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ACKNOWLEDGEMENT. . . . . . . . . . . . . . . . . . PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1. CEMENT AND ITS TYPES 2. INDIAN CEMENT INDUSTRY
OVERVIEW STRUCTURE MAJOR PLAYERS GOVT. POLICIES CEMENT EXPORTS PORTER’S 5-FORCE MODEL
3. INTRODUCTION ULTRA TECH CEMENT
3.1 PRODUCTION UNITS 3.2 ULTRA TECH ADVANTAGES 3.3 AWARDS 3.4 EXPORTS
4. PROJECT WORK
4.1 OBJECTIVE OF THE STUDY 4.2 RESEARCH DESIGN 4.3 DATA ANALYSIS & FINDINGS 4.4 LIMITATIONS 4.5 RECOMMENDATIONS
HE WAS ALWAYS THERE TO MEET & TALK ABOUT MY IDEAS.______________. I AM ALSO GREATLY INDEBTED TO MY MENTOR MR.HE HAS BEEN SO LENIENT ALSO. I THANK Mr. STIMULATING SUGGESTIONS AND HELPING ME ALL THE TIME DURING MY PROJECT.________________.MR.VIKAS HAS BEEN A FRIEND AND A GUIDE.____________________. ULTRA TECH CEMENT. INSPIRATION AND MOTIVATION HAVE ALWAYS PLAYED A KEY ROLE IN THE SUCCESS OF ANY VENTURE.HE WAS THERE TO LISTEN ME & HELP ME OUT IF I EVER HAD ANY PROBLEM. FIRST. FOR HIS CONTINUOUS SUPPORT. THANKS TO MY FAMILY MEMBERS & ALSO TO FRIEND NAVIN FOR BEING SO SUPPORTIVE.ACKNOWLEDGEMENT PERSEVERANCE.SO HEREBY.BOTH OF THEM WERE ALWAYS READY TO LISTEN & GIVE ADVICE. 4 .. AT LAST. A SPECIAL THANK GOES TO MR. ULTRA TECH CEMENT. IT’S MY PLEASURE TO RECORD THANKS & GRATITUDE TO THE PERSONS INVOLVED.
Indian economy is facing a boom in the real estate. This is directly related with the cement sector. Ultra Tech cement being one of the top three players in the Indian market and the most exported Indian cement is an important part of the sector. During my project, I carried out a research for Ultra Tech cement and tried to find out its current market position, reasons behind any shortcomings and also found out some methods of increasing Ultra Tech cement sales. The report also gives a detailed idea about the Indian cement industry and the key players.
WHAT IS CEMENT?
Cement is a mixture of limestone, Clay, Silica and Gypsum. It is a fine powder which when mixed with water sets to a hard mass as a result of hydration of the constituent compounds. It is the most commonly used construction material. Cement is manufactured by burning a mixture of limestone and Clay at high temperatures in a kiln, and then finely grinding the resulting clinker along with Gypsum. The end product thus obtained is called Ordinary Portland Cement (OPC). Different Types of Cement There are different varieties of cement based on different compositions according to specific end uses, namely Ordinary Portland Cement, Portland Pozolona Cement, Portland Blast Furnace Slag Cement, White Cement and Specialized Cement. The basic difference lies in the percentage of clinker used. 1. Ordinary Portland cement (OPC): OPC, popularly known as grey cement, has 95% clinker and 5% of Gypsum and other materials. It accounts for 70% of the total consumption. White cement is a variation of OPC and is used for decorative purposes like rendering of walls, flooring etc. It contains a very low proportion of iron oxide. 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.
2. Portland Pozolona Cement (PPC): Portland pozzolana cement is Ordinary Portland Cement blended with pozzolanic materials (power-station fly ash, burnt clays, ash from burnt plant material or Siliceous earths), either together or separately. Portland clinker is ground with Gypsum and Pozzolanic materials which, though they do not have cementing properties in themselves, combine 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. PPC has 80% clinker, 15% pozolona and 5% gypsum and accounts for 18% of the total cement consumption. It is cheaply manufactured because it uses fly ash/burnt clay/coal waste as the main ingredient. It has a lower heat of hydration, which helps in preventing cracks where large volumes are being cast. 3. Portland Blast Furnace Slag Cement (PBFSC): PBFSC consists of 45% clinker, 50% blast furnace slag and 5% Gypsum and accounts for 10% of the total cement consumed. It has a heat of hydration even lower than PPC and is generally used in construction of dams and similar massive constructions. Portland blast-furnace slag cement contains up to 70 per cent of finely ground, granulated blastfurnace slag, a nonmetallic product consisting essentially of Silicates and Aluminum-silicates of Calcium. Slag brings with it the advantage of the energy invested in the slag making. Grinding slag for cement replacement takes only 25 per cent of the energy needed to manufacture
higher compressive and flexural strength. Rapid Hardening Portland cement: It is similar to OPC. so that on casting. Water Proof Cement: OPC.Portland cement. improved resistance to aggressive chemicals and more consistent plastic and hardened consistency. Special cooling technique is used. except that it is ground much finer. It is used to enhance aesthetic value. 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. the compressible strength increases rapidly. Specialized Cement: Oil Well Cement: is made from clinker with special additives to prevent any porosity. It is manufactured using fuel oil (instead of coal) and with iron oxide content below 0. White Cement: White Portland cement has essentially the same properties as gray cement. easier finish ability. 4. better concrete workability. with small portion of calcium stearate or non-saponifibale oil to impart waterproofing properties. White cement is much more expensive than grey cement. 8 . which is a very important quality control issue in the industry. in tiles and for flooring. 5. except for color. lower permeability.4% to ensure whiteness. Portland blast-furnace slag cement has a lighter colour.
Broadly. The increase in infrastructure projects by the government coupled 9 . road network and housing facilities. In India too. Rural areas consume less than 23% of the total cement. The real driver of cement demand is creation of infrastructure.INDIAN CEMENT INDUSTRY-AN OVERVIEW Cement production commenced in India as early as 1914. Earlier. With the boost given by the government to various infrastructure projects. The first cement unit was set up at Porbandar in 1914 with a capacity of 1. both in rural and urban areas. but in the last decade. growth in the cement consumption is anticipated in the coming year. roads. Availability of cheaper building materials for nonpermanent structures affects the rural demand. Demand for cement is linked to the economic activity in any country. the demand for cement will be affected by spending on infrastructure (including housing). hence cement demand in emerging economies is much higher than developed countries where the demand has reached a plateau.) and infrastructure creation (ports. power plants etc). government sector used to consume over 50% of the total cement sold in India. The favorable housing finance environment is expected to fulfill the vast housing requirements. it can be categorized into demand for housing construction (homes. its share has come down to 35%.Cement is the preferred building material in India. offices etc. It is used extensively in household and industrial construction.000 tones per annum.
The reduction in import duties is not likely to affect the industry as the cement produced is at par with the international standards and the prices are lower than those prevailing in international markets. 10 .with the construction of the Golden Quadrilateral and the North-South and East-West corridor projects have led to an increase in consumption of cement. This increase is expected to continue in the future. The graph below show the consumption of cement in different areas of housing. infrastructure and industries.
composite cement and special cement and has begun offering its marketing expertise and distribution facilities to other producers in cement and related areas. The company plans capital expenditure through expansion of existing units and/or through acquisitions. It has twelve manufacturing plants located throughout the country with exports to SAARC nations. 11 . Non-core assets are to be divested to release locked up capital. It is also expected to actively pursue overseas project engineering and consultancy services.Structure of the industry Domestic players: Associated Cement Companies Ltd (ACCL) Associated Cement Companies Ltd manufactures ordinary Portland cement.
property & land development. shipping. Portland slag cement. one in Chattisgarh. yarn.77 million metric tones of cement in 2003-04.43 million tones in 2003-04. pulp & paper. Going forward. builders and floriculture. Portland pozzolana cement. Century Textiles and Industries Ltd (CTIL) The product portfolio of CTIL includes textiles. jute goods. casting.78 million metric tones and produced 4. calcium carbide etc. It manufactures Ordinary Portland cement (OPC).Birla Corp Birla Corp's product portfolio includes acetylene gas. low heat cement and sulphate resistant cement. CTIL has four plants that manufacture cement. Cement is the largest division of CTIL and contributes to over 40 per cent of the company's revenues. The cement division has an installed capacity of 4. The company has two plants in Madhya Pradesh and Rajasthan and one each in West Bengal and Uttar Pradesh and holds a market share of 4. fly ash-based PPC. the company is setting up its captive power plant to remain cost competitive. cement. Large quantities of its cement are exported to Nepal and Bangladesh. Going forward. two in Madhya Pradesh and one in Maharashtra. Low-alkali Portland cement. auto trim parts. the company has 12 . cement. The company has an installed capacity of 4.7 million tones with a total cement production of 5. rayon.1 per cent.
The company plans to invest over US$ 9 million in the next two years to augment capacity of its cement and fiber business. ramping up the capacity of Alexandra Carbon Black in Egypt to 1. grey cement. L&T's cement division in early 2004. Punjab. Gujarat Ambuja Cements Ltd (GACL) 13 . Tamil Nadu and Gujarat among others. sponge iron.70. Rajasthan.000 tpa to 60. and Focusing on cement. Grasim-UltraTech Cemco Grasim's product profile includes viscose staple fiber (VSF). rayon and paper as its long-term business plan.000 tpa.scripted a three-pronged strategy closing down its shipping business.20. white cement. continuing with its chemicals and adhesive division.000 tpa) and raising the capacity of the carbon black plant in China from 12. Chattisgarh. chemicals and textiles. Grasim (with UltraTech) held a market share of around 21 per cent in 2005-06. It has plants in Madhya Pradesh. Its also plans to focus on its international ventures.000 tone per annum (from 1. With the acquisition of UltraTech. Grasim has now become the world's seventh largest cement producer with a combined capacity of 31 million tones.
The company has free cash flows that it is likely to use to grow inorganically. The company is scouting for a capacity of around two million tonne in the northern and western markets. Its product portfolio includes ordinary portland cement and blended cement. The company has a market share of 5. The group has clinker manufacturing facilities at Himachal Pradesh. Maharashtra. Chattisgarh. after Grasim-UltraTech Cemco.6 million tonne in 2003-04. Punjab and Rajasthan.81 million tonne and plants in Andhra Pradesh and Tamil Nadu. Gujarat. Maharashtra. The company has a market share of around 10 per cent. with a strong foothold in the northern and western markets. Its total sales aggregated US$ 526 million with a capacity of 12. making it the second largest cement group in the country. GACL has a 14.Gujarat Ambuja Cements Ltd was set up in 1986 with the commencement of commercial production at its 2 million tonne plant in Chandrapur. It has also earmarked around US$ 195-220 million for acquisitions India Cements India Cements is the largest cement producer in southern India with a total capacity of 8. The company has limited 14 . Gujarat Ambuja is one of India's largest cement exporter and one of the most cost efficient firms.45 per cent stake in ACC.36 million tonne in 2003-04.4 per cent with a total cement production of 6.
15 .8 per cent with the cement division contributing US$ 172 million to revenue in 2003-04. The company plans to reduce its manpower significantly And exit non-core businesses to turnaround its fortune. The company has a market share of 3.its business activity to cement. though it has a marginal exposure to the shipping business. It has an annual capacity of 4.5 million tonne through the modernizing of the existing units and the commissioning of a new grinding unit at Tanda (Uttar Pradesh) with an investment of US$ 163 million. 43. now known as Jaiprakash Associates Limited (JAL) is part of the Jaypee Group with businesses in civil engineering. It also expects the export market to open up. cement. hydropower. 53. hospitality. with the Gulf emerging as a major importer. design consultancy and IT. Jaiprakash Associates Limited Jaiprakash Industries.6 million tonne with plants located in Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar Pradesh). The company is upgrading its capacity to 6. The company manufactures a wide range of world class cement of OPC grades 33. IRST-40 and special Blends of pozzolana cement. Jaiprakash Associates has decided to concentrate on its core business of construction and engineering and leave its cement plant to its subsidiary Jaypee Rewa Cement Ltd.
The company is engaged in cement. 16 . ready mix cements (RMC) and units generated from windmills. a Singhania Group company.JK Synthetics JK Synthetics. Madras Cements plans to expand by putting up RMC plants. started manufacturing nylon at Kota in 1962. As Karnataka is a promising market. nylon tyre-cord. clinker. dolomite.JK Cements and JK Synthetics. cement (in 1975).4 million tonne through an investment of US$ 9 million.26 million metric tonne and manufacturing white cement. limestone.7 per cent. Madras Cements Madras Cements Ltd is one of the oldest cement companies in the southern region and is a part of the Armco group. After the restructuring. the company is further expanding its capacity from the present 1. The company has three plants in Tamil Nadu. The company has a market share of 2. it will be left with a cement plant at Nimbahera in Rajasthan. Subsequently. JK Synthetics Limited is restructuring its business divisions into two separate entities. with a capacity of 3.1 per cent. it diversified into PSY/PFY. one in Andhra Pradesh and a mini cement plant in Karnataka. It has a total capacity of 5.47 million tonne annually and holds a market share of 3.5 million tonne to 3. dry mortar mix. acrylic and white cement (in 1984).
Holcim entered India by means of a longterm strategic alliance with Gujarat Ambuja Cements Ltd (GACL). has a cement production capacity of 141. Africa and North America.Foreign players: Holcim Holcim. Italcementi Group The Italecementi group is one of the largest producers and distributors of cement with 60 cement plants. It has a strong market presence in over 70 countries and is a market leader in South America and in a number of European and overseas markets. the Middle East and the region adjoining the Indian Ocean. concrete and construction related services. It is a key player in aggregates. earlier known as Holder bank. Holcim also intends to use India as an additional base for its IT operations. The alliance aims to strengthen their clinker and cement trading activities in South Asia. Asia. All initiatives in southern India are 17 . 547 concrete batching units and 155 quarries spread across 19 countries in Europe. R&D projects as well as a procurement sourcing hub to generate additional synergies and value for the group. Italcementi is present in the Indian markets through a 50:50 joint venture company with Zuari Cements.9 million tonne.
The Indian cement plants are located in Chhattisgarh and Rajasthan. has a total cement capacity of 5 million tonne and a clinker capacity of 3 million tonne in the country.4 per cent. Lafarge India Lafarge India Pvt Ltd.routed through the joint venture company.4 million tonne and a market share of 2. ordinary portland cement and portland pozzolana cement. a subsidiary of the Lafarge Group. The joint venture company has a capacity of 3. Lafarge Cement has become the largest cement selling firm in the Indian markets of West Bengal. It exports clinker and cement to Bangladesh and Nepal. 18 . Lafarge commenced operations in 1999 and currently has a market share of 3. Bihar.1 per cent. while Italcementi is free to buy deals In its individual capacity in northern India. It produces Portland slag cement. Jharkhand and Chhattisgarh.
Two players call all the shots. Historically. where profits move disproportionately with even small changes in cement prices. In a commodity business. two companies . along with their associate companies. Government is the single largest buyer of cement. airports. drive to complete pending infrastructure project has driven demand 19 . seaports and railroads and the boom in housing driven by easy availability of cheap housing credit have been the key growth drivers for the sector. this is a significant development The emphasis laid by the government on the development of physical infrastructure mainly roads. control almost 50% of India’s cement capacity and supply. For the first time in India.Grasim and Gujarat Ambuja. in the last year.
presence in high growth markets and fiscal benefits. large cement plants accounted for 93% of the total installed capacity in India. 3. which translates into an investment of Rs. This edge got further sharpened post ACC acquisition that added to scale as well as geographical diversity. The cement 20 . Major Consolidations With an installed capacity of around 157 million tonne per annum (mtpa) at end-March 2007. However. cement plants are capital intensive and require a capital investment of over Rs. Gujarat Ambuja has always traded at a premium to its peers due to its higher operational efficiency. the concentration at the top is increasing.growth. One of the major cement consuming projects is the Golden Quadrilateral Project-Besides construction and modernization of four airports and two seaports. The structure of the industry is fragmented. The installed capacity is distributed over across approximately 129 large cement plants owned by around 54 companies. although.500 million for a 1 mtpa plant. Grasim and ultra tech on the other hand are doing so well to capture the more and more market share.500 per tonne of cement. 3. The fragmented structure is a result of the low entry barriers in the post decontrol period and the ready availability of technology.
wholly-owned subsidiary of Holcim. Indian Rayon's cement division merging with Grasim. Holcim had entered into a strategic alliance with GACL. the share of promoters in the company is 9%. 90. Multinational cement companies have also initiated the acquisition process in the Indian cement market. Holderind Investments (Holcim Mauritius). Holcim also made an open offer to acquire an additional 20% stake in GACL at Rs. Holcim acquired a majority in Ambuja Cement Eastern and a substantial stake in ACC. and acquired a 67% controlling stake in Ambuja Cement India. L&T taking over Narmada Cements.64 per share. Through this holding company. the Holcim-ACC-Gujarat Ambuja Cements combine (capacity of 33.105 per share from the promoters. Grasim taking over Sri Dig Vijay Cements. In January 2006.5 mt) and the 21 . Ambuja Cement India holds a 34% share in ACC and a 97% share in Ambuja Cement Eastern. an indirect. Gujarat Ambuja taking over DLF Cements and Modi Cement.industry has witnessed substantial reorganization of capacities during the last couple of years. Post-sale. acquired 200 million equity shares of GACL at a price of Rs. Holcim's acquisition has led to the emergence of two major groups in the Indian cement industry. ACC taking over IDCOL. Swiss cement major Holcim has picked up 14. India Cement taking over Raasi Cement and Sri Vishnu Cement. Grasim's acquisition of the cement business of L&T. Earlier. Some examples of the consolidation witnessed during the recent past include: Gujarat Ambuja taking a stake of 14% in ACC.8% of the promoters stake in Gujarat Ambuja Cements (GACL).
The Gujarat Ambuja group has emerged as the third largest player with a capacity of 14.64 mtpa.Aditya Birla group through Grasim Industries and Ultratech Cement (combined capacity of 31. 22 . Lafarge. UltraTech CemCo Ltd.86 mtpa. ACC was the largest player with a capacity of 18. and Birla Corp.1 mt). Heidelberg Cement is expected to take a 50% controlling stake in Indo-Rama's grinding plant of 0. Other leading players include India Cements. with a capacity of 3. Recently. Lafarge. Madras Cements. Jaypee group.K. Reasons behind these consolidations. Grasim ranks fourth with a capacity of 14.1 now occupies the second slot with a capacity of 17 mtpa (which includes 1. As on March 2006. had acquired the cement plants of Raymond and Tisco in the recent past. Birla promoted Zuari Industries' cement plant in AP. and has an installed capacity of 5 mtpa.75 mtpa at Raigad in Maharashtra. Heidelberg Cement has entered into an equal joint-venture agreement with S P Lohia Group controlled Indo-Rama Cement. the French cement major.4 mtpa.12 mtpa. Italy based Italcementi has acquired a stake in the K. Century Textiles.5 mtpa of subsidiary Narmada Cement).
benefits of tax shelter. The relatively smaller and weaker units are finding it difficult to withstand the cyclical pressure of the cement industry. State wise Capacity As cement is a low value commodity. Transporting costs render the prices of cement in 23 .As discussed above. Some of the key benefits accruing to the acquiring companies from these acquisition deals include: ❑Economies of scale resulting from the larger size of operations ❑Savings in the time and cost required to set up a new unit ❑Access to new markets ❑Access to special facilities / features of the acquired company ❑And. The extent of concentration in the industry has increased over the years. the cement industry is witnessing a number of Mergers & Acquisitions (M&As). freight costs assume a significant proportion of the final cost. This concentration is mainly because of the focus of the larger and the more efficient units to consolidate their operations by restructuring their business and taking over relatively weaker units.
its bulky nature and infrastructure bottlenecks render even rail transport unviable over very long distances (that is why Madras Cements or India Cements. Karanataka. Rajasthan. Railways are mostly used to transport cement over longer distances. Pondicherry. J&K and Uttranchal). Himachal Pradesh. can hardly make a difference to the fortunes of west-based companies like Gujarat Ambuja). However.distant destinations uncompetitive. Delhi. Assam. For instance. Therefore. West (Maharashtra and Gujarat). This is the reason for showing regional demand rather than state demand in case of cement. Andhra Pradesh. Jharkhand and Chhattisgarh). East (Bihar. Northern Region 24 . manufacturers tend to sell cement at the nearest market first and sell in distant markets only if additional realization is greater than freight costs incurred. Region wise Capacity The Indian cement industry has to be viewed in terms of five regions: North (Punjab. Chandigarh. located in the south. Orissa. West Bengal. Andaman & Nicobar and Goa). Karnataka. South (Tamil Nadu. Meghalaya. Kerala. it is financially infeasible to transport cement by road over 250 kms. and Central (Uttar Pradesh and Madhya Pradesh).
68 8950.34 200.00 16299.02 9744.00 172.00 21887.00 23404.Punjab Delhi Karanataka Himachal Pradesh Rajasthan J&K TOTAL West Maharashtra Gujarat TOTAL South Tamil Nadu Andra Pradesh Karnataka Kerala 2173.00 12937.00 4060.00 420.18 19831.00 12913.00 25 .34 500.
94% of the total production capacity.00 South accounts for 33. TOTAL 42908. M.66 400.03% of cement production capacity of the country.27% of the total production capacity of India.33 21215.00 16185.00 3475.02% of the total production 26 .01 11287.20 1000. It has an installed capacity of around 20mn tons of cement and ranks first in the country. with Andra Pradesh accounting for 15.00 2291.00 6297. followed by Tamil Nadu with 9.00 2761.00 20482. North accounts for 18.P.P.TOTAL East Bihar Orissa West Bengal Assam Meghalaya Jharkhand Chattisgarh TOTAL Central U.
9% and 9%.33% and 15.96% respectively. Domestically. Trade between these regions is on a very low scale mainly because of the transportation bottlenecks and uncompetitive cost of transportation. Southern region has witnessed highest CAGR of cement demand growth at 10. respectively Mechanics of Distribution Channels of Sector Companies invariably hire agents or transport cements to own or government warehouses either via roadway or railways. with Rajasthan at 12.4% followed by Northern and Eastern regions at 8.89% and 9. West accounts for 16. Maharashtra and Gujarat have production capacity of 6. There may or may not be physical ownership of goods.85% of the total production capacity. The Southern region dominated the cement consumption at 44.55% of the total production capacity of the country. cement reaches the nearest port via roadways or railways and is then transferred to the importing country. from agents or warehouses the cement is transported to the dealers/distributors and in turn to sub dealers who finally sell it to the end users. Incase of exports. During FY 03-07. accounting for about 30% of total domestic cement consumption. East and Central Regions account for 16.capacity.5 mn tonnes in FY 07. In the second case.77% of the total production capacity of the country respectively. dealers and sub 27 .
dealers take order from buyers and place it to the companies. and. power and transport. 28 . One additional external influencer of the cement industry performance is the taxes and levies imposed by the Central and State Governments. use of waterways). Both the availability and the cost of these inputs have a vital bearing on the fortunes of the cement players. Hence. All these sectors are largely in the State sector. the industry response has largely been in the form of achieving efficiency gains and finding alternatives (captive power. ENERGY AND TRANSPORT REQUIREMENTS The cement industry is dependent on three major infrastructural sectors of the economy: coal. co ordinate and monitor the timely dispatch of said orders. historically cement companies have had virtually no control on the cost or availability of these inputs. These together account for around 30% of the selling price of cement in the Indian context. The inputs from these three sectors account for roughly 50% of the cost of cement.
This reflects the effects of the trend in rising global oil and fuel prices.The shortage in domestic coal production coupled with the poor quality has resulted in cement companies resorting to importing coal. or using alternative fuel such as lignite or pet coke. On the other hand Employee costs form the smallest proportion of over all cost. Use of imported coal has become an essential feature of the Indian cement industry and has shown a rising trend during the last few years. or going in for open market purchase of coal. Power and Fuel cost form the largest proportion of the cost structure. 29 .
The installed capacity reached only 27. 30 . cement was declared as an essential commodity under the Defense of India Rules and was brought under price and distribution controls which resulted in sluggish growth. This also accounts for the huge depreciation and interest costs which accrue on the plant and machinery. 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: Price and Distribution Controls (1940-1981): During the Second World War. Moreover. the labour employed is essentially semi-skilled excluding the top management which bring down labour costs.9 MT by the year 1980-81. GOVERNMENT POLICIES Government policies have affected the growth of cement plants in India in various stages.This is essentially because cement industry is a very capital intensive industry.
which can be seen from the increase in the installed capacity to 59MT in 1988-89 in comparison with the figure of a mere 27. 31 . levy cement quota was fixed for the units and the balance could be sold in the open market. This resulted in extensive modernization and expansion drive. an increase of almost 111%.9MT in 198081.Partial Decontrol (1982-1988): In February 1982. partial decontrol was announced. Under this scheme.
500-4. However this process is not very common. Lignite is also used as a fuel by blending it with coal. the government relaxed the forces of demand and supply. the industry remained stagnant with no addition to existing capacity The things that primarily control the price of cement are coal. however.200. Since coalfields like BCCL supply a poor quality of coal. 32 . This means for per ton clinker produced 0. the economy slipped into recession taking the cement industry down with it. The Indian coal has a low calorific value (3. the pace of overall economic liberalization had peaked. the industry enjoyed a boom in sales and profits. Coal: The consumption of coal in a typically dry process system ranges from 2025% of clinker production. ironically.000 kcal/kg) with ash content as high as 25-30% compared to imported coal of high calorific value (7. By decontrolling the cement industry. NCL and CCL the industry has to blend high-grade coal with it.25 ton of coal is consumed. The cement industry consumes about 10mn tons of coal annually. royalty and cess on limestone.000-8. freight. Interestingly.Total Decontrol (1989): In the year 1989. power tariffs. railway. In the next two years. This contributes 35-40% of the production cost. For 1992-93. all of these prices are controlled by government.000 kcal/kg) with low ash content 6-7%. total decontrol of the cement industry was announced. By 1992.
and Rajasthan 6.P 8%.6 ton of limestone is required. the cement plant location is determined by the location of limestone mines. The plants near the limestone deposit pay less transportation cost than others. AP has the largest share -. Most of the cement producing states like AP. Gujarat 13%. For producing one ton of cement. experience power cuts to the tune of 25-30% every year causing substantial production loss. approximately 1. The state governments supply this input and hence plants in different states shall have different power tariffs. Karnataka 13%.34%. MP. Transportation: 33 . Power tariffs vary according to the location of the plant and on the production process. Therefore.Electricity: Cement industry consumes about 5. M. The major cash outflow takes place in way of royalty payment to the central government and cess on royalties levied by the state government.5%. The total limestone deposit in the country is estimated to be 90 billion tons. Another major hindrance to the industry is severe power cuts.5bn units of electricity annually while one ton of cement approximately requires 120-130 units of electricity. Limestone: This constitutes the largest bulk in terms of input to cement.
Cement is mostly packed in paper bags now. Today. like Madhya Pradesh and Rajasthan. this applies only to intrastate sales. 100 per cent foreign direct investment (FDI) is permitted in the cement industry. ACC and Grasim having set up their bulk terminals. It is then transported either by rail or road. while Gujarat offers exemption from electric duty. At present. Under this scenario. this being not only cheap but also reducing the losses in transit. States like Karanataka offer a freeze on power tariff for 5 years. manufacturers are looking for sea routes. in order to attract investments in their respective states. However. Incentives in States: Most state governments. Road transportation beyond 200 kms is not economical therefore about 55% cement is being moved by the railways. Lafarge was the first foreign company to enter the Indian market in 1999. the scenario is changing with most of the big players like L&T. offer fiscal incentives in the form of sales tax exemptions/deferrals. There is also the problem of inadequate availability of wagons especially on western railways and southeastern railways. Opening up the FDI channel: The impact of government policies on cement demand has been steadily decreasing with the sector being gradually deregulated. 70% of the cement movement worldwide is by sea compared to 1% in India. In some states. 34 .
5% in FY1996. Export of cement from India The Indian cement industry exported around 6 mt of cement during FY2006. Cement was also the industry of choice of many corporate diversifying away from the troubled traditional areas of jute and textiles. Unlike much of heavy industry and utilities. The share in production of the public sector companies is even lower at 1. Over the years. cement has been one of the most important areas of operations for the Indian private sector. the share of the public sector in cement production has declined. While the private sector (large companies) accounts for around 95% of the total installed capacity.4% in FY2006. cement was not deemed to be the exclusive preserve of the State sector in the post-independence development strategy.2% in FY2006 as compared to 6. the share of public sector companies has declined from a level of 11% in FY1996 to around 4. accounting for around 4% of the total production. There has been a 35 .The French Declining Role of Public Sector: Historically.
A fair amount of clinker and cement by-products are also exported by India. and construction activity.significant year on year variation in the export trend. This has given a major boost to the Indian export of cement. The cement industry in India has around 300 mini cement plants and 130 large cement plants. The India cement industry is technologically very advanced. The demand for cement in the foreign countries is a derived demand. as a result of which the quality of Indian cement is now considered the second best in the world. The production of cement in India is not only able to meet the domestic demand. implying that Companies rely on cement exports to balance out the domestic demand supply situation. The total production capacity of these plants is around 167. but large amounts are also exported. Since growth is taking place all over the world in these sectors. its demand in the international market is always high. Indian export of cement is also increasing. The export of Indian cement has increased over the years. for it depends on industrial activity.36 million tons. 36 . so the difference in supply and demand is met by exporting. giving a boost to the Indian cement industry. As the quality of Indian cement is very good. As seen from above there is excess production. real estate.
The graph shows that the production of cement in India is at 2nd place after China. In 2001-2002. this higher production is a good reason for exporting cement . That figure stood at 3. 3.45 million tons.38 million tons of cement was exported from India. 37 .64 million tons. This shows that the export of Indian cement has been increasing at a steady pace over the years. In 2002.36 million tons in 200304. 1.2003 clinker exports amounted to 3. and in 20032004 the figure stood at 5.76 million tons of clinker was exported from India.47 million tons in 2002-03. In 2001-2002. and 3.
Adequate cement capacity and world-class cement production with the latest technology. 38 .The major companies exporting Indian cement are: Gujarat Ambuja Ultra Tech Cement L&T Limited Export of Indian cement has registered growth a fair amount of growth. India has an immense potential to tap cement markets of countries in the Middle East and South East Asia due to its strengths of locational advantage. giving a boost to the Indian economy. India has an estimated total of 90 billion tonnes of limestone deposit in the country. large-scale limestone and coal deposits.
Indian technology advantage
The manufacturing process of cement consists of the mixing, drying and grinding of limestone, clay and silica into a composite mass. The mixture is then heated and burnt in a pre-heater and kiln to be cooled in an air cooling system to form clinker, which is the
Semi-finished form. This clinker is cooled by air and subsequently ground with gypsum to form cement. The dry and semi-dry processes are more fuel-efficient. The wet process requires 0.28 tonne of coal and 110 kWh of power to manufacture one tonne of cement, whereas the dry process requires only 0.18 tonnes of coal and 100 kWh of power. Coal and power costs account for 35 per cent of the total cement production costs. With 95 per cent of the total capacity based on the modern dry process technology, the Indian cement industry has become more cost efficient.
Top companies in the cement industry match quite well with world standards in terms of energy (thermal energy Kcal/kg of clinker - India 665 against 690 of Japan) and pollution norms (SPM of 40 in India against 20 in Japan).
PORTER’S 5-FORCE MODEL FOR CEMENT INDUSTRY
Threat of New Entrants: The high capital costs acts as a major entry barrier for the entry of new players. Cement being a high volume low value commodity results in high freight costs. due to logistics issues and lack of port 42 . making cement duty free. Domestic Cement industry is highly insulated from global cement markets. However. The high freight costs make it difficult to import cement. With GoI intervention. which makes cement imports economically unfeasible. cement is being imported from neighboring countries.
The Prices of both coal and power are determined by the government.handling capabilities. During the last few years the industry has become more consolidated with the Top 3 players having a combined market share of 49 percent in 2005-06 as compared to 32 percent in 1999-2000. Threat of Substitutes: There are no good substitutes for cement. Competitive rivalry between existing players: Previously the rivalry was strong among the players. Bargaining power of Buyers: Retail sales constitute about 80 percent of the total sales and the rest is institutional sales. 43 . imports of cement will remain negligible and do not pose a threat to domestic industry. To mitigate the high costs of power the cement players have set up captive power plants. Bargaining power of Suppliers: The major inputs are coal and power. as the industry was not consolidated. The retail buyers don’t have any bargaining power while the institutional buyers get a discount of 5 to 10 percent as they buy cement in bulk.
airports. -Infrastructure projects like ports. power projects. derived from: -Growth in housing sector (over 30%) key demand driver.SWOT ANALYSIS Strengths: Double digit growth rate Cement demand has grown in tandem with strong economic growth. dam & irrigation projects -National Highway Development Programme -Bharat Nirman Yojana for rural infrastructure -Rise in industrial projects -Export potential also demand driver Capacity utilization over 90% 44 .
45 .Weakness: Low value commodity Cement Industry is highly fragmented Industry is also highly regionalized Low – value commodity makes transportation over long distances uneconomical Opportunities: Demand–supply gap 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.
Differences in regional demand supply situation have translated into price differences across regions. Additional capacity of 20 million tons per annum will be required to match the demand Limited green field capacity addition in pipeline for next two years. industry players say current shortage of coal in the country is estimated to be over 10 million tonnes PRICES The regional variation in the Indian market has resulted in the cement prices across regions witnessing movement within a band. with no appreciable increase in any region. Prices are 46 . leading to favorable demand – supply scenario Threats: Rising input costs Government intervention to adjust cement prices Possibility of over bunching of capacities in the long term as some of the players have already announced new capacities Transportation cost is scaling high. bottleneck due to loading restrictions Coal prices climbing up.
as compared with a growth of 1.2% during FY2004. Margins Cement prices have firmed up during the last few years due to improvement in demand-supply position and increasing consolidation in the industry.The cyclical trough in the late-1990s had a severe impact on the industry financials. The Wholesale Price Index (WPI) for cement increased 3. cement prices have firmed up during the last few years due to improvement in demand-supply position and increasing consolidation in the industry. However.lower in Southern regions where there is normally a supply surplus. However. The WPI for March 2006 was 11% higher than the WPI for March 2005. The trend in gross sales realization is similar for the cement 47 . prices are higher in Eastern and Western regions where shortages exist. . The surplus position had resulted in significant pressure on price realizations in recent years.9% during FY2005.
the cement companies posted increased operating profits and margins. While sales volume of the sample companies improved 7%.companies in our sample (comprising pure cement companies accounting for around two-thirds of industry production and sales). This reversed the decline in operating profits and margins during FY2002-03.2% to Rs. This was mainly because of excess capacity and the consequent low price realizations. During FY2004-05. operating income (OI) increased 24. The operating profits and margins for cement companies are most sensitive to cement sales realizations.45 billion RETURNS: 48 . riding on high average sales realizations. 183.
The companies make bumper returns during the boom years (FY1994-96. which fluctuate depending on outlook on demand-supply gaps. The fluctuating fortunes of the Indian cement industry are very typical of a commodity industry. operational efficiency and cost control measures supplemented with higher sales realizations. 49 .The key driver of profitability is cement prices. and FY2003-06) while the performance goes down drastically during the lean years (FY1997-2001). Most of the companies are making profits. the Indian cement industry has undergone vital changes through technological changes in the pursuit of cost efficiency and drive for consolidations. The returns have improved significantly since FY2003 because of higher capacity utilizations.
INTRODUCTION 51 .
south. It is the part of Aditya Birla group and is subsidiary of Grasim. It has a capacity of 17 million tonnes.52 million tonnes of cement. The company exports are moving towards cement from clinker owing to the higher realization in the cement. The western and southern regions are its major markets. UltraTech has a presence in the west. The company is the largest exporter of cement and clinker from India. In 2005-06 the company exported 1. The company exports both clinker and cement. north and east.ULTRA TECH CEMENT UltraTech is the second largest cement manufacturer in India. 52 . With UltraTech Cement.
make it the largest cement producer in India. This also includes the integrated plant and two grinding units of the erstwhile Narmada Cement Company Limited. 53 . The group mainly has two cement units – Grasim and Ultra tech. It manufactures and markets Ordinary Portland Cement. a subsidiary. the Aditya Birla Group is the 11th largest cement producer in the world and the seventh largest in Asia and Ultra Tech and Grasim together. Now a look at Aditya Birla group’s cement capacity: Currently.the Aditya Birla Group has established itself as not only the most respected domestic player but also among the global leaders in cement. UltraTech Cement Limited. a Grasim subsidiary has an annual capacity of 17 million tonnes. which has been amalgamated with the company in May 2006. It has five integrated plants. Portland Blast Furnace Slag Cement and Portland Pozzolana Cement.
L&T allowed its name to be used for about a year. the Aditya Birla group would have a cement capacity of 37.200 crore.2 mtpa.Grasim.08 mtpa. the company has the capacity to manufacture 14. making it clearly the largest cement maker of India.20 mtpa. on the other hand.This name also didn’t last for long and finally the ultra tech cemco was changed to Ultra Tech cement. In grey cement.20 mtpa. The Aditya Birla Group bought over the cement business of L&T for around Rs. Subsequently increases stake to 15.3 per cent by October 2002 54 . Vikram Cement 4. Aditya Cement 1. manufactures grey and white cement.the name was changed to ultra tech cemco. These stages of evolution of ultra tech cement are listed below: 2001 :: Grasim acquires 10 per cent stake in L&T. Rajashree Cement 4. Grasim and Ultra Tech together have a cement capacity of 31. Then from 19th November 2003.86 mtpa.2 mtpa.06 mtpa. And when the B K Birla cement companies also come into the fold. This includes Grasim’s capacity of 2. 2.16 mtpa and the acquired Digvijay Cement 1. the acquired and merged Dharni Cement 1.5 mtpa.
5 per cent equity stake from L&T and then make an open 55 . in accordance with the provisions and guidelines issued by the Securities & Exchange Board of India (SEBI) Regulations. Grasim decides to acquire an 8.:: Durgapur grinding unit 2002 The Grasim Board approves an open offer for purchase of up to 20 per :: cent of the equity shares of Larsen & Toubro Ltd (L&T). :: Grasim increases its stake in L&T to 14. 1997.15 per cent :: Arakkonam grinding unit 2003 :: The board of Larsen & Toubro Ltd (L&T) decides to demerge its cement business into a separate cement company (CemCo).
offer for 30 per cent of the equity of CemCo. with the latter acquiring controlling stake in the newly formed company UltraTech 2006 Narmada Cement Company Limited amalgamated with UltraTech pursuant to a Scheme of Amalgamation being approved by the Board for Industrial & Financial Reconstruction (BIFR) in terms of the provision of Sick Industrial Companies Act (Special Provisions) 56 . to acquire management control of the company. 2004 :: Completion of the implementation process to demerge the cement business of L&T and completion of open offer by Grasim.
The details of its different production units is shown on the next page. which has been amalgamated with the company in May 2006. These include an integrated plant and two grinding units of the erstwhile Narmada Cement Company Limited.ULTRA TECH PRODUCTION UNITS: Ultra Tech’s subsidiaries are Dakshin Cement Limited and UltraTech Ceylinco (P) Ltd. five grinding units and three terminals — two in India and one in Sri Lanka. a subsidiary. 57 .UltraTech has five integrated plants.
AndraPradesh Cement Works. Gujrat cement works 15000 5. Composite integrated Plants.4 B.Details of units: PLANT/UNIT KILN CAPACITY(tpd) CAPACITIES(million tpa) A. Hirmi cement works 8050 1. 8000 2. 1. Awarpur Cement works 9500 3.6 5.3 4.3 2.3 3.Grinding Units 58 . Narmada cement works 4350 0.
Narmada cement(Magdala) Works 0.8 8. Arakkonam cements works 1. Jharsuguda cements works 0. Narmada cement (Ratnagri) Works 0.6.2 7.0 THE ULTRA TECH ADVANTAGE 59 .4 9.0 TOTAL 17.7 10.West-Bengal cement works 1.
Rigorous hourly tests are conducted on raw material. UltraTech Cement due to its consistently superior quality has become the first choice amongst discerning users and construction professionals. UltraTech Cement is manufactured in the state of the art dry process plant at Tadipatri (Andhra Pradesh) and grinding unit at Arakkonam (Tamil Nadu). computerized process control and online quality control through X-ray ensure consistently high quality product at UltraTech Cement plant. Key features include: Use of good quality limestone and careful selection of other raw material Computerized mining operation and homogenization of crushed limestone 60 . Advanced instrumentation systems. The quality of UltraTech Cement has been globally accepted and is India's largest exporter of clinker and cement. The quality attributes are consistently ensured through rigorous application of advanced technology.UltraTech Cement Ltd is one of the largest premium quality cement producer in India. Laboratories at all plants are equipped with sophisticated facilities. Raw Material : Careful selection and scientific proportioning of raw material with the use of latest technology enables manufacturing of high quality cement. World Class process Technology ensures Quality and Consistency : Quality Assurance is an integral part of Ultra Tech’s manufacturing philosophy.
Perfect proportioning of raw materials by QCX ( Quality Control through X-ray ) Online process control through CCR ( Computerized Control Room ) High-quality clinkerisation and close-circuit grinding for optimum particle size distribution UltraTech Cement plants have been accredited with ISO 9001. 18001 Certifications by DNV of Netherlands Distinct Features: Higher Compressive strength Optimal fineness Balanced physical and chemical properties Optimal setting time Consistency in quality Low-level of Chloride High-soundness Advantages: Higher workability Lower consumption Enhanced durability Quicker construction Overall economy 61 . 14001.
A full. Cement dumps have also been established at strategic locations to facilitate faster delivery of cement. Value Added Services : Mobile concrete lab services ( Concrete cube testing facilities ) Training Programmes for masons.Customer Care and Guidance: UltraTech Cement offers customers a range of "product plus" services. site supervisors on good construction practices Field visits by qualified civil engineers Educating individual house builders on various aspects of building material and construction Non-destructive testing of concrete 62 .fledged Technical Services Network has been set up exclusively for technical advice and guidance in usage of cement UltraTech Cement is marketed nationwide through large network of stockist's. sales officers and representatives.
blocks. year after year. 4. clients have consistently endorsed Ultra Tech’s highest quality standards. Slip form constructions Rehabilitation and retrofitting works Cement based products such as pipes. Roads. poles. runways. Ultra Tech has been on the roll call of top exporters of the Chemicals & Allied Products Export Promotion Council (Capexil). The list of export awards it has won is testimony to Ultra Tech’s uncompromising standards on product quality.Highest Export in Non-mineral 63 . Any other customer specific services Applications : 1. 2002 and 2003. Ultratech won the Capexil Certificate of Export Recognition . Clinker.etc. 5. Other awards that have come its way have included: Year 2001 and 1999 Award Capexil Certificate of Export Recognition . All Kinds of constructions including precast and prestressed concrete.Top Exporter . 6. Asbestos and Cement Products for the years 2000. tiles. bridges and flyovers Water retaining structures AWARDS FOR ULTRA TECH Export awards Worldwide. masonry works 2.Cement. 3.
Asbestos.Chemicals & Allied Products (for Portland cement) Capexil Certificate of Export Recognition .Certificate of Merit for Export Achievement in Cement and Clinker 1999 1998 1998 1997 National awards won by Awarpur Cement Works Year Award Indo-German Greentech Environment Excellence Awards by the Greentech Foundation.Top Exporter.Cement.Rajiv Gandhi National Quality Award By 2000-2001 1999-2000 1999 1995 1994-95 1994 64 . Gujarat state Capexil Certificate of Export Recognition . Cement Products Certificate of Outstanding Export Performance. Goverment of India Special Gold Award By The Council of Industry & Trade Development for Quality Delhi Commendation Certificate . New Delhi Business / Trade Award Jamanalal Bajaj Uchit Vyavahar Purashkar ISO 14001 Certification By M/S Det Norske Veritas in November ISO 9001 Certification By M/S Der Norske Veritas 1996 FIMI National Social Awareness Awards 1995-96 FIMI National Social Awareness Awards Indira Priyadarshini Vrikshmitra (IPVM) National Award By Ministry of Environment & Forests.Sector Capexil Certificate of Outstanding Export Performance .
Vadodara 2004 2002-2003 2002 2001-2002 2001 Awards won by Andhra Pradesh Cement Works: Year 2004-2005 2003-2004 Award State and Zonal level I prize for overall performance in Mines safety Energy efficient unit award from CII Energy Conservation Award from PCRA Excellence Award in Water Conservation & Pollution Control by APPCB 2002-2003 Gold medal for Six Sigma Project on Optimisation of Compressed air energy at HIMER National Conference FIMI environment award for mines Award for six sigma project on reduction in specific fuel consumption at NIQR Energy efficient unit award from CII 2001-2002 65 . New Delhi Greentech Gold Safety Award By Greentech Foundation. New Delhi Awards for Excellence in "Industrial Relations" By Federation of Gujarat Industries (FGI).Bureau of Indian Standards Awards won by Gujarat Cement Works: Year Award Bhartiya Udyog Ratan Award presented to Sh. Vadodara Greentech Environment Excellence Award By Greentech Foundation. KYP Kulkarni By Indian Economic Development & Research Association (IEDRA). New Delhi Gujarat State Safety Award By Gujarat Safety Council (GSC).
A leading cement exporter. stringent quality control and testing in the best laboratories 66 .Best rural development effort award from FAPCCI Appreciation award from NSC for achieving OHSAS-18001 Awards won by Hirmi Cement Works: Year 2001-2002 Award Environment Energy Foundation award for water conservation. The company has been credited with boosting its exports of cement and clinker last year by 25 per cent to 4 million tonnes from 2. safety and management of better industrial relations.8 million tonnes in 2005-2006. social awareness. its plants have also received various awards for environment protection. Fuller Energy award for reduction in specific power consumption (KWH/T) per tonne of cement 2001-2002 ULTRA TECH CEMENT EXPORTS UltraTech Cement recently bagged an award for being the highest exporter of the year from CAPEXIL for the eighth time in a row for its sterling performance.
is a pre-requisite to supply cement to EC member countries. which is fed by a four km long conveyor belt that connects the plant to the jetty. UltraTech Cement is the first and only Indian cement company to obtain an EC certification for this plant. The company has a captive jetty at the Gujarat plant. All the plants are ISO 9001 certified for the latest production process and 14001 certified for environmental management. UltraTech Cement has found wide acceptance in these neighboring countries 67 . UltraTech is one of the few Asian cement companies to receive this recognition. given by Bureau Veritas. The laboratory is equipped to test cement as per ASTM. British and Euro standards. The export markets span countries around the Indian Ocean. The Hirmi Cement Works in Chattisgarh and the Jharsuguda Cement Works in Orissa make them ideal locations for export of cement and clinker to Nepal and Bangladesh. Africa.000 DWT with 11 meters draft.ensure that cement and clinker produced from its plants conform to and surpass international standards. The jetty length of 337 meters and width of 23 meters is capable of handling ships of 45. The accreditation. The cement plant in Gujarat has an additional OHSAS 18001 certification as well for occupation hazards and safety parameters. Loading of cement and clinker onto the ship is carried out by a ship loader. With captive railway sidings to facilitate loading of railway rakes and a high-tech production facility for cement and clinker. Europe and the Middle East.
To find out the market share of Ultra Tech cement. 4. To find out the possible newer methods for advertisement and methods for increasing sales of Ultra Tech cement. 3. 2. To help the ultra tech dealers/retailers to increase their sales. in Thirthahalli and Shimoga distt. To find out the major competitors of Ultra Tech cement in a particular area. Of Karanataka. To find out the problems faced by the Ultra Tech dealers/retailers and try to minimize these problems. 5. 69 . Secondary objectives: 1.OBJECTIVE OF THE STUDY Primary objective: To study the distribution channel of Ultra Tech cement along with other brands.
The locale of the study was distt. what type of incentive schemes the different brands are using. The second stage comprised determining the objective of the study and drafting the questionnaire. It was designed with due guidance of the company guide. That was. It was assured that the questionnaire didn’t exceed more than 10 questions. The questionnaire was designed keeping in mind the objective of the study. Keeping in mind 70 .The first stage included gathering information about the general cement market of the two cities. Thirthahalli and shimoga of Karanataka.RESEARCH DESIGN (a) General Methodology: The methodology adopted for this project was completely base on primary information. to find out which are major players. what is general distribution pattern.
A pilot test of this questionnaire was done for the preparation of final questionnaire.based survey of customers. applying the draft questionnaire to a sample of 5 people. 71 . wrongly worded or in any way objectionable. we went for a questionnaire. c) Research Approach: The research conducted was exploratory in nature and the goal was to gather preliminary data to shed light on the real nature of problems and to suggest possible solutions. *Primary source The primary data is gathered for specific purpose and is collected by the researcher himself. This was done to ascertain which questions are ambiguous. It involved. the questionnaire was kept simple and precise. It includes direct communication and feedback from the customers. Hence. primary sources were considered for the collection of data. For the purpose of this project. For the purpose of collecting information from customers a structured questionnaire was formulated and is contacted directly.the education level of the respondents who were mainly dealers/retailers. b) Data Sources: The research called for gathering primary data only.
a questionnaire was designed to collect data that consisted of close ended questions & open ended questions. The areas covered were as following: 1.(d)Research Instrument: 1. Structured interview 3. Personally administered questionnaire 2. Shimoga: 72 . During the project a survey of customers using personal interview was done at random locations in thirthahalli and shimoga and a predetermined structured questionnaire was administered to them. A survey technique is being used to collect the data.Thirthahalli: (a) Kundali (b) Bahalgarh (c) Kharkhoda (d) Guhana (e) Gannaur 2. Unstructured interview For the purpose of this project.
*Sampling Procedure We try to find out almost all of the cement dealers and retailers in the market. Keeping in mind the objective of the study we sampled dealers and retailers of each and every brand.All the respondents were chosen randomly. 73 .(a) Pehowa (b) Ismailabad (c) Ladwa (d) Pipli (e) Shahabad e)Sampling Plan: * Sampling Unit The study was restricted to thirthahalli and shimoga only. *Sample Size The sample size taken for the purpose of study was around 150 respondents from the two distt. We try to explore out as many shops as could be possible.
f) Analytical tools: The data. The analysis performed was mainly comparative analysis using statistical analytical tools. Few shopkeepers due to their busy schedule or loyalty for their brand refused to respond at all. The tools that have been used are as follows: Bar Chart Pie Chart Line Graph 74 . was summarized and tabulated on MS-excel for further analysis. which was collected.*Contact Method I personally visited most of the customers after seeking prior appointment.
J.k.Thirthahalli: ultra tech 6% 9% 27% 8% 9% 4% 12% 10% 15% Acc J. BINANI Ambuja Shree Ultra Tuff Cemento Bangur 75 .P.DATA ANALYSIS & FINDINGS Market share graph for distt.
J.K. Cement. Cement on the other hand is having a good market share due to a nicely balanced supply chain of dealers along with many retailers. Market Share Graph for shimoga: 1% 3% 3% ultra tech Acc 12% 9% 6% 21% 20% J. followed by J.k.P.K. All the other brands like Sri Ram and Bangur are struggling to find market in Thirthahalli. BINANI 25% Ambuja Shree Ultra Tuff Cemento Bangur 76 .The graph clearly shows that the Ultra Tech Cement has largest market share in Thirthahalli. J.The main reason behind this excess market share goes to the higher number of dealers of Ultra Tech cement than other brands. cement and J.P.
The credit for ACC success goes to the no.Its no. of dealers it has in shimoga. The possibility behind Ultra Tech success lies at the chances of getting some more retailers.The graph shows that the Ultra Tech is lagging behind ACC cement in shimoga.although it has a good 20% share. 77 . of dealers is almost double than the Ultra Tech dealers plus retailers.
78 . the dealers didn’t want to give a poor image of the company. different type of incentive schemes meant for the dealers etc. regular visits by the company officials. Satisfaction level of Dealers/Retailers: 70 60 50 40 30 20 highly satisfied satisfied average 10 0 highly satisfied satisfied average not satisfied not satisfied highly dissatisfied highly dissatisfied the graph clearly shows that most of the dealers are well satisfied with the services provided to them by the brand they deal in.The other side of the fact can be that-being loyal to their respective cement brands. The services include timely supply of cement.i.they were not satisfied with the company but responded positively.e.
But the last portion of the graph i.e.This portion shows the dealers who may shift to a new brand if it proves beneficial for them. So if Ultra Tech assures them 79 . Want to Shift to Other Brand? 90 80 70 60 50 40 30 20 10 0 NO MAY BE YES NO YES MAY BE The graph shows that about 84% of the dealers and retailers don’t want to shift to any cement brand other than the one in which they are currently dealing. MAY BE part is of crucial importance for Ultra Tech.
So Ultra Tech need to concentrate more in Thirthahalli. LUXMI are both well established here. The total cement consumption in Thirthahalli is much higher than that in Shimoga.projects in Thirthahalli.e.The reason behind this is the presence of more no. Provides the benefit of low cost and quality to the customers as compared to higher price of Ultra Tech cement. of malls.The two brands under J. J. of retailers for J.K. It seems that ACC has given more importance to Shimoga.K. i. presence of major real estate players like ANSAL. SUPER & J.K.K.It has just 4 dealers in Thirthahalli but in Shimoga it has about 12 dealers.J. 80 .K.some better services and mainly the better incentives then these can be the new suppliers for it The major competitor for Ultra Tech in Thirthahalli is J. Cement. DLF etc and other Govt. Cement.The reasons behind this are construction of a no.K. The competitor for Ultra Tech in Shimoga is ACC cement.
so this survey demands a good piece of 81 .like they didn’t talk much about what problems they are facing. The major problem of the survey was that most of the respondents being very loyal to their brands didn’t give exact answers . what are the different marketing schemes of the brand in which they deal etc. So Ultra Tech should introduce some more of these vans. which cement is mostly sold in that area etc. On the other hand. we need to restart the conversation in a very generalized way and talk about the local market conditions. These are very popular among the local customers. LIMITATIONS OF THE STUDY 1. Ultra Tech cement lags behind other brands only at the price point. 2. customers are very sure about the thing that Ultra Tech cement provides much better quality. This is the main reason for some lower sales. It costs nearly 4-5 rupees higher than the other cements. Once we got the questionnaire filled. Like who is the main dealer. These vans are the feature that no other brand is offering. Ultra Tech should try to increase the number of ‘MOBILE CONCRETE HELP’ vans.
Some of the respondents may have told their average monthly sale more than the actual. Because all of them think that the monthly sale attached with the market image of their shop. 3.time while talking to the respondent. 5. usefull suggestions of the dealers & retailers and the findings from the survey. Also Thirthahalli & Shimoga are both big Distts. Being new to the Distts of Thirthahalli & Shimoga. Many of the dealers/retailers refused to answer any question atall. it is quite possible that I was unable to explore some of the dealers/retailers. So to complete the survey within 2 months time seems to be a bit difficult. RECOMMENDATIONS Based upon the time spent by me in the market.So the actual figures can be somewhat different from the one that we have found out . With a number of small towns and villages. following 82 . 4.
if any brand costs higher than X. to much extant not interested in buying Ultra Tech cement. They simply know that X is ongoing price of the cement.recommendations can be suggested for increasing sales and effectiveness of Ultra Tech Cement: What matters for most of the cement buyers is the price of the cement and then the quality.Birla cement had a very good image and it is still very popular among the customers. they will not buy that brand.therefore. While visiting market for cement purchase. Because this will bring the old Birla loyal customers to Ultra Tech cement. they don’t care about which brand they are going to buy. so Ultra Tech need to take some steps to make people familiar with the’ Birla cement and Ultra Tech’ relation. 83 . But people are not so much sure about Ultra Tech cement. Ultra Tech Cement usually costs 4-5 Rs. This extra price is the main reason behind lower sales. The second thing is that a good percentage of buyers is still unaware of the fact that Ultra Tech cement is the changed name of Birla cement. So the buyers. Ultra Tech need to take some serious steps to reduce the selling price somehow. Higher than the other counterparts.
They don’t give proper attention to the company officials and also to the various schemes of increasing sales. They need to increase the no. so the cement selling becomes less important for these dealers.K. It should try to encash this image. in the same shop. May be. but this scheme needs some improvements. they are not the cement buyers at present but future possibility lies with them. I saw that the main condition for this new scheme was that the retailer will not sell any other brand of cement. So Ultra Tech needs to give them some relaxation in this case. For ex-margin for the retailers can be increased.So Ultra Tech need to be oriented in this direction. So Ultra Tech needs to give proper attention to the youngsters. etc. This in turn brings reduced sales to the company Ultra Tech Cement has market image of a modern cement with very good quality. Its mainly the younger section of people who care about quality first and then the price. This should not be permitted by Ultra Tech. The number of retailers and sub dealers for Ultra Tech cement is very less as compared to the main competitors ACC.Because selling of these building materials is more profitable than cement. of retailers as much as possible. Many of the Ultra Tech dealers used to shop other type of building materials along with cement. J. While working. 84 . Although Ultra Tech has taken a right step with the ‘retailer registration scheme’ to increase the no. Most of the retailers refused the scheme due to this particular reason. of retailers. we can assure them some gifts also.
Mapple Leaf and Elephant costs 10-15 Rs. due to the high price of the cement provided by them. Ultra Tech also should have a check on the upcoming threat of imported cement from Pakistan. the dealers are not satisfied with the company. So at some point. The Pak cement brands like Lucky. This need to be taken seriously by Ultra Tech. The main reason behind this success is the lower price.Some more incentive schemes should be introduced for the dealers and also the frequency of visits from company officials need to be increased. Ultra Tech which is already facing charges of higher price needs to be prepared for this. 85 . The import of cement from Pakistan has just started and very quickly it has become successful in the southern markets. Lesser than the local Indian brands. Some of the Ultra Tech dealers complained that they are losing the customers loyal to their shops.
which are untouched.There are still many possible methods of advertisement and creating brand awareness. use banners.POSSIBLE ADVERTISEMENT METHODS All of the cement brands use the similar methods of advertising likepainting walls. Some of these methods are as below: 86 . giving free gifts to the dealers and masons etc.
we need to put the Ultra Tech logo 87 . stations of thirthahalli and Karnal are also reaching a good part of listeners. dealer’s shop and on walls only. What we can do in this case is to take help of Handvertising i. So these can also be used for the same purpose. contact no. We can think about using banners on rickshaws and autos also. A number of meetings are organized by all the cement companies with the local masons. Different type of incentive schemes. They attend many meetings. current market price etc can be shown. Details like address. scratch cards etc can be made available for the customers. can be used for advertising as well as to give details about the major dealer/dealers in the city. Most of the masons are very less educated. paintings are used mainly on the tractor trolleys. Local cable T. Local F.V. So it may become difficult for them to recognize a particular cement brand. different schemes. For ex-discount coupons. of the dealer. small free gifts. free gifts are mainly for dealers and sometimes for the masons. As a change. we can also try to attract the customers directly. Banners.e.M.
entertainment. So that next time they saw this logo. 88 . The ‘masons meet’ are organized by the company regularly.on the hands of these masons. The people like these masons are more impressed by the presence of Govt. We need to call some big personalities from that city only. of people. higher company officials. they found themselves a bit familiar with the company. What we can do is that organize a big meet with a no. and snacks for all. We need to decrease the frequency of these meets. The presence of company officials in the meeting is not alone sufficient.officials. This needs some improvements.
Price is the major factor that matters for a customer while purchasing cement Market share increases with the increase in no. CEMENT and ACC CEMENT. 89 . Ultra Tech is well established in the markets as far as quality is concerned. of dealers.J.K. Ultra Tech has two major competitors. Introduction of new attractive incentive schemes can bring new dealers & retailers for Ultra Tech cement.
I assure you that the information provided by you will be used for my project work only. 90 .’ I would be extremely benefited if you answer the following questions. We are conducting a survey on behalf of ultra tech cement as a part of my ‘summer training project.ANNEXURE 1 QUESTIONNAIRE SOLICITATION Dear Sir/Madam.
NAME: _ _ _ _ _ _ _ _ ADDRESS & CONTACT NO. : _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _____________ WHICH CEMENT YOU DEAL IN: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ YOU ARE A: >DEALER >RETAILER >SUB DEALER YOUR AVERAGE MONTHLY SALE (IN BAGS): _ _ _ _ _ _ _ _ _ _ _ HOW MUCH ARE YOU SATISFIED WITH THE SERVICES PROVIDED TO YOU BY THE BRAND YOU DEAL IN: >HIGHLY SATISFIED 91 .
>SATISFIED >AVERAGE >DISSATISFIED >HIGHLY DISSATISFIED WHAT TYPE OF PROBLEMS ARE YOU FACING WITH YOUR CURRENT BRAND(IF ANY): _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ WHAT ARE THE REASONS FOR SELLING THIS PARTICULAR BRAND: _ _ _ _ _______________________________ ___________ __________________________________________ ___________ _________________ DO YOU WANT TO SHIFT TO ANY OTHER BRAND: >YES >NO >MAY BE 92 .
USEFUL COMMENTS: ____________________________ __________________________________________ _____________________________________ THANKS A LOT KAPIL KUMAR ANNEXURE 2 93 .
BIBLIOGRAPHY ► www.cemnet.ceicdata.pca.com ► www.com ► WWW.com ► www.ULTRATECH.COM 98 .
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