1. Use Exhibits H and I, estimate and evaluate ratios for liquidity, financial strength, profitability, and ROI (include DuPont analysis)
2. For 2008, Aget is contemplating adding two new dry-process kilns for an investment of 10.7 million . That investment is expected to increase current capacity by 18%.

1. Assuming the most current operational cost levels, what sales must it generate to recoup the above investment?
2. If we assume 2004 prices of 45.91 /mt, what does the new break-even level do to the utilization rate, given its new capacity level? What can you say about its effect upon Agets pricing?
3. It is expected that the dry-process technology will help achieve an increase of 22% in production cost efficiencies, compared to current level. How might such an increase affect price competitiveness?
4. Assuming that Agets sales by 2008 will have grown at the forecasted global market rate increase of 22.6% over those of 2004, what will be its production and utilization rate?

1. If Aget does capture 20% market share in the markets of Lebanon, Kuwait and UAE, as estimated, at what sales units and revenues, will it break-even? What is the B/E market share?
2. In case Aget reduced price by 10%:

1. What effect would such price reduction have on gross margin?
2. By how much must sales increase to avoid a loss in gross profit?
3. What can you say about the potential implications of such price reductions, upon the industry and the market?

1. Based on your analysis, is Agets contemplated expansion into Lebanon, Kuwait, and UAE advisable or inadvisable? Argue your position.

Exhibit A Portland cement specification - purchase order Technical specification of Portland Portland cement bs12/196 grade # 42.5r "British standard". Chemical analysis SiO2: 19.62%, A1203: 5.18%, Fe203: 3.89%, CaO: 61.62%, MgO: 2.44%, Na20: 0.46%, K20: 0.27%, Cl: 0.07%, S03: 2.71%, 1.0. I: 2.15%. Undetermined: 0.37%. Total: 100% C3A 7.15% max3.5. Physical & mechanical: Standard consistency: 25.5% Packaging: in 50kgs pp bags Quantity: min 12.500 metric tons (+/- 5%) Price: contact us Size of shipment: min 12.500/mt Loading rate per day: 2000 tons a day Discharge rate per day: min 2000 tons a day Inspection: SGS certificate is required as a supporting documentation for product quality Delivery time: within 30-45 day after confirmed L/C Origin: Supplier's plant origin Payment term: DL/C at sight, irrevocable, non transferable, confirmed and payable at sight by a prime first class bank Shipment: first shipment will commence (30-45 days) after receipt and acceptance of designated buyer's payment instrument L/C Documents: full set of international accepted standard Exhibit B Global market structure* Company Global Market Share CRH Holcim Lafarge Taiheiyo Other 4.10% 4.00% 3.50% 1.20% 87.20% * DATAMONITOR; Global Construction Materials; Industry Profile; Reference Code: 0199-2030 Publication date: May 2004 Exhibit C Total Regional Market Sales Allocation per Segment* - 2004 2004 Regional Sales by Market Segment Building segment Non-Building segment A. Residential: 11.89 mmt. Heavy construction B. Non-residential: 39.26 mmt. industrial & non-industrial): 22.09 mmt. Total sales: A+B+C = 73.4 mmt. Exhibit D Anticipated 5-year Segmental Regional Growth in Cement Consumption Years Segment 2005 2006 2007 2008 2009 (Growth rate) Non-residential 3.9% 40.79 3.8% 42.34 4.1% 44.07 4.3% 45.97 4.0% 47.81 (Growth rate) Non-building 4.0% 22.97 4.1% 23.91 3.8% 24.82 4.7% 25.99 6.1% 27.57 Exhibit E Aget's 5-Year Projected Sales Growth* Years Segment 2005 2006 2007 2008 2009 (Growth rate) Non-residential 3.9% X 4.93 = 5.12 3.8% X 5.12 = 5.31 4.1% X 5.31 = 5.53 4.3% X 5.53 = 5.77 4.0% X 5.77 = 6 (Growth rate) Non-building 4.0% 3.06 = 3.18 4.1% 3.18 = 3.31 3.8% 3.31 = 3.43 4.7% 3.43 = 3.6 6.1% 3.6 = 3.82 * Assuming maintenance of current share levels. Exhibit F Average Cost Structure (as % of cost of sales)* Power & Fuel 32.8% Material cost 12.4% Freight (outward) 19.7% Admin. & Overhead 19.8% Employee cost 8.0% Selling expenses 4.2% Repair & Mainten. 3.1% + Averages cover the period of 1995 through 2004. Exhibit G Average Returns on Capital Employed* 1994 1995 1996 1997 1998 1999 15.8% 22.9% 28.8% 13.9% 4.8% 4.0% Pure Cement Companies Diversified Cement Cos. 16.4% 17.5% 14.3% 10.7% 7.7% 6.7% Source: INDIAN Cement industry http://www.icraindia.com/biz-arch/u2000ceaexecutive pdf 2003 2.829 228,858 15,256 244,114 63,538 Exhibit H Balance Sheet AGET GROUP OF COMPANIES BALANCE SHEET AS OF 30.9.2004 (In 000 EURO C) ASSETS 2004 B. FORMATION EXPENSES 1.778 c. FIXED ASSETS I. II. Intangible, Tangible assets 651,349 642,284 Less: Acc. Depreciation 440,016 211,333 413,426 III. Investments & other long-term Assets 15,260 TOTAL FIXED ASSETS 226,593 D. CURRENT ASSETS I. Inventories 58,393 II. Receivables 1. Trade debtors 158,746 183,516 2. Sundry debtors 44.458 203,204 38,584 III. Cash at bank and in hand 40.786 TOTAL CURRENT ASSETS 302,383 E. ACCRUALS & PREPAYMENTS 1,343 TOTAL ASSETS (B+C+D+E) 532,097 MEMO ACCOUNTS 124,050 LIABILITIES A. SHAREHOLDERS' EQUITY I. Issued Share Capital 109,467 II. Share premium 1,279 III. Revaluation reserves 9,028 IV. Reserves 153,771 Consolidation difference (1,523) V. Retained earnings Retained earnings brought forward (22,079) (39,765) Profit for the period 86,185 83,023 Less: Other taxes (586) 63.520 _(8.739). TOTAL SHAREHOLDERS' EQUITY 335.542 B. PROVISION FOR RISK & CHARGES 80,490 C. LIABILITIES I. Long-term 1,249 II. Short-term 71,490 64,432 III. Bank overdrafts 30 160 101,650 82.039 TOTAL LIABILITIES 102.899 D. ACCRUALS & DEFERRED INCOME 13.166 TOTAL LIABILITIES (A+B+C+D) 532,097 222,100 17.932 303,570 1.626 552,139 74,769 109,467 1,279 9,362 137.309 (1,523) 34,519 290,413 75,013 28,545 146,471 175,016 11.697 552.139 MEMO ACCOUNTS 174,050 74,769 Exhibit I Income Statement AGET GROUP OF COMPANIES PROFIT AND LOSS STATEMENT AS OF 30.9.2004 (In 000 EURO C) Operating Results 2004 2003 Turnover (Sales) Less: Cost of sales 390.215 281.405 108.810 5 393.559 285.805 107.754 1 108.815 107.255 19.808 183 4.842 19.497 178 5.559 25.234 Add: Other operating income Gross operating results Less: Administration expenses Research & development expenses Selling & distribution expenses Oper. Income before investing & financial activities Less: Interest expense and financial charges Total operating income Plus : Extraordinary & non-operating income Less : Extraordinary & non-operating expenses Less : Total depreciation Less : Charged to the operating cost Net income before tax 24.833 83,982 543 83.439 82,521 2.898 79.623 1.677 2.598 2.357 3.163 (680) 82,759 (565) 79,058 20.577 20.577 18.507 18.507 82.759 79,058 Cement Manufacturing Process Pozzolana Limestone Gypsum Heater Raw meal sila Kiln 1450C Clinker storace Raw mill Cement mill Coment Silo - Coral stone - Shale - Bauxite - Iron ore QUARRYING MIXING GRINDING BURNING Distribution MILLING http://www.bamburicement.com/make.htm