STRATEGIC POSITIONING OF ULTRA TECH CEMENT AND ITS GROWTH (ADITYA BIRLA GROUP)

HISTORY OF ADITYA BIRLA GROUP

Aditya Birla Group was Indias first multinational corporation. Cotton Trading Operations starter in Pilani in the Rajasthan in 1857. Today, the groups footprint extend to 36 countries and its revenue are US$40 billion. Over 53 per cent of its revenues flow from its overseas operations. It is anchored by an extraordinary force of over 133,000 employees, belonging to 42 different nationalities.

The Group has been ranked Number 4 in the Global 'Top Companies for Leaders' survey
Ranked Number 1 in Asia Pacific for 2011.

Ranked Number 3 in Top 10 Indian Cement Market.

VISION & VALUES OF ADITYA BIRLA GROUP

VISION
To be a premium global conglomerate with a clear focus on each business.

MISSION
To deliver superior value to our customers, shareholders, employees and society at large.

VALUES
Integrity Commitment Passion Seamlessness Speed

ADITYA BIRLA GROUP IN INDIA.

Aditya Birla Nuvo Grasim Industries Limited Grasim Bhiwani Textiles Limited Hindalco Industries Limited UltraTech Cement Limited Aditya Birla Minacs Worldwide Limited Aditya Birla Chemicals (India) Limited Utkal Alumina International Limited Dahej Harbour & Infrastructure Limited Aditya Birla Science and Technology Company Limited Aditya Birla Finance Limited Aditya Birla Money Aditya Birla Insurance Brokers Aditya Birla Capital Advisors Private Limited Idea Cellular Limited Madura Fashion and Lifestyle Essel Mining and Industries Aditya Birla Retail Limited Aditya Birla Group Power Projects

ULTRA TECH CEMENT

On 17 June 2003, the Aditya Birla Group (ABG) acquired management control of L&T Cement and renamed it UltraTech. The acquisition brought in new competitive dynamics. The company has since grown rapidly. It is currently the second largest cement producer and is third in terms of profitability. India's largest and the Worlds 10th largest manufacturer of cement with an installed capacity of 52 Million Tonnes Per Annum and an expected increase of 10 Million Tonnes Per Annum by FY 13.

ULTRA TECH CEMENT CHALLENGES

L&T cement which enjoyed leadership position in the premium cement market epitomized engineering prowess , technology quality and modernity
This has enabled the brand to command a premium over the other cement brands. Grasim was allowed 8 months to use the L&T brand. Ultratech was faced with a tough task. The time was short and there were two choices, merge the L&T brand with existing Grasim brands or launch a new brand . It had to make sure that the new brand did not lose the qualities of L&T

The new brand should be able to command the same level of premium of L&T.
Time was short

It was a risky affair.

ULTRA TECH CEMENT STRATEGY

The name Ultratech was chosen after careful marketing

research. Since L&T does not mean anything by virtue of the brand name, Grasim wanted the new brandname to portray significant intrinsic value of the brand. Since Grasim didnot want to dilute the premiumness that L&T enjoyed, a high decibel ad blitz was launched to announce that L&T is now Ultratech. The campaigns was backed with direct marketing where the company officials met the 5500 odd stockists and authorised dealers explaining the new brand and company policies.

ULTRA TECH CEMENT STRATEGIC POSITIONING

Ultratech was positioned as the ' Engineer's choice" cement emphasizing on the qualities such as Quality, Modernity and technology. The gamble has paid off well for Aditya Birla group and Ultratech was able to carry the legacy of L&T cement.

The Engineer's Choice

STRATEGY FOR REDUCING PRODUCTION COST

Three Major Cost s factors of Cement Industry (1) Sourcing of raw materials and fuel from quarries and mines (2) The manufacturing process, (3) Financial and Human resource advantage. 1.Sourcing of Raw Material UltraTech's greatest strength is its raw material sourcing. Limestone quarries are usually leased from the government on a long-term basis (usually at least 25-30 years) This source of long-term competitive advantage is due to their people skills which aid in identifying the sources and their terms of leasing which lock in these resources for the long term. Clearly, this resource is valuable and rare. UltraTech's capabilities in identifying, and leasing, higher quality raw material quarries results in significant cost savings for them.

STRATEGY FOR REDUCING PRODUCTION COST

2. Fuel used in Manufacturing process.
The manufacturing process offers no distinct competitive advantage to UltraTech or its largest competitor ACC . UltraTech has already started switching to coal

3. Financial and Human resource advantage

UltraTech, being a part of the Aditya Birla Group, has access to the deep pockets of its promoters. Ultra Tech also having human capital of highest quality. A final point to note is that UltraTech has higher operating leverage than ACC

POSITIVE THING FOR ULTRA TECH

A comparison of raw material costs showed that UltraTech had a huge advantage (nearly double) over ACC due to greater access to better quality quarries.

YOY SALES PERFORMANCE

Sales Rs Crs

Years

92% GROWTH IN SALES BETWEEN MAR.10 TO MAR.11

YOY PAT PERFORMANCE

PAT Rs Crs

Years

28% GROWTH IN SALES BETWEEN MAR.10 TO MAR.11

YOY SALES PERFORMANCE COMPARISION WITH ACC CEMENT

IN FY 10-11 ULTRATECH 57% AHEAD IN SALES

YOY PAT PERFORMANCE COMPARISION WITH ACC CEMENT

IN FY 10-11 ULTRATECH 6% AHEAD IN PAT

CONCLUSION
The acquisition brought in new competitive dynamics. Ultratech was able to carry the legacy of L&T cement. With the help there competitive strategy they are able to go ahead of there main competitor ACC in FY 10-11 in terms or Sales & Revenue. Further, Ultratech Cement assuming approx 8% growth in Indian Cement Market in next coming 5 years, As Govt. are expected to spend large budget into Rural & Urban Infrastructure Development .

If Ultratech Cement able to maintain same growth in next 4 to 5 years then they may become India No.1 Cement Company.

THANK YOU

ULTRA TECH CEMENT Looking ahead

Cost leadership: Striving to become a cost leader by means of setting up captive power plants, and/or up-gradation of technology to enhance productivity, is increasingly becoming critical for large cement players in this sector. Relationship Management: UltraTech should focus on managing its relationships with importers, exporters, distributors, warehouse providers, wholesalers, retailers and dealers for their long-term profitability. Synergies with Grasim: The two companies under the ABG banner can exploit operational synergies in raw materials procurement, manufacturing, common branding, dealer networking, logistics, and exchange of key personnel. Ready Mix Concrete: Finally, one of the recent trends in this sector is the focus on ready-mix concrete. Therefore, an early technology and capacity building in this area would determine the strategic moves of cement companies in the future.