Ashish

Chhabra
Darpan Shah
The CEMEX Navneet Bajaj
Way Shwaytaj Raste
Abhishek Nasta
Siddharth Garg
 Part 1 - The McKinsey 7S
Model
H a rd E le m e n ts

R e st a ll
S o ft
E le m e n ts
 Strategy
• Rapid Acquisitions
• Identifying potential markets
• Focus on innovation
• Technology-based Solutions, strong IT
and telecom support (CemexNet )
• Distribution and delivery process
through sophisticated information
systems
• Continuous attempts to reduce
operating cost
 Structure
• Highly Centralized company, while
operating in 60 countries – Unique
simple Organizational structure
• Top management does not see much
change when a company is
acquired
• Ad-doc PMI teams are formed which
includes top performing executives
from various departments to
deliver while relieving them from
their day-to-day activities
 Systems
• IT platform and standardized processes
enable them to identify and share
best practices across global
operations network
• Data is continuously fed into systems at
various levels, which helps in
monitoring the operations better
• GPS trucks, 24-hour cement dispatch
system has given them cutting edge
• Backed by a 97% success rates
• CEMEX being able to cut 35% of its
fleet, saving it $100 million!!
•
 Shared Values
• Visionary
– What sets CEMEX apart are its vision and the actions
the company takes to achieve it.
– Hector Kelvin Castillo, Quality Control Advisor, CEMEX,
Dominican Republic
• Professional
– CEMEX offers a very professional and dynamic
atmosphere, where values and ethics are extremely
important. Working at CEMEX is a never-ending
learning process.
– Kamla Sherif Nassar, Human Resource Projects &
Information Manager, CEMEX, Egypt
• Great emphasis on Ethics and integrity
• Aligned goals
• Motivation from challenges in workplace keeps them
going

 Style
• Progressive – Emphasis on Market
research & Information systems
• Focus on Innovation – Nine days in a
year are kept aside known as ‘idea
days’ where employees give their
ideas and also brain storm on them
 Staff
• Development programs to grow
lower level managers to be ready
for more responsibility
• Place left by ad-hoc PMI execs are
filled by their sub-ordinates which
is a training ground for them
• With 60,000 employees the company
has been an HR process innovator,
with operations in over 60 countries
•
 Part 2 - From International to
Global
• CEMEX believed in getting the basics
right first
• Founded in 1906, their first
international acquisition was made
in 1992 in Spain
• Before that it strongly captured
Mexico’s market, and became 2nd
largest there
• It had invested in technology heavily
• Since Cement is a ‘Commodity
CEMEX’s Modus operandi
 Groundwork for
Internationalization
• Went International in 1992
– strong operational capabilities based
on engineering and IT
– a culture of transparency
– mastered the art of acquisition and
integration within Mexico
– Spent $1Bn between 1987-89, to get
stronger at home
– CemexNet – for Communication

 Stepping Out
• Acquired a majority stake in two
Spanish cement companies,
Valenciana and Sanson, for $1.8
billion - majority market share (28%)
in one of Europe’s largest cement
markets, motivation was Holcim
entering into Mexico, to counter-
attack
• Also Spain was investment grade
country, just entered European
Monetary Union
 Contd…
• A major source of value resulting from
the acquisition was the improvement
in operating results due to the
transfer of best practice from a
supposedly less advanced country to
a supposedly more advanced one
• This acquisition, because of its size and
the fact that it was in a foreign
country, forced CEMEX to formalize
and codify its Post Merger Integration
(PMI) process
• Ex began using Petroleum Coke,
cheaply available in Spain, for
manufacturing
How CEMEX grew
Inorganically…
CEMEX’s Post Merger
Integration(PMI)
 Part 3 - How would you
analyze the global cement
market given the industry
structures ?
Global Cement Consumption
• World demand for cement is forecast to
grow 4.7 percent per year to 3.5
billion metric tons in 2012
• Gains will be driven  by strong
increases in cement consumption in
the developing countries, fueled by
rising income levels and a focus on
infrastructure development
• Rebound in cement demand in
industrialized markets such as  the
US, Japan and Germany, will further
boost advances
• Apart from India & China. Indonesia,
Malaysia, Nigeria, Vietnam and the
UAE are all expected to record gains
 Supply & Demand
• As World economies progress
demand for Cement, Oil, Coal will
increase
•
 Part 4 – Entry Strategy for
India
C u rre n t S ce n a rio
• D rive n b y a b o o m in g h o u sin g se cto r, g lo b a l
d e m a n d a n d in cre a se d a ctivity in in fra stru ctu re
d e ve lo p m e n t su ch a s ra ilw a ys, sta te a n d
n a tio n a l h ig h w a ys, th e ce m e n t in d u stry h a s
o u tp a ce d itse lf
– ra m p in g u p p ro d u ctio n ca p a city
– a ttra ctin g th e to p ce m e n t co m p a n ie s in th e w o rld ,
and
– sp a rkin g o ff a sp a te o f m e rg e rs a n d a cq u isitio n s to
sp u r g ro w th
• T h e re ce n t b o o m in th e h o u sin g a n d co n stru ctio n
in d u stry in  In d ia  h a s w o rke d w o n d e rs fo r
 Opportunity
• Despite the
growth of the
Indian cement
industry, India'
s per capita
production of
115 kilograms
per year lags
the world
average of
over 250
kilograms
and China's
production of
more than 450
kilograms per
Top Ten Cement companies
in India
Company
Company Production( Installed % utilization
Production( Installed
tonnes) Capacity
ACC 17,902 18,640 96.04
Gujarat Ambuja 13,094 14,860 95.57
Ultratech 13,707 17,000 80.63
Grasim 13,649 14,115 97.78
India Cements 8,434 8,810 95.73
JK Group 6,174 6,680 92.43
Jaypee Group 6,316 6,531 96.71
Century 6,109 6,300 98.33
Madras Cements 4,550 5,470 83.18
Birla Corp. 5,150 5,500 98.72
• Can start by acquiring companies which
are strong in regions
– Shree Cement (Bangur) has strong
presence in north
– India Cements in South
– Aditya Birla in East
– Eastern India growing @11.4% Y-o-Y
– Biggest Markets are UP & Maharashtra
followed by Gujarat & MP

 Specific to India
• For developed market, Industrial and
institution buying accounts for 80%
while rest is for consumers, who
buy in small quantities
• This is reversed in developing
countries where most of the sale is
accounted by small quantity
buyers, since they believe in
making their own homes
• This is very relevant to have a big
retailer/distributor base
 New Investments
• JSW Cement, part of the OP Jindal Group, plans to set
up cement units near the group’s steel plants
at Kurnool, Andhra Pradesh, and Vijayanagar,
Karnataka. The units which will have a combined
capacity of 5.5 MT per annum will be set up at a cost of
US$ 393.1 million.
• Anil Ambani Group Company Reliance Infrastructure
will invest US$ 2.1 billion to set up cement plants with a
total capacity of 20 MT per annum over the next five
years.
• Reliance Cementation, an Anil Dhirubhai Ambani
Group (ADAG) company plans to set up a 5 MT
integrated cement plant in Yavatmal district of
Maharashtra at a cost of US$ 463.2 million.
• Jaiprakash Associates Ltd has inked a MoU with state-
owned Assam Mineral Development Corporation
Limited (AMDC) for setting up a 2 MT per annum
capacity cement plant at an estimated cost of US$
221.36 million.
• Iron ore mining firm Rungta Mines (RML), the flagship
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Thank you