the plant like; production, inventory,
finance and customer relationship. Integrated use of technology blended with human values
makes it possible to deliver domain specific customization and generic solutions. Ahlcon
RMC specialises in producing pavescape concrete, which does not retain water. Ahlcon RMC
deploys a variety of systems in order to contribute to a clean environment and recycle natural
resources, especially water.

4.2 Ci Concrete India

#214/C, Doddanekkundl Industrlal Area , Whitefleld, Bangalore-560048

Phone: 080-4152 1111 Mobile: 9900993333 www.ciconcreteindia.com
M Srinivas Reddy, Managing Director
CI Concrete India has almost a decade experience in the filed of Ready Mix Concrete
business. Started four years ago, ICC has produced over three lakh concrete of different
grades from M7.5 to M60. The plants are modern and managed by experienced personnel,
known for quality and timely deliveries. The company has a host of big clients like BMRCL,
Golden Gate Properties, Kumar Urbania, L&T ECC Division, Nagarjuna Construction etc.

ACC Concrete Ltd.

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4.3 Godrej & Boyce Mfg. Co.

Pirojsha Nagar, Vikhroli, Mumbai 400079

Tel: 022- 6796 2004 www.godrej.com
Jamshyd N. Godrej, Managing Director
Godrej Ready Mix Concrete is a part of the Construction Division of Godrej & Boyce Mfg.
Co. It was launched in the year 1997 in Mumbai. The Construction Division has imported
high tech concrete batching plant from SIMEM, Italy to cater to its various emergent projects
in the industrial as well as in the residential township of Pirojshanagar, Mumbai.With the
rising customers need, the company began commercial supply of concrete in the year 1999.
Today, the company has four plants in Mumbai, one in Navi Mumbai and a couple of them in
Pune. The organisation has a wide range of products like High strength Concrete (HSC),
temperature controlled concrete (TCC), elf compacting concrete (SCC), dry lean concrete
(DLC), pavement quality concrete (PQC), fibre reinforced concrete (FRC), rheodynamic mix
concrete (RDC) and high density concrete (HDC).

4.4 Ijm Concrete Products

H No. 1-89/1, Plot No: 42 & 43, 2nd Floor Kavuri Hills, Next to Madhapur Police Station,
Hi-Tech City Road, Hyderabad-500 081
Tel: +91 40 43408888 Fax: +91 40 23114669 www.ijmconcrete.com
S. M. Wong, Country Head
IJM CPPL which has its roots in Malaysia started operations in Hyderabad in 2004, and later
at Bangalore and Chennai. The parent company IJM Corporation Berhad is renowned as one
of the largest infrastructure companies in the world. IJM Concrete Products is an IJM group
company which specializes in delivering quality concrete, ready-mixed, consistently. IJM
CPPL has state-of-the-art infrastructure. Backed by high capacity plants to the tune of 120
m/hr and computerized delivery management system ensures delivery on time. The company
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has served the Prestige Group, TCS, Hyderabad and Vaswani Group. The company also has
an office in Mumbai.

4.5 India Cements

Dhun Bldg, 827, Anna Salai, Chennai-600002.

Tel: 044-2859 2476 www.indiacements.co.in
N.Srinivasan, Vice Chairman & MD
The India Cements was established in 1946 and the first plant was set up at Sankarnagar in
Tamil Nadu in 1949. Since then it has grown in stature to seven plants spread over Tamil
Nadu and Andhra Pradesh and has become the largest producer of cement in South India. The
capacities as on March 2010 have reached 14.05 mtpa. One of the products of the company is
concrete. The Coromandel RMC plant is set up at Thirumudivakkam near Thiruneermalai in
the suburbs of Chennai. The plant is equipped with the state-of-the-art technology package
comprising of automatic batching plant, transit mixers, concrete pumps and fully equipped
laboratory manned by the best in the industry. The company has well established brandsSankar Super Power, Coromandel Super Power and Raasi Super Power and has its regional
offices in all southern states and Maharasthra offices/representative in every district and aims
to be one of the largest companies in India.

ACC Concrete Ltd.

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4.6 Lafarge Aggregates & Concrete India

1004, B-Wing, Crescenzo, G Block Behind MCA, BKC - Bandra (East), Mumbai 400 051.
Tel: 022- 6769 2500 www.lafarge.in
Uday Khanna, Managing Director
Lafarge Aggregates & Concrete India entered the Indian market in 1999, through its cement
business, with the acquisition of Tata Steels cement activity, followed by purchase of
Raymond Cement facility in 2001. Lafarge currently has four cement plants in India: two
plants in Chhattisgarh and grinding units in Jharkhand and West Bengal. The organisation has
a wide range of concrete products and the mega range of concrete products enables the
customer to complete the construction in double quick time. As the world no. 2 in aggregates,
Lafarge Aggregates brings international expertise and extensive market knowledge. The
aggregates are crushed, screened, graded and blended in completely automated systems to
meet the highest standards of consistency and quality for the customers.

4.7 Madras Cements

(Ramco Concrete) Auras Corporate Centre, 4th Floor, 98-A, Dr. Radhakrishnan Road,
Mylapore, Chennai- 600004
Tel.: 044 28478666, 28478656 Fax: 044 28478676 www.ramcocement.in
P.R.Ramasubrahmaneya Rajha Chairman & MD
In 1998, Madras Cements established its RMC unit to cater to the needs of the infrastructure
and housing industry. This unit is located in Chennai at Vegaivasal on the MedavvakamMambakkam Road. With its expertise and ability to produce concretes of various grades, the
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plant has been producing concrete customized to the unique requirements of its customers.
The company produces high performance concrete based on customers requirements with
various permutations based on concrete grades, workability and site conditions.

4.8 Rdc Concrete (India)

C/8, Sigma, Road No, 22, MIDC Andheri East Mumbai 400093.
Tel: 022-6691 0055 www.rdcconcrete.com
Uday Shankar, Managing Director
RDC Concrete (India) is the largest standalone ready mixed concrete company in India. The
company was established in 1993 by Unitech Constructions Ltd along with RDC Concrete
Singapore. It pioneered the concept of Readymix Concrete in India. Subsequently, RDC
Singapore acquired majority stake in the company. India Value Fund Advisors (IVFA)
acquired 100 per cent equity stake in RDC Concrete (India) Pvt Limited in 2005. The
company primarily manufactures and supplies ready mixed concrete. Having started its
operations in 1993, RDC Concrete (India) Pvt Ltd is now become the largest non-cement
ready mix concrete company in India. Over the years, RDC Concrete has established a
reputation for being able to deliver cost-effective and innovative building solutions to meet a
variety of requirements. The variety of products included: high performance concrete, self
compacting concrete, fibre reinforced concrete, colored concrete, heavy density concrete and
RMC readymix.

4.9 Rmc Readymix India

7th Floor, Windsor, CST Road, Kalina, Santa Cruz East, Mumbai- 400098.
Tel: 022-2654 7000/2652 6171/2/3/4 www.rmcindia.com
Vijay Aggarwal, Managing Director.
Ready-mixed concrete is one of the main businesses of RMC Readymix (India) Pvt. Ltd.
Beginning with 1996 by setting up the first plant in Mumbai; the company expanded its
network of state-of-the-art concrete batching and mixing plants to more than 50 locations in
ACC Concrete Ltd.

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the country. Today, their operation spreads to all major metropolitan cities in the country and
is the producer and supplier of tailor-made concretes to suit differing customer needs. The
organisation was set up by the RMC Group, United Kingdom and Hathway Investments
(Rajan Raheja Group Company) in the year 1996. Besides ready-mixed concrete, the firm has
also entered in the aggregates quarrying and processing business with effect from October
2000. Presently, it is operating seven aggregate manufacturing units in the western and
southern regions of the country. The major area where the company dominates is coloured
concrete, temperature-controlled concrete, fibre-reinforced concrete and high density
concrete.

4.10 Ultratech Concrete

Ahura Centre, 3rd Floor, Mahakali Caves Road, Andheri East, Mumbai 400093.
Tel: 022-6691 7274. www.ultratechconcrete.com.
Debu Bhattacharya, Managing Director
Incorporated in the year 1983 with a small cement plant, the company has grown to be the
eighth largest manufacturer of cement in the world. Hailing from the famous Aditya Birla
Group, it operates in 33 countries including Australia, France, Italy, and Germany. UltraTech
Concrete attributes its success to the state- of the-art technology and innovation. As a part of
its value offering it deploys expert quality systems for managing the quality of raw materials,
efficient raw mix design and cube test results that help it analyze data statistically. The
engineers study the clients requirements and then recommend the type of concrete to be
used. The expert dispatch and tracking system ensures optimum order booking, visibility and
tracking of the deliveries being made to the customers. All Transit Mixers are equipped with
Vehicle Tracking System which maintains the quality of concrete in transit. The product line
of the company includes: colourcon, fibrecon, thermocon, hypercon, rervious, dcor, free
flow, stainless.

ACC Concrete Ltd.

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4.11 Major Competitors In

Mumbai:
Lafarge

1,811
ACCCL

10%

Lafarge

17%

Ultratech

17%

Ultratech
RMC India
Godrej

RMC(I)
Others

10%

411
13%
5%
8%
4%

230

8%

8%
5%

25%

13%

66

33%

133
6%
15%
13%

5%
10%

13%

24%
71%

47%

Ashoka
Pan India

311

Delhi

69%

11%

9%

13%

35%

33%

Mumbai

Hyderabad

Kolkata

54%

Chennai

Relcon
ACCCL market share across regions for Dec 09
Volumes in 000 m3

Figure3 Market share

ACC Concrete Ltd.

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5. RECIPE
There are standard grades that are required in Industry. The composition of various grades is
presented below.

Grade

M10

CEMENT OPC 43 BULK

Fly ash - RMX
RIVER SAND RMX
Manufactured Sand
Aggregate 12 mm down
Aggregate 20 mm down
Admixtures-Adm3
Water
Total

M15

Quantity(kg)/m3
M25 M30 M35

M20

M40

M45

M50

M55

M60

160
100
482
482
439
576
2
170

218
112
517
517
461
420
3
167

240
110
540
540
320
500
4
155

270
110
455
562
412
434
5
165

310
110
495
485
320
545
4
160

360
100
511
510
504
297
6
165

390
100
492
492
518
293
5
163

430
80
476
476
302
533
7
160

470
100
510
340
426
425
7
160

485
80
611
255
334
549
7
150

510
90
950
0
322
457
8
145

2,411

2,415

2,409

2,413

2,429

2,453

2,453

2,464

2,438

2,471

2,482

Figure4 Recipe

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6. COST STRUCTURE
The cost of supplying RMX is composed of three basic costs.
Note: To find out fixed cost per m3, the fixed cost has been divided by the target allocation of
supply for that plant.
Total Cost = Raw Material Cost + Production Cost + Distribution Cost
Raw material cost and production cost are plant dependent and are different for
each plant.
Distribution cost is different for each plant X site combination and depends upon
distance between plant and site.
The production cost and distribution cost was further divided into fixed cost and
variable cost.

6.1 Production Cost

Fixed cost for production included lease rent and rent of godown and other fixed
production expenses like security and employee charges.
The fixed cost for lease rent and rent of godown are not used for calculating total
cost. This is because the lease rents are very different in different areas in
Mumbai and cause cost distortion, but presence of plant is necessary in different
regions in Mumbai because the service area of a RMX plant is limited and varies
in between 10-30 km.
But the other fixed production cost were considered because the plant is
movable and some of these cost which are now incurred at plants can be
eliminated if plant is located at different location. For e.g. At Deonar plant the
cost of watering the raw material whenever any raw material comes in and
several times during the day because it is located close to residential areas.
The variable production cost included power usage charges, fuel charges etc.

6.2 Distribution Cost

The fixed distribution cost is the fixed charges that ACCCL incurs for hiring a TM
from a third party vendor. The third party vendor charges a fixed cost for
deploying a TM.
The variable cost for distribution is dependent upon the distance a TM has to
travel. A variable charge per m3 per km was found out. This serves as the variable
distribution cost.

ACC Concrete Ltd.

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Figure5 Cost according to grade of concrete

Cost (in Rs. Thousand) v/s Standard Grades

As presented by graph the cost is minimum for Sion plant of the three plants. The solver
considers this while making distribution decision.

Figure6 Cost structure for Sion plant

ACC Concrete Ltd.

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7. PRODUCTION TO BILLING PROCESS

production

Delivery

POD

Billing

The ready mix concrete is manufactured in the ACCs plant

The concrete mixture is selected by the client

The concrete is delivered to the respective site by the TM ( transit mixture)

Post manufacturing the concrete has to be delivered within 3 hours

The client site engineer/ in-charge confirms the delivery and accepts the order
The proof of delivery is signed by the site engineer/ in-charge and sent back to sit with the TM

When the POD is approved by the plant in charge on SAP the message is updated in the area office
After approval the billing department starts the billing process

Invoice attached with the hard copy of POD is sent to the clients head office or site as per clients demand
The delivery of POD from plant to area office , Billing and Invoice and POD delivery to client takes
Bill Delivery approximately 2 days

Figure7 Production to billing process

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7.1 Plant Wise POD

Following is the plant wise chart of the time taken by each plant to send the POD to the area
office.

Figure8 Plant wise POD

7.2 Plant Name:
PLANT
CODE
NS15
NS21
NS76
NS84
NS85
NS86
NS89

PLANT NAME
Deonar
Bhayander Pada
Borivali
Sion
NTC Mill (wadala)
Aurangabad
Nashik

Figure9 Plant name

The above analysis is obtained from the Invoice tracker maintained by the ACC concrete.
further we have analyzed the percentage of invoices reached the area office in the range
between 0 to 6 days and BCP ( business continuation process). As well as the number of
invoices.
ACC Concrete Ltd.

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7.3 Percentage Of Invoices:

Figure10 Percentage of invoices

Percentage of invoices out of total invoices made in the month of April.

7.4 Number Of Invoices:

Figure11 Number of invoices

Number of invoices out of total invoices made in the month of April.

ACC Concrete Ltd.

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8. TOP 30 CLIENTS
top 30 clients contribute to the maximum business done by ACC in Mumbai. Following is the
graphical representation of the top clients and percentage of business done in a month of
April by them.

90.00%

82.51%

Top 30 Clients (Supply - Delivery Timespan)

80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
16.25%

20.00%
10.00%

1.23%

0.00%
0-5 Days

5 - 10 Days

10 Days and above

Figure12 Top 30 clients(supply to delivery time)

Supply to delivery time-span for top 30 clients

ACC Concrete Ltd.

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9. CREDIT EVALUATION MODEL

Credit evaluation model is the most flexible model which can be applied to every client and
generates a score out of 20 for existing customer and out of 15 for new customers.
This model gives a clear picture of the client about his liquidity, solvency, profitability, trade
history for existing clients and market reputation.
The ranges provided in the model are industry specific and are computed by the analysis of
the existing clients.

9.1 Interface of the Model:

SOLVENCY
net worth
debt equity ratio
ICR
sector
class
ownership

more than 500cr

less than 1
greater than 20times
infrastructure
promoter
public ltd listed company

LIQUIDITY
current ratio
ACP
APP

greater than 2
less than 45 Days
less than 45 Days

PROFITABILITY
Profit after tax
profit margin
profit growth rate
sales growth rate
sales turnover

greater than 200cr

greater than 15
greater than 30%
greater than 30%
greater than 1000cr

CLIENT TRADE HISTORY

value of monthly business done
average DSO
recent track history

10lac to 50 lac
less than 45 days
always paid

MARKET REPUTATION
iconic projects
trade creditors reference
bank reference
projects in hand

yes
always paid
good
more than 5

1
1.5
0.75
1
0.75
1
6
2
1
1
4
1
1
0.5
0.5
0.5
3.5
1
3
1
5
0.5
0.25
0.5
0.25
1.5

Figure13 Evaluation model

(The current parameters are selected to obtain a maximum score out of 20 which is
unobserved amongst ACCs clients)
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9.2 Solvency Parameters:

SOLVENCY
networth
more than 500cr
250cr to 500cr
50cr to 250cr
less than 50cr

1
0.75
0.5
0.25

debt equity ratio

less than 1
1 to 2
2 to 3
greater than 3

1.5
1
0.5
0

ICR
greater than 20times
10 to 20times
2 to 10times
less than 2times

0.75
0.5
0.25
0

sector
infrastructure
builder and developer commercial
builder and developer resedential
builder and developer industrial

1
0.75
0.5
0.25

Class
promoter
contractor
subcontractor

0.75
0.5
0.25

ownership
public ltd listed company
public ltd unlisted company
private ltd sub of listed company
private limited
partnership firm
proprietorship firm
NGO/HUF/others

1
0.9
0.8
0.6
0.5
0.3
0.2

Figure14 Solvency

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9.3 Liquidity Parameters:

LIQUIDITY
current ratio
greater than 2
greater than 1.5
greater than 1
less than 1
ACP
less than 45 Days
less than 60 days
less than 90 days
greater than 90
days
APP
less than 45 Days
less than 60 days
less than 90 days
greater than 90
days

2
1.5
1
0.25

1
0.75
0.5
0

1
0.75
0.5
0

Figure15 Liquidity

9.4 Profitability Parameters:

PROFITABILITY
Profit after tax
greater than 200cr
100cr to 200cr
0 to 100cr
loss

1
0.75
0.5
0

Profit Margin
greater than 15
10% to 15%
5% to 10%
less than 5%

1
0.75
0.5
0

profit growth rate

greater than 30%
greater than 10%
less than 10%

0.5
0.25
0

Sales Growth Rate

ACC Concrete Ltd.

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greater than 30%

greater than 10%
less than 10%

0.5
0.25
0

Sales Turnover
greater than 1000cr
200cr to 1000cr
less than 200cr

0.5
0.25
0

Figure16 Profitability

9.5 Client Trade History Parameters:

Client Trade History
Value of Business Done (Monthly)
10lac to 50 lac
3lac to 10lac
below 3lac
Average DSO
less than 45 days
46 to 60 days
60 to 90 days
greater tha 90
recent track history
always paid
paid with delays
irregular
problematic

1
0.5
0.25

3
2
1
0

1
0.75
0.5
0

Figure17 Client trade history

9.6 Market Reputation Parameters:

MARKET REPUTATION
iconic projects
yes
no
trade creditors reference
always paid
paid with delays
irregular
problematic
bank reference
good

ACC Concrete Ltd.

0.5
0

0.25
0.2
0.15
0

0.5

Page 35

average
neutral
defaulter
number of projects
more than 5
2 to 4
single

0.4
0.3
0.1

0.25
0.15
0.5

Figure18 market reputation parameters

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10. CONCLUSION

We set out to solve the problem of rising DSO. However before solving that, it
was required that we understand the RMX business thoroughly. Also
understanding the company method of calculation of DSO, its way of
accounting for provisions, procedures and formalities involved for authorization
of debit notes and credit notes, study of the internal procedure that has to be
gone through before invoice is created and delivered to the customer, etc., was
equally important.
What initially felt like a problem caused by a loose credit policy turned out to
be a compulsory and absolute essential marketing tool employed by all players
in the RMX industry to support their topline. Using a loose credit policy as a
marketing tool is advantageous as long as it is supported by a sophisticated
system of continuous monitoring and rigorous collection efforts of the
receivables. It was found that the Company was indeed following a disciplined
and well set out receivables collection and monitoring mechanism; sending out
regular reminders through e-mails, calls and visits to client locations along with
carrying out timely reconciliations with all its top clients for the period ending
two months before closing date.
An opportunity of reducing the DSO by improvising the current process being
followed internally before an invoice is being delivered to the client was being
identified and the suggestion of implementing the same is being incorporated in
the recommendations sent to the company.
Finally another very important factor impacting DSO i.e acceptable credit
standards for clients and the procedure currently being followed for ascertaining
client credit limits presently being done using traditional non-quantitative tools
was studied in great detail. The potential risks arising out of ignoring the
financial position of the clients while arriving at the credit limits were
communicated to the company. Thus, a model to assess the financial position of
the clients has been provided to the company in order to aid them in making
well informed decision on the credit limit.

ACC Concrete Ltd.

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11. RECOMMENDATIONS TO THE COMPANY

The Companys regional Credit Control Department handles the Mumbai, Navi
Mumbai and Thane area catering to approximately 180 clients including both
new and existing customers on an average month on month. A majority of the
clients are those who buy RMX concrete from the company on a regular basis
and the company gets a major portion of the revenue from them. On detailed
analysis it was found that 86% of the revenues was contributed by the top 30
clients, 10% of the revenues from the next 50 clients and only 3% of the
revenue from the next 100 clients. This trend is noticed at all times and is true
during any part of the year. On the basis of this information and the study of
internal billing process it is recommended that
The Company focus on the top 30 clients and prioritize them while
carrying out all pre and post billing activities i.e proof of delivery, invoice
creation, invoice delivery.
It is also recommended that the company start e-mailing the invoices to
atleast 5 major clients on a pilot basis and then later on migrate other
customers onto the same system of invoice e-mailing in order to cut
down the DSO which is caused by the current internal time lag between
supply and bill delivery. ( Current Average time lag between supply and
bill delivery is 7 Days). Moreover there are other issues with hardcopy of
Invoice viz. physical damage, loss, misplacement etc. contributing to
further delay.
The company currently uses total volume requirement of the client,
number of projects in hand, overall reputation in the market and
other such non-quantitative and non-financial parameters to arrive at a
certain specific credit limit for its clients. It is recommended that the
company use the model prepared during the course of the internship
named Client Report Card which assesses the clients on both its
financial and non-financial strength before fixing a certain credit limit.
Since the company deals with a lot of clients which are public listed
companies it is also recommended that the company monitor the
ACC Concrete Ltd.

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financial performance of these clients which also happen to be

contributing to major portion of the revenue and review their credit
limit from time to time based on the receivables collection experience
and financial position.

ACC Concrete Ltd.

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12. REFERENCES AND BIBLIOGRAPHY

www.veda.com.au
www.investopedia.com/creditrating
www.moodysanalytics.com
www.ecccreditcontrol.com
www.moodys.com
www.standardandpoors.com
www.crisil.com
www.acclimited.com
www.moneycontrol.com
en.wikipedia.org
www.accconcrete.com

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13. GLOSSARY

ACCCL ACC concrete Ltd.

Batcher The person at plant who give instruction to batching machine for loading RMX in
TMs. He also updates the TM info on SAP
CDS Concrete Dispatch scheduler. The scheduling department at ACCCL
Cycle Time The time taken between TM arriving and leaving the plant at full capacity
Pour The RMX supplied to a site
RMX Ready Mix Concrete
RMC Ready Mix Concrete
TM Transit Mixture. The vehicle with a rotating drum on back chassis for transporting RMX
Unload Time The time spent at site in arranging, unloading and removing TM from the
pump

ACC Concrete Ltd.

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