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A
Research Report
For
Management Research Project -I
Submitted
In the partial fulfillment of the Degree of
Master of Business Administration
Semester-III
By
Name
Exam No.
Hetal Mistri
(12044311048)
Tosifbhai Nandoliya (12044311056)
Dhara Patel
(12044311078)
Dixita Patel
(12044311083)
Jigarbhai Patel
(12044311094)
Vaibhavi Raval
(12044311142)
Under the Guidance of:
Prof. (Dr.) Mahendra Sharma
Prof. & Head,
V. M. Patel Institute of Management.
&
Ms.Harsha Jariwala
Prof. Abhishek Parikh
Faculty Members,
V. M. Patel Institute of Management.
Submitted To:
V. M. Patel Institute of Management,
Ganpat University,
Kherva.
(December, 2013)
This is to certify that the contents of this report entitled Cement Industry by Hetal Mistri
(12044311048) Dhara Patel (12044311078) Dixita Patel (12044311083) Vaibhavi Raval
(12044311142 Jigarbhai Patel (12044311094), Tosifbhai Nandoliya (12044311056) submitted to V.
M. Patel Institute of Management for the Award of Master of Business Administration (MBA
Semester -III) is original research work carried out by him/her/them under my supervision.
This report has not been submitted either partly or fully to any other University or Institute for award
of any degree or diploma.
Date : 03/12/2013
Place : Kherva
CANDIDATES STATEMENT
I/We hereby declare that the work incorporated in this report entitled Cement Industry in partial
fulfillment of the requirements for the award of Master of Business Administration (Semester - III ) is
the outcome of original study undertaken by me/us and it has not been submitted earlier to any other
University or Institution for the award of any Degree or Diploma.
Hetal Mistri
Dhara Patel
Dixita Patel
Vaibhavi Raval
Jigarbhai Patel
Tosifbhai Nandoliya
Date: 03/12/2013
Place: Kherva
PREFACE
One can deny for the importance of the practical exposure of the problem for its better understanding
and better grip of coming out with an industrially acceptable solution.
Being the Management student and performing small practical even is in itself an experience of
responsibility on our head. The project is certainly the best chance to work in the Management field
and have practical understanding of Management Strategic formulation and its implementation. This
exposure has really added a supplement and nourishment to our growing tree of management
knowledge- just like the fertilizer does to the plants.
In view of above, this report has been completed as a part of syllabus prescribed for the master of
business administration. This had been made in order to know Cement industry overview and its
strategic tools and its planning. This will help us to understand How Made Strategic Tools for
particular industry, which factor affected to Cement industry. We also know the Strengths, Weakness,
Opportunities, and Threats. This will help to understand financial overview of Cement industry. We
also know the Political, Economical, Social, Technology factor which affected to the Cement Industry.
It is matters of proud to be students of such great university where in students are helped to extract
hidden potentials from their selves. We are highly Thankful to all the Faculties of the department who
guided us all the way long as how the entire MRP 1 report is to be conducted.
The education institutions offering management programs play a significant part in un calculating the
much needed managerial skills in their students, the aspiring managers. The real success of
management lies in applying the professional management techniques in all managerial activities.
Practical study is eminent, and plays vital role for the students of management, because classroom
coaching and theoretical study alone are not enough. To survive in this highly competitive world,
practicality outweighs theoretic. Students are supposed to learn the various principles of business
administration conceptually but accuracy and efficiency in their implementation is possible only
through exposure to practical environment.
We have tried our best and have applied all our efforts, knowledge and sources available, in this
project.
Here we try our level best for finding data.
ACKNOWLEDGEMENT
It is with profound in depthless that we acknowledge the efforts of all the well-wishers who have in
some or the other way contributes in their own special way to the success of this project.
We would like to express deep sense of gratitude to Dr. Mahendra Sharma. We would also thankful
to Prof.Harsha Jariwala for their advise, constant encouragement and timely help throughout the
course of our project.
We would like to thank Prof.Harsha Jariwala and prof. Abhisekh Parikh for provide us this golden
opportunity for preparing report and provide us guideline regarding project report.
We would like to thanks our group partener because of they help and support for preparing report and
providing informetiom regarding our project report.
Last but not the least we thank all the persons who have directly or indirectly support in this project
report.
Hetal Mistri
Dhara Patel
Dixita Patel
Vaibhavi Raval
Jigarbhai Patel
Tosifbhai Nandoliya
EXECUTIVE SUMMARY
India's economy is the third largest by GDP in terms of purchasing power parity but, with a very large
population, it ranks only 165th in GDP/capita terms. Gradual de-centralization of the economy since
the early 1990s has allowed the development of a more diverse market economy that is increasingly
driven by an educated and business-minded middle class. This is highlighted by India's now worldfamous telecommunications and service sector, which has grown extensively over the past decade.
Increased variation has resulted in a reduction in India's agriculture dependency, although this sector
still supplies around 50% of the country's income. Manufacturing remains strong, representing more
than a quarter of output.
However, despite economic expansion and development of its service sector, economic disparity
remains a severe problem for India. Almost a third of Indians lived in poverty in 2011 and constant
population growth makes it hard to increase living standards. For illustration, India welcomed its 1
billionth inhabitant in 2000. In just 12 years since then the population has increased to over 1.2 billion!
In order to conduct this MRP-1 report we have done primary research to know the performance of four
major cement players with respect to customer loyalty. We have also done the financial analysis of
four major players of cement industry through secondary data for last five years, which includes
aggregate industry ratio analysis, separate companys ratio analysis, aggregate industry sales trend of
last ten years and production trend of last five years. We have also done the various analysis like
Porters five force model, OT Analysis, PEST Analysis,
CONTENT
Certificate by the guide..........................................................................................I
Candidates statements..........................................................................................II
Preface.....III
Acknowledgments...IV
Executive summary..V
SR. NO.
CHAPTER-1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
CHAPTER-2
2.1
2.2
2.3
2.4
2.5
CHEPTER-3
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
CHAPTER-4
4.1
4.2
4.3
4.4
CHAPTER-5
5.1
PARTICULARS
INTRODUCTION OF THE INDUSTRY
Current Scenarios
History of Cement
Process Technology
Development of The Cement Industry
Historical Synthetic Cement Production
Production Scenario
The Manufacturing Process
Environmental Regulation
MAJAR PLAYER OF CEMENT INDUSTRY
J K Cement Ltd.
J K Lakshmi Cement Ltd.
Shree Cement Ltd.
ACC Cement Ltd.
Ultra Tech Cement Ltd.
MAICRO ANALSIS OF CEMENT INDUSTRY
Industry Life Cycle
Porters Five Force Model
Opportunities and Threats
Driving Forces
PEST Analysis
SWOT Analysis
Economic Future of Indian Cement
Key Success factor in the Cement Industry
Industry Dominant Economic Factors
Strategic Group Mapping
FINANCIAL ANALYSIS
Introduction
Filtrations
Ratio Analysis
Trade Analysis
RESEARCH FINDINGS & CONCLUSION
RESEARCH FINDINGS
PAGE
NO.
1
3
9
10
15
17
21
24
27-31
32-37
38-43
43-47
47-53
54-57
58-65
66-67
67-71
72-79
79-81
81-82
83
84-88
89-91
93
94
95-106
106-115
116
5.2
CHAPTER-6
6.1
6.2
6.2.1
6.2.2
6.3
6.4
6.4.1
6.4.2
6.5
6.6
6.7
6.8
6.9
6.10
6.11
6.12
CHAPTER-7
CHAPTER-8
CHAPTER-9
CONCLUSION
BUSINESS-PLAN
INTRODUCTION
Objective
Vision
Mission
COMPANY DESCRIPTION
BRAND INFORMATION
Brand name
brand details
STP ANALYSIS
METHOD OF DISTRIBUTION & SALES
PROMOTION
Projected income statement
projected balance sheet
Projected cash flow statement
SOURCE OF FINANCE
Depreciation schedules
Salary structure
BIBLIOGRAPHY
ANNEXURE
Profit & Loss Account
Balance Sheet
LIMITATION OF REPOT
117
119-124
125-125
125
125
126
126
126
126
127
127
130
131
132
133
133
133
134
LIST OF TABLE
SR.
NO.
PARTICULARS
PAGE NO.
1.1
Cement Dispatches
1.2
18
2.1
26
3.1
56
3.2
86
4.1
94
4.2
95
4.3
Current Ratio
97
4.4
99
4.5
101
4.6
Stock Turnover
102
4.7
104
4.8
Total income
106
4.9
Total Expenses
107
4.10
Operating Profit
109
4.11
PBDT
110
4.12
111
4.13
Total Liability
112
4.14
Investment
113
4.15
Total Assets
115
PARTICULARS
PAGE
NO.
1.1
Cement Dispatches
23
3.1
54
3.2
56
3.3
58
3.4
Geographical Coverage
89
3.5
90
4.1
96
4.2
98
4.3
Current Ratio
100
4.4
101
4.5
103
4.6
Stock Turnover
105
4.7
106
4.8
Total income
108
4.9
Total Expenses
109
4.10
Operating Profit
110
4.11
PBDT
111
4.12
112
4.13
Total Liability
113
4.14
Investment
114
4.15
Total Assets
115
1. INDUSTRY ANALYSIS
1.1 CURRENT SCENARIOS
The Indian cement industry is the second largest producer of quality cement, which meets
global standards. The cement industry comprises 130 large cement plant sand more than 300
mini cement plants. The industry's capacity at the end of the year reached 188.97 million tons
which was 166.73 million tons at the end of the year 2006-07. Cement production during
April to March 2007-08 was 168.31 milliontons as compared to 155.66 million tons during
the same period for the year 2006-07.Despatches were 167.67 million tons during April to
March 2007- 08 whereas155.26 during the same period. During April-March 2007-08,
cement export was3.65 million tons as compared to 5.89 during the same period. Cement
industry in India is currently going through a consolidation phase. Some examples of
consolidation in the Indian cement industry are: Gujarat Ambujatakinga stake of 14 per cent
in ACC, and taking over DLF Cements and Modi Cement; ACCtaking over IDCOL; India
Cement taking over Raasi Cement and Sri Vishnu Cement; and Grasim's acquisition of the
cement business of L&T, Indian Rayon's cementdivision, and Sri Digvijay Cements. Foreign
cement companies are also picking upstakes in large Indian cement companies. Swiss cement
major Holcim has picked up14.8 per cent of the promoters' stake in Gujarat Ambuja Cements
(GACL).
The cement industry is one of the main beneficiaries of the infrastructure boom. With robust
demand and supply, the industry has bright future. The Indian Cement Industry with total
capacity of 165 million tones is the second largest after China. Cement industry is dominated
by 20 companies who account for over 70% of the market. Individually no company accounts
for over 12% of the market. The major players like L&T and ACC have been quiet successful
in narrowing the gap between demand and supply. Private housing sector is the major
consumer of cement (53%) followed by the government infrastructure sector. forecasted to
grow by over 22% by 2009-10 from 2007-08.Among the states, Maharashtra has the highest
share in consumption at12.18%,followed by Uttar Pradesh, In production terms, Andhra
Pradesh is leading with 14.72% of total production followed by Rajasthan. Cement
production grew at the rate of 9.1 per cent during 2006-07 over the previous fiscal's total
production of 147.8 mt (million tons). Due to rising demand of cement the sales volume of
cement companies are also increasing & companies reporting higher production, higher sales
and higher profits. The net profit growth rate of cement firms was 85%.Cement industry has
1
Economic Trends
India is among the fastest-growing economies in the world, with close to 8% annual
growth since 2002, and expected to be sustained for the next 5 years as well. Inflation rate
remained below 5% between 2001 to 2007, but has since increased, touching 8.75% in May
2008. The business regulatory environment is fairly open, and follows free-market
competition principles. All quantitative restrictions on trade were removed in 2001, except
for a few highly sensitive goods. Trade as a % of GDP has risen from 13% in 1991 to nearly
30.2% in 2005-06. The total cumulative foreign direct investment (FDI) received into India
up to March 2007 was US$ 54.63 billion, of which Italys share is about 1.2%. The monetary
unit of India is Indian Rupee (1 Indian Rupee = 100 paise). The exchange rate of Indian
Rupee is Euro 1 = Rs. 63.20 and US$ 1 = Rs. 40.45 (March 2008 - Reserve Bank of India).
Demographics
India is a unique market on account of its diversity in age, income, and urban-rural
demographics. Nearly 58 million households, comprising 32.3% of Indias dwelling units,
live in urban areas. Nearly 38% of urban households are in middle and higher income strata,
and only 14% of rural households have similar income levels.
Income Classification
Though the population is more than 1.1 billion, the real consuming class of 300 million
people outnumbers several of the worlds large markets in terms of market potential. Of
these, around 150 million people (2 million very rich and 30 million rich households)
represent the consuming potential, particularly for lifestyle goods and services.
There are close to 80,000 high net worth Individuals in India, with saving and Assets
exceeding US$1 million.
At least 50,000 households buy premium cars every year (priced at US$ 30,000 and
above)
The market for luxury goods is estimated to be Rs 100 billion, with over 2 million
Indians estimated to be engaging in some luxury purchase or the other each year.
Table-1.1
Particular
2007-08 (Apr-Oct) in MT
Production
101.04
95.05
Despatches (Excluding
100.24
94.33
1.46
2.16
85
93
Export)
Export
Capacity Utilization (%)
UltraTech Cement is going to absorb its sister concern Samruddhi Cement to become
biggest cement company in India.
World's leading foreign funds like HSBC, ABN Amro, Fidelity, Emerging Market Fund
and Asset Management Fund have together bought 7.5% of India Cements (ICL) at a
cost of US$ 124.91 million.
Cimpor, a Cement company of Portugal, has bought 53.63% stake that Grasim
Industries had in Shree Digvijay Cement.
French cement company Vicat SA bought 6.67% share of Sagar Cement at a cost of
US$ 14.35 million.
Holcim now holds 56% stake of Ambuja Cement. Previously it held 22% of stake. The
company utilized various open market transactions to increase its stakes. It invested
US$ 1.8 billion for that.
In a recent announcement, the second largest cement company in South India, Dalmia
Cement declared that it's going to invest more than US$ 652.6 million in the next 2-3
years to add 10 MT capacity.
Anil Ambani-led Reliance Infrastructure is going to build up cement plants with a total
capacity of yearly 20 MT in the next 5 years. For this, the company will invest US$ 2.1
billion.
India Cements is going to set up 2 thermal power plants in Andhra Pradesh and Tamil
Nadu at a cost of US$ 104 billion.
5
Jaiprakash Associates Ltd has signed a MoU with Assam Mineral Development
Corporation Limited to set up a 2 MT cement plant. The estimated project cost is US$
221.36 million.
Rungta Mines (RML) is also planning to invest US$ 123 million for setting up a 1 MT
cement plant in Orissa
taking the cement industry down with it. For 1992-93, the industry remained stagnant with no
addition to existing capacity.
Government Controls
The prices that primarily control the price of cement are coal, power tariffs, railway, freight,
royalty and cess on limestone. Interestingly, all of these prices are controlled by government.
Opportunities and challenges
The glue that holds the infrastructure sector is cement and the growth of cement industry is
directly linked to the growth of infrastructure sector.
India today is the second fastest growing economy in the world with the cement and
construction sector being the prime movers. The Indian cement industry with a total installed
capacity of 219 million tonnes is the second largest producer in the world and has been
growing at a rate of 9 to 10 percent per annum. With a large percentage of Indian population
being below the age of 25, the construction activity is expected to make a significant
contribution in the context of growing housing needs, development of roads and other
infrastructure, urbanization, etc.
It is the construction sector which shares the blame of global economic slowdown leading to
slackening of demand for housing; but withstanding that hard time, our cement sector is still
growing at a 10 percent when compared to the global average of 5 percent. Indian industry is
fortunate in having an active support and services of the National Council for cement &
Building Materials with an excellent R&D Infrastructure and invaluable intellectual capital.
In a recent International Seminar on Cement & Building Materials in New Delhi,
ShriJyotiraditya M. Scindia, Minister of State for Commerce & industry, said: "In spite of
global slowdown and reduction in demand, cement industry needs to be complimented for
weathering the downturn and recording a commendable growth of around 8 percent in 200708 as well as in 2008-09. In the current year 2009-10 so far, the pace of growth of cement
industry has accelerated significantly above double digit."
The Indian cement industry has achieved an installed capacity of 242 million tonnes and is
targetted to reach 300 million tonnes by 2011-12 and 600 million by 2020. India has 97
percent of the installed capacity through dry process; the Indian cement industry has been
adopting latest technologies for energy conservation and pollution control as well as on-line
process of quality control based on expert systems and laboratory automation.
Despite having high demand in India, our per capita cement consumption is very low, where
the world average is 396 kg, in India the per capita consumption is only 156 kg. India being
the country of young population has a huge potential and its ushering social and economic
base will improve the domestic consumption.
Indian cement industry is efficient and eco-friendly, when it comes to energy conservation,
the best level is achieved by the industry as far as data goes of 687 kilo calories per kg of
clinker and 66 KWh per tonne cement are at par with the best achieved levels in the world.
The cement industry effort towards control of emissions, preservations of ecology and its
Corporate Social Responsibility for Environmental Protection are laudable. The sustainable
and long- standing efforts towards reduction of carbon footprint is commendable CO2
emission of 0.82 tonnes per tonne of cement produced in 2006, a sustainable drop from the
level of 1.12 in 1996 and 0.94 in 2000.
On the technology front, the Indian cement industry has largely adopted state-of-art
manufacturing technologies, system for cogeneration of power and technologies for low NOx
and SO2 emission have yet to achieve many targets. The initiative taken by cement industry
for waste utilization are evident from the fact that production of blended cement in the
country in the year 2008-09 was as high as 74 percent as against only 36 percent in 2000-01.
The Indian cement industry annually recycles more that 30 million tones of fly ash, apart
from consuming the entire quality of granulated blast furnace slag- another waste generated
by steel plants in our country.
The rising cost of energy transportation and persistent raw material pressures have been
playing a heavy strain on the cement and construction industry. As a result, Indian
Companies have to not only explore alternate sources of energy and materials but also strive
to enhance operational efficiency. But Indias potential for growth remains intact. The
need of the hour is to spend invest adequately in developing human resources capable of
addressing the professional needs of construction industry like application of advanced
technologies and construction practices, project management construction, litigation,
insurance and finance, etc.
10
Development of means of transport and availability of capital are other factors which
determine development of cement industry.
Although, in India, cement manufacturing has developed in different states except a few like
Punjab, yet 85% of the cement manufacturing is carried on in the states of Tamil Nadu,
Madhya Pradesh, Gujarat, Rajasthan, Andhra Pradesh and Bihar. Eleven types of cement is
manufactured in India like
Portland 71%
Pozollana 18%
Slag Cement 10%
Rest Others.
Tamil Nadu.
The state of Tamil Nadu has a very well developed cement industry.
Tamil Nadu.
The state of Tamil Nadu has a very well developed cement industry. There are eight factories,
ThsTalukapatli cement factory is one of the largest in the country. Its annual capacity is about
10 lalchtonnes.
The industry is attributed to enormous reserves of raw material in the state, availability of
cheap labor and demand for cement.
Other cement factories are at Madhukarni, Dalmiapuram, Poliyur, Chhattisgarh, Alangulam,
Talaiyuthu, Sankaridurg and Aryalur.
Madhya Pradesh and Chhattisgarh.
These two states are the largest producer of cement in India. The centres are at Jamul, Satna,
Banmore, Katni, Gopalnagar, Durg, Kaymore, Tilda, Khor, Mandhar.
11
The Akaltara Cement Factory produces about 11 lakh tonnes of cement every year. New
plants are located at Rewa and Neemuch.
Gujarat.
Cement manufacturing is carried on at a number of centres in the state of Gujarat. The
Saurasthra Cement Company and Digvijay Company dominate cement production in the
state.
The Vadodra, Okha, Viraval, Bhavnagar factories are located at Ranavav, Sikka,
Ahmedabad, Dwarka, Porbander, Sevalia and Amiragarh. Gujarat state has rich resources of
raw material required for cement manufacturing.
Bihar.
Cement manufacturing in the Bihar state is done at Japla, Sindri, Dalmianagar, Kalyanpur,
Khalari and Chaibasa. Two new factories have been set up at Bhawanthpur. The rich coal and
lime-stone reserves are the major assets for the development of cement manufacturing.
Rajasthan.
Rajasthan has rich potentials for cement manufacturing. Cement factories are located at
Lakheri, SawaiMadhopur, Udaipur, Chittorgarh, Bundi, Banas, Beawar, Nimbaheda and
Sirohi.
Cement is also produced in various other states of the country. These are :
Karnataka: Bangalore, Wadi, Hosdurga, Bagalkot, Shahabad, Krukunta. Dadri.
Himachal Pradesh: Bilaspur (Gaggal) Paonta Sahib.
Kerala: Kottayam
Andhra Praqdesh: Hyderabad and Vijaywada, Panyon, Tandur, Adilabad, Vishakhapatnam.
Uttar Pradesh: Allahabad Churk, Dalla Chun
Maharashtra: Chanda, Ratnagiri, Mumbai, Kohlapur.
12
India is producing different varieties of cement like Ordinary Portland Cement (OPC),
Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well
Cement, White Cement, etc.
These different varieties of cement are produced strictly under BIS specifications and the
quality is comparable with the best in the world.
The cement industry has kept pace with technological advancement and modernization.
Export of cement was 3-14 million tonnes (provisional) in 1999- 2000. Improvement in the
quality of Indian Cement has found its ready market in a number of countries named earlier.
In order to meet the increasing trained manpower requirement of the Indian Cement Industry,
a Human Resource Development (HRD) Project has been implemented with assistance from
World Bank and DANIDA (Danish International Development Agency).
Under this Project, four Regional Training Centres have been set up at ACC -Jamul (M.P),
Dalmia Cement Dalmiapuram (T.N.), JK Cement Nimbahera (Rajasthan) and Gujarat
Ambuja, Ambuja Nagar (Gujarat).
14
15
16
Silicon
Aluminum
Iron
Limestone
Clay
Clay
Clay
Marl
Marl
Shale
Iron ore
Calcite
Sand
Fly ash
Mill scale
Aragonite
Shale
Shale
Shale
Fly ash
Sea Shells
Slag
The ingredients listed above include both naturally occurring materials such as limestone
and clay, and industrial byproduct materials such as slag and fly ash. From Table 3.3 it may
seem as if just about any material that contains one of the main cement elements can be
tossed into the kiln, but this is not quite true. Materials that contain more than minor (or in
some cases trace) amounts of metallic elements such as magnesium, sodium, potassium,
strontium, and various heavy metals cannot be used, as these will not burn off in the kiln and
will negatively affect the cement. Another consideration is the reactivity, which is a function
of both the chemical structure and the fineness. Clays are ideal because they are made of fine
particles already and thus need little processing prior to use, and are the most common source
of silica and alumina. Calcium is most often obtained from quarried rock, particularly
limestone (calcium carbonate) which must be crushed and ground before entering the kiln.
The most readily abundant source of silica is quartz, but pure quartz is very unreactive even
at the maximum kiln temperature and cannot be used.
Grinding and blending prior to entering the kiln can be performed with the raw ingredients in
the form of a slurry (the wet process) or in dry form (the dry process). The addition of water
facilitates grinding. However, the water must then be removed by evaporation as the first step
in the burning process, which requires additional energy. The wet process, which was once
standard, has now been rendered obsolete by the development of efficient dry grinding
equipment, and all modern cement plants use the dry process. When it is ready to enter the
kiln, the dry raw mix has 85% of the particles less than 90 gm. in size
18
The next step in the process is to heat the blended mixture of raw ingredients (the raw mix) to
convert it into a granular material called cement clinker. This requires maximum
temperatures that are high enough to partially melt the raw mix. Because the raw ingredients
are not completely melted, the mix must be agitated to ensure that the clinker forms with a
uniform composition.
This description refers to a standard dry-process kiln as illustrated in Figure 3-2. Such a kiln
is typically about 180 m long and 6 m in diameter, has a downward slope of 3-4%, and
rotates at 1-2 revolutions per minute.
Suspension preheaters and claimers
The chemical reactions that occur in the dehydration and calcination zones are
endothermic, meaning that a continuous input of energy to each of the particles of the raw
mix is required to complete the reaction. When the raw mix is piled up inside a standard
rotary kiln, the rate of reaction is limited by the rate at which heat can be transferred into a
large mass of particles. To make this process more efficient, suspension preheaters are used
in modern cement plants to replace the cooler upper end of the rotary kiln (see Figure 32). Raw mix is fed in at the top, while hot gas from the kiln heater enters at the bottom. As
the hot gas moves upward it creates circulating cyclones that separate the mix particles as
they settle down from above. This greatly increases the rate of heating, allowing individual
particles of raw mix to be dehydrated and partially calcined within a period of less than a
minute.
Grinding and the addition of gypsum
Once the nodules of cement clinker have cooled, they are ground back into a fine powder in
a large grinding mill. At the same time, a small amount of calcium sulfate such as gypsum
(calcium sulfate dehydrate) is blended into the cement. The calcium sulfate is added to
control the rate of early reaction of the cement, as will be discussed in Section 5.3. At this
point the manufacturing process is complete and the cement is ready to be bagged or
transported in bulk away from the plant. However, the cement is normally stored in large
silos at the cement plant for a while so that various batches of cement can be blended together
to even out small variations in composition that occur over time. Cement manufacturers go
to considerable lengths to maintain consistent behavior in their cements over time, with the
19
most important parameters being the time to set, the early strength development, and the
workability at a given water content.
Cement kiln dust
As the hot kiln gas moves through the kiln, it carries with it the smallest particles of the raw
mix as well as volatilized inorganic substances such as alkalis (sodium and potassium) and
chlorides. As the gas cools, the volatiles condense back round the small particles, and the
resulting powder is called cement kiln dust (CKD). In the old days, the CKD was simply
vented out of the smokestack, after which it would continuously settle out of the air to create
a thin coating of grey dust on the surrounding countryside. This is no longer allowed. In
fact, environmental restrictions even prevent CKD from being buried in landfills because of
the tendency for the alkalis and chlorides to leach into groundwater. In modern cement
plants, the CKD is removed in the suspension preheater and by and electrostatic precipitators
located near the base of the smokestack.
Tricalcium Silicate (C3S)
C3S is the most abundant mineral in Portland cement, occupying 4070 wt% of the cement,
and it is also the most important. The hydration of C3S gives cement paste most of its
strength, particularly at early times.
Dicalcium Silicate (C2S)
As with C3S, C2S can form with a variety of different structures. There is a high temperature
tructure in that is in equilibrium at intermediate
An important aspect of C2
-C2S
2S
is irregular, but
considerably less so than that of C3S, and this accounts for the lower reactivity of C2S. The
C2S in cement contains slightly higher levels of impurities than C3S. According to Taylor [2
], the overall substitution of oxides is 4-6%, with significant amounts of Al2O3, Fe2O3, and
K2O.
20
Cement is a fine powder which sets after a few hours when mixed with water, and then
hardens in a few days into a solid, strong material. Cement is mainly used to bind fine
sand and coarse aggregates together in concrete. Cement is a hydraulic binder, i.e. it
hardens when water is added.
There are 27 types of common cement which can be grouped into 5 general categories
and 3 strength classes: ordinary, high and very high. In addition, some special cements
exist like sulphate resisting cement, low heat cement and calcium aluminate cement.
21
Cement plants are usually located closely either to hot spots in the market or to areas with
sufficient quantities of raw materials. The aim is to keep transportation costs low. Basic
constituents for cement (limestone and clay) are taken from quarries in these areas.
A two-step process
Basically, cement is produced in two steps: first, clinker is produced from raw materials.
In the second step cement is produced from cement clinker. The first step can be a dry,
wet, semi-dry or semi-wet process according to the state of the raw material.
Making clinker
The raw materials are delivered in bulk, crushed and homogenised into a mixture which is
fed into a rotary kiln. This is an enormous rotating pipe of 60 to 90 m long and up to 6 m
in diameter. This huge kiln is heated by a 2000C flame inside of it. The kiln is slightly
inclined to allow for the materials to slowly reach the other end, where it is quickly
cooled to 100-200C.
Four basic oxides in the correct proportions make cement clinker: calcium oxide (65%),
silicon oxide (20%), alumina oxide (10%) and iron oxide (5%). These elements mixed
homogeneously (called raw meal or slurry) will combine when heated by the flame at a
temperature of approximately 1450C. New compounds are formed: silicates, aluminates
and ferrites of calcium. Hydraulic hardening of cement is due to the hydration of these
compounds.
The final product of this phase is called clinker. These solid grains are then stored in
huge silos. End of phase one.
From clinker to cement
The second phase is handled in a cement grinding mill, which may be located in a
different place to the clinker plant. Gypsum (calcium sulphates) and possibly additional
cementitious (such as blastfurnace slag, coal fly ash, natural pozzolanas, etc.) or inert
materials (limestone) are added to the clinker. All constituents are ground leading to a
fine and homogenous powder. End of phase two. The cement is then stored in silos before
being dispatched either in bulk or bagged.
22
What is concrete?
Concrete is a solid material made of cement, sand, water, aggregates and often with
admixtures. When fresh, it has a certain workability and takes the form of the mould into
which it is put. When set and hardened, it is as strong as natural stone and resists time,
water, frost, mechanical constraints and fire. Typically, concrete is the essential material
used in all types of construction [residential (housing), non-residential (offices) and civil
engineering (roads, bridges, etc.)].
Figar-1.1
23
During floor debate on the Cement Sector Regulatory Relief Act, Rep. Waxman shows a
picture of an elementary school located right next to a cement kiln.
The House is currently debating the Cement Sector Regulatory Relief Act, which would
eliminate EPA standards, passed last August, to reduce hazardous air pollution. Industry
hacks say regulations currently facing the cement industry could force the closure of 18 of the
nearly 100 U.S. cement plants and result in the loss of 4,000 manufacturing jobs. Democrats
and the Congressional Research Service refute those numbers. Republicans have been
toiling away all year to gut EPA regulations of all stripes indeed, California Democrat
Henry Waxman, ranking member of the Energy and Commerce Committee, today called it
the most anti-environment Congress in history, having voted 136 times this session to
block environmental measures.
But the GOP says this one in particular is a jobs-killer. The cement industry is in its weakest
economic condition since the 1930s, said Jason Altmire (R-PA) on the floor of the House.
He says the bill would simply remove an unnecessary barrier to industry. About 40 percent of
the cement used in the U.S. in a given year is used to surface highways. According to
Earthjustice, cement plants are among the nations worst toxic polluters. Cement kilns are the
second largest source of mercury emissions in the United States, after coal-fired power
plants. So essentially, this Republican bill is another government subsidy to the road industry,
only this time were paying with the air we breathe, the water we drink, and the food we eat.
24
Its true, 20 percent of construction workers are currently unemployed, and that represents a
significant economic and human problem. To address that problem, Democrats and
transportation advocates, including industry representatives, continue to urge Congress to
pass a multi-year transportation reauthorization not gut life-saving environmental
standards. If these bills are enacted, Waxman said on the floor, there will be more cases of
cancer, birth defects, and brain damage. The ability of our children to think and learn will be
impaired because of their exposure to mercury and other dangerous air pollutants.
Mercury is so toxic just one seventieth of a teaspoon of mercury or .0024 ounces can
contaminate a 20-acre lake and render the fish in that lake poisonous to eat, said Rep. James
Moran (D-VA). Waxman offered three amendments to the bill. One uses the rhetoric
Republicans have been using to block bills all year requiring that the money used to
authorize the bill be offset elsewhere in the budget. But instead of requiring that offset
upfront, it would require that the cost offset be examined after the bill passes, and render the
bill ineffective if there is no offset. The other amendment would continue government
emissions enforcement if those emissions are harming brain development or causing
learning disabilities in infants or children.
The NIH says exposure to even low levels of mercury can reduce a childs IQ. Moran made
an economic argument, saying that those children have a harder time getting and keeping
jobs. He quoted independent scientific studies saying the cost of mercury pollution is as high
as $22,300 per IQ point per child, which cumulatively amounts to $8.7 billion in lost
potential per year. The majority constantly urges us to balance the costs and benefits of
environmental regulation, Moran said. But when the benefits of regulating hazardous
pollution substantially outweigh the costs, as they do with mercury, all of a sudden that
doesnt become an issue for debate.
If we do not defeat this bill if it were to be enacted children will suffer, he went on.
Our economy will become weaker. The fact is, we have both a moral and an economic
responsibility to defeat this bill.
25
2. INTRODUCTION
There are a number of players prevailing in the cement industry in India. However, there are
around 20 big names that account for more than 70% of the total cement production in India.
The total installed capacity is distributed over around 129 plants, owned by 54 major
companies.
Table-2.1
No.
Name
production
Installed capacity
J K Cement
12,782
16,000
J K Laksmi Cement
13,000
16,500
Acc cement
17,902
18,640
Shree cement
14,500
14,115
Ultatech cement
13,707
17,000
Gujarat ambuja
15,094
14,860
Grasim
14,649
14,115
Indin cement
8,434
8,810
Jaypee group
6,316
6,531
10
Century
6,636
6,300
11
Madrascement
4,550
5,470
12
Birla corp.
5,150
5,113
26
27
state which was at final stage of implementation. The installed capacity of grey cement of JK
cement with the merger incrased to 7.5 million tones per annum.
These plant have received various certifications ISO-9001:2000 for quality management
system. ISO-14001:2004 for environment management system and OHSAS-18001:2005 for
occupational health and safety systems. J.k cement ltd. Is part of the $3 billion conglomerate.
Jk
organization.
The
company
is
promoted
by
DR.Gaurharisinghania&
MR.
yadupatisinghania and entered cement business in 1975. 2ed largest white cement
manufacturer in india with 0.40 MTPA capacity and one of the leading grey cement
producers in north India with over 36 years of experience. And highly reputed brand with
extensive nation-wide distribution. Integrated cement manufacturing company with 7.5
MTPA grey cement capacity. Nimbahera, mangrol and gotan (rajashtan): 4.5 MTPA
Muddapur( Karnataka): 3 MTPA 105.5 MW of captive power Proximity and access to large
high quality reserves of limestone, sufficient to operate cement plants for the next 30 years.
Expanding domestic grey cement capacity to 10.5 MTPA and white cement capacity to 0.60
MTPA and wall putty capacity to 0.60 MTPA by se pt 2014.Jhajjar (Haryana): 105 MTPA
split grinding Gotan (Rajasthan): 0.20 MTPA white cement and 0.30 MTPA wall putty
Greenfield expansion in the middle east Fujairah (UAE): dual process plant 0.6 MTPA
white cement or 1.0 MTPA grey cement
upgraded to AA by care ratings Listed on national stock exchange (NSE) and Bombay
stock exchange (BSE) with a market capitalization of INR 23bn
TYPES OF PRODUCT
J k cement produces ordinary portland cement of 53-grade, 43-grade and 33-grade. It markets
these cements under the brand name J K cement and sarvashaktiman. It also manufactures
portland pozzoland cement and markets it under the name J K super. It markets white cement
under the name J K white and camel.
J.K cement has introduced water repellent material in powder form. It has also introduced
white cement based putty for plastering walls and ceiling and sells the same under the name
JK wall puty.
28
29
PRODUCTION CAPACITY
In the current economic and political scenario, setting up a new Greenfield project has
become challenging in view of the following:
Long arduous process of environmental approvals
Land acquisition
Complexity of mineral composition in new areas
Supporting infrastructure of rail connect and water availability
Greenfield project cost in current context is $135-$150/ton, depending on the
site location
SEGMENT
J.K. Super Cement is one of the premium grey cement brands in the Country, available as
application friendly Portland Pozzolana Cement (PPC). The product complies with quality
standards specified by the Bureau of Indian Standards (BIS) and is much in demand, by both,
the retail and the institutional segment.
SWOT ANALYSIS
WMIs J.K. Cement Ltd. contains a company overview, key facts, locations and subsidiaries,
News and events as well as a swot analysis of company.
This SWOT Analysis company profile is a crucial resource for industry executives and
anyone looking to quickly understand the key information concerning J.K. Cement Ltd.s
business. WMIs J.K. Cement Ltd. SWOT Analysis & Company Profile reports utilize a
wide range of primary and secondary sources, which are analyzed and presented in a
consistent and easily accessible format. WMI strictly follows a standardized research
methodology to ensure high levels of data quality and these characteristics guarantee a unique
report.
Examines and identifies key information and issues about (J.K. Cement Ltd.) for business
intelligence requirements.
30
Studies and presents J.K. Cement Ltd.s strengths, weaknesses, opportunities (growth
potential) and threats (competition). Strategic and operational business information is
Objectively reported.
The profile contains business operations, the company history, major products and services,
prospects, key competitors, structure and key employees, locations and subsidiaries.
Quickly enhance your understanding of the company.
Obtain details and analysis of the market and competitors as well as internal and external
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Increase business/sales activities by understanding your competitors businesses better.
31
The oldest use of cement dates back to the thousands of years old Egyptian civilisation. The
Egyptians used natural cement made by combining limestone and gypsum for the
construction of their massive and highly impressive pyramids. The fact that the Egyptian
Pyramids have proudly stood the test of time over such a long period of human history is a
testimony to the phenomenal strength of cement. However it must be stated that the ancient
Egyptian cement was very different from the cement in use today.
Later in the Roman era, the concept of cement advanced further. Romans used a combination
of slaked lime with Pozzolana, a volcanic ash from Mount Vesuvius. The Romans made
32
many impressive structures using this cement. The Basilica of Constantine is one popular
example
of
Roman
construction
in
which
they
used
such
cement
mortar.
In eighteenth century England, John Smeaton, a British engineer, was assigned the task of reconstructing the Eddystone Lighthouse, a structure that had witnessed repeated structural
failure. In 1756, Smeaton conducted a number of experiments that led to the discovery that
cement made from limestone containing a considerable proportion of clay would harden
under water. Based on this discovery, Smeaton rebuilt this lighthouse in 1759 and this time, it
stood strong for 126 years.
Subsequently, until the early part of the nineteenth century, large quantities of natural cement
was used, that was made with a combination of naturally occurring lime and clay.
In 1824, Joseph Aspdin, a British mason obtained a patent on his hydraulic cement formula
that closely resembled the modern cement as we know today. He called this cement Portland
Cement, and it was made through the proportionate mixing, burning and the subsequent
grinding of a combination of clay and limestone. Cement went through many more
improvements and developments in the nineteenth and twentieth centuries. The industrial
revolution and the subsequent development of the rotary kiln paved the way for huge and
sophisticated cement manufacturing plants. These plants possess the capability of a
homogenous mixing and intense heating of the raw material thus vastly improving the quality
of the cement produced. The sophisticated quality-testing equipment employed by modern
cement plants further helps in ensuring the quality of the cement produced.
TYPES OF PRODUCT
Upholding the tradition of JK Organisation for maintaining the highest standards in quality,
JK Lakshmi Cement today is one of the most preferred brands in its marketing area with a
network of about 2200 dealers spread in the states of Rajasthan, Gujarat, Delhi, Haryana,
U.P., Punjab, J&K, MP and Mumbai. Our endeavour is always to give our best and maintain
the highest standards of customer satisfaction. No wonder the discernible buyers prefer this
cement over other brands owing to its consistency, higher level of quality and impeccable
customer service.
33
Also not surprising is the fact that the decision makers of the nation's important projects like
IGNP, SardarSarvorar Dam and major corporations like L&T, Reliance, Essar and Airport
Authority of India chose JK Lakshmi Cement over other brands.
JK Lakshmi Cement Ltd is also the first Cement Manufacturer in North India to use coloured
bags to help the customer in segregating different products. It also has a regular contact
program with masons, dealers and architects to keep in tune with their needs and
requirements. One of the many innovative initiatives the company took was to have a mason's
club that now has over 45,000 members. Under this program the masons are given an
insurance cover against accidents absolutely free of cost, besides educating them on the latest
in construction activities.
The high standard of advertising has been another feather in the cap of JK Lakshmi Cement
Ltd. This has not only helped it to reach out to its customers but also in connecting with them
at an emotional level. No wonder then that "Mazbooti Guaranteed" is now a term that is
synonymous with JK Lakshmi Cement.
PRODUCTION CAPACITY
JK Lakshmi Cement Limited's manufacturing facility at Sirohi, Rajasthan is equipped with
state-of-the-art equipment acquired from leading vendors from across the world. Rated
among the topmost Cement Plants in India, our manufacturing facility is well positioned to
deliver an extremely superior quality of product that adheres to the highest quality standards.
34
Established a Waste Heat Recovery Power project to generate 12 MW of power from waste
heat gases, which does not use any fossil fuel, taking the companys total captive power
generation capacity to 66 MW
The operating parameters at par with international standards and trendsetter in various
initiatives, including usage of alternative fuels such as petcoke
Recognition for its outstanding efforts in various fields, by way of numerous awards such as
Indias Best Companies to Work for Award, Gold Award - National Institute of Personal
Management, Star Brands 2011, Green Manufacturing Excellence Award by Frost &
Sullivan, Greentech Safety Gold Award by Greentech Foundation, Golden Peacock HR
Excellence Award, Safety Innovation Award, Leading Businesswoman of the Year Award,
Greentech HR Excellence Award by Greentech Foundation, Leading CEO of the Year
35
Award, Best Professionally Managed Company Award and Golden Peacock Award for CSR
initiatives.
It forayed into the Ready Mix concrete business, an emerging segment in construction sector,
with the brand name JK Lakshmi Power Mix. It operates 11 RMC plants. It also markets
Plaster of Paris under the brand name JK Lakshmiplast a market leader in its product
category Work is on at the 2.7 million MT-Greenfield-site plant at Durg in Chattisgarh.
SWOT ANALYSIS
JK Lakshmi Cement Ltd. is engaged in manufacturing and distribution of construction
materials. It is engaged in the production of cement that include cement 53 blended, 53 grade
ordinary portland cement and 43 grade ordinary portland cement. The company caters its
product to civil and industrial works and operates in India. It is headquartered at New Delhi,
India.
This comprehensive SWOT profile of JK Lakshmi Cement Ltd. provides you an in-depth
strategic analysis of the companys businesses and operations. The profile has been compiled
by Global Data to bring to you a clear and an unbiased view of the companys key strengths
and weaknesses and the potential opportunities and threats. The profile helps you formulate
strategies that augment your business by enabling you to understand your partners, customers
and competitors better.
This company report forms part of Global Datas Profile on Demand service, covering over
50,000 of the worlds leading companies. Once purchased, Global Datas highly qualified
team of company analysts will comprehensively research and author a full financial and
strategic analysis of JK Lakshmi Cement Ltd. including a detailed SWOT analysis, and
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Upon ordering, this SWOT profile will be updated and delivered direct to your inbox within
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The companys core strengths and weaknesses and areas of development or decline are
analyzed and presented in the profile objectively. Recent developments in the company
covered in the profile help you track important events.
36
Equip yourself with information that enables you to sharpen your strategies and transform
your operations profitably.
Opportunities that the company can explore and exploit are sized up and its growth potential
assessed in the profile. Competitive and/or technological threats are highlighted.
Scout for potential investments and acquisition targets, with detailed insight into the
companies strategic, financial and operational performance.
Financial ratio presented for major public companies in the profile include the revenue trends,
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Gain key insights into the company for academic or business research.
Key elements such as SWOT analysis, corporate strategy and financial ratios and charts are
incorporated in the profile to assist your academic or business research needs.
37
38
F.L. Smidth &Cia. Espanola S.A., Madrid and with Larsen& Toubro Ltd., Mumbai for the
supply of plant equipment and services for the proposed project.
1984 - 70 No. of equity shares subscribed for by the signatories to the Memorandum of
Association. In Oct./Nov. 1,53,99,930 No. of equity shares issued of which 1,06,99,930 shar
reserved for firm allotment as follows:
(i)48,00,000 shares to Shree Digvijay Cement Co. Ltd.;
(ii) 11,00,000 shares each to Graphite India,Ltd. And Fort Gloster Industries, Ltd.and
(iii) 36,99,930 shares to Directors, their friends etc. including upto 25,00,000 shares to NRIs
with repatriation rights. The balance 47,00,000 shares offered to the public of which
18,80,000 shares offered for allotment on preferential basis to Non-Residents.
1991 - Production of clinker and cement declined due to a major shut down of the plant for
implementation of modernisation/renovation/modification work. The Company undertook to
set
up
new
cement
plant
of
0.6
million
TPA
capacity
in
Rajasthan.
1993 - The Company undertook a scheme of implementing second stage of its licensed
capacity to increase its capacity to 3300 tonnes per day. The Company issued 21975 - 16%
each with equity warrants and these will be converted as per institutional guidelines.
2,40,021
shares
issued
in
pursuance
of
scheme
of
Amalgamation.
1994 - The Company issued 10,00,000-16% Secured Redeemable NCD of Rs 100 each on
private placement basis. A scheme of amalgamation of an existing leasing and finance
Company with the Company was prepared for undertaking leasing activities and other
financial services on large scale. M/s. Mannakrishna Investment, Ltd. is a subsidiary of the
Company.
1995 - The Company undertook the implementation of new unit of 124 MT capacity per
annum named "Raj Cement". 43,95,000 No. of Equity shares on surrender of detachable
optional share warrants attached with 16% unsubscribed non-Convertible Debentures of 100
each.
39
1996 - The Company commissioned its second cement plant - Raj Cement with a capacity of
12.4 lakh tonnes per annum in Beawar. 58,06,204 rights shares issued .(prem. Rs 10 per
share)
1998 - Shree Cement, the Calcutta-based PD-BG Bangur group company, has decided to
issue preference shares aggregating Rs 15 crore to mobilise long-term funds. Shree Cement's
expansion in capacity by 12.4 lakh tonnes at the new unit in Reawar, has made it a leading
cement manufacturer in North India. ICRA has downgraded the rating of the NCD
programme of Shree Cement Ltd (SCL) from LAA to LA. The Rs 372-crore 1.25 million
tonne cement plant near Ajmer was commissioned during the year after considerable delay
due to an explosion in the electro-static precipitator.
1999 - The company has been awarded the first prize for energy conservation in 1998 in the
cement sector. SCL, belonging to the house of Bangurs, is one of the largest cement
manufacturers in North India, having the installed capacity of 2 million tonnes. Its plants are
located in Rajasthan. The new plant was set up at Beawar with the capacity of 1.24 million.
-Unit I and Unit II of the company receives National Award for 'Best Electrical Energy
Performance' and 'Best Thermal Energy Performance' in the Cement Industry for the year
2000-01 Decides to change the Accounting year to April - March each year and accordingly
the current year is only for nine months. Appoints Mr M K Singhi as the Executive Director
of Shree Cements. In pursuance to the IDBI, company approve for early redemption of
privately placed under noted cummulative redeemable preference shares. Change in
Management Structure: Mr B G Bangur re-appointed as executive chairman and Shri H M
Bangur
re-appointed
as
the
Managing
Director
for
period
of
five
years.
2008-Shree Cement - RCCI Excellence Award. Launch of Tuff Cement 3556 in March 2007.
National awards for Excellence in Water Management as Water efficient Unit by CII, 2007.
2011-World Economic Forum (WEF), Switzerland has identified the Company as New
Sustainability Champion. The Company has recommended final Dividend @ Rs. 8 per share.
41
PRODUCTION CAPACITY
In 2011-12 company changed its financial year closing to July. Since 2006, it has more than
quadrupled its production capacity both by expanding into new areas and increasing the
capacities of the existing plants. Plants are located in Beware, Rash, Khushkhera and
Suratgarh in Rajasthan and Laxer (Roorkee) in Uttarakhand
SEGMENT
Shree Cement Limited is a cement producer. The Company operates in two segments:
Cement and Power. As of June 30, 2012, the Company had the cement capacity of 13.5
million tons per annum and power capacity of 560 megawatt. This includes 300 megawatt
(150 megawatt x2) thermal power plant commissioned at Beawar. The Company's waste heat
recovery power plants have a total capacity of 46 megawatt. The Companys brands include
Shree Ultra, Bangur Cement and Rockstrong Cement. SCL has manufacturing facilities at
Beawar and Ras in Ajmer and Pali district and grinding units at Khushkhera, Suratgarh and
Jaipur, respectively, in Rajasthan and Roorkie in Uttarakhand.
SWOT ANALYSIS
Shree Cement Limited (500387) : Company Profile and SWOT Analysis' contains in depth
information and data about the company and its operations. The profile contains a company
overview, business description, financial ratios, SWOT analysis, competitive benchmarking,
key facts, key employees, location and subsidiaries as well as information on products and
services.
This SWOT analysis and company profile is a crucial resource for industry executives and
anyone
looking
to
gain
better
understanding
of
the
company's
business
Shree Cement Limited (500387) : Company Profile and SWOT Analysis' report utilizes a
wide range of primary and secondary sources, which are analyzed and presented in a
consistent and easily accessible format.
A standardized research methodology is followed to ensure high levels of data quality and
these characteristics guarantee a unique report .Examines and identifies key information and
issues
about
'Shree
Cement
Limited'
for
business
intelligence
requirements
- Studies and presents the company's strengths, weaknesses, opportunities (growth potential)
and threats (competition). Strategic and operational business information is objectively
42
reported
- Provides analysis on financial ratios along with a competitor benchmarking section
- The profile also contains information on business operations, company history, major
products and services, key employees Buy Quickly enhance your understanding of the
company
ACC Ltd was incorporated on August 1, 1996 as The Associated Cement Companies Ltd.
The company was formed by merger of ten existing cement companies. In the year 1944,
they established India's first entirely indigenous cement plant at Chaibasa in Bihar.
HISTORY
ACC Limited (Formerly The Associated Cement Companies Limited) one of the largest
producers of cement in India.It's registered office is called Cement House. It is located on
Maharishi Karve Road, Mumbai. The stock price of company contributes in calculating BSE
Sensex.
The management control of company was taken over by Swiss cement major Holcim in 2004.
On 1 September 2006 the name of The Associated Cement Companies Limited was changed
to ACC Limited. The company is only cement company to get Superbrand status in India.
43
In 1936 ten cement companies belonging to Tatas, Khataus, Kellick Nixon and F E Dins haw
groups merged to form a single entity, The Associated Cement Companies. Sir Nowroji B
Saklatvala was the first chairman of ACC. The first board of directors had some prominent
industrialists J R D Tata, Ambalal Sarabhai, WalchandHirachand, DharamseyKhatau, Sir
Akbar Hydari, NawabSalar Jung Bahadur and Sir HomyMody.
TYPES OF PRODUCTS
ACC's brand name is synonymous with cement and enjoys a high level of equity in the Indian
market. Our range of cements and blended cements is marketed through a countrywide
network of Sales Units, Area Offices, and warehouses. This is backed by a vast distribution
network of over 9,000 dealer who, in turn, are assisted by their sub-dealers.
ACCs marketing, sales and distribution processes are industry standards. Although we take
immense pride in having supplied some of Indias most admired projects, ACC is essentially
a peoples brand of cement with more than 80 per cent of sales made through an extensive
dealer network that covers every state in India. Its customer base represents the masses of
India - individual homebuilders in small towns, rural and semi-urban India. ACC cement
enjoys an image of assuring consistency and of high quality backed by in-house research and
expertise.
Complementing this is a unique customer services cell comprising qualified civil engineers,
who assist and advise customers with prior and post sales service. This service begins with
selection of type and grade of cement (where applicable) to troubleshooting and on-site
assistance.
ACC manufactures the various kinds of Portland Cement for general construction and special
applications.
44
PRODUCTION CAPACITY
Enthused by rising cement demand from the eastern region, ACC will create additional five
million tonnes per annum capacity (mtpa), entailing an estimated investment of around Rs
3,000 crore. The expansion, which is likely to go on stream over the next three years, will
take the overall cement making capacity of the company to 35 million tonnes a year.
The group company ACC will increase cement capacity in east India by additional five
million tonnes by early 2015, Holcim, which is a majority stakeholder in ACC Ltd, said in a
release. When contacted, a company official declined to comment on the likely investment.
However, an industry official said that it takes around Rs 600 croreinvestment to create a one
million tonne cement manufacturing capacity. ACC has nine million tonnes per annum
cement making capacity in the countrys eastern part, where the demand for cement is of late
going up by nearly double digits. Aiming to cash in on the increased demand, cement makers
are putting in 18 million tonnes per annum additional capacity between FY12 and FY14 in
the eastern India to its overall current capacity of 60 million tonnes. The cement making
capacity of the country is currently pegged at a little over 300 million tonnes per annum, up
from 200 million tonnes in 2008 and the industry is projected to add 72 million tonnes a year
capacity between FY12 and FY14.
Capacity utilisation is also one of the highest in the eastern region so far in the current fiscal
at 80 per cent. Holcim said the existing Jamul clinker making facility in Chhattisgarh would
be replaced by a latest plant and grinding capacity to be increased simultaneously. The Jamul
facility would have 2.79 million tonnes clinker manufacturing capacity with an estimated
investment of Rs 800 crore. In addition, capacity of the existing Sindri grinding plant would
also be increased. ... a new grinding plant will be built at Kharagpur (in West Bengal). Both
(Kharagpur and Sindri) installations will source clinker from the new Jamul plant. Therewith,
overall capacity of ACC will increase to 35 million tonnes, it said. In the recent past, ACC
Ltd has increased capacity at its Chanda plant in Maharashtra and has begun operating
worlds largest clinker kiln at its Wadi plant in Karnataka.
ACCs sister firm Ambuja Cements is also ramping up its clinker capacity at Rauri in
Himachal Pradesh and Bhatapara, near Raipur and setting up two new grinding stations.
Holcim holds majority stake in Ambuja Cement as well.
45
SEGMENT
In 2012, the cement industry added ~34 million tonnes of capacity talking its installed
capacity to ~ 360 million tonnes. The first half of the calendar year witnessed high demand
for cement at 10% YOY. This demand fell in the second half of the year following a
slowdown in the construction sector.
Cement industry is expected to gather momentum driven by a revival in the general
investment climent and by reduction in interest rates which will positively impact demand
from housing, infrastructure and industry segments. We, therefore expect a favourable rate of
growth in cement consumption. At the same time, there is a likelihood of mounting pressure
on costs mainly arising out of increases in the cost of coal, diesel, rail freight and exchange
rate fluctuations.
SWOT ANALYSIS
ACC Limited (ACC) is a manufacturer of cement and ready mix concretes. It manufactures
cement, blended cement, bulk cement and concrete mix. It manufactures different kinds of
portland cement for general construction and special applications. ACC operates through a
network of factories, marketing offices, sales units, area offices, and warehouses spread
across India. The companys products are distributed through a network of 9,000 dealers and
sub-dealers. It has manufacturing plants located in Bargarh, Orissa; Chaibasa, Jharkhand;
Chanda, Maharashtra; Damodhar, West Bengal; Gaga, Himachal Pradesh; Jamul,
Chhattisgarh; Kymore, Madhya Pradesh; Kudithini, Karnataka; Lakheri, Rajasthan;
Madukkarai, Tamil Nadu; Sindri, Jharkhand; New Wadi, Karnataka and Thondebhavi,
Karnataka. ACC is headquartered in Mumbai, India.
This comprehensive SWOT profile of ACC Limited provides you an in-depth strategic
analysis of the companys businesses and operations. The profile has been compiled by
GlobalData to bring to you a clear and an unbiased view of the companys key strengths and
weaknesses and the potential opportunities and threats. The profile helps you formulate
strategies that augment your business by enabling you to understand your partners, customers
and competitors better.
46
This company report forms part of GlobalDatas Profile on Demand service, covering over
50,000 of the worlds leading companies. Once purchased, GlobalDatas highly qualified
team of company analysts will comprehensively research and author a full financial and
strategic analysis of ACC Limited including a detailed SWOT analysis, and deliver this direct
to you in pdf format within two business days. (excluding weekends).
The company is the country's largest exporter of cement clinker. The export markets span
countries around the Indian Ocean, Africa, Europe and the Middle East. The export market
comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. The
company's subsidiaries are Dakshin Cements Ltd, UltraTech Cement Lanka Pvt Ltd
HISTORY
UltraTech Cement Ltd was incorporated on August 24, 2000 as a public limited company
with the name L&T Cement Ltd as a 100% subsidiary of Larsen & Toubro Ltd. In November
2003, the name of the company was changed from L&T Cement Ltd to UltraTech ChemCo
Ltd.
In the year 2004, pursuant to the scheme of arrangement, the cement business of Larsen &
Toubro Ltd was de-merged and got transferred to the company with effect from April 1,
2003. In May 14, 2004, the company acquired four crore equity shares of Larsen & Toubro
Ceylino (Pvt) Ltd from Larsen & Toubro Ltd at an aggregate consideration of Rs 23.03
crore.
47
In July 2004, Grasim Industries Ltd acquired management control of the company and in
October 14, 2004, the name of the company was changed from UltraTech ChemCo Ltd to
UltraTech Cement Ltd. Also, Narmada Cement Company Ltd became a subsidiary of the
company by virtue of the scheme of arrangement for de-merger of cement business of
Larsen.
During the year 2005-06, the company increased the production capacity of Cement from
155 lakh tonnes to 170 lakh tonnes. As per the scheme of amalgamation, Narmada Cement
Company Ltd was amalgamated with the company. Thus, the entire undertaking of Narmada
Cement Company Ltd was transferred to the company with effect from October 1, 2005.
During the year 2007-08, the company increased the production capacity of Cement from
170 lakh tonnes to 182 lakh tonnes. They set up 15 Ready Mix Concrete plants across the
country.
During the year 2008-09, the company increased the production capacity of Cement from
182 lakh tonnes to 219 lakh tonnes as a result of expansion of capacity at the company's unit
at Andhra Pradesh Cement Works (APCW) together with a new split grinding unit at
Ginigera, Karnataka.
During the year, the company commissioned 192 MW captive TPPs at their units at APCW,
Hirmi Cement Works (HCW) in Chhattisgarh and Gujarat Cement Works (GCW) in Gujarat
in a phased manner. Also, they set up new Ready Mix Concrete (RMC) plants and thus
increased the RMC capacity to 4.76 million cubic metres per annum.
During the year 2009-10, the company increased the production capacity from 219 lakh
tonnes to 231 lakh tonnes. They incorporated a wholly-owned subsidiary company in UAE in
the name of 'UltraTech Cement Middle East Investments Ltd'. In May 2010, the cement
business of Grasim Industries Ltd was de-merged and vested in Samruddhi Cement Ltd. In
July2010, Samruddhi Cement Ltd was amal gamated with the company.
During the year 2010-11, the company's wholly-owned subsidiary, UltraTech Cement Middle
East Investments Ltd completed the acquisition of ETA Star Cement (ETA) and acquired
management control of ETA's operations in the UAE, Bahrain and Bangladesh. The
company's capacity stands augmented to 52 MMTPA placing it among the top 10 cement
companies in the world due to the merger and acquisition.
48
The company has proposed setting up a cement plant in West Bengal of two million tonne
capacity. The unit, to be second in the state, has received the clearance from the West Bengal
Pollution Control Board. The plant would have capacities of 6,000 tonne per day of Portland.
TYPES OF PRODUCT
Ordinary portland cement is the most commonly used cement for a wide range of
applications. These applications cover dry-lean mixes, general-purpose ready-mixes and even
high strength pre-cast and pre-stressed concrete.
Portland blast-furnace slag cement contains up to 70 percent of finely ground, granulated
blast-furnace slag, a nonmetallic product essentially consisting of silicates and aluminosilicates of calcium. Slag brings with it the advantage of the energy invested in the slag
making process. Grinding slag for cement replacement takes only 25 per cent of the energy
needed to manufacture portland cement. Using slag cement to replace a portion of portland
cement in a concrete mixture is a useful method to make concrete better and more consistent.
Portland blast-furnace slag cement has a lighter colour, better concrete workability, easier
finishability, higher compressive and flexural strength, lower permeability, improved
resistance to aggressive chemicals and more consistent plastic and hardened consistency.
UltraTech Premium is UltraTechs new Concrete Special Cement composed of high quality
clinker blended with judicious amounts of superior blast furnace slag having high glass
content, gypsum devoid of deleterious materials and optimum PSD (Particle Size
Distribution).
Portland pozzolana cement is ordinary portland cement blended with pozzolanic materials
(power-station fly ash, burnt clays, ash from burnt plant material or silicious earths), either
together or separately. Portland clinker is ground with gypsum and pozzolanic materials
which, though they do not have cementing properties in themselves, theycombine chemically
with portland cement in the presence of water to form extra strong cementing material which
resists wet cracking, thermal cracking and has a high degree of cohesion and workability in
concrete and mortar.
UltraTech's bulk cement terminal in Sri Lanka is located at Colombo. Cement is received by
specially-engineered, self-discharging bulk cement carriers. It is then discharged at the port in
road bowsers which transport cement 10 km from port to the terminal. Cement is stored in 4 x
7500 T cement concrete silos. A sophisticated bulk cement terminal (which subscribes to all
49
environmental norms) despatches cement in bulk form to RMC and asbestos plants. The
terminal also has a modern Italian make Ventomatic packer to pack cement in 50 kg.
paperbags to services customers on this land. With its sharp focus on cement, the Aditya
Birla Group has always believed that like arrangements between countries in different parts
of the world for regional cooperation, the group too should be present in adjacent countries
with facilities to qualify as a local producer of cement. Two of the countries adjacent to India
have limited deposits of limestone, the basic raw material for cement. This position compels
the two to be dependent on import for their domestic construction activity. It was in this
context that a joint venture bulk cement terminal was established in Colombo, Sri Lanka.
Gujarat Cement Works (GCW) has a captive jetty engineered for exports. Accordingly, for
the past five years, bulk cement has been exported from GCW to UltraTech Cement Lanka
(Pvt.) Ltd,the groups joint venture(JV) in Sri Lanka. UltraTech Cement has been meeting
the cement requirements of Sri Lanka by supplying a good quality product. The companys
customer base has recognized the quality and service levels backed with a field force to
market cement along with qualified engineers in the technical cell who render technical
advice to customer sat thesite.
This recognition has enabled the company to achieve a substantial market share in a fiercely
competitive market teeming with multinational competitors including two of the largest
manufacturers in the world. In this competitive environment, the companys customer base
has given it brand equity and acknowledged it as a premium quality cement supplier in the
island.
PRODUCTION CAPACITY
UltraTech Cement Limited and its subsidiaries have an annual capacity of 53.90 million
tonnes, making it among the top 10 producers of cement globally. UltraTech is also the
largest manufacturer of White Cement in India. The company manufactures and markets
ordinary portland cement, portland blast furnace slag cement, portlandpozzalana cement,
ready mix concrete building products and building solutions.
UltraTech Cement has 11 integrated plants, 15 grinding units, five bulk terminals and 101
RMC plants spanning India, UAE, Bahrain, Bangladesh and Sri Lanka. UltraTech Cement
is also India's largest exporter of cement clinker reaching out to meet demand in countries
around the Indian Ocean, Africa, Europe and the Middle East.
50
The company's subsidiaries are Dakshin Cements Limited, Harish Cements Limited,
UltraTech Cement Lanka (Pvt.) Ltd, and UltraTech Cement Middle East Investments
Limited, which completed the acquisition of ETA Star Cement together with its operations in
the UAE, Bahrain and Bangladesh, and acquired management control.
SEGMENTS
UltraTech's success is attributed to its diverse product offerings. Different products are
handled by different product groups, which are also known as profiles. Product groups
decentralise control and encourage innovation. They also ensure better customer
segmentation, which in turn leads to better customization of product offerings and guarantees
cent percent customer satisfaction. UltraTech Cement, Birla White, UltraTech Concrete,
UltraTech Building Products and UltraTech Solutions are the different profiles of UltraTech,
each catering to varied needs. This versatility has been a key competitive advantage for
UltraTech over the years.
SWOT ANALYSIS
The SWOT analysis about Ultra Tech cement and its position in the market. The company is
one of the best in the cement industry, analysing it through the different framework of
analysis in order to judge the actual situational and industrial position of the company in
order to find out how actually is the company doing.
The company is facing a lot of problem regarding its promotion and marketing techniques
due to which it faces a short of awareness in the market due to which people are not aware of
the product but instead of all the problems it is quite stable and maintain its position in the
market. After performing Swot analysis of the company by reviewing porters 5 forces and
pestel analysis companys strategic standing and positioning have been analysed.
Currently the company is having a better standing as threat of entry is very low due to high
initial funds required to establish the factory setup.
Cement demand has grown in tandem with strong economic growth derived from: Growth in
housing sector (over 30%) key demand driver.Infrastructure projects like ports, airports,
power
projects,
dam
&
irrigation
Projects.National
Highway
Development
Cement Industry is highly fragmented and it is also highly regionalized and Low value
commodity makes transportation over long distances uneconomical.
Not available in all the places: Ultra tech is not available at all the places as it is not
manufactured at all places and all plants are not available everywhere due to which people
cannot find it everywhere hence the profit margins are affected to a greater extend.
With the low per capita consumption of cement in India 102 kg compared to the global
average of 260 kg and the emphasis on infrastructure development, Ultra tech has ample
opportunity to ride the growth curve. Ultratech can develop new marketing area. It can sign
MOUs (memorandum of understanding) with government regarding supply of cement
for government work. Ultratech can also maintain the position of competition in the market.
Institutional market like corporate and offices, school society complexes are growing in large
scale, which will increase the requirement. People are opting for more stable structures and
good future, so large use of cement is taking place, so government is spending heavily on
infrastructure project as Indian industry base is growing rapidly Thus, this is the right time to
fully invest in these market. There is regular demand of cement which in turn will increase
foreign investment in this sector. As roads transformation process is going on through which
the traditional method of road building will be convert by modern concrete roads.
Substantially lower per capita cement consumption as compared to developing countries (1/3
rd of world average) Per capita cement consumption in India is 82 kgs against a global
average of 255 kgs and Asian average of 200 kgs. For green field capacity 20 million tons per
annum will be required to match the demand in pipeline for other two years leading to
favourable demand supply scenario. (verma, 2008)
As huge cement industry emerge there is more competition for ACC (Associated Cement
Companies) to carefully enhanced its price , product and at the same time satisfy its dealers
and customers. Cheap priced brand are capturing like a mushroom to lower income
customer base. Players such as Jaypee Cement, Prism Cement, and Birla cement. ACC
cement are eating up considerable market share. Due to India satisfy growth many new
international cement companies are expected in coming years which will bring enormous
change and can start price war. Government intervention to adjust cement prices
Transportation cost is upgrading. Due to loading restriction there is overloading industrialist
shows increase in costs due to the shortage in coal industry.
52
Many retailers are influence by better profit margin, and other Benefits because of small
industries increase competition among them, which in turn give heavy discount to customer
and start malpractices.
Timber is also being considered as one of the substitutes of cement, which is cheap and long
lasting. Due to continuous attack of earthquake, many countries like Japan, Indonesia,
Singaporeetc are now using timber in construction since those areas are high earthquake
affected. (Kalesh, 2009)
53
The life of an industry can be separate into the pioneering stage , the expansion stage, the
stagnation stage, and the decay stage.
Figar-3.1
Pioneering stage
The entry and exit barriers for the cement industry are high due to very high cost of cement
production plants, be it cost of setting up new plants or operational costs of existing plants.
To exit a losing position in the cement industry would incur huge losses for the firm.
Price increase in driven by high demand growth and high capacity utilization, but contrast to
this, during the period (2008-2011), the capacity utilization has decreased considerably for
India cements Ltd., madras cement Ltd, kesoram industries Ltd, Dalmia Bharat sugar &
Indus. Ltd Ultratech Cement Ltd., Chettinad Cement Corpn.Ltd. and Penna Cement
Inds.Ltd.Only ACCLtd. and Grasim Industries Ltd. seem tohave appropriate capacity
utilization levels along with their financial numbers.
Capacity utilization levels remained high for Ultratech Cement Ltd., Grasim Industries Ltd.,
and Century Textiles &Inds. Ltd. and Lafarge India Pvt. Ltd. over the period.Ultratech
Cement Ltd.s capacity utilization has never been above 85% with the March-11 figure at
54
80% even after increasing their cement production consistently over the last six to seven
years. This may indicate a huge capacity build up by Ultratech Cement.
Expansion stage
The production of cement has seen a healthy increase by all the major companies in the east
zone.
During 2005-06 to 2010-11, the operating profit margin all the companies has soared to reach
new highs during 2007-2008, but has come back to 2005-06 levels or even below those levels
for all the companies. It may indicate that the cost of production and operation are higher
from 2009-10 onwards and though the slight decrease in selling price of cement must also
contribute to the low operating profit margin levels, this much amount of fluctuation in
operating profit margins (around 15-20% for almost all.
contrast to this, during the period (2008-2011), the capacity utilization has decreased for
ACC Ltd., Shree Cement Ltd., Grasim Industries Ltd., and JK Lakshmi Cement Ltd., when
retail prices have been steady (decreased ever so slightly in 2008-09 due to economic crisis)
if not increased in the same period. Capacity utilization levels for Ultratech Cement Ltd.
remain high and low for Binani Cement Ltd. due to late entrance in the north zone market
(2008-09).
Stabilization stage
Price increase is driven by high demand growth and high capacity utilization, but in contrast
to this, during the period (2008-2011), the capacity utilization has decreased for Sanghi
Industries Ltd. to be around 70% for the last two years from a high of 97% in Mar-08. The
production level for Sanghi Industries Ltd. have decreased considerable over the last three
years to be at a production index of 150 in Mar-11 from an index of over 200 in Mar-08, thus
signalling possible supply/production control of cement to maintain the price level.
55
2009
25971
5194.2
2010
24370
4874
2011
28577
5715.4
2012
42569
8513.4
2013
47314
9462.8
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
2009
2010
2011
2012
2013
Figar-3.2
It is one of the main industries that plays a pivotal role in the growth and expansion of a
nation. This industry is one of the main beneficiaries of the infrastructure boom in the
country. The Indian cement industry is huge, and it has great production capacity. Currently,
the total capacity of cement industry is about 165 million tones, which is the second largest in
the world.
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Today, the cement industry in India is one of the most advanced and pioneering sectors in the
country, and the cement industry has a huge potential for growth and attracting new
investments. The cement industry in India uses the most modern and world-class technology.
Also, because India has a high quantity and quality of limestone deposits throughout the
country, the cement industry promises huge potential for growth.
In India, the cement industry in the initial stages grew very slowly and the supply struggled to
meet the demands. However, the scenario changed drastically after the liberalization period.
The cement industry began to grow and since then the supply of cement has always managed
to keep pace with its demand
During the financial year 2011-12 (FY12), Indias cement production grew by 6.2% year-onyear. The muted growth was mainly attributable to slowdown in construction activities, extended
monsoon, delay in infrastructural projects and the overall downturn in the economy. As such, the
capacity utilization levels stood lower at 73.7%.
The industry witnessed high operating costs, particularly those of energy and freight. The price
of imported coal went up sharply. The steep depreciation of the rupee and hike in diesel prices
further aggravated the concerns. However, the industry witnessed some recovery in demand from
November 2011 onwards.
Thegrowth of the Indian economy has slowed down in recent times on account of the rising
inflation, high interest rates, high prices of commodities and fuels. The growth prospects of the
cement industry are closely linked to the growth of the overall economy in general and the real
estate and construction sectors in particular. The importance of the housing sector in cement
demand can be gauged from the fact that it consumes nearly two-thirds of the countrys total
cement. If the slowdown in real estate persists for an extended period, it would impact the
growth in consumption of cement.
However, the long term drivers for cement demand remain intact. Higher infrastructure
spending, robust growth in rural housing and peaking interest rates are likely to augur well for
the cement industry. The government plans to spend US$ 1 trillion on infrastructure in the 12th
five year plan period (2012-17). The same during the 11th plan period was US$ 514 bn. The
focus on infrastructure development is expected to boost cement demand.
57
Figure:-3.3
58
59
the new entrants have to establish a good and an efficient distribution channel to serve its
customers in time, which will again require a high amount of investment in distribution
channel. When and profit margin exciting sellers have, well-functioning distributer and
retailer net-works a new comers has an uphill struggle in squeezing its way in. and also old
company give high markup and profit margin.
3.1.1.4 Industry Growth Rate:
Cement demand has continued to remain weak in Apr-May 2013 mainly due to lackluster
demand from end user industries. The domestic cement production grew by 8.2% Y or in Apr
2013 as compared to 12.5% Y or in Apr 2012. The growth slowed down further to 3.0% Y or
in May 2013 pulling down the overall growth rate to 5.6%Y or in Apr-May 2013. Although
the demand picked up temporarily from the end of May 2013, it does not reflect any
fundamental recovery in prospects. The cement demand in May end and June 2013 has been
supported by pre-monsoon increase in construction activities and is not likely to be sustained
going forward. With the onset of monsoons and consequent lull in construction activities, the
demand is likely to come under pressure in Q2 FY14 as well.
weakened during Mar and Apr 2013 due to weak demand saw some recovery from mid May
2013.
3.1.1.5Government Policies:
Government police is liberalization toward new enters, but some restriction on emission,
price, quality, etc. it is required high amount of investment but we will start small unit, and
also give support for stating business central as well as stats governments.
3.1.2THREAT OF SUBSTITUTE PRODUCTS OR SERVICES (Low)
Relative price performance of substitutes : no substitute in India
Buyer switching costs : low and high
Perceived level of product differentiation : low level of differentiation
Now a day timber is also being considered as one of the substitutes, therefore cement it one
of cement. In many countries like japan, Indonesia, Singapore etc., are a now using timber in
construction since those areas are high earthquake affected. They now prefer timber which is
cheap and long lasting for years. But timber cannot be considered as one of the major
substitutes of cement, therefore cement is one of the main components of any construction,
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Employee solidarity (e.g. labor unions) : high in organized sector, but those company
use technology do not solidarity of employee, its low.
Raw materials supplier is high available in market that way company is stronger for
bargaining power.
Thats way attractive price for company and end user have low price getting products.
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Whether supplier increasing price of raw materials price due to company switch off
and use other supplier those who give low price provide raw materials.
There were fewer suppliers who dominated the market and the switching cost for the buyers
were high. There were no substitutes present. But this scenario is changing now as the
suppliers have increased thats why increasing bargaining power for company.
3.1.5RIVALRY AMONG EXISTING PLAYERS (High)
The Indian cement industry has large number of cement production thus making it low
concentration market. The four biggest cement players in the Indian cement industries.The
market share of the above mentioned four companies account to 39.80% currently. It is
believed that it these four companies do not increase their market share in the coming years.
Then their combine share could drop to 34%. The share of mid large players will remain
about 36%, small players will hold about 24%, and new players will account for 6% of the
market with focus on capacity addition, many small/medium players have been able to
capture more market share and consolidate their position in the industry in the fast last two
years. Market share of top five individual companies taken together show a decline to a level
of 44.3%in FY12 from 46.3% in FY13.
3.1.5.1Exit Barriers:
The India cement industries has got high exist barriers for investing huge amount of money.
But small industries exist barriers is low. One of the main reasons is the high initial capital
investment required for starting up a manufacturing unit. Shutting down and switching over
to other industry may cost fortunes.
Thus in this way, with the help of Porter Five Force Model the Competitive Analysis of
cement industry is done. In regard to this some important success factors are also considered
which are helpful for the development of two wheeler industry in India.
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Number of competitors: The total installed capacity is distributed over around 129
plants, owned by 54 major companies.
Exit barriers : low for small business and for large company exit barriers is high.
Buyer costs to switch brand are high, if increasing price at that time, but customer are
brand loyal at that time switch is brand is mordent.
65
66
Domestic price of cement is rising as well as the imported cement price is lowering. So
altogether the supply of the cement, which is affordable, will increase. This may in decrease
the gap between supply and demand. Major Demand was from the housing sector, which may
shift to infrastructure as lots of infrastructural development processes has already being taken
up & due to the increased price, housing segment started showing a slowdown.
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Production:
There are agriculture, infrastructure, energy& power, banking, & finance service sector.
Construction is the second largest economy activity after agriculture and is poised for
continuous growth due to industrialization, urbanization, and economic development with
expectation of improvement living standard of people in India. It account for nearly 65% of
the total investment in infrastructure, employee 33 million people approximately and
accounts for 6-8 percent of GDP. The construction industry is primarily drive by Government
of Indian investment on core infrastructure project and creation of urban infrastructure,
industries capital expenditure by corporate sector and development activities of real estates or
housing sector in urban as well as rural areas. the economic condition of Indian rural
population. the production of industrial machinery has also been on the rise and the
increasing flow of goods has spurred increases in rail, road and port traffic, necessitating
future infrastructure improvements.
Growth in the road infrastructure increases demand for vehicles. Indian highways and roads
have improved a lot in quality and connectivity in the last 20 years. Projects like the Golden
Quadrilateral aim to make even remote areas accessible by road. Some of the National
Highways are of international standards. This has made road transport a viable, cost effective
and speedy option both for goods and passenger traffic.
Globalization impact on cement industry
The paper evaluates the effects of deregulation on the performance and structure of the Indian
Cement Industry. The implementation of the deregulation process is complex and varied.
Therefore the paper mainly focuses on the impact of liberalization on the growth and the
structure of the cement industry, where structure is primarily being captured by
concentration. In this paper, we contribute to the discussion on productivity growth and the
role of technological change within the context of global environment change.
The performance of the industry, under different policy regimes, truly establishes that
decontrol of the industry and liberalization of the economy has led to remarkable
improvement in the indicators such as installed capacity, capacity utilization
The Globalization of Indian Cement Industry has helped the industry to restructure itself
to coop up with the alterations in the global economic and trading system. The Indian cement
industry is one of the oldest industries. It has been catering to India's cement requirements
69
since its emergence during the British Raj in India. Though the majority of the players in the
Indian cement industry were private sector organizations, the industry was highly regulated.
With the rapid growth rate of the Indian economy after the 1990s, the infrastructural
developments within the country has been tremendous. The increase in the construction
activities has led to the increase in the demand for updated quality building materials and
other allied products. Cement being one of the major elements in the construction work, there
is a growth in the cement industry in India. The consumption of cement has increased in India
by nearly 7.5%. With the globalization of Indian cement industry many foreign cement
manufacturers are engaging themselves in agreements and deals with their India counter parts
To have a share of the growth.
Globalization of Indian Cement Industry includes several foreign companies engaging in
mergers and acquisitions of Indian cement companies. For example,
Heidelberg cement Indorama cement Ltd. Heidelberg Cement Company entered into an
agreement for a 50% joint venture with the Indorama Cement Ltd., situated in Mumbai,
originally possessed by the Indorama S P Lohia Group. Heidelberg Cement company is the
leading German cement manufacturing company. The Heidelberg Cement was set up in 1873
and has a long and prosperous history. Being one of the best in the world the Heidelberg
Cement Company has its bases in different countries. The Heidelberg Cement Company has
two manufacturing units in India. A grinding plant in Mumbai and a cement terminal near
Mumbai harbor. A clinker plant is coming up in the state on Gujarat.
Holcim cement Gujarat Ambuja cements Holcim Cement signed an agreement of 14.8% take
over with the Gujarat Ambuja Cements (GACL). With new products, skilled personnel,
superb management, and a outstanding market strategy gives this tie up good edge over the
other competitors. Holcim Cement Company is among the leading cement manufacturing and
supplying companies in the world. It is one of the major employers in the world, having a
work force of 90,000.The Holcim Cement Company has units in excess of 70 countries all
over the world.
Italcementi cement Zuari cement Limited Italcementi Cement Company with the help of the
Ciments Franais, a subsidiary for its global activities, has acquired shares of the famous
Indian cement manufacturer - Zuari Cement Limited. The acquisition was of 50%
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shareholding and the deal was of about 100 million Euros. Italcementi Cement is the 5th
largest cement manufacturing company in the world. The production capacity of the
Italcementi cement company is about 70 million tons in a year. With the construction boom
in India the company looks for a stable future. In 2001 the Italcementi cement entered the
Indian market scenario. It took over the plant of the Zuari Cement Limited in Andhra Pradesh
in southern India. The joint venture earned revenues of around 100 million Euros and an
operating profit of 4 million Euros.
Lafarge India is the subsidiary of the Lafarge Cement Company of France. It was established
in 1999 in India with the acquisition of the Tisco and the Raymond cement plants. Lafarge
Cement presently has three cement manufacturing units in India. One of them is in Jharkhand
which is used for the purpose of grinding and the other two are in Chhattisgarh used for
manufacturing. The Lafarge Cement Company was set up in the year 1833 by Leon Pavin.
Lafarge Cement Company situated in France is the leading cement producing company in the
world. It has plans for increasing the cement production through technological innovations
and maximization of the capacity of the plant. It has a large network of distributors in the
eastern part of India. The Lafarge Cement Company is presently producing nearly 5.5 million
tons of cement for the Indian cement market.
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3.4.1 POLITICAL
The price of cement is primarily controlled by the coal rates, power tariffs, s railway tariff,
fright ,royalty and chess on limestone. Interestingly government control all of these prices.
Government is also one of the biggest consumers of the cement in the country. Most state
government in order to attract investment in their respective states. Offer fiscal incentive in
the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff
5 years, while Gujarat offers exemption from electric duty.
Firstly, we will discuss the political impact of cement industry. The 212-million tonne cement
industry's demands seem to have no end. After a healthy quarter (January-March 2009) due to
robust demand from the infrastructure segment, good dispatches and growth in profit the
industry seems to be wanting for more. With election results being declared in favor of the
UPA and the country moving on its way to form the new government, the cement industry is
expecting excise benefits and ban on imports to boost the cement demand which has taken a
hit due to slowdown in the real estate sector.
Says Sumit Banerjee, MD of ACC Ltd, "We need directional steps to correct anomalies in
excise taxes, the manner in which these are levied on our industry. We would also want a
customs duty rationalization that would rectify the current imperfection, whereby the inputs
are taxed but not the direct import of cement.
According to Vinod Juneja, MD of Binani Cement, "We are looking at reduction in excise
duty to 4% and a complete ban on import of cement, from the new government. Meanwhile,
taking into consideration the crisis the cement industry is going through, the government had,
in its stimulus package, imposed a 4% cut in excise duty to 8% along with cut in excise duty
on bulk cement from 14% to 8%. HM Bangur, president of Cement Manufacturers
Association (CMA) and CMD of Shree Cement however, declined to comment on the I
ndustry expectations from the new government.
72
The election results are positive but it is too early for me to comment on the industry's
expectations before the new government is formed, he said. Meanwhile, Vinita Singhania,
MD of JK Lakshmi Cement Ltd and vice president of CMA, expects that the infrastructure
development would have to be pursued with much more vigor to take India closer to its aim
of being a super economic power. This would entail building of modern ports, new super
express highways, concretization of roads, emphasis on canal lining etc. We would also
expect the new government to have a re-look at the high incidence of taxation on the cement
industry so that cement becomes more affordable to all sections of the society and fulfill the
dream of common people to have a home of their own, Singhania adds.
3.4.2 Economic
The industry is on the boom, with a lot of government infrastructure and housing project
under construction. The export segment of the industry is expected to grow again on account
of various infrastructure project that are being taken up all over the world and numerous
cement plants coming up in near future in the country.
Inportance Cement Industry to indian:
Generation of employment.
Now we will discuss the economic impact of cement industry. India is the second largest
industry after china. A variety of studies on productivity growth and technological change in
Indian industries has been carried out so far. Originally these studies were driven by an
interest in understanding the capital vanishing phenomena in the Indian industry between
1950 and 1980. During that time, labor productivity as well as capital availability and use
increased considerably, while the overall growth rate of the economy stagnated at low levels
(see Ahluwalia, 1991). Concerned about the efficiency of resource use researchers started
investigating productivity growth and input factor substitutions for aggregate manufacturing
as well as various industries. The results of these analyses differed substantially depending on
73
obtained by simply dividing the value figure for each factor by the gross value of output or by
the gross value added respectively. Partial factor productivity growth indicates how much
output changes in relation to a fixed amount of each single input. It measures how
"productive a factor is. The inverse means how much of a factor has to be used to produce a
specific amount of output - it measures the factor intensity of production.
India's economy is the third largest by GDP in terms of purchasing power parity but, with a
very large population, it ranks only 165th in GDP/capita terms. Gradual de-centralization of
the economy since the early 1990s has allowed the development of a more diverse market
economy that is increasingly driven by an educated and business-minded middle class. This is
highlighted by India's now world-famous telecommunications and service sector, which has
grown extensively over the past decade.
Increased variation has resulted in a reduction in India's agriculture dependency, although this
sector still supplies around 50% of the country's income. Manufacturing remains strong,
representing more than a quarter of output.
However, despite economic expansion and development of its service sector, economic
disparity remains a severe problem for India. Almost a third of Indians lived in poverty in
2011 and constant population growth makes it hard to increase living standards. For
illustration, India welcomed its 1 billionth inhabitant in 2000. In just 12 years since then the
population has increased to over 1.2 billion!.
Role of cemnt industry in india GDP
The Role of Cement Industry in India GDP is significant in the economic development of the
country. The cement industry in India is one of the oldest sectors in India.
The industry is driven by the immense growth in the housing sector, the infrastructure
development, and construction of transportation systems.
Role of Cement Industry in India GDP-Facts
The Indian cement industry is one of the booming sectors of the Indian economy
The infrastructure development of the country in the recent years is the demand driver
for the cement industry
75
The Indian Cement Industry is experiencing the entry of many foreign players in the
Indian market
The average monthly capacity utilization during the year 2006-07 was 94%
The cement dispatches in the year 2006-07 was 155 million tonnes
The growth of the cement sector pertaining to the total output was 10% in 2006-07
The growth rate of the production of cement during the year 2006-07 was 9.1%
The export of the cement in the year 2006-07 was 9.3 million tonnes
The cement industry in India constitutes of 365 small cement manufacturing units and
130 large cement manufacturing units
The total installed capability of the cement manufacturing is 165 million tonnes per
year
The large manufacturing units accounts for 94% of the total output of cement
Heidelberg Cement Company entered into an agreement for a 50% joint venture with
the Indorama Cement Ltd, situated in Mumbai, originally possessed by the Indorama
S P Lohia Group.
Italcementi cement company has acquired share of the famous Indian cement
manufacturer, the Zuari Cement Limited
The acquisition was of 50% shareholding and the deal was of about 100 million
It took over the plant of the Zuari Cement Limited in Andhra Pradesh
Holcim Cement signed an agreement of 14.8% take over with the Gujarat Ambuja
Cements (GACL).
76
Holcim Cement Company is among the leading cement manufacturing and supplying
companies in the world.
Lafarge India
It was established in 1999 with the acquisition of the Tisco and the Raymond cement
plants
Lafarge Cement presently has three cement manufacturing units in India one of them
is in Jharkhand and two other in Chhattisgarh
3.4.3 Social
The cement industry in India consist of both organization sector and the unorganized sector.
Organized sector comprises of the well know cement manufacturing companies while the
main players of the unorganized sector are the regional and local cement producing branded
cement like ULTRATECH, JAYPEE, etc. A population of more than 100 billion people, it is
expected that cement industry will create another 25 lacks job in the next 4-5 years.
The cement industry has responded to the demands of infrastructure and consequent
increasing the production capacity enormously. This industry mainly rely on mining
operation for its product, impacting large number of people and the environment around it.
Hence, adequate responsibility has to move alongside its growth.
India, historically has been a society that has had a tradition of showing concern to others. As
the country industrialized, business houses also kept with these traditions. It is documented
that the oldest business houses have been the most just and hence respected companies in our
society.
Indian economy has grown leaps and bounds in recent years and today India is recognized by
the world as an emerging economy. Consequently, companies of all sizes have emerged,
grown and expanded in the last few decades, at times very quickly, with impacts on the
environment and the society. However, their responsibilities often have not kept pace with
their growth. Governance is often compromised and probably because of the sheer numbers
of people available, the dignity and value for human beings and their rights often ignored.
77
Many organizations have grown, often flouting norms, arriving at quick fix solutions with
sometimes with complete disregard for the environment or the impacts on its work force and
Its neighborhood owing to its operations.
Any quick fix models with a complete lack of concern for the society and environment can
only work in the short term. To survive, organizations need to be viewed as responsible
companies, both by their internal as well as external stakeholders. And this sentiment is being
echoed by all - the government, business forums, etc. and companies are encouraged to
understand this for their owe good. Different organizations have been using the terms CSR,
corporate citizenship and sustainability interchangeably. For example, Ambuja Cements
sees CSR as the social performance forming a significant aspect of the company's overall
sustainability. Sustainability is the broad umbrella and CSR is the company's performance
towards all its stakeholders - workforce , business partners, customer and the society which it
impact through its operations.
While there is no doubt that companies need to sprout and grow, especially to meet the
development demands of society, they also in turn directly or indirectly impact the societies
in which they exist. There is a need and a demand to monitor social impacts and performance.
Just projecting a strong financial bottom line is simply not enough. Hence, CSR is about
responsible management of business processes which produce an overall positive impact on
society.
3.4.4 Technology
The government of India plant to study and possibly acquire new technology from the cement
industry of world. The government is discussing technology transfer in the field of energy
conservation and environment protection to help improve efficiency of the India cement
industry. Cement industry has made tremendous strides in technological up gradation and
assimilation of latest technology. At present 93% of the total capacity in the industry is based
on modern and environment friendly dry process technology.
Continuous technological upgrading and assimilation of latest technology has been going on
in the cement industry. Presently 93 per cent of the total capacity in the industry is based on
modern and environment-friendly dry process technology and only 7 per cent of the capacity
is based on old wet and semi-dry process technology. There is tremendous scope for waste
78
heat recovery in cement plants and thereby reduction in emission level. One project for cogeneration of power utilizing waste heat in an Indian cement plant is being implemented with
Japanese assistance under Green Aid Plan. The induction of advanced technology has helped
the industry immensely to conserve energy and fuel and to save materials substantially.
India is also producing different varieties of cement like Ordinary Portland cement(OPC),
Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well
Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White
Cement etc. Production of these varieties of cement conform to the BIS Specifications. Also,
some cement plants have set up dedicated jetties for promoting bulk transportation and
export.
79
The cement business is a $10 billion industry, measured by annual cement shipments. There
is also a strong reputation behind the cement industry.
Cement is a solid material and consumers rarely have complaints about the product. Regional
distribution plants have also made cement widely available to any type of buyer.
3.5.2 Weaknesses
The cement industry is not without its drawbacks. The cement industry relies on construction
jobs to create a profit. But the cement industry heavily relies on weather. About two-thirds of
cement production takes place between May and October.
Cement producers often use the winter months to produce and stockpile cement, to meet
demand. Another weakness is the cost of transport; the cost of transporting cement is high
and this keeps cement from being profitable over long distances. In other words, shipping
cement costs more than the profit from selling it.
3.5.3 Opportunities
The cement industries has opportunities as well. One such opportunity is the cement
industry's efficiency. The cement industry has recently streamlined its production efforts,
using dry manufacturing instead of wet, which is heavier and more time-consuming.
The cement industry has also invested about $6 billion in expansion efforts to meet unmet
cement needs. Projections show that by 2012, the cement industry will have 25 percent more
production capabilities.
3.5.4 Threats
The nature of the economy have uncovered a number of threats to the cement industry. The
cement industry greatly relies on construction. The current economy has lessened the number
of construction jobs, which in turn hurts the cement industry.
The cement industry controls the majority of the United States market, but not all of it. About
11.5 metric tons of cement are imported annually to support the unmet need. If other
countries can produce and ship cement for a reduced price, the U.S. cement industry is in
danger.
80
The U.S. government is also attempting to regulate the cement industry's waste. The
Environmental Protection Agency has introduced regulations for the cement industry to cut
down emissions.
3.7 Economic Future of Indian Cement industry:Given the rampant growth of the Indian cement industry, few are betting against continued
capacity additions in the short- to medium-term. The extent of capacity addition, however,
and whether or not demand will rise to match it more closely than at present, is up for
debate.In November 2012 the India Brand Equity Foundation (IBEF) said that it expected
double-digit growth in the cement industry for the 2013 and 2014 fiscal years, which end on
31 March 2013 and 31 March 2014 respectively. It reported that the cement industry would
increase production by around 71Mt/yr over the same time-frame to reach over 300Mt/yr in
2014.Meanwhile, the Indian Government's 12th Five-Year Plan, which runs for 2013 to 2017,
states that India will require a cement capacity in the region of 480Mt/yr by the end of
2017.12 It states that a further 150Mt/yr of capacity will be required to accomplish this.
Separately, ACC expects India to have a capacity of 500Mt/yr by 2020.This represents more
than twice the cement that India currently consumes in a year and so it is worth asking, if this
capacity is reached, what will the capacity utilization rate be? The government promises
significant investment in infrastructure, although bureaucracy has hampered such investments
in the past."Land acquisition is a big issue," said H M Bangur, chairman and managing
director of north-based Shree Cement, in August 2012. "No state government is providing
land to set up units. Greenfield expansion is tough."
Sunil Singhania, equity head at Reliance Mutual Fund, said, "Capacity creation in India is
very difficult because there is no land (in some places) and no limestone deposits at others.
Several cement companies have written down assets. I believe capacity additions going
forward will not be as aggressive as in the past. Expansion will be slower than demand
growth. "With prices remaining low due to overcapacity and low demand, the potential for
future collusion between producers and the difficulty of setting up new capacity, it is possible
that producers, under pressure to meet the expectations placed on them by the Five-Year
Plan, will see increased pressure on margins in the next few years, especially if fuel prices
continue to rise .In the midst of this, smaller companies are likely to suffer more than most,
possibly making them acquisition targets for better-equipped multinationals. Indeed, in
81
January 2013 Prism Cement, one of India's smaller cement producers, actually reported a net
loss for the quarter to 31 December 2012. It cited low demand, high fuel costs and increased
electricity prices. How long can such producers continue as the Ultratechs, ACCs and
Ambujas of this world keep adding new capacity?
An academic report carried out for the Competition Commission of India in 2012 hints at this
possibility of future consolidation in the industry. The study found that, despite capacity
utilizations falling across all cement producers in India from 2006 to 2011, it was those with
the smallest market share that experienced by far the worst reduction. Binani Cement, for
example, recorded utilizations rates of only around 55-60%. Conversely mega-players like
Ultratech have been more stable, with rates of 80-95%. In January 2013 India Ratings
reported that smaller businesses were less likely to benefit from the expected improvement in
the industry.A major reason behind this phenomenon is rising fuel costs, which have hit
producers from two directions in the past year. Firstly, demand for power in India is high and
domestic fuels are dedicated predominantly to electrical generation. Industrial companies are
forced, in many cases, to import costly foreign fuel, which must be shipped inland to be used.
A second effect of increased fuel prices is that cement is more costly to transport once it has
left the factory.Due to their size allowing greater economies of scale, larger cement
companies are better positioned to import fuel on a large scale and are more likely to have
flexible vehicle fleets to respond as demand fluctuates in different areas. Another crucial
difference between the larger and smaller companies is that larger players are more likely to
have a pan-Indian presence. This enables them to ride-out periods of difficulty in one area
while maximizing margins elsewhere. Local producers do not have this luxury.Smaller local
producers are less well equipped to deal with expansion and their relative size will gradually
diminish compared to the top 12 producers. As this happens, it is likely that they will become
the acquisition targets of the larger firms.
82
3.8 Key Success Fasters in the cement Industry:Cement industry players a crucial role in the development in the infrastructure country. Due
to the various construction activity undertaken by the central government state government
public sector and other organization to meet need of the massive population in the country
generate huge demand for cement and also provision for housing is the first and foremost
requirement of every household and there for market demand of cement for private
consumption is increasing consultable. According to the ministry the liberalization process
provide the much desired demand to the cement industry and the growth was quit visible
leading to noticeable growth in term of 100 million tonnes capacity aiding during the decade
1999-2012.
Key point
Cement industry is second largest industry in India after china.
183 large cement plant and more than 360 mini plants.
328 million tonnes a years installed capacity.
97% of the installed capacity is accounted for by large producer.
21 top companies control 90% of the market.
40% of the market is controlled by group, holcim and aditya birla group.
Brand Equity
Distribution Network
Economies of scale
83
weakened during Mar and Apr 2013 due to weak demand saw some recovery from mid May
2013. The hike in cement prices was supported by pre-monsoon increase in construction
activities which provided an opportunity to cement companies to raise prices before the lean
season sets in. The industry also increased prices to pass on the increase in coal prices by
Coal India Limited (CIL). As a result, the average wholesale cement prices increased by ~Rs.
10/bag in Delhi, Rs. 17/ bag in Chandigarh and Rs. 5/bag in Kolkata between April-Jun
2013. Prices in some parts of South India such as Bangalore and Chennai also saw hike of
Rs. 10-15/bag in June 2013.
pressure in North, West and East with cement prices declining by Rs. 5-20 per bag in Delhi,
Chandigarh and Ahmedabad markets. The Hyderabad market, which had seen significant
downward pressure in prices in the last one year with average wholesale cement prices
84
declining by 20% from Rs. 283/bag in July 2012 to Rs. 228 -232/bag in April 2013, also saw
a steep recovery in prices in the last week of May 2013. The cement prices in Hyderabad
increased by 30% to Rs. 296/bag in June 2013 driven by slowdown in capacity addition in
South, efforts by cement players to rationalize production as per market demand and to pass
on the rise in costs to the customers. This rise in prices augurs well for South-based players
with significant exposure to Andhra Pradesh market. However, the ability of cement
companies
overhang in the state and lean monsoon season ahead. Going forward, with the busy season
coming to an end, demand scenario continuing to look muted and a seasonally weak monsoon
season ahead, the pricing power is expected to remain weak for the cement industry. On
the cost side, the cement industry was affected by increase in coal prices effected by CIL. In
May 2013, CIL reduced the prices of premium varieties of coal (G3 and G4) with Gross
Calorific Value in the range of 6100-6700 kcal/kg by 10% in line with decline in
international coal prices. To offset this, CIL increased the prices of low grade coal (G6 G17)-varieties that are commonly used by Indian cement companies- by an average 10%. The
increase in coal prices will affect the power and fuel cost for cement companies. The impact
of increase in coal prices will be more pronounced on companies which depend more heavily
on domestic coal.
3.8.3 Major Players in Indian Cement Industry
There are a number of players prevailing in the cement industry in India. However, there are
around 20 big names that account for more than 70% of the total cement production in India.
The total installed capacity is distributed over around 129 plants, owned by 54 major
companies.
85
Table:- 3.2 Following are some of the major names in the Indian cement industry:
Company
Production
Installed Capacity
ACC
17,902
18,640
Gujarat Ambuja
15,094
14,860
Ultratech
13,707
17,000
Grasim
14,649
14,115
India Cements
8,434
8,810
JK Group
6,174
6,680
Jaypee Group
6,316
6,531
Century
6,636
6,300
Madras Cements
4,550
5,470
Birla Corp.
5,150
5,113
In a recent announcement, the second largest cement company in South India, Dalmia
Cement declared that it's going to invest more than US$ 652.6 million in the next 2-3
years to add 10 MT capacity.
India Cements is going to set up 2 thermal power plants in Andhra Pradesh and Tamil
Nadu at a cost of US$ 104 billion.
86
Jaiprakash Associates Ltd has signed a MoU with Assam Mineral Development
Corporation Limited to set up a 2 MT cement plant. The estimated project cost is US$
221.36 million.
Rungta Mines (RML) is also planning to invest US$ 123 million for setting up a 1 MT
cement plant in Orissa
3.8.6 Scope
This report provides a comprehensive analysis of the Indian cement industry, It provides
historical values for the Indian cement industry for the report's 20072011 review period and
Forecast figure for the 2012-2016 forecast period in offer a details analysis of production
capacity,
It
details
the
Indian
cement industry
It covers an exhaustive summary on key trends, drivers and issues affecting the Indian
cement in
It contains an analysis of market entry, growth and operational strategies of key players
Make strategic business decisions using historic and forecast market data related to the
87
Indian cement industry, Assess the growth opportunities and industry dynamics by viewing
production
Capacity , demand, import and export figure identify the key market tread and opportunity
Assess industry structure and competitive landscape the competitive in the Indian cement
industry enabling the formulation of effective market entry strategies.
88
Ultratech
A
V
A
High
Ultratech
Ultratech
J.K
J.K
J.K laxmi
J.K laxmi
J.K
I
L
A
J.K laxmi
ACC
ACC
Ultratech
B
Medium
ACC
SHREE
SHREE
J.K laxmi
T
Y
J.K laxmi
Low
SHREE
ACC
SHREE
Local
Regional
National
Global
Figure:- 3.4
Geographical Coverage
89
Ultratech
High
J.K
R
A
N
D
Medium
J.K
Laxmi
Acc
Shree
Low
High
Figure:- 3.5
Medium
Low
PRICE
90
Interpretation for Geographical Converge:Here in the above table of geographical coverage vice analysis of strategic group mapping,
we can analyse that ULTRATECH, J.K, contain higher availability on the local basis. and
mediums and low level available J.K LAXMI, ACC, SHREE
But on the global level availability, ULTRATECH, J.K, J.K LAXMI, ACC, SHREE
all brands are at mediums and low level.
At the regional level, availability of all brands at high and medium position
91
FINANCIAL ANALASIS
4.1 INTRODUCTION
4.2 Filtrations
4.3 TOOLS FOR FINANCIAL ANALYSIS
Ratio analysis
Tread analysis
92
4.1 INTRODUCTION
we highlighted the content and importance of the statement of change in financial position.
Management, creditors, investors and other use the information contained in these statements
to form judgment about the operating performance and financial position of the firm. User of
financial statement can get future insight about financial strength and weakness of the firm if
they properly analyse information reported in these statement. Management should be
particularly interested in knowing financial strength of the firm to make their best use and to
be able to spot out financial weakness of the firm to take suitable corrective action. The
future plan of the free should be laid down in view of the firms financial strengths and
weakness. Thus financial analysis is the starting point for making plans, before using any
sophisticated forecasting and planning procedures. Understanding the past is a prerequisites
for anticipating the future.
93
4.2 FILTARETION
Interpretation
Currently there are about 3000 dairie in Gujarat, but four major players in the premium
organized segment dominate the industry. That is the reason for selecting four companies out
of several companies.
We selected these four companie on the basis of Sales Net Profit and. From all companies we
select five company which gives higher selse net profit and earning per share as a compare to
others.
In a pie chart it shows thesalse, net profit and earning par share it of selected five companies.
From four selected companies the first company is Ultatech Cement which highest in Sales
Net profit The last company is J K Lakshmi.
Table:- 4.1
Name
Acc cement
Sales
11357.96
Net Profit
EPS
Rank
1231.75
60.70
J k cement
2911.97
235.03
32.501
Jk laxmi cement
2054.95
158.25
13
Shree cement
5590.25
912.68
258.60
Ultra Tech
20174.94
2485.38
89.10
94
Capital employed
Table-4.2
Particular
2013
2012
2011
2010
2009
Acc cement
22.24
21.56
22.37
39.67
36
J k cement
17.67
16.76
8.61
20.98
21.06
J k Lakshmi cement
13.91
9.69
6.03
22.7
19.52
Shree cement
16.29
6.98
30
33.98
25.01
Ultra Tech
21.29
22.56
19.45
28.53
29.21
Total
91.4
77.55
86.46
145.86
130.8
Average
18.28
15.51
17.29
29.17
26.16
95
160
140
120
100
80
Return on Investment
60
40
20
0
2009
2010
2011
2012
2013
Figur-4.1
Return on capital employee that indicates the efficiency profitability of the industry capital
investment. Above graph show the industry return of capital employee continually decrease.
This is not a good sign for the industry having such a reputed name in the market. It also
affects industry capital investment.
96
Table-4.3
Particular
2013
2012
2011
2010
2009
Acc cement
27.7
17.23
19.72
10.68
7.81
J k cement
8.2
6.55
15.8
5.7
2.01
J k Lakshmi Cement
6.71
7.61
11.03
3.75
1.5
Shree cement
21.63
35.86
11.99
4.32
14.71
Ultra Tech
19.6
17.13
22.25
13.32
7.1
Total
83.84
84.38
80.79
37.77
33.13
Average
16.76
16.87
16.16
7.55
6.62
97
18
16
14
12
10
Earning par Share
8
6
4
2
0
2009
2010
2011
2012
2013
Figar-4.2
Financial analyst considers the earning per share as an important measure of profitability.
EPS measures the profit available to the equity share holders on a per share basis. That is the
amount that they can get on every share held.
The earnings per share has increase rapidly from 2009-10 to 2012-13 This Higher Ratio will
attract investors. This ratio shows that company Successfully increase profitability.
98
-----------------------------Current Liabilities
Table-4.4
Particular
2013
2012
2011
2010
2009
Acc cement
0.76
0.77
0.67
0.77
0.88
J k cement
1.09
1.09
1.48
1.79
0.44
0.55
0.96
1.62
2.12
1.39
1.5
1.84
2.02
Ultra Tech
0 .62
0.6
0.57
0.64
0.61
Total
3.82
4.4
4.79
6.35
7.42
Average
0.76
0.88
0.95
1.27
1.48
J k Lakshmi cement
Shree cement
99
1.6
1.4
1.2
1
current Ratio
0.8
Column2
Column3
0.6
0.4
0.2
0
2009
2010
2011
2012
2013
Figar-4.3
The current ratio is a financial ratio that measures whether or not a industry has enough
resources to pay its debts over the next 12 months. It compares a firm's current assets to its
current liabilities. Above graph show the current ratio Decrease rapidly from in the year of
2009-10. It means the industry next five year current assets and current liability was decrease.
100
Table-4.5
particular
2013
2012
2011
2010
2009
Acc cement
0.05
0.08
0.09
0.1
0.09
J k cement
0.9
1.04
1.07
0.82
0.64
J k Lakshmi cement
1.03
0.96
0.95
0.92
0.99
Shree cement
0.76
1.04
1.18
1.5
2.01
Ultra Tech
0.34
0.35
0.38
0.46
0.62
Total
3.08
3.47
3.67
3.8
4.35
Average
0.62
0.69
0.73
0.76
0.87
18
16
14
12
interest coverage tio
10
Series 2
Series 3
6
4
2
0
2009
2010
2011
2012
2013
Figar-4.4
A
measure
of
an
industry
financial
leverage
calculated
by
dividing its
total
liabilities by stockholders' equity. It indicates what proportion of equity and debt the industry
is using to finance its assets. Above graph show the industry debt equity ratio was decrease in
the year of the 2009-10 to 20012-13 it is good position in the market.
101
This ratio indicates as to how many times the profit covers the payment of interest on
debentures and other long- term loans. Hence, it is also known as times-interest earned
ratio it measures the debt service capacity of the firm in respect of fixed interest on longterm debts. This ratio is obtained by dividing profit of the firm before interest and taxes by
fixed interest charges.
Interest Coverage Ratio =
Table-4.6
Particular
2013
2012
2011
2010
2009
Acc cement
27.7
17.23
19.72
10.68
7.81
J k cement
8.2
6.55
15.8
5.7
2.01
J k Lakshmi cement
6.71
7.61
11.03
3.75
1.5
Shree cement
21.63
35.86
11.99
4.32
14.71
Ultra Tech
19.6
17.13
22.25
13.32
7.1
Total
83.84
84.38
80.79
37.77
33.13
Average
16.76
16.87
16.16
7.55
6.63
102
18
16
14
12
10
Interest Coverage Ratio
8
6
4
2
0
2009
2010
2011
2012
2013
Figar-4.5
This ratio indicates as to how many times the profit covers the payment of interest on
debentures and other long- term loans. Hence, it is also known as times-interest earned
ratio it measures the debt service capacity of the firm in respect of fixed interest on longterm debts. Above graph show the industry Interest Coverage Ratio was increase in the year
of the 2009-10 to 20012-13 it ,s means that industry cover interest form profit.
103
Average inventory =
Table-4.7
Particular
2013
2012
2011
2010
2009
Acc cement
11.32
10.62
10.11
11.1
10.8
J k cement
8.13
8.46
8.53
12.03
14.97
19.58
16.01
15.32
23.35
21.9
Shree cement
11.6
10.18
15.71
18.71
14.67
Ultra Tech
10.42
10.3
10.77
10.21
11
Total
61.05
55.57
60.44
75.4
73.34
Average
12.21
11.11
12.08
15.08
14.67
J k Lakshmi cement
104
16
14
12
10
8
Stock Turnover
6
4
2
0
2009
2010
2011
2012
2013
Figar-4.6
A ratio showing how many times a inventory is sold and replaced over a period. Here the
graph show the higher inventory turnover ratio in the year of the 2010-11.it means the
industry inventory is more sold and replaced over a period.
4.3.8 Debtors turnover ratio
The debtors turnover ratio suggests the number of times the amount of credit sale is collected
during the year, while debtors ratio indicates the number of days during which the dues for
credit sales are collected.
Debtors + B/R
Average daily sales
105
Credit sales
365
Table-4.8
2013
2012
2011
2010
2009
Acc cement
51.46
58.47
44.84
33.96
27.47
J k cement
33.68
40.04
33.42
33.33
34.02
J. k Laxmi
cement
52.07
58.06
52.39
52.87
66.97
Shree cement
36.38
40.7
57.21
57.51
64.51
Ultra Tech
25.64
30.08
36.57
37.72
34.88
Average
39.85
45.47
44.88
45.08
45.57
46
45
44
43
42
41
40
39
38
37
36
2009
2010
2011
2012
2013
Figure - 4.7
Debtor turnover ratio or accounts receivable turnover ratio indicates the velocity of debt
collection of an industry. In simple words it indicates the number of times average debtors
(receivable) are turned over during a year. The graph show debtor turnover ratio in the year
106
2009-10 higher and in the year of 2012-13 is lower as camper to past .It means the debtor
turnover ratio decrease. It is the benefit of the industry.
Trend analysis is an aspect of technical analysis that tries to predict the future movement of a
stock based on past data. Trend analysis is based on the idea that what has happened in the
past gives traders an idea of what will happen in the future.
Method for calculating trend:
Trend percentage Method:
We have utilized trend percentage method for the calculation of trend. For the trend analysis
index number is advocated. The procedure followed is to assign the number 100 to the item
of the base year and to calculate percentage change in each item of other years in the relation
to the base year. this procedure is called trend percentage method.
Base year for the trend analysis:
For the trend analysis, year dec 2006 is taken as base for the calculation of the trend of
different of balance sheet and income statement.
Particular
2013
2012
2011
2010
2009
Acc cement
11,602.76
9,946.59
8,130.84
8,296.36
7,503.69
J k cement
2,997.39
2,600.50
2,148.35
2,110.95
1,686.70
J k 107Lakshmi cement
2,093.57
1,780.92
1,390.35
1,537.58
1,257.56
Shree cement
5,793.98
5,943.61
3,613.44
3,790.33
2,788.43
Ultra Tech
20,598.13
18,660.46
13,529.88
7,169.43
6,577.68
43086.53
38932.05
28812.86
22904.65
19814.06
5762.57
4580.93
3962.81
Total
Average
8617.31
7786.41
107
10000
9000
8000
7000
6000
5000
Average Income
4000
3000
2000
1000
0
2009
2010
2011
2012
2013
Figar-4.8
The Industry has a fluctuating flow of income over the 5 years. The industry has not been
able to improve its sell much. The difference of income from 2007-2008 to 2008-2009 is just
7014.92 crores. Next 4 year the industry has not increase their total income. This is not a
good sign for the industry having such a reputed name in the market. Also it affects the
earnings of shareholders.
4.4.2 Total Expenses
Table - 4.11
2013
2012
2011
2010
2009
Acc cement
9,477.74
7,833.96
6,219.93
5,575.58
5,432.95
J k cement
2,388.68
2,044.86
1,833.43
1,644.76
1,345.65
Cement
1,609.41
1,389.55
1,166.47
1,071.70
912.26
Shree cement
4,045.79
4,147.41
2,651.98
2,222.89
1,782.97
Ultra Tech
15,617.65
14,141.17
10,708.33
5,076.17
4,768.17
Total
33139.27
29556.95
22580.14
15591.1
14242
Average
6627.85
5911.39
4516.02
3118.22
2848.4
J K Lakshmi
108
7000
6000
5000
4000
Total Expenses
Column2
3000
Column3
2000
1000
0
2009
2010
2011
2012
2013
Figar-4.9
Above graph show the industry fluctuating of expenses over the 5 year. The industry has not
able to decrease their expenses. The different of expenses from 20010-11 and 2012-13 is
increase This is not good sign for industry. In 2012-13 the industry has not control expenses.
This is not a good sign for the company having such a reputed name in the market. Also it
affects the earnings of shareholders.
4.4.3 Operating Profit
Table-4.10
Name of
2013
2012
2011
2010
2009
Acc cement
2,125.02
2,112.63
1,910.91
2,720.78
2,070.74
J k cement
608.71
555.64
314.92
466.19
341.05
484.16
391.37
223.88
465.88
345.3
Shree cement
1,748.19
1,796.20
961.46
1,567.44
1,005.46
Ultra Tech
4,980.48
4,519.29
2,821.55
2,093.26
1,809.51
Total
9946.56
9375.13
6232.72
7313.55
5572.06
Average
1989.31
1875.02
1246.54
1462.71
1114.41
company
J k Lakshmi
cement
109
2500
2000
1500
Operating
Profit
1000
500
0
2009
2010
2011
2012
2013
Figar-4.10
Above graph show the industry different year operating profit over the 5 year. The graph
show the first 3 year profit continually increase. The industry show, they have achieved good
market share over the first 3 year. But the year of the 2010-11 the industry operating profit
was decrease. Because the J k cement and J K Laksmi Cement Company has decrease their
operating profit.
4.4.4 PBDT
Table-4.11
Particular
2013
2012
2011
2010
2009
Acc cement
2,010.37
2,015.72
1,854.13
2,636.48
2,030.78
J k cement
468.89
411.36
196.41
396.77
286.38
384.29
311.71
163.4
410.9
295.79
Shree cement
1,555.05
1,560.84
786.11
1,438.35
928.3
Ultra Tech
4,770.77
4,295.43
2,549.03
1,975.74
1,684.00
Total
9189.37
8595.06
5549.08
6858.24
5225.25
Average
1837.87
1719.01
1109.82
1371.65
1045.05
J k Lakshmi
cement
110
2000
1800
1600
1400
1200
1000
PBDT
800
600
400
200
0
2009
2010
2011
2012
2013
Figar-4.11
Above graph show the industry fluctuating of PBDT over the 5 year. The industry has not
able to improve their PBDT. But industry PBDT was decrease . Because the J k cement and
J K Lakshmi Cement Company has decrease their PBDT. in 2010-2011 . Hence it is not easy
to predict future of the industry.
4.4.5 Total Share Capital
Table-4.12
Particular
2013
2012
2011
2010
2009
Acc cement
187.95
187.95
187.95
187.94
187.88
J k cement
69.93
69.93
69.93
69.93
69.93
cement
58.85
61.19
61.19
61.19
61.19
Shree cement
34.84
34.84
34.84
34.84
34.84
Ultra Tech
274.18
274.07
274.04
124.49
124.49
Total
625.75
627.98
627.95
478.39
478.33
Average
125.15
125.59
125.59
95.68
95.67
J k Lakshmi
111
140
120
100
80
Total Share capital
60
40
20
0
2009
2010
2011
2012
2013
Figar-4.12
Above graph show the industry fluctuating of Total share capital over the 5 year. The
industry has not able to improve their share capital in 2011-11. This is not a good sign for the
industry having such a reputed name in the market. Also it affects the industry volume and
profit
4.4.6 Total Liability
Table-4.13
Particular
2013
2012
2011
2010
2009
Acc cement
8,084.16
8,198.32
6,993.31
6,583.14
5,409.76
J k cement
3,070.49
2,834.70
2,788.94
2,427.49
1,750.48
cement
2638.83
2279.44
2074.73
1942.43
1533.92
Shree cement
4,825.27
4,241.29
3,939.47
2,706.17
2,003.51
Ultra Tech
20,779.19
17,135.66
14,925.26
6,213.17
5,742.05
Total
39397.94
34689.41
30721.71
19872.42
16439.72
Average
7879.58
6937.88
6144.34
3974.48
3287.94
J k Lakshmi
112
8000
7000
6000
5000
4000
Total Liability
3000
2000
1000
0
2009
2010
2011
2012
2013
Figar-4.13
Above graph show that the industry total liability continually over the 5 year. Because all
three company has increase their liability.
4.4.7 Investment
Table-4.14
Particular
2013
2012
2011
2010
2009
Acc cement
2,553.55
679.08
J k cement
169.3
10.84
5.84
5.99
10.74
J k Lakshmi cement
406.46
453.75
527.76
480.53
88.91
844.83
591
Shree cement
2,535.20
1,196.46 1,592.24
Ultra Tech
5,108.72
Total
10773.23
7074.77
7558383
4476.54
2404.53
Average
2154.65
1414.95
1511.76
895.31
480.91
113
2500
2000
1500
Invesment
1000
500
0
2009
2010
2011
2012
2013
Figar-4.14
At the initial level the industry is very poor in making investments at the year 2011-12
industry sold its investments but in 2011-12 and 2012-13 industry had done good business
And at 2012-13 industry had increase their investment compared past Year.
4.1.8 Total Assets
Table-4.15
Particular
2013
2012
2011
2010
2009
Acc cement
8,084.16
8,198.32
6,993.31
6,583.14
5,409.76
J k cement
3,070.49
2,834.70
2,788.94
2,427.49
1,750.48
cement
2,638.83
2,279.44
2,074.73
1,942.43
1,533.92
Shree cement
4,825.27
4,241.29
3,939.47
2,706.17
2,003.51
Ultaech
20,779.19
17,135.66
14,925.26
6,213.17
5,742.05
Total
393978.69
34689.41
30721.71
19872.4
16439.72
Average
7879.74
6937.88
6144.34
3974.48
3287.94
J k Lakshmi
114
9000
8000
7000
6000
5000
Total Assets
4000
3000
2000
1000
0
2009
2010
2011
2012
2013
Figar-4.15
From the above trend of total assets of the company we can say that company has a good
growth rate. It has increased from 2009-10 to 2011-12 it is because of company overvalued
its fixed assets and investments. But in 2011-12 to 2012-13 is decrease Because company
undervalued its fixed assets.
115
5.1 FINDINGS
After preparing a MRP-1 report on Bakery industry with special focus on cement products,
we have finally reached to the following findings;
We found that Cement Industry is right now prevailing in Growth stage, it is grow at the
rate of 15 17% every year.
We have also found that in order to sustain the current market share all current market
players have to struggle a lot, they have to keep strong distribution channel to reach the
product in each place of the country and Ulltratech become successful to do this.
Apart from strong distribution channel other factors like aggressive promotions and
advertisement, strong research and development, new innovations at regular interval on
continues basis etc. Also play a vital role in sustaining existing customers and attracting
new potential customers.
After making Research on Customer Loyalty of five major brands of cements We have
also found that Customers of Ulltratech and J.K cement are more loyal compare to other
brands like J.K Laxmi, Acc, Shree Cement. But when we compare the loyalty of
Ulltratech and J.K, Ulltratech has upper hand.
116
5.2 CONCLUSION
With the change in the economic condition and opening up of the economy and India being a
signatory to the WTO, it can be observed that the Indian cement industry is in for a heavy
shakeup in addition to this the industry being a capital intensive one and a squeeze of
profitability margins it may be right for the Indian cement industry to look for some
innovative ideas to improve their margins. In addition to this as seen from the various facts
put forward in the previous chapter the demand supply gap exists and in some regions it is the
supply which exceeds demand and in some regions it is the demand which exceed supply, the
company may have to think of new strategies to improve their market share and with this also
improve the profitability margins.
The order of the day is innovate or perish and thus Indian cement companies need to
innovate new methods or some value added products, which may give some fillip to the
industry to improve its margins.
Thus the Indian cement company should try and manufacture a product at a lesser cost,
although it seems not feasible as the cost of cement depend on the power tariffs existing
ground the country. The company can look at the route of captive power generation, which
may be an answer to this problem of high power tariffs.
117
6.1 Introduction
We want to start own agency for cement in India and Northern part of Gujarat at Mehsana,
because of second largest growing economy in the world after China, and also various
industries are contributing for this growth. There are agriculture, infrastructure, energy&
power, banking, & finance service sector. Construction is the second largest economy activity
after agriculture and is poised for continuous growth due to industrialization, urbanization,
and economic development with expectation of improvement living standard of people in
India. It account for nearly 65% of the total investment in infrastructure, employee 33 million
people approximately and accounts for 6-8 percent of GDP. The construction industry is
primarily drive by Government of Indian investment on core infrastructure project and
creation of urban infrastructure, industries capital expenditure by corporate sector and
development activities of real estates or housing sector in urban as well as rural areas.
The Indian economy is booming, with rates of gross domestic product growth exceeding an
average of 7% ever year. This growth is due to rapidly developing service and manufacturing
sectors, increasing consumer demand and government commitment to the agriculture sector
and improve the economic condition of Indian rural population. the production of industrial
machinery has also been on the rise and the increasing flow of goods has spurred increases in
rail, road and port traffic, necessitating future infrastructure improvements.
Government Policies
118
Government policies have affected the growth of cement plants in India in various stages.
The control on cement for a long time and then partial decontrol and then total decontrol has
contributed to the gradual opening up of the market for cement producers. The stages of
growth of the cement industry can be best described in the following stages:
Government Controls
The prices that primarily control the price of cement are coal, power tariffs, railway, freight,
royalty and cess on limestone. Interestingly, all of these prices are controlled by government
REQUIREMENTS
119
Coal
The consumption of coal in a typically dry process system ranges from 20-25% of clinker
production. This means for per ton clinker produced 0.20-0.25 ton of coal is consumed. This
contributes 35-40% of the production cost. The cement industry consumes about 10mn tons
of coal annually. Since coalfields like BCCL supply a poor quality of coal, NCL and CCL the
industry has to blend high-grade coal with it. The Indian coal has a low calorific value
(3,500-4,000 kcal/kg) with ash content as high as 25-30% compared to imported coal of high
calorific value (7,000-8,000 kcal/kg) with low ash content 6-7%. Lignite is also used as a fuel
by blending it with coal. However this process is not very common.
Electricity
Cement industry consumes about 5.5bn units of electricity annually while one ton of cement
approximately requires 120-130 units of electricity. Power tariffs vary according to the
location of the plant and on the production process. The state governments supply this input
and hence plants in different states shall have different power tariffs. Another major
hindrance to the industry is severe power cuts. Most of the cement producing states like AP,
MP experience power cuts to the tune of 25-30% every year causing substantial production
loss.
Infrastructure
To reduce uncertainty relating to power, most of the leading companies like ACC, Indian
Rayon, and Grasim rely on captive power plants. A few companies are also considering
power-generating windmills.
Limestone
This constitutes the largest bulk in terms of input to cement. For producing one ton of
cement, approximately 1.6 ton of limestone is required. Therefore, the cement plant location
is determined by the location of limestone mines. The major cash outflow takes place in way
of royalty payment to the central government and cess on royalties levied by the state
government. The total limestone deposit in the country is estimated to be 90 billion tons. AP
has the largest share -- 34%, Karnataka 13%, Gujarat 13%, M.P 8%, and Rajasthan 6.5%.
The plants near the limestone deposit pay less transportation cost than others.
120
Transportation
Cement is mostly packed in paper bags now. It is then transported either by rail or road. Road
transportation beyond 200 kms is not economical therefore about 55% cement is being
moved by the railways. There is also the problem of inadequate availability of wagons
especially on western railways and southeastern railways. Under this scenario, manufacturers
are looking for sea routes, this being not only cheap but also reducing the losses in transit.
Today, 70% of the cement movement worldwide is by sea compared to 1% in India.
However, the scenario is changing with most of the big players like L&T, ACC and Grasim
having set up their bulk terminals.
Incentives in States
Most state governments, in order to attract investments in their respective states, offer fiscal
incentives in the form of sales tax exemptions/deferrals. In some states, this applies only to
intrastate sales, like Madhya Pradesh and Rajasthan. States like Haryana offer a freeze on
power tariff for 5 years, while Gujarat offers exemption from electric duty.
Installed Capacity
India is the worlds second largest cement producing country after China. The industry is
characterized by a high degree of fragmentation that has created intense competitive pressure
on price realizations. Spread across the length and breadth of the country, there are 120 large
121
122
The Indian cement industry must comply with the various environmental acts and regulations
notified by the Ministry of Environment and Forests (MoEF), etc., which covers different
spheres of the environment, encompassing emissions of air pollutants, consumption of water,
generation and discharge of trade effluents, utilisation and storage of hazardous waste, noise
generation, utilisation of forest land and wildlife areas. Specifically, these are as follows:
These Acts/Regulations, together with some of the stringent conditions that are relevant for
environment protection from industrial pollution and imposed by the pollution control boards,
are discussed in this article.
The full version of this article, written by the National Council for Cement and Building
Materials, India, appeared in the October 2013 issue of World Cement.
123
6.2 Objective
Vision:The vision of the our company is to provide batter quality and with comparatives price and
easily available .
Mission:Our mission is to large cement manufacturing company in India. We went to provide best
quality and at competitive price, develop brand image into customer mind.
Goal:Make largest manufacturing company in India with our vision and mission.
Our objectives
To build strong brand image.
To make our business profitability within a shortest period.
Office Address:
Shop No:- 45, Classic Plaza, Between Radhanpur circle and Modher
Circle, Meshana High- way.
Warehouse Address:
ADVANTAGEYS OF LOCATION:
Easy transportation
Conducive environment
Low Cost of land for the production.
Electricity and water availability
Easy and cheaper labor availability
124
Partners:
Ms.Hetal Mistry
Ms. Dhara Patel
Mr.Tosif Nandoliya
Mr. Jigar Patel
Ms. Vaibhavi Raval
Ms.Dixita Patel
CEMENT PVT.LTD.
Build Make Strong Relation
125
A. Geographic Segmentation:
Here, we are focusing in our country only and especially for the northern part of Gujarat like
Patan, Mehsana, Radhanpur, Harij, Chanasma, Siddhpur. In other word we can say that all
northern districts and villages covered.
Region: Northern part of Gujarat.
City and Villages: Patan, Mehsana, Radhanpur, Harij, Chanasma, Siddhpur,
northern
B. Demographic Segmentation:
Age: Up to 30 year above
Life cycle stage: Business man, Contractors, Farmer.
Education: Primary, secondary, High- Secondary, Graduate, PG.
Social class: Lower-Middle, Upper class.
D. Benefit Segmentation
Convenience, Social Acceptance, Long lasting, Economy, Value for the Money.
Targeting:
126
retailer, distributer,
Advertising
Advertising is a specific communication task and achievement level to be accomplished with
a specific audience in a specific period of time.
Advertising can be used to build up a long term image for a product or trigger quick sales.
Advertising can efficiently reach geographically depressed buyer. Certain forms of
advertising like electronic media in which television, radio, internet and many more but all
this requires large budget. And in print media, news papers, magazines, pamphlets, hoardings
which do not. Deciding advertising forms have effects on sales.
Our aim to providing advertising is a reinforcement advertising that is to convince current
purchasers to make the right choice by using additional features which we provide. By
considering the cost of advertising and to aware customers promptly we use in electronic
media television only because our target customers are kids and there parents who use to
watch TV and select their products. In Print media which is less costly we use news papers,
comics and hoardings.
Sales Promotions:
Advertising typically build brand loyalty and awareness to the customers, while sales
promotion enhance the brand image by offering the products with different sales promotion
tools like, coupons, contests, premiums, instant price of , deals to draw a stronger buyer
response.
127
Initially, we are providing discounts and contests as a Promotional tools to our customers.
This tool is for short run effect such as to highlight product offers and boost sagging sales.
Through which we get three distinctive benefits like, communication, incentive and
invitation.
ADVANTAGEYS OF LOCATION:
Easy transportation
Conducive environment
Low Cost of land for the production.
Electricity and water availability
Easy and cheaper labor availability
DISTRIBUTION CHANNEL:
The producer and the end-users are the part of every channel. We can use the number of
intermediary levels to designate to length of channel there are zero level channel, one level
channel, two level channels, three level channels are available. But in our product we are
using one level distribution channel.
To provide greater service output by decreasing channel level cost and provide lesser price
for customers we have used two level distribution level.
The distribution channel of the company plays a vital role as the product is new to the market
and it is aimed at initially targeting the masons, contractors, architect, business men, farmer,
retailer, distributer, wholesaler, professional person.
Selecting this distribution system through because of covered all local market or approach to
customers, through distribution channel. And taking demand advantage or full fill market
demand.
128
ORGENIZATION STRUCTURE
MD
Marketing
manager
3 sales persons
Financial
manager
HR
manager
Production
manager
R&D
10 labors
129
(Amount in
P & L Account
PARTICULAR
2013-14
2014-15
2015-16
2016-17
2017-18
Sales
15,79,500
21,43,700
25,51,770
28,37,380
32,43,240
Less: Expenses
12,68,000
16,49,000
19,62,900
21,82,600
24,94,800
Rent
1,50,000
1,50,000
1,50,000
1,50 ,000
1,50,000
Salary& wages
Material Purchase
4,98,000
5,17,000
5,36,400
5,55,600
5,74,800
4,50,000
8,05,000
10,80,000
12,80,000
15,60,000
Electricity bills
70,000
68,000
73,000
65,000
72,000
Transportations cost
40,000
48,000
62,000
70,000
75,000
50,000
50,000
50,000
50,000
50,000
Other expenses
10,000
11,000
11,500
12,000
13,000
Operating Profit
3,11,500
4,94,700
5,88,870
6,54,780
7,48,440
Interest
1,60,000
1,38,000
1,16,000
94,000
72,000
Gross Profit
1,51,500
3,56,700
4,72,870
5,60,780
6,76,440
Depreciation
Profit Before Tax
Less tax@30%+3%
Net profit/Loss
1,24,000
(27,500)
(27,500)
1,24,000
2,32,700
71,904
1,43,037
1,24,000
3,48,870
1,24,000
1,24,000
4,36,780
5,52,480
1,07,801
134,965
1,70,716
4,17,364
5,18,941
7,06,893
130
(Amount in
Particular
2014
2015
2016
2017
2018
capital
35,00,000
35,00,000
35,00,000
35,00,000
35,00,000
(27,500)
1,33,296
3,74,365
8,93,306
16,00,199
Total Shareholder
fund
35,00,000
36,33,296
38,74,365
43,93,306
51,00,199
Secured loans
10,00,000
9,00,000
8,00,000
7,00,000
6,00,000
unsecured loans
5,00,000
4,00,000
3,00,000
2,00,000
1,00,000
Total Debt
15,00,000
13,00,000
11,00,000
9,00,000
7,00,000
49,72,500
49,73,296
49,74,365
52,93,306
58,00,199
Gross Block
6,20,000
4,96,000
3,72,000
2,48,000
1,24,000
Less: Depreciation
1,24,000
1,24,000
1,24,000
1,24,000
124,000
Net Block
4,96,000
3,72,000
2,48,000
Total liabilities
LICATION OF
FUNDS:
1,24,000
12,80,000
15,60,000
Current Assets,
Loans & Advances
Finish good
4,50,000
8,05,000
10,80,000
Sundry debtors
4,00,000
7,36,000
10,00,000
5,00,000
60,56,500
65,12,000
69,44,204
79,85,135
88,15,320
90,24,204
97,65,135
1,13,75,320
10,00,000
Total Current
Assets
69,06,500
80,53,000
Less: Current
Liabilities &
Provision
Current Liabilities
29,30,000
39,01,704
23,00,101
Liabilities
29,30,000
26,68,037
46,97,839
49,45,826
58,75,121
39,76,500
41,51,296
43,26,365
48,19,309
55,00,199
Miscellaneous
Expenses not
Written Off
TOTAL ASSETS
5,00,000
4,50,000
4,00,000
3,50,000
3,00,000
49,72,500
49,73,296
49,74,365
52,93,309
58,00,199
22,16,000
22,50,000
Total Current
131
2009-10
2010-11
2011-12
2010-11
2011-12
3,11,500
4,94,700
5,88,870
6,54,780
7,48,440
Depreciation
1,24,000
1,24,000
1,24,000
1,24,000
1,24,000
50,000
50,000
50,000
50,000
50,000
10,00,000
9,00,000
8,00,000
7,00,000
6,00,000
5,00,000
4,00,000
3,00,000
2,00,000
1,00,000
Total (A)
19,85,500
19,68,700
18,62,870
17,28,780
16,22,440
Sources of funds
Capital
Disposition of funds
Capital expenditure for the project
6,20,000
8,50,000
15,41,000
20,80,000
17,80,000
25,60,000
Preliminary expenses
5,00,000
4,50,000
4,00,000
3,50,000
3,00,000
2,00,000
2,00,000
2,00,000
2,00,000
2,00,000
1,00,000
90,000
80,000
70000
60000
60,000
48,000
36,000
24,000
12,000
71,904
1,07,801
1,34,965
1,70,716
23,30,000
24,00,904
29,03,801
25,58,965
33,02,716
60,56,500
65,12,000
69,44,204
79,85,135
88,15,320
3,44,500
4,32,204
10,40,931
8,30,185
16,80,276
65,12,000
69,44,204
79,85,135
88,15,320
1,04,95,596
Taxation
Total (B)
132
5,83,334
Dhara Patel
5,83,333
Dixita Patel
5,83,333
Vaibhavi Raval
5,83,333
Jigarbhai Patel
5,83,333
Tosifbhai Nandoliya
5,83,334
Loan
15,00,000
Total
50,00,000
Table-6.4
Book value
Rate Dep
Dep
A.C
1,20,000
20%
24,000
Furniture
3,00,000
20%
60,000
Computers
2,00,000
20%
40,000
Total
6,20,000
1,24,000
Table-6.5
No
2013-14
2014-15
2015-16
2016-17
2017-2018
Sales mane
1,44,000
1,48,800
1,53,600
1,58,400
1,63,200
Labour
2,70,000
2,82,000
2,94,000
3,06,000
3,18,000
Accountant
84,000
86,400
88,800
91,200
93,600
4,98,000
9,50,000
13,25,000
14,50,000
17,00,000
Total
expenses
Table-6.6
133
Depreciation
Cash Flow
PVIT
PV
(27,500)
1,24,000
96,500
0.909
87,718.5
1,43,037
1,24,000
2,67,037
0.826
2,20,572.56
4,17,364
1,24,000
5,41,364
0.751
4,06,564.36
5,18,941
1,24,000
6,42,941
0.683
4,39,128.70
7,06,893
1,24,000
8,30,893
0.621
5,15,984.55
Total
1,66,69,968.67
Profitability Index
PV of cash inflow
Cash outflow
1,66,69,968.67
50,00,000
= 3.3
134
7. BIBLIOGRAPHY
Books Referred:
Finacial Management
Marketing Management
News Papers:
Business Standard
Economic Times
Magazine:
Business Todays
Websites visited:
www.infoline.com
www.cementsonline.com
www.cmaindia.com
www.wikipedia.com
www.money control.com
www.economicctimes.com
135
In this report we are assuming that selected five companies are representing the whole
industry but it may not be.
We select five companies on the basis of available financial data it may be possible
that major companies remain unconsidered because of lack of financial data.
Here we selected five major companies on the basis of only net profit ratio so it may
be possible that other parameters of the companies are good compare to selected
companies.
In the strategic analysis of the cement industry we used strategic analysis tool
dominant economic features, and critical success factors as per our understanding.
In the PEST and porters five force analysis we include all possible as per our
understanding but there may be chances of missing some variable.
In case of financial analysis we had done five year financial analysis up to 2010.
We try our best effort to apply all possible strategic tools and financial data to study
the performance of cement industry but it may possible that some portion of the
industry remain unanalyzed.
137