Pioneer Institute of Professional Studies

SWOT Analysis OF Ultratech Cement Ltd.

Submitter by:Tarun Nayak MBA (3rd SEM) Sec ± µR¶

INTRODUCTION:Ultratech is India's largest exporter of cement clinker. The company's production facilities are spread across eleven integrated plants, one white cement plant, twelve grinding units, and five terminals ² four in India and one in Sri Lanka. Most of the plants have ISO 9001, ISO 14001 and OHSAS 18001 certification. In addition, two plants have received ISO 27001 certification and four have received SA 8000 certification. The process is currently underway for the remaining plants. The company exports over 2.5 million tons per annum, which is about 30 per cent of the country's total exports. The export market comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. Export is a thrust area in the company's strategy for growth. Ultratech Cement Limited is among the world¶s top 10 cement companies. The company has an annual capacity of 48.8 million tones, and manufactures and markets ordinary Portland cement, Portland blast furnace slag cement and Portland pozzalana cement. It also manufactures ready mix concrete. The company has eleven integrated plants, one white cement plant, twelve grinding units and five terminals ² four in India and one in Sri Lanka. Ultratech Cement 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 company's subsidiaries are Dakshin Cements Limited, Harish Cements Limited, Ultratech Ceylinco (P) Limited and UltraTech Cement Middle East Investments Limited.For further information, go to www.ultratechcement.com

UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3

improved resistance to aggressive chemicals and more consistent plastic and hardened consistency. SWOT Analysis Phase 1-2-3 .To deliver superior value to our customers. UltraTech Cement Ltd. These applications cover dry-lean mixes. a nonmetallic product consisting essentially of silicates and alumina silicates of calcium. Slag brings with it the advantage of the energy invested in the slag making.To be a premium global conglomerate. Portland Pozzolana cement and Portland blast furnace slag cement. MISSION: . granulated blast-furnace slag. 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. higher compressive and flexural strength.VISION: . general-purpose ready-mixes. with a clear focus on each business. employees and employees and society at large VALUES:y y y y y Integrity Commitment Passion Seamlessness Speed PRODUCT MIX:Ultra Tech¶s products include Ordinary Portland cement. lower permeability. Portland blast furnace slag cement Portland blast-furnace slag cement contains up to 70 per cent of finely ground. better concrete workability. shareholders.and even high strength pre-cast and pre-stressed concrete. easier finish ability. Grinding slag for cement replacement takes only 25 per cent of the energy needed to manufacture Portland cement. Portland blast-furnace slag cement has a lighter colour. Ordinary Portland cement Ordinary Portland cement is the most commonly used cement for a wide range of applications.

as indicated below: UltraTech Cement Ltd. Portland clinker is ground with gypsum and Pozzolanic materials which. Sri Lanka).Portland Pozzolana cement Portland Pozzolana cement is ordinary Portland cement blended with Pozzolanic materials (power-station fly ash. in Colombo. one white cement plant. burnt clays. UltraTech Cement has eleven integrated plants. though they do not have cementing properties in themselves. These facilities gradually came up over the years. thermal cracking and has a high degree of cohesion and workability in concrete and mortar As part of the ninth biggest cement manufacturer in the world. ash from burnt plant material or Siliceous earths). combine chemically with Portland cement in the presence of water to form extra strong cementing material which resists wet cracking. either together or separately. twelve grinding units as well as five terminals of its own (one overseas. SWOT Analysis Phase 1-2-3 .

SWOT Analysis Phase 1-2-3 . TIDCO (Tamil Nadu Industrial Development fluorine chemicals Corporation) Aditya Birla Grasun Chemicals Fangchenggang Grasun Company Limited food grade (Fangchenggang) Limited.V. of Guangxi Province (China) phosphoric acid Thai Peroxide Hindalco-Almex Limited A.Group Aerospace Almex USA. Inc. hydrogen peroxide aerospace alloy softwood/hardwood dissolving grade pulp (for VSF manufacture) hardwood dissolving grade pulp (for VSF manufacture) Essar Power DUBAL mining bauxite / alumina Mahan Coal Limited Hydromine UltraTech Cement Ltd.JOINT VENTURE:Company Birla Sun Life Company Ltd. Partner Insurance Sun Life (Canada) Key products services life insurance / Tanfac Industries Ltd.

O. S. C. V. Rajashree Birla Mr. SWOT Analysis Phase 1-2-3 . T. Rathi Mr. C. D. B.N. S. Rajgopal Mr. P. Moorthy Mr. M. B. Chairman Mrs. Bhargava Mr. S. Birla Chief Manufacturing Officer Mr. K. D. (Whole time Director) Executive President & Chief Financial Officer Mr. R. R. N. Kumar Mangalam Birla. Mathur Mr. K. G. S. Puranmalka. Dave Mr. Jhaveri Mr. Tiwari Company Secretary Mr. Chatterjee UltraTech Cement Ltd. J.K. C.TOP MANAGEMENT:Board of Directors Mr.Jajoo Chief People Officer Mr. Shah Chief Marketing Officer Mr.

Gujarat 365 541 Tel: 02794-283 034 Fax: 02794-283 036 Chukkalur A. Chhatisgarh 493 195 Tel: 07726-281 269 Fax: 07726-281 268 Amreli Gujarat Cement Works. Dist. Raipur. Dist.Cement Works. Taluka: Jafrabad. SWOT Analysis Phase 1-2-3 . Amreli. Village: Bhogasamudram. Muchipara. P.O. Village: Kovaya. Andhra Pradesh 515 415.LOCATION AND MANUFACTURING UNIT:Plant locations Awarpur Awarpur Cement Works. Near EPIP plot. Chandrapur. Tadipatri. Taluka: Simga. Taluka: Rajula City. Dumas Road. Taluka: Korpana. Maharashtra 442 917 Tel: 07173-266 323 Fax: 07173-266 339 Hirmi Hirmi Cement Works. Surat. Amreli. Dist.O. Anantapur District. Gujarat 365 540 Tel: 02794-245 103 Fax: 02794-245 110 Durgapur West Bengal Cement Works. Village: Babarkot. Dist. Magdalla Port.P. Gujarat 395 007 Tel: 0261-272 5175 Fax: 0261-272 6952 UltraTech Cement Ltd. P.Fax: 08558-288 821 / 31 Jafrabad Jafrabad Works (NCCL). Awarpur Cement Project.Tel: 08558-288 841. Hirmi. Via: Neora. Durgapur 713 212 (West Bengal) Tel: 0343-253 3030 / 253 4324 / 253 3361 Fax: 0343-253 3358 Magdalla Magdalla Works (NCCL). Post: Rajbandh.

Zadgaon Block. Ratnagiri. SWOT Analysis Phase 1-2-3 . Arda.Ratnagiri Ratnagiri Works (NCCL). P.O. Maharashtra 415 639 Tel: 02352-223 679 Fax: 02352-221 807 Vellore Arakkonam Cement Works. Dist. Chetteri Village. Jharsuguda. Arakkonam 631 003. Dist.O. Orissa 768 202 Tel: 06645-283 161 Fax: 06645-283 108 UltraTech Cement Ltd. MIDC Industrial Estste. Near Dhutra railway station. Vellore (Tamil Nadu) Tel: 04177-293 291 Jharsuguda Jharsuguda Cement Works. P.

08 3 15. Africa.24 1093.66 Mar '07 71. 1 RATIOS Operating margin (%) Gross profit margin (%) Net profit margin (%) EPS (Rs) Return on net worth (%) Dividend payout ratio (%) PBDIT Depreciation PBIT PBT PAT Net profit Mar '10 70.12 4 5 6 5.PHASE II CURRENT GOALS AND OBJECTIVES y Our goal is to become a US$ 65 billion Group by 2015 from US$ 30 billion today.50 87. ------------------- S.90 62.9 18. The export markets span countries around the Indian Ocean. Europe and the Middle East y y FINANCIAL ASPECT OF THE COMPANY ------------------. We expect your Company to contribute significantly to this growth and earnings.02 5.94 37.30 Mar '08 68.48 27.40 15. SWOT Analysis Phase 1-2-3 . Cr.02 977.12 1008.10 18.24 48.06 375 216 375 286 230.12 4 1253 226 1253 1166 782.72 15.1 1589 237 1589 1507 1008.24 4.50 78.10 54.40 6.40 51.32 230.NO.in Rs.60 44.64 1706 388 1706 1588 1093.84 44.46 22.24 782.32 7 8 9 10 11 12 UltraTech Cement Ltd.20 2 51.15 Mar '06 83.20 80. UltraTech Cement is the country¶s largest exporter of cement clinker.24 5 1448 323 1487 1361 977.82 23.09 Mar '09 72.

9 Ultratech net profit margin reduces due to higher expenditure on operations.60 44.24 48. Operating margin (%) In the year 2006 OR margin is maximum because company spend lot in total cost. UltraTech Cement Ltd. A high or increasing operating margin is preferred because if the operating margin is increasing. administrating. Net profit margin (%) Net profit margin ratio establishes a relationship between net profit and net sales and indicates management efficiency in manufacturing. Return on net worth 23.82 78.48 80. the company is earning more per rupees of sales. Ultratech it is as 51. EPS EPS shows the profitability of firm on a per share it does not reflect how much is paid as dividend and how much is retained in the business 87.20 15. 5.84 18. company also provides a huge amount on interest in this year.46 Company increases their reserves maximum in year 2007 due to this EPS was minimum.40 22. it continuously fluctuate every year but it was less in year 2008. SWOT Analysis Phase 1-2-3 . 4. Earlier in2010 it was highest. Gross profit margin (%) Gross profit margin reflects the efficiency with which management produces each unit of product.10 54.50 18.40 44.1.90 6. it was maximum in year2007 from the all.94 62. 2.10 37.72 27.08 Which indicates that company¶s spending on one unit reduced drastically in2006 3.50 15.40 51.12 How well the firm has used the resources of owners the earning of a satisfactory return is the most desirable objective of a business. From above table it shows that how well company invest their own capital . 15.

6. SWOT Analysis Phase 1-2-3 . PBDIT 1706 8.06 Company earning higher profit in year 2007 but they invest their profit in various ventures and they also paid higher tax. Dividend Payout ratio 5. Payout ratios of company gradually decrease from last 3 years because company diversifies their business in various field.64 5 5. 7.1 4 4. their operating expenses were also high. And due to this they give less payout ratio. Depreciation 388 323 237 226 216 Company purchased fixed assets in huge amount. 1448 1589 1253 375 SHAREHOLDERS OF COMPANY UltraTech Cement Ltd.

PHASE III BENCH MARKING PERFORMANCE BENCH MARKING The last few years of this decade have been good for cement companies as prices have remained high. though ACC enjoys lower fuel cost. the coming years would see companies scrambling for bases on the Western coast to minimize their export transportation costs. and one that is important for the future. and/or up-gradation of technology to enhance productivity. In the same period. SWOT Analysis Phase 1-2-3 . PROCESS BENCH MARKING Due to similar raw material inputs and production processes. Hence. But it can follow the Manufacturing Process of its largest competitor ACC. there is no significant differentiation in the cement produced across firms and thus they follow the standardized process of manufacturing. and most recently Tata Steel have tried a similar concept. Retail Stores: A unique concept. Other companies like Asian paints. this is not sustainable has already started switching to coal. However. is increasingly becoming critical for large cement players in this sector. and hence profits have been good. which ACC is experimenting with in recent times.. Gujarat Ambuja Cements and ACC have shown the same trends of increasing sales growth and capacity utilization of Gujarat Ambuja Cements and ACC both are growing continuously because of the increase in the demand of the cement in this scenario and they are very effective in meeting the demand of the consumers by doing their best performance. UltraTech Cement Ltd. Rising Exports: Due to the increasing construction activity in the Middle-East. STRATEGIC BENCHMARKING Can adopt the strategies of ACC cement i. Cost leadership: Striving to become a cost leader by means of setting up captive power plants. Similarly it can have the advantage of coal fuel. is to continue setting up retail stores.e. exports will constitute a major sales driver.

warehouse providers. 17. SWOT Analysis Phase 1-2-3 . wholesalers. distributors.Relationship Management: ACC focus on managing its relationships with importers. retailers and dealers for their long-term profitability. PRODUCT LIFE CYCLE UltraTech Cement Ltd. exporters.

COMPANY LIFE CYCLE INDUSTRY LIFE CYCLE UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3 .

SWOT Analysis Phase 1-2-3 .STRATEGIC MODELS PORTER¶S FIVE FORCE MODEL UltraTech Cement Ltd.

y y Annual production capacity of 23. Logistics y Can directly deals with the limestone tenders and thus the middle man do not affect its cost. one white cement plant. Plantation y Ultratech manufacturing plant uses ultra-modern technology and imported machinery. SWOT Analysis Phase 1-2-3 . At some points. y Company¶s CSR (corporate social responsibility) activities extend to 127 villages. in proximity to its plants. It is used for meeting the water needs of the plant and the colony. across the country.Ton cement production in 2009-10. y High quality 17. Use of high-end equipment such as the Gamma Metrics Machine and the X-ray Analyzer ensures that each product passing out of Ultraech manufacturing facility adheres to global standards of quality and performance. y The Ultratech cement manufacturing The greenbelt at our Units is simply awesome and is surrounded by trees all around. Only the leaves and the flowers and hear the cacophony of the birds.10 million tones.64Mn. you cannot even see the skyline.production is increasing annually. 12 grinding units. y Use the local transporters which provide the efficient transportation cost. UltraTech Cement Ltd. The waste gases from the cooler are used in the desalination plant.SWOT ANALYSIS STRENGTHS Production y The company's production facilities are spread across 11 integrated plants. y Company¶s Unit at Kovaya is the only Unit in this sector in India to have a desalination plant. and 5 terminals ² 4 in India and one in Sri Lanka.

multi storied complexes. SWOT Analysis Phase 1-2-3 . which is about 30 per cent of the country's total exports. y The company exports over 2. y y Ultratech has won the best employer award in 2007. y Ordinary portland cement is the most commonly used cement for a wide range of applications. and even high strength pre-cast and pre-stressed concrete. These applications cover dry-lean mixes. industrial constructions. Management has infused a lot of rigor and intensity in its people development processes and in honing skill sets.Brand Positioning y The Aditya Birla Group the eighth largest cement player in the world. Distribution Channels y y The Company has a network of cement UltraTech's distribution network is very widely spread out in the country with over 5. Portland Pozzolana cement and Portland blast furnace slag cement.000 retailers Human Resource y Total number of employees in Company as on 31st March. y PPC cement is used for big construction like dam and thermal power plant.500 dealers and 30. general-purpose readymixes.481 employees.5 million tons per annum. such as commercial buildings. 2010 was 4. Company continuously strives to foster a culture of high performance. y UltraTech's products include Ordinary Portland cement. y OPC is used for applications. UltraTech Cement Ltd. y The Performance Management System at Ultratech Cement ensures that performance and achievement do not go unnoticed. cement concrete roads and heavy duty floors.

Finance y Production for the Aditya Birla Group company ± UltraTech Cement.(from year 2009 to 2010) EBIT increase from 1487 cr.16 lakh mt during April-September 2009.99% at 186. y y y y Consistent revenue growth. refreshing HR systems in line with global benchmarks. each employee¶s performance is assessed against the set KRAs. Individual performance targets in the form of Key Result Areas (KRAs) are set at the beginning of the year through consultation with the reporting managers. Performance Management provides the employee an opportunity to discuss his/her achievements during the given period and to focus on improvement areas. enabling them to think the unthinkable and rise above the benchmarks they set for themselves. have enabled Company sustain its reputation of a meritocratic organization. SWOT Analysis Phase 1-2-3 . y Training & development-We lay a lot of emphasis on developing our employees beyond their present boundaries. y y Its HR processes are absolutely aligned to organizational goals It provides an opportunity to the employees to monitor their progress and develop into complete professionals. to 1093 cr.(from year 2009 to 2010) UltraTech Cement Ltd. y The Group¶s Corporate Human Resources function has played and continues to play an integral role in Company¶s Talent Management Processes.y Ongoing learning.30 lakh mt as against 179. Gross sales increase from 7160 cr. y The cornerstone of our Performance Management System is the Appraisal System. broadening their horizon. to 7729 cr. aligning rewards an recognition with performance. y At the end of the year. to 1706 cr. has moved up by 3.(from year 2009 to 2010) PAT increase from 977 cr. for the period April-September 2010.

65 Rs/share (from year 2009 to 2010) Quality y All the plants of UltraTech are ISO 14001 Environment Management Systems certified and adhere to OHSAS 18001 standards. New Delhi in 2004. Jafrabad and Magdalla in Gujarat. UltraTech Cement Ltd. Clinker.) increase from 118.y EPS (Rs. we see it in the Bandra-Worli Sea Link ± an eight lane bridge that is going to make a difference to millions of commuters. Kovaya. y Ultratech won the Capexil Certificate of Export Recognition . SWOT Analysis Phase 1-2-3 .94 to 127. Jharsuguda in Orissa and Durgapur in West Bengal. officially named as the Rajiv Gandhi Setu the bridge will provide an alternative route to south Mumbai from the western suburbs. 2002 and 2003 y y Uniform cement quality to customer. Hirmi in Chhattisgarh. Arakkonam in Tamil Nadu. Projects y Ultratech Cement. Asbestos and Cement Products for the years 2000. Bhartiya Udyog Ratan Award presented to Sh.Top Exporter Cement. Tadipatri in Andhra Pradesh. y Clean technologies and processes that combine economic progress and sustainable environment have been adopted at Ultratech plants at Awarpur and Ratnagiri in Maharashtra.KYP Kulkarni By Indian Economic Development & Research Association (IEDRA).

y High inventory handling cost. Operations y High Power/ Fuel costs. y Losses of raw material. UltraTech Cement Ltd. y Required efficient maintenance for the wastes. Lack of marketing mix. Human Resource y y Due to openness in the organization work culture is very informal that will not suit for better management in corporate. Insufficient man power Marketing y y y Health y Highly dusty environment at the time of dumping the cement is hazardous for health. y Raw material inventory required due to perishable of raw material. In other words. y Cement industry is highly fragmented Industry is also highly regionalized Low value commodity makes transportation over long distances uneconomical The cost of transporting cement is high and this keeps cement from being profitable over long distances. y It affects human¶s respiratory system adversely. shipping cement costs more than the profit from selling it.WEAKNESSESS Raw materials y Not available in all the places. Delay in supply. Products y High cost of branded products. Others y y y Lack of awareness program for consumers due to low promotion mix. SWOT Analysis Phase 1-2-3 .

y People are opting for more stable structures and intensive use of cement is taking place. y As Indian core industry is also growing at rate of nearly 10% per annum it is having a good future. y y It can develop new marketing area. Thus. It can sign MOUs with government regarding supply of cement for government work. this is the right time to fully tap these markets. which will increase the requirement. even government is spending heavily on infrastructure projects. Malaysia: 529 kg and South Korea: 951 kg) ². Institutional market like corporate and offices. The cement industry has recently streamlined its production efforts. Ultratech has ample opportunity to ride the growth curve. Projections show that by 2012. SWOT Analysis Phase 1-2-3 . school society complexes are growing in large scale. which will increase the demand of cement. the cement industry will have 25 percent more production capabilities.and the emphasis on infrastructure development. The cement industry has also invested about $6 billion in expansion efforts to meet unmet cement needs.OPPURTUNITIES y With the low per capita consumption of cement in India ² 102 kg compared to the global average of 260 kg (China: 429 kg. One such opportunity is the cement industry's efficiency. UltraTech Cement Ltd. which is heavier and more time-consuming. using dry manufacturing instead of wet. y Foreign direct investment in infrastructure sector going to increase in coming years. y y Maintain the position of competition in the market. y Roads are undergoing through the transformation process through which the traditional method of road building will be replaced by modern concrete roads. y The cement industries have opportunities as well.

Coal prices climbing up industry players say current shortage of coal in the country is estimated to be over 10 million tons.ACC cement are eating up considerable market share. They can also influence many retailers by giving better profit margin. and heavy discounts to retailers. Prism Cement. y The emergence of small players in this market may increase the competition and start the malpractices. bottleneck due to loading restriction. In many countries like Japan. y Now-a-days Timber is also being considered as one of the substitutes of cement. and Birla cement. Indonesia. and other Benefits. y Cheep priced brand are grabbing rapidly a large chunk of lower income customer base. y Players such as Jaypee Cement. y Due to India¶s exponential growth many new international cement companies are expected in coming years which will bring a tide of change and can start price war. SWOT Analysis Phase 1-2-3 . y y y Government intervention to adjust cement prices Transportation cost is scaling high. They now prefer timber which is cheap and long lasting for years y UltraTech Cement Ltd.THREATS Large number of players in cement industry makes it more competitive for ACC to carefully price its product and at the same time satisfy its dealers and customers. Singapore etc are now using timber in construction since those areas are high earthquake affected.

it will reduce the cost of product that will increase the profit margin and good for human health also. 23. y y Proper use of waste material.SUGGESTION y Adopt new technology for the production like wet process of cement manufacturing. UltraTech Cement Ltd. They can increase the production plant because of high growth rate of infrastructure. SWOT Analysis Phase 1-2-3 . y They can increase the production for global market. CONCLUSION ‡ As India is the second largest producer of cement in the worlds many big player presents in the market after that ultra tech cement increases his market share due to the high growth rate of real estate.

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