“CEMENT

INDUSTRY” A
Research Report
For
Management Research Project -I
Submitted
In the partial fulfillment of the Degree of
Master of Business
Administration Semester-III
By
Name Exam No.
Hetal Mistri (12044311048)
Tosifbhai Nandoliya (12044311056)
Dhara Patel (12044311078)
Dixita Patel (12044311083)
Jigarbhai Patel (12044311094)
Vaibhavi Raval (12044311142)

Under the Guidance of:

Prof. (Dr.) Mahendra Sharma
Prof. & Head,
V. M. Patel Institute of Management.
&
Ms.Harsha Jariwala
Prof. Abhishek
Parikh Faculty
Members,
V. M. Patel Institute of Management.
Submitted To:
V. M. Patel Institute of Management,
Ganpat University,
Kherva.

(December, 2013)
 CERTIFICATE BY THE GUIDE

This is to certify that the contents of this report entitled “Cement Industry” by Hetal Mistri
(12044311048) Dhara Patel (12044311078) Dixita Patel (12044311083) Vaibhavi Raval
(12044311142 Jigarbhai Patel (12044311094), Tosifbhai Nandoliya (12044311056) submitted to V.
M. Patel Institute of Management for the Award of Master of Business Administration (MBA
Semester -III) is original research work carried out by him/her/them under my supervision.

This report has not been submitted either partly or fully to any other University or Institute for award
of any degree or diploma.

Prof. (Dr.) Mahendra

Sharma, Professor & Head,
V. M. Patel Institute Of Management,
Ganpat University.
Ganpat Vidyanagar.

Date : 03/12/2013
Place : Kherva
 CANDIDATE’S STATEMENT

I/We hereby declare that the work incorporated in this report entitled “Cement Industry ” in partial
fulfillment of the requirements for the award of Master of Business Administration (Semester - III ) is
the outcome of original study undertaken by me/us and it has not been submitted earlier to any other
University or Institution for the award of any Degree or Diploma.

Hetal Mistri
Dhara Patel
Dixita Patel
Vaibhavi Raval
Jigarbhai Patel
Tosifbhai Nandoliya

Date: 03/12/2013
Place: Kherva
 PREFACE

One can deny for the importance of the practical exposure of the problem for its better understanding
and better grip of coming out with an industrially acceptable solution.

Being the Management student and performing small practical even is in itself an experience of
responsibility on our head. The project is certainly the best chance to work in the Management field
and have practical understanding of Management Strategic formulation and its implementation. This
exposure has really added a supplement and nourishment to our growing tree of management
knowledge- just like the fertilizer does to the plants.
In view of above, this report has been completed as a part of syllabus prescribed for the master of
business administration. This had been made in order to know Cement industry overview and its
strategic tools and its planning. This will help us to understand How Made Strategic Tools for
particular industry, which factor affected to Cement industry. We also know the Strengths, Weakness,
Opportunities, and Threats. This will help to understand financial overview of Cement industry. We
also know the Political, Economical, Social, Technology factor which affected to the Cement Industry.

It is matters of proud to be students of such great university where in students are helped to extract
hidden potentials from their selves. We are highly Thankful to all the Faculties of the department who
guided us all the way long as how the entire MRP 1 report is to be conducted.

The education institutions offering management programs play a significant part in un calculating the
much needed managerial skills in their students, the aspiring managers. The real success of
management lies in applying the professional management techniques in all managerial activities.
Practical study is eminent, and plays vital role for the students of management, because classroom
coaching and theoretical study alone are not enough. To survive in this highly competitive world,
practicality outweighs theoretic. Students are supposed to learn the various principles of business
administration conceptually but accuracy and efficiency in their implementation is possible only
through exposure to practical environment.
We have tried our best and have applied all our efforts, knowledge and sources available, in this
project.
Here we try our level best for finding data.
 ACKNOWLEDGEMENT
It is with profound in depthless that we acknowledge the efforts of all the well-wishers who have in
some or the other way contributes in their own special way to the success of this project.

We would like to express deep sense of gratitude to Dr. Mahendra Sharma. We would also thankful
to Prof.Harsha Jariwala for their advise, constant encouragement and timely help throughout the
course of our project.

We would like to thank Prof.Harsha Jariwala and prof. Abhisekh Parikh for provide us this golden
opportunity for preparing report and provide us guideline regarding project report.

We would like to thanks our group partener because of they help and support for preparing report and
providing informetiom regarding our project report.

Last but not the least we thank all the persons who have directly or indirectly support in this project
report.

Hetal Mistri
Dhara Patel
Dixita Patel
Vaibhavi Raval
Jigarbhai Patel
Tosifbhai Nandoliya
 EXECUTIVE SUMMARY

India's economy is the third largest by GDP in terms of purchasing power parity but, with a very large
population, it ranks only 165th in GDP/capita terms. Gradual de-centralization of the economy since
the early 1990s has allowed the development of a more diverse market economy that is increasingly
driven by an educated and business-minded middle class. This is highlighted by India's now world-
famous telecommunications and service sector, which has grown extensively over the past decade.

Increased variation has resulted in a reduction in India's agriculture dependency, although this sector
still supplies around 50% of the country's income. Manufacturing remains strong, representing more
than a quarter of output.

However, despite economic expansion and development of its service sector, economic disparity
remains a severe problem for India. Almost a third of Indians lived in poverty in 2011 and constant
population growth makes it hard to increase living standards. For illustration, India welcomed its 1
billionth inhabitant in 2000. In just 12 years since then the population has increased to over 1.2 billion!

In order to conduct this MRP-1 report we have done primary research to know the performance of four
major cement players with respect to customer loyalty. We have also done the financial analysis of
four major players of cement industry through secondary data for last five years, which includes
aggregate industry ratio analysis, separate company’s ratio analysis, aggregate industry sales trend of
last ten years and production trend of last five years. We have also done the various analysis like
Porter’s five force model, OT Analysis, PEST Analysis,
 CONTENT

Certificate by the guide..........................................................................................I

Candidate’s statements.........................................................................................II
Preface....................................................................................................................III
Acknowledgments...................................................................................................IV
Executive summary…..............................................................................................V

SR. NO. PARTICULARS PAGE

NO.
CHAPTER-1 INTRODUCTION OF THE INDUSTRY
1.1 Current Scenarios 1
1.2 History of Cement 3
1.3 Process Technology 9
1.4 Development of The Cement Industry 10
1.5 Historical Synthetic Cement Production 15
1.6 Production Scenario 17
1.7 The Manufacturing Process 21
1.8 Environmental Regulation 24
CHAPTER-2 MAJAR PLAYER OF CEMENT INDUSTRY
2.1 J K Cement Ltd. 27-31
2.2 J K Lakshmi Cement Ltd. 32-37
2.3 Shree Cement Ltd. 38-43
2.4 ACC Cement Ltd. 43-47
2.5 Ultra Tech Cement Ltd. 47-53
CHEPTER-3 MAICRO ANALSIS OF CEMENT INDUSTRY
3.1 Industry Life Cycle 54-57
3.2 Porters Five Force Model 58-65
3.3 Opportunities and Threats 66-67
3.4 Driving Forces 67-71
3.5 PEST Analysis 72-79
3.6 SWOT Analysis 79-81
3.7 Economic Future of Indian Cement 81-82
3.8 Key Success factor in the Cement Industry 83
3.9 Industry Dominant Economic Factors 84-88
3.10 Strategic Group Mapping 89-91
CHAPTER-4 FINANCIAL ANALYSIS
4.1 Introduction 93
4.2 Filtrations 94
4.3 Ratio Analysis 95-106
4.4 Trade Analysis 106-115
CHAPTER-5 RESEARCH FINDINGS & CONCLUSION
5.1 RESEARCH FINDINGS 116
 5.2 CONCLUSION 117
CHAPTER-6 BUSINESS-PLAN
6.1 INTRODUCTION 119-124
6.2 Objective 125-125
6.2.1 Vision 125
6.2.2 Mission 125
6.3 COMPANY DESCRIPTION 126
6.4 BRAND INFORMATION 126
6.4.1 Brand name 126
6.4.2 brand details 126
6.5 STP ANALYSIS 127
6.6 METHOD OF DISTRIBUTION & SALES 127
PROMOTION
6.7 Projected income statement 130
6.8 projected balance sheet 131
6.9 Projected cash flow statement 132
6.10 SOURCE OF FINANCE 133
6.11 Depreciation schedules 133
6.12 Salary structure 133
CHAPTER-7 BIBLIOGRAPHY 134
CHAPTER-8 ANNEXURE
Profit & Loss Account
Balance Sheet
CHAPTER-9 LIMITATION OF REPOT
 LIST OF TABLE
SR. PARTICULARS PAGE NO.
NO.
1.1 Cement Dispatches 5

1.2 Raw Materials For Portland Cement Manu faction 18

2.1 Major play Of Cement Industry 26

3.1 Cement Industry Life Cycle 56

3.2 Major Name Of Cement Industry 86

4.1 Capital Return on investment 94

4.2 Earnings Per Share 95

4.3 Current Ratio 97

4.4 Debt- Equity Ratio 99

4.5 Interest Coverage Ratio 101

4.6 Stock Turnover 102

4.7 Debtors turnover ratio 104

4.8 Total income 106

4.9 Total Expenses 107

4.10 Operating Profit 109

4.11 PBDT 110

4.12 Total Share Capital 111

4.13 Total Liability 112

4.14 Investment 113

4.15 Total Assets 115

 LIST OF FIGURES & GRAPHS
SR. PARTICULARS PAGE
NO. NO.
1.1 Cement Dispatches 23

3.1 Industry Life Cycle 54

3.2 Cement Industry Life Cycle 56

3.3 Five Forces Model Of Competition 58

3.4 Geographical Coverage 89

3.5 Price VS. Brand 90

4.1 Capital Return on investment 96

4.2 Earnings Per Share 98

4.3 Current Ratio 100

4.4 Debt- Equity Ratio 101

4.5 Interest Coverage Ratio 103

4.6 Stock Turnover 105

4.7 Debtors turnover ratio 106

4.8 Total income 108

4.9 Total Expenses 109

4.10 Operating Profit 110

4.11 PBDT 111

4.12 Total Share Capital 112

4.13 Total Liability 113

4.14 Investment 114

4.15 Total Assets 115

1. INDUSTRY ANALYSIS

1.1 CURRENT SCENARIOS

The Indian cement industry is the second largest producer of quality cement, which meets
global standards. The cement industry comprises 130 large cement plant sand more than 300
mini cement plants. The industry's capacity at the end of the year reached 188.97 million tons
which was 166.73 million tons at the end of the year 2006-07. Cement production during
April to March 2007-08 was 168.31 milliontons as compared to 155.66 million tons during
the same period for the year 2006-07.Despatches were 167.67 million tons during April to
March 2007- 08 whereas155.26 during the same period. During April-March 2007-08,
cement export was3.65 million tons as compared to 5.89 during the same period. Cement
industry in India is currently going through a consolidation phase. Some examples of
consolidation in the Indian cement industry are: Gujarat Ambujatakinga stake of 14 per cent
in ACC, and taking over DLF Cements and Modi Cement; ACCtaking over IDCOL; India
Cement taking over Raasi Cement and Sri Vishnu Cement; and Grasim's acquisition of the
cement business of L&T, Indian Rayon's cementdivision, and Sri Digvijay Cements. Foreign
cement companies are also picking upstakes in large Indian cement companies. Swiss cement
major Holcim has picked up14.8 per cent of the promoters' stake in Gujarat Ambuja Cements
(GACL).

The cement industry is one of the main beneficiaries of the infrastructure boom. With robust
demand and supply, the industry has bright future. The Indian Cement Industry with total
capacity of 165 million tones is the second largest after China. Cement industry is dominated
by 20 companies who account for over 70% of the market. Individually no company accounts
for over 12% of the market. The major players like L&T and ACC have been quiet successful
in narrowing the gap between demand and supply. Private housing sector is the major
consumer of cement (53%) followed by the government infrastructure sector. forecasted to
grow by over 22% by 2009-10 from 2007-08.Among the states, Maharashtra has the highest
share in consumption at12.18%,followed by Uttar Pradesh, In production terms, Andhra
Pradesh is leading with 14.72% of total production followed by Rajasthan. Cement
production grew at the rate of 9.1 per cent during 2006-07 over the previous fiscal's total
production of 147.8 mt (million tons). Due to rising demand of cement the sales volume of
cement companies are also increasing & companies reporting higher production, higher sales
and higher profits. The net profit growth rate of cement firms was 85%.Cement industry has

1
contributed around 8% to the economic development of India. Outsiders (foreign players)
eyeing India as a major market to invest in the form of either merger or FDI (Foreign Direct
Investment). Cement industry has a long way to go as Indian economy is poised to grow
because of being on verge of development

 Economic Trends
India is among the fastest-growing economies in the world, with close to 8% annual
growth since 2002, and expected to be sustained for the next 5 years as well. Inflation rate
remained below 5% between 2001 to 2007, but has since increased, touching 8.75% in May
2008. The business regulatory environment is fairly open, and follows free-market
competition principles. All quantitative restrictions on trade were removed in 2001, except
for a few highly sensitive goods. Trade as a % of GDP has risen from 13% in 1991 to nearly
30.2% in 2005-06. The total cumulative foreign direct investment (FDI) received into India
up to March 2007 was US$ 54.63 billion, of which Italy‘s share is about 1.2%. The monetary
unit of India is Indian Rupee (1 Indian Rupee = 100 paise). The exchange rate of Indian
Rupee is Euro 1 = Rs. 63.20 and US$ 1 = Rs. 40.45 (March 2008 - Reserve Bank of India).

 Demographics
India is a unique market on account of its diversity in age, income, and urban-rural
demographics. Nearly 58 million households, comprising 32.3% of India‘s dwelling units,
live in urban areas. Nearly 38% of urban households are in middle and higher income strata,
and only 14% of rural households have similar income levels.

 Income Classification
Though the population is more than 1.1 billion, the real consuming class of 300 million
people outnumbers several of the world‘s large markets in terms of market potential. Of
these, around 150 million people (2 million very rich and 30 million rich households)
represent the consuming potential, particularly for lifestyle goods and services.

• There are close to 80,000 high net worth Individuals in India, with saving and Assets
exceeding US$1 million.

2
 • At least 50,000 households buy premium cars every year (priced at US$ 30,000 and
above)

• The market for luxury goods is estimated to be Rs 100 billion, with over 2 million
Indians estimated to be engaging in some luxury purchase or the other each year.

1.2 THE HISTORY OF CEMENT

The history of the cement industry in India dates back to the 1889 when a Kolkata-based
company started manufacturing cement from Argillaceous. But the industry started getting
the organized shape in the early 1900s. In 1914, India Cement Company Ltd was established
in Porbandar with a capacity of 10,000 tons and production of 1000 installed. The World War
I gave the first initial thrust to the cement industry in India and the industry started growing at
a fast rate in terms of production, manufacturing units, and installed capacity. This stage was
referred to as the Nascent Stage of Indian Cement Company. In 1927, Concrete Association
of India was set up to create public awareness on the utility of cement as well as to propagate
cement consumption.

The cement industry in India saw the price and distribution control system in the year 1956,
established to ensure fair price model for consumers as well as manufacturers. Later in 1977,
government authorized new manufacturing units (as well as existing units going for capacity
enhancement) to put a higher price tag for their products. A couple of years later, government
introduced a three-tier pricing system with different pricing on cement produced in high,
medium and low cost plants.

Cement Company, in any country, plays a major role in the growth of the nation. Cement
industry in India was under full control and supervision of the government. However, it got
relief at a large extent after the economic reform. But government interference, especially in
the pricing, is still evident in India. In spite of being the second largest cement producer in
the world, India falls in the list of lowest per capita consumption of cement with 125 kg. The
reason behind this is the poor rural people who mostly live in mud huts and cannot afford to
have the commodity. Despite the fact, the demand and supply of cement in India has grown
up. In a fast developing economy like India, there is always large possibility of expansion of
cement industry.

3
Cement Production and Growth

Domestic demand plays a major role in the fast growth of cement industry in India. In fact the
domestic demand of cement has surpassed the economic growth rate of India. The cement
consumption is expected to rise more than 22% by 2009-10 from 2007-08. In cement
consumption, the state of Maharashtra leads the table with 12.18% consumption, followed by
Uttar Pradesh. In terms of cement production, Andhra Pradesh leads the list with 14.72% of
production, while Rajasthan remains at second position.

The production of cement in India grew at a rate of 9.1% during 2006-07 against the total
production of 147.8 MT in the previous fiscal year. During April to October 2008-09, the
production of cement in India was 101.04 MT comparing to 95.05 MT during the same
period in the previous year. During October 2009, the total cement production in India was
12.37 MT compared to a production of 11.61 MT in the same month in the previous year.
The cement companies are also increasing their productions due to the high market demand.
The cement companies have seen a net profit growth rate of 85%. With this huge success, the
cement industry in India has contributed almost 8% to India's economic development.

Technology Up-gradation

Cement industry in India is currently going through a technological change as a lot of up

gradation and assimilation is taking place. Currently, almost 93% of the total capacity is
based entirely on the modern dry process, which is considered as more environment-friendly.
Only the rest 7% uses old wet and semi-dry process technology. There is also a huge scope of
waste heat recovery in the cement plants, which lead to reduction in the emission level and
hence improves the environment.

Cement Dispatches

Cement industry in India has successfully maintained almost total capacity utilization levels,
which resulted in maintaining a 10% growth rate. In 2006-07, the total dispatch was 155 MT,
which rose up to 170 MT in 2007-08. The month of October 2009 saw a cement dispatch of
12.22 MT, which was almost 9% higher than the total cement dispatch of 11.21 MT in the
same month in the previous year.

4
Table-1.1

Particular 2008-09 (Apr-Oct) (in MT) 2007-08 (Apr-Oct) in MT

Production 101.04 95.05
Despatches (Excluding 100.24 94.33
Export)
Export 1.46 2.16
Capacity Utilization (%) 85 93

Mergers and Acquisitions in Cement Industry in India

 UltraTech Cement is going to absorb its sister concern Samruddhi Cement to become
biggest cement company in India.
 World's leading foreign funds like HSBC, ABN Amro, Fidelity, Emerging Market Fund
and Asset Management Fund have together bought 7.5% of India Cements (ICL) at a
cost of US$ 124.91 million.
 Cimpor, a Cement company of Portugal, has bought 53.63% stake that Grasim
Industries had in Shree Digvijay Cement.
 French cement company Vicat SA bought 6.67% share of Sagar Cement at a cost of
US$ 14.35 million.
 Holcim now holds 56% stake of Ambuja Cement. Previously it held 22% of stake. The
company utilized various open market transactions to increase its stakes. It invested
US$ 1.8 billion for that.

Recent Investments in the Indian Cement Industry

 In a recent announcement, the second largest cement company in South India, Dalmia
Cement declared that it's going to invest more than US$ 652.6 million in the next 2-3
years to add 10 MT capacity.
 Anil Ambani-led Reliance Infrastructure is going to build up cement plants with a total
capacity of yearly 20 MT in the next 5 years. For this, the company will invest US$ 2.1
billion.
 India Cements is going to set up 2 thermal power plants in Andhra Pradesh and Tamil
Nadu at a cost of US$ 104 billion.

5
 Anil Ambani-led Reliance Cementation is also going to set up a 5 MT integrated cement
plant in Maharashtra. It will invest US$ 463.2 million for that.
 Jaiprakash Associates Ltd has signed a MoU with Assam Mineral Development
Corporation Limited to set up a 2 MT cement plant. The estimated project cost is US$
221.36 million.
 Rungta Mines (RML) is also planning to invest US$ 123 million for setting up a 1 MT
cement plant in Orissa

- See more at: http://business.mapsofindia.com/cement/#sthash.emOox1fS.dpuf

Government Policies

Government policies have affected the growth of cement plants in India in various stages.
The control on cement for a long time and then partial decontrol and then total decontrol has
contributed to the gradual opening up of the market for cement producers. The stages of
growth of the cement industry can be best described in the following stages:

Price and Distribution Controls (1940-1981)

During the Second World War, 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. The installed capacity reached only 27.9MT by the year 1980-81.

Partial Decontrol (1982-1988)

In February 1982, partial decontrol was announced. Under this scheme, 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, which can be seen from the increase in the
installed capacity to 59MT in 1988-89 in comparison with the figure of a mere 27.9MT in
1980-81, an increase of almost 111%.

Total Decontrol (1989)

In the year 1989, total decontrol of the cement industry was announced. By decontrolling the
cement industry, the government relaxed the forces of demand and supply. In the next two
years, the industry enjoyed a boom in sales and profits. By 1992, the pace of overall
economic liberalization had peaked; ironically, however, the economy slipped into recession

6
taking the cement industry down with it. For 1992-93, the industry remained stagnant with no
addition to existing capacity.

Government Controls

The prices that primarily control the price of cement are coal, power tariffs, railway, freight,
royalty and cess on limestone. Interestingly, all of these prices are controlled by government.

Opportunities and challenges

The glue that holds the infrastructure sector is cement and the growth of cement industry is
directly linked to the growth of infrastructure sector.

India today is the second fastest growing economy in the world with the cement and
construction sector being the prime movers. The Indian cement industry with a total installed
capacity of 219 million tonnes is the second largest producer in the world and has been
growing at a rate of 9 to 10 percent per annum. With a large percentage of Indian population
being below the age of 25, the construction activity is expected to make a significant
contribution in the context of growing housing needs, development of roads and other
infrastructure, urbanization, etc.

It is the construction sector which shares the blame of global economic slowdown leading to
slackening of demand for housing; but withstanding that hard time, our cement sector is still
growing at a 10 percent when compared to the global average of 5 percent. Indian industry is
fortunate in having an active support and services of the National Council for cement &
Building Materials with an excellent R&D Infrastructure and invaluable intellectual capital.

In a recent International Seminar on Cement & Building Materials in New Delhi,

ShriJyotiraditya M. Scindia, Minister of State for Commerce & industry, said: "In spite of
global slowdown and reduction in demand, cement industry needs to be complimented for
weathering the downturn and recording a commendable growth of around 8 percent in 2007-
08 as well as in 2008-09. In the current year 2009-10 so far, the pace of growth of cement
industry has accelerated significantly above double digit."

The Indian cement industry has achieved an installed capacity of 242 million tonnes and is
targetted to reach 300 million tonnes by 2011-12 and 600 million by 2020. India has 97
percent of the installed capacity through dry process; the Indian cement industry has been

7
adopting latest technologies for energy conservation and pollution control as well as on-line
process of quality control based on expert systems and laboratory automation.

Despite having high demand in India, our per capita cement consumption is very low, where
the world average is 396 kg, in India the per capita consumption is only 156 kg. India being
the country of young population has a huge potential and its ushering social and economic
base will improve the domestic consumption.

Indian cement industry is efficient and eco-friendly, when it comes to energy conservation,
the best level is achieved by the industry as far as data goes of 687 kilo calories per kg of
clinker and 66 KWh per tonne cement are at par with the best achieved levels in the world.
The cement industry effort towards control of emissions, preservations of ecology and its
Corporate Social Responsibility for Environmental Protection are laudable. The sustainable
and long- standing efforts towards reduction of carbon footprint is commendable â€― CO2
emission of 0.82 tonnes per tonne of cement produced in 2006, a sustainable drop from the
level of 1.12 in 1996 and 0.94 in 2000.

On the technology front, the Indian cement industry has largely adopted state-of-art
manufacturing technologies, system for cogeneration of power and technologies for low NOx
and SO2 emission have yet to achieve many targets. The initiative taken by cement industry
for waste utilization are evident from the fact that production of blended cement in the
country in the year 2008-09 was as high as 74 percent as against only 36 percent in 2000-01.
The Indian cement industry annually recycles more that 30 million tones of fly ash, apart
from consuming the entire quality of granulated blast furnace slag- another waste generated
by steel plants in our country.

The rising cost of energy transportation and persistent raw material pressures have been
playing a heavy strain on the cement and construction industry. As a result, Indian
Companies have to not only explore alternate sources of energy and materials but also strive
to enhance operational efficiency. But India’s potential for growth remains intact. The
need of the hour is to spend invest adequately in developing human resources capable of
addressing the professional needs of construction industry like application of advanced
technologies and construction practices, project management construction, litigation,
insurance and finance, etc.

8
Indian cement industry is in search of competitive advantage, therefore, it is continuously
improving on the innovation and optimization front. While embracing its commitment to
grow and compete globally, it is however not neglecting the ecological and environmental
needs. Cement sector is adopting sustainable development practices and conservation
measures while harnessing energy for its use. The industry if fully committed and partner
global efforts to reduce Green House Gases impact and mitigating the evil of climate change.

1.3 PROCESS TECHNOLOGY

While adding fresh capacities, the cement manufacturers are very conscious of the
technology used. In cement production, raw materials preparation involves primary and
secondary crushing of the quarried material, drying the material (for use in the dry process) or
undertaking a further raw grinding through either wet or dry processes, and blending the
materials. Clinker production is the most energy-intensive step, accounting for about 80% of
the energy used in cement Production. Produced by burning a mixture of materials, mainly
limestone, silicon oxides, aluminum, and iron oxides, clinker is made by one of two
production processes: we tordry; these terms refer to the grinding processes although other
configurations and mixed forms (semi-wet, semi-dry) exist for both types. In the dry process,
the raw materials are ground, mixed, and fed into the kiln in their dry state. In the wet
process, the crushed and proportioned materials are ground with water, mixed, and fed into
the kiln in the form of slurry. Different types of cement that are produced in India are:•
Ordinary Portland cement (OPC):OPC, popularly known as grey cement, has 95 per cent
clinker and 5 per centgypsum and other materials. It accounts for 70 per cent of the total
consumption.• Portland Pozzolana Cement (PPC):PPC has 80 per cent clinker, 15 per cent
pozzolana and 5 per cent gypsum and accounts for 18 per cent of the total cement
consumption. It is manufactured because it uses fly ash/burnt clay/coal waste as the main
ingredient.• White Cement: White cement is basically OPC - clinker using fuel oil (instead of
coal) with iron oxide content below 0.4 per cent to ensure whiteness. A special cooling
technique is use din its production. It is used to enhance aesthetic value in tiles and flooring.
White cement is much more expensive than grey cement.

9
1.4 DEVELOPMENT OF THE CEMENT INDUSTRY

Cement is an indispensable building material required for the construction of houses, bridges,
tunnels, dams etc.

The start of cement manufacturing in India goes back to 1904, when the first cement factory
was set up in Madras. Its production was as low as 30 tonnes a day, as such it failed.

The real beginning of this industry came up in 1913, when three units were set up at ICatni
(Madhya Pradesh) in 1915, Lekheri (Tamil Nadu) in 1916 and Porbander (Gujarat) in 1913.
The First World War gave incentive to the industry and a few more factories were set up at
Japla (Bihar), Dwarka (Gujarat) and Banmore (Madhya Pradesh). In 1934, ten out of eleven
cement manufacturing companies merged together and formed one Associated Cement
Company (A.C.C.).

The Dalmia Group entered in the field of cement manufacturing in 1937. This group set'up its
factories at Dalmianagar Bihar, Dadri (Haryana) and Dalmiapuram (Tamil Nadu). At the time
of partition, there were 18 cement factories with an annual installed capacity of 21-15 Lakh
tons.

Three more factories were established just after independence at Talaiyuthu (Tamil Nadu),
Kottayam (Kerala) and Sikka (Gujarat).

The production of cement was boosted up after 1950. It is because of developmental work in
the country, like construction of multipurpose river valley projects, means of transport,
industries and housing activity.

Percentage production of cement

In order to meet the growing demand of cement, a number of factories were set up in the
country. Presently, there are 120 factories.

The industry depends upon the availability of limestone, clay or shale and gypsum. These
natural materials are mined in different regions; as such factories are set up close to the
sources of raw material.

10
Development of means of transport and availability of capital are other factors which
determine development of cement industry.

Although, in India, cement manufacturing has developed in different states except a few like
Punjab, yet 85% of the cement manufacturing is carried on in the states of Tamil Nadu,
Madhya Pradesh, Gujarat, Rajasthan, Andhra Pradesh and Bihar. Eleven types of cement is
manufactured in India like

Portland 71%

Pozollana 18%

Slag Cement 10%

Rest Others.

Tamil Nadu.

The state of Tamil Nadu has a very well developed cement industry.

Tamil Nadu.

The state of Tamil Nadu has a very well developed cement industry. There are eight factories,
ThsTalukapatli cement factory is one of the largest in the country. Its annual capacity is about
10 lalchtonnes.

The industry is attributed to enormous reserves of raw material in the state, availability of
cheap labor and demand for cement.

Other cement factories are at Madhukarni, Dalmiapuram, Poliyur, Chhattisgarh, Alangulam,

Talaiyuthu, Sankaridurg and Aryalur.

Madhya Pradesh and Chhattisgarh.

These two states are the largest producer of cement in India. The centres are at Jamul, Satna,
Banmore, Katni, Gopalnagar, Durg, Kaymore, Tilda, Khor, Mandhar.

11
The Akaltara Cement Factory produces about 11 lakh tonnes of cement every year. New
plants are located at Rewa and Neemuch.

Gujarat.

Cement manufacturing is carried on at a number of centres in the state of Gujarat. The

Saurasthra Cement Company and Digvijay Company dominate cement production in the
state.

The Vadodra, Okha, Viraval, Bhavnagar factories are located at Ranavav, Sikka,
Ahmedabad, Dwarka, Porbander, Sevalia and Amiragarh. Gujarat state has rich resources of
raw material required for cement manufacturing.

Bihar.

Cement manufacturing in the Bihar state is done at Japla, Sindri, Dalmianagar, Kalyanpur,
Khalari and Chaibasa. Two new factories have been set up at Bhawanthpur. The rich coal and
lime-stone reserves are the major assets for the development of cement manufacturing.

Rajasthan.

Rajasthan has rich potentials for cement manufacturing. Cement factories are located at
Lakheri, SawaiMadhopur, Udaipur, Chittorgarh, Bundi, Banas, Beawar, Nimbaheda and
Sirohi.

Cement is also produced in various other states of the country. These are :

Karnataka: Bangalore, Wadi, Hosdurga, Bagalkot, Shahabad, Krukunta. Dadri.

Himachal Pradesh: Bilaspur (Gaggal) Paonta Sahib.

Kerala: Kottayam

Andhra Praqdesh: Hyderabad and Vijaywada, Panyon, Tandur, Adilabad, Vishakhapatnam.

Uttar Pradesh: Allahabad Churk, Dalla Chun

Maharashtra: Chanda, Ratnagiri, Mumbai, Kohlapur.

12
West Bengal: Prulia, Durgapur,

Asansol. Assam: Guwahti.

Production of cement in this country is controlled mainly by private companies. The

Associated Cement Company Ltd. (A.C.C.) and the Dalmia Group control bulk of the cement
production.

The Cement Corporation of India, a public sector concern has set up a number of cement
factories, in die country, one each in Karnataka, Himachal Pradesh, Assam and Haryana, two
in Andhra Pardesh and three in Madhya Pradesh.

India also manufactures asbestos cement. Twelve units in the country manufacture asbestos
cement.

India has developed some export trade in cement. At times it exports cement and cement
products to the countries like Iraq, Iran, Afghanistan, Kuwait, Bangladesh, Mynmar, Sri
Lanka, E. African countries and South East Asian Countries.

However, at times the country has to import cement from Poland, Indonesia, Korea etc. to
meet the growing demand of cement in the country.

Cement industry of India faces problems like those of shortage of coal for running the
factories and at times shortage of railway wagons for the transportation of cement to the
markets.

Cement manufacturing is one of the most advanced industries in India. A decade back, the
country was having deficient production of cement and had to resort to import it from
different countries in order to meet country's demand of cement.

However, after March, 1989 due to changes in the policy, cement industry made rapid strides
both in capacity/production and process technology. At present there are

122 large cement plants with an installed capacity of 112-95 million tonnes per annum and
more than 300 mini cement plants with a combined estimated capacity of nine million tonnes
per annum. The production during 1999-2000 was 100-72 million tonnes (provisional). The
cement industry achieved a growth rate of 15 per cent in 1999-2000.

13
India is producing different varieties of cement like Ordinary Portland Cement (OPC),
Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well
Cement, White Cement, etc.

These different varieties of cement are produced strictly under BIS specifications and the
quality is comparable with the best in the world.

The cement industry has kept pace with technological advancement and modernization.
Export of cement was 3-14 million tonnes (provisional) in 1999- 2000. Improvement in the
quality of Indian Cement has found its ready market in a number of countries named earlier.

In order to meet the increasing trained manpower requirement of the Indian Cement Industry,
a Human Resource Development (HRD) Project has been implemented with assistance from
World Bank and DANIDA (Danish International Development Agency).

Under this Project, four Regional Training Centres have been set up at ACC -Jamul (M.P),
Dalmia Cement Dalmiapuram (T.N.), JK Cement Nimbahera (Rajasthan) and Gujarat
Ambuja, Ambuja Nagar (Gujarat).

14
1.5 HISTORICAL SYNTHETIC CEMENT PRODUCTION

A cement is a binder, a substance that sets and hardens independently, and can bind other
materials together. The word "cement" traces to the Romans, who used the term opus
caementicium to describe masonry resembling modern concrete that was made from crushed
rock with burnt lime as binder. The volcanic ash and pulverized brick additives that were
added to the burnt lime to obtain a hydraulic binder were later referred to as cementum,
cimentum, cäment, and cement.

Cements used in construction can be characterized as being either hydraulic or non-

hydraulic. Hydraulic cements (e.g.,Portland cement) harden because of hydration, a
chemical reaction between the anhydrous cement powder and water. Thus, they can harden
underwater or when constantly exposed to wet weather. The chemical reaction results in
hydrates that are not very water-soluble and so are quite durable in water. Non-hydraulic
cements do not harden underwater; for example, slaked limes harden by reaction with
atmospheric carbon dioxide.

The most important uses of cement are as an ingredient in the production of mortar in
masonry, and of concrete, a combination of cement and an aggregate to form a strong
building material.

Non-hydraulic cement such as slaked limes (calcium hydroxide mixed with water), harden
due to the reaction of carbonation in presence of the carbon dioxide naturally present in the
air. Calcium oxide is produced by lime calcination at temperatures above 825 °C (1,517 °F)
for about 10 hours at atmospheric pressure:

CaCO3 → CaO + CO2

The calcium oxide is then spent mixing it to water to make slaked lime:

CaO + H2O → Ca(OH)2

Once the water in excess from the slaked lime is completely evaporated (this process is
technically called setting), the carbonation starts:

15
 Ca(OH)2 + CO2 → CaCO3 + H2O

This reaction takes a significant amount of time because the partial pressure of carbon
dioxide in the air is small. The reaction of carbonation requires the air be in contact with the
dry cement, hence, for this reason the slaked lime is a non-hydraulic cement and cannot be
used under water.

Conversely, the chemistry ruling the action of the hydraulic cement is the hydration.
Hydraulic cements (such as the Portland cement) are made of a mixture of silicates and
oxides, the four main components being:

Belite (2CaO·SiO2);
Alite (3CaO·SiO2);
Celite (3CaO·Al2O3);
Brownmillerite (4CaO·Al2O3·Fe2O3).

The reactions during the setting of the cement are:

(3CaO·Al2O3)2 + (x+8) H2O → 4 CaO·Al2O3·xH2O + 2 CaO·Al2O3·8H2O

(3CaO·Al2O3) + 12 H2O + Ca(OH)2 → 4 CaO·Al2O3·13 H2O
(4CaO·Al2O3·Fe2O3) + 7 H2O → 3 CaO·Al2O3·6H2O + CaO·Fe2O3·H2O

And during the hardening (the chemistry of the reaction of hydration is still not completely
clear):

(3CaO·SiO2)2 + (x+3) H2O → 3 CaO2·SiO2·xH2O + 3 Ca(OH)2

(2CaO·SiO2)2 + (x+1) H2O → 3 CaO2·SiO2·xH2O + Ca(OH)2

The silicates are responsible of the mechanical properties of the cement, the celite and the
browmillerite are essential to allow the formation of the liquid phase during the cooking. The
chemistry of the above listed reactions is not completely clear and is still the object of
research.

16
1.6 PRODUCTION SCENARIO

The cement industry worldwide is facing growing challenges in the context of saving
material and energy resources as well as reducing its CO2 emissions. The International
Energy Agency highlighted in its 'Road Map for the Cement Industry' that the main levers for
the cement producers are the use of alternative materials, be it as fuel or raw material and in
addition the reduction of the clinker/cement factor by utilisation of well tried and proven
materials like slag, fly ash, pozzolanas or limestone fines. This underlines that in the years to
come cement will depend on OPC clinker to a high degree. New cements will therefore most
certainly first take into account higher amounts of main constituents besides clinker which
show pozzolanic or latent hydraulic properties.

Artificial materials that originate from natural or industrial resources but require additional
thermal treatment and/or activation may also have a role to play. It is not clear at present to
what extent cements based on magnesia can play a role. On the other hand, sulphoaluminate
cements may have a significant role to play. Unfortunately, due to their specific raw materials
as well as their performance in concrete they will most probably not be able to substitute
relevant parts of today's cement markets.

Raw Material

The first step in the manufacture of Portland cement is to combine a variety of raw
ingredients so that the resulting cement will have the desired chemical composition. These
ingredients are ground into small particles to make them more reactive, blended together, and
then the resulting raw mix is fed into a cement kiln which heats them to extremely high
temperatures.

Since the final composition and properties of Portland cement are specified within rather
strict bounds, it might be supposed that the requirements for the raw mix would be similarly
strict. As it turns out, this is not the case. While it is important to have the correct proportions
of calcium, silicon, aluminum, and iron, the overall chemical composition and structure of the
individual raw ingredients can vary considerably. The reason for this is that at the very high
temperatures in the kiln, many chemical components in the raw ingredients are burned off
and replaced with oxygen from the air. Table 3.3 lists just some of the many possible raw
ingredients that can be used to provide each of the main cement elements.

17
Table-1.2 Examples of raw materials for Portland cement manufacturing

Calcium Silicon Aluminum Iron

Limestone Clay Clay Clay
Marl Marl Shale Iron ore
Calcite Sand Fly ash Mill scale
Aragonite Shale Aluminum ore refuse Shale
Shale Fly ash Blast furnace dust
Sea Shells Rice hull ash
Cement kiln dust Slag

The ingredients listed above include both naturally occurring materials such as limestone
and clay, and industrial byproduct materials such as slag and fly ash. From Table 3.3 it may
seem as if just about any material that contains one of the main cement elements can be
tossed into the kiln, but this is not quite true. Materials that contain more than minor (or in
some cases trace) amounts of metallic elements such as magnesium, sodium, potassium,
strontium, and various heavy metals cannot be used, as these will not burn off in the kiln and
will negatively affect the cement. Another consideration is the reactivity, which is a function
of both the chemical structure and the fineness. Clays are ideal because they are made of fine
particles already and thus need little processing prior to use, and are the most common source
of silica and alumina. Calcium is most often obtained from quarried rock, particularly
limestone (calcium carbonate) which must be crushed and ground before entering the kiln.
The most readily abundant source of silica is quartz, but pure quartz is very unreactive even
at the maximum kiln temperature and cannot be used.

Grinding and blending prior to entering the kiln can be performed with the raw ingredients in
the form of a slurry (the wet process) or in dry form (the dry process). The addition of water
facilitates grinding. However, the water must then be removed by evaporation as the first step
in the burning process, which requires additional energy. The wet process, which was once
standard, has now been rendered obsolete by the development of efficient dry grinding
equipment, and all modern cement plants use the dry process. When it is ready to enter the
kiln, the dry raw mix has 85% of the particles less than 90 £gm. in size

18
The next step in the process is to heat the blended mixture of raw ingredients (the raw mix) to
convert it into a granular material called cement clinker. This requires maximum
temperatures that are high enough to partially melt the raw mix. Because the raw ingredients
are not completely melted, the mix must be agitated to ensure that the clinker forms with a
uniform composition.

This description refers to a standard dry-process kiln as illustrated in Figure 3-2. Such a kiln
is typically about 180 m long and 6 m in diameter, has a downward slope of 3-4%, and
rotates at 1-2 revolutions per minute.

Suspension preheaters and claimers

The chemical reactions that occur in the dehydration and calcination zones are
endothermic, meaning that a continuous input of energy to each of the particles of the raw
mix is required to complete the reaction. When the raw mix is piled up inside a standard
rotary kiln, the rate of reaction is limited by the rate at which heat can be transferred into a
large mass of particles. To make this process more efficient, suspension preheaters are used
in modern cement plants to replace the cooler upper end of the rotary kiln (see Figure 3-
2). Raw mix is fed in at the top, while hot gas from the kiln heater enters at the bottom. As
the hot gas moves upward it creates circulating ―cyclones‖ that separate the mix particles as
they settle down from above. This greatly increases the rate of heating, allowing individual
particles of raw mix to be dehydrated and partially calcined within a period of less than a
minute.

Grinding and the addition of gypsum

Once the nodules of cement clinker have cooled, they are ground back into a fine powder in
a large grinding mill. At the same time, a small amount of calcium sulfate such as gypsum
(calcium sulfate dehydrate) is blended into the cement. The calcium sulfate is added to
control the rate of early reaction of the cement, as will be discussed in Section 5.3. At this
point the manufacturing process is complete and the cement is ready to be bagged or
transported in bulk away from the plant. However, the cement is normally stored in large
silos at the cement plant for a while so that various batches of cement can be blended together
to even out small variations in composition that occur over time. Cement manufacturers go
to considerable lengths to maintain consistent behavior in their cements over time, with the

19
most important parameters being the time to set, the early strength development, and the
workability at a given water content.

Cement kiln dust

As the hot kiln gas moves through the kiln, it carries with it the smallest particles of the raw
mix as well as volatilized inorganic substances such as alkalis (sodium and potassium) and
chlorides. As the gas cools, the volatiles condense back round the small particles, and the
resulting powder is called cement kiln dust (CKD). In the old days, the CKD was simply
vented out of the smokestack, after which it would continuously settle out of the air to create
a thin coating of grey dust on the surrounding countryside. This is no longer allowed. In
fact, environmental restrictions even prevent CKD from being buried in landfills because of
the tendency for the alkalis and chlorides to leach into groundwater. In modern cement
plants, the CKD is removed in the suspension preheater and by and electrostatic precipitators
located near the base of the smokestack.

Tricalcium Silicate (C3S)

C3S is the most abundant mineral in Portland cement, occupying 40–70 wt% of the cement,
and it is also the most important. The hydration of C3S gives cement paste most of its
strength, particularly at early times.

Dicalcium Silicate (C2S)

As with C3S, C2S can form with a variety of different structures. There is a high temperature
tructure in that is in equilibrium at intermediate
An important aspect of C2 -C2S
has a very stable crystal structure that is completely unreactive in water.

structure is easil
is never present in portland cement. 2S is irregular, but
considerably less so than that of C3S, and this accounts for the lower reactivity of C2S. The
C2S in cement contains slightly higher levels of impurities than C3S. According to Taylor [2
], the overall substitution of oxides is 4-6%, with significant amounts of Al2O3, Fe2O3, and
K2O.

20
Tricalcium Aluminate (C3A)

Tricalcium aluminate (C3A) comprises anywhere from zero to 14% of a portland

cement. Like C3S, it is highly reactive, releasing a significant amount of exothermic heat
during the early hydration period. Unfortunately, the hydration products of formed from C3A
contribute little to the strength or other engineering properties of cement paste. In certain
environmental conditions (i.e., the presence of sulfate ions), C3A and its products can actually
harm the concrete by participating in expansive reactions that lead to stress and cracking.

TetracalciumAluminoferrite (C4AF)

A stable compound with any composition between C2A and C2F can be formed, and the
cement mineral termed C4AF is an approximation that simply the represents the midpoint of
this compositional series. The crystal structure is complex, and is believed to be related to
that of the mineral perovskite. The actual composition of C4AF in cement clinker is generally
higher in aluminum than in iron, and there is considerable substitution of SiO2 and
MgO. Taylor reports a typical composition (in normal chemical notation) to be
Ca2AlFe0.6Mg0.2Si0.15Ti0.5O5. However, the composition will vary somewhat depending on the
overall composition of the cement clinker.

1.7 THE MANUFACTURING PROCESS

What is cement?

 Cement is a fine powder which sets after a few hours when mixed with water, and then
hardens in a few days into a solid, strong material. Cement is mainly used to bind fine
sand and coarse aggregates together in concrete. Cement is a hydraulic binder, i.e. it
hardens when water is added.
 There are 27 types of common cement which can be grouped into 5 general categories
and 3 strength classes: ordinary, high and very high. In addition, some special cements
exist like sulphate resisting cement, low heat cement and calcium aluminate cement.

21
 The quarry is the starting point

 Cement plants are usually located closely either to hot spots in the market or to areas with
sufficient quantities of raw materials. The aim is to keep transportation costs low. Basic
constituents for cement (limestone and clay) are taken from quarries in these areas.

A two-step process

 Basically, cement is produced in two steps: first, clinker is produced from raw materials.
In the second step cement is produced from cement clinker. The first step can be a dry,
wet, semi-dry or semi-wet process according to the state of the raw material.

Making clinker

 The raw materials are delivered in bulk, crushed and homogenised into a mixture which is
fed into a rotary kiln. This is an enormous rotating pipe of 60 to 90 m long and up to 6 m
in diameter. This huge kiln is heated by a 2000°C flame inside of it. The kiln is slightly
inclined to allow for the materials to slowly reach the other end, where it is quickly
cooled to 100-200°C.
 Four basic oxides in the correct proportions make cement clinker: calcium oxide (65%),
silicon oxide (20%), alumina oxide (10%) and iron oxide (5%). These elements mixed
homogeneously (called ―raw meal‖ or slurry) will combine when heated by the flame at
a temperature of approximately 1450°C. New compounds are formed: silicates,
aluminates and ferrites of calcium. Hydraulic hardening of cement is due to the hydration
of these compounds.
 The final product of this phase is called ―clinker‖. These solid grains are then stored in
huge silos. End of phase one.

From clinker to cement

 The second phase is handled in a cement grinding mill, which may be located in a
different place to the clinker plant. Gypsum (calcium sulphates) and possibly additional
cementitious (such as blastfurnace slag, coal fly ash, natural pozzolanas, etc.) or inert
materials (limestone) are added to the clinker. All constituents are ground leading to a
fine and homogenous powder. End of phase two. The cement is then stored in silos before
being dispatched either in bulk or bagged.

22
 What is concrete?

 Concrete is a solid material made of cement, sand, water, aggregates and often with
admixtures. When fresh, it has a certain workability and takes the form of the mould into
which it is put. When set and hardened, it is as strong as natural stone and resists time,
water, frost, mechanical constraints and fire. Typically, concrete is the essential material
used in all types of construction [residential (housing), non-residential (offices) and civil
engineering (roads, bridges, etc.)].

Figar-1.1

23
1.8 ENVIRONMENTAL REGULATION

Republicans have made clear that they don‘t think President Obama‘s jobs plan, including
$50 billion for transportation infrastructure, will create jobs. They would rather remove
regulations that cost industry money. They say reducing this ―regulatory burden‖ will create
jobs — and they want to start with the cement industry.

During floor debate on the Cement Sector Regulatory Relief Act, Rep. Waxman shows a
picture of an elementary school located right next to a cement kiln.

The House is currently debating the Cement Sector Regulatory Relief Act, which would
eliminate EPA standards, passed last August, to reduce hazardous air pollution. Industry
hacks say regulations currently facing the cement industry could force the closure of 18 of the
nearly 100 U.S. cement plants and result in the loss of 4,000 manufacturing jobs. Democrats
— and the Congressional Research Service — refute those numbers. Republicans have been
toiling away all year to gut EPA regulations of all stripes — indeed, California Democrat
Henry Waxman, ranking member of the Energy and Commerce Committee, today called it
―the most anti-environment Congress in history,‖ having voted 136 times this session
to block environmental measures.

But the GOP says this one in particular is a jobs-killer. ―The cement industry is in its weakest
economic condition since the 1930s,‖ said Jason Altmire (R-PA) on the floor of the House.
He says the bill would simply remove an unnecessary barrier to industry. About 40 percent of
the cement used in the U.S. in a given year is used to surface highways. According to
Earthjustice, cement plants are among the nation‘s worst toxic polluters. Cement kilns are the
second largest source of mercury emissions in the United States, after coal-fired power
plants. So essentially, this Republican bill is another government subsidy to the road industry,
only this time we‘re paying with the air we breathe, the water we drink, and the food we eat.

24
It‘s true, 20 percent of construction workers are currently unemployed, and that represents a
significant economic and human problem. To address that problem, Democrats and
transportation advocates, including industry representatives, continue to urge Congress to
pass a multi-year transportation reauthorization — not gut life-saving environmental
standards. ―If these bills are enacted,‖ Waxman said on the floor, ―there will be more cases of
cancer, birth defects, and brain damage. The ability of our children to think and learn will be
impaired because of their exposure to mercury and other dangerous air pollutants.‖

―Mercury is so toxic just one seventieth of a teaspoon of mercury — or .0024 ounces — can
contaminate a 20-acre lake and render the fish in that lake poisonous to eat,‖ said Rep. James
Moran (D-VA). Waxman offered three amendments to the bill. One uses the rhetoric
Republicans have been using to block bills all year — requiring that the money used to
authorize the bill be offset elsewhere in the budget. But instead of requiring that offset
upfront, it would require that the cost offset be examined after the bill passes, and render the
bill ineffective if there is no offset. The other amendment would continue government
emissions enforcement if those emissions ―are harming brain development or causing
learning disabilities in infants or children.‖

The NIH says exposure to even low levels of mercury can reduce a child‘s IQ. Moran made
an economic argument, saying that those children have a harder time getting and keeping
jobs. He quoted independent scientific studies saying the cost of mercury pollution ―is as high
as $22,300 per IQ point per child, which cumulatively amounts to $8.7 billion in lost
potential per year.‖ ―The majority constantly urges us to balance the costs and
benefits of environmental regulation,‖ Moran said. ―But when the benefits of
regulating hazardous pollution substantially outweigh the costs, as they do with mercury, all
of a sudden that doesn‘t become an issue for debate.‖

―If we do not defeat this bill — if it were to be enacted — children will suffer,‖ he went on.
―Our economy will become weaker. The fact is, we have both a moral and an
economic responsibility to defeat this bill.‖

25
2. INTRODUCTION

There are a number of players prevailing in the cement industry in India. However, there are
around 20 big names that account for more than 70% of the total cement production in India.
The total installed capacity is distributed over around 129 plants, owned by 54 major
companies.

Table-2.1

No. Name production Installed capacity

1 J K Cement 12,782 16,000
2 J K Laksmi Cement 13,000 16,500
3 Acc cement 17,902 18,640

4 Shree cement 14,500 14,115

5 Ultatech cement 13,707 17,000
6 Gujarat ambuja 15,094 14,860
7 Grasim 14,649 14,115
8 Indin cement 8,434 8,810
9 Jaypee group 6,316 6,531
10 Century 6,636 6,300
11 Madrascement 4,550 5,470
12 Birla corp. 5,150 5,113

26
2.1 J.K CEMENT LIMITED

INTRODUCTION

J.K. Cement Ltd. (JKC) is engaged in the cement production. The company produces two
types of cement, namely, White and Grey cement. It also produces and supplies water proof
cement. The company is the largest producer of grey cement in Northern India and the second
largest producer of white cement in India in terms of production capacity. The company's
manufacturing facilities are located in Nimbahera, Mangrol and Gotan, India. JKC exports its
products to countries including South Africa, Nigeria, Singapore, Bahrain, Bangladesh, Sri
Lanka, Kenya, Tanzania, UAE and Nepal. JKC is headquartered in Kanpur, India.

J K Cement Limited (JK Cement) is one of the largest cement manufacturers in Northern
India and also the second largest white cement manufacturer in India by production capacity.
It is an affiliate of the J.K. Organization, which was founded by LalaKamlapatSinghania in
the year 1994. The Company produces 53-grade, 43-grade and 33-grade Ordinary Portland
Cement (OPC) grey cement, Portland Pozzolana Cement ('PPC') under grey and white
cement. JK Water proof is another product from JK Cements used for flooring, wall
application and other specialized applications. The products are marketed under the brand
names J.K. Cement and Sarvashaktiman for OPC products, J.K. Super for PPC products and
J.J White and camel for white cement products.

HISTORY

J.K cement started its commercial production in may 1975 in its first plant nimbahera in
rajasthan. The company was incorporated in the year 1994.

Today J.K cement is one of the largest cement manufacturers in north india. It is also second
largest producer of white cement in india. The company export white cement to countries like
south Africa, Nigeria, Singapore, Bahrain, Bangladesh, srilanka, Tanzania, UAE and Nepal.

The company has two manufacturing facilities located at nimbahera and mangrol in the state
of rajsthan. The company produces white cement and its production unit is located in gotan at
rajasthan. During august 2009, Allahabad HC had sanctioned the scheme of amalgamation of
jaykaycem a wholly owned subsidiary with the company. Jaykaycem was implementing 3
million tones per annum green field grey cement plant at mudhol, district bagalkot, Karnataka

27
state which was at final stage of implementation. The installed capacity of grey cement of JK
cement with the merger incrased to 7.5 million tones per annum.

These plant have received various certifications ISO-9001:2000 for quality management
system. ISO-14001:2004 for environment management system and OHSAS-18001:2005 for
occupational health and safety systems. J.k cement ltd. Is part of the $3 billion conglomerate.
Jk organization. The company is promoted by DR.Gaurharisinghania& MR.
yadupatisinghania and entered cement business in 1975. 2ed largest white cement
manufacturer in india with 0.40 MTPA capacity and one of the leading grey cement
producers in north India with over 36 years of experience. And highly reputed brand with
extensive nation-wide distribution. Integrated cement manufacturing company with 7.5
MTPA grey cement capacity. Nimbahera, mangrol and gotan (rajashtan): 4.5 MTPA

Muddapur( Karnataka): 3 MTPA 105.5 MW of captive power Proximity and access to large
high quality reserves of limestone, sufficient to operate cement plants for the next 30 years.
Expanding domestic grey cement capacity to 10.5 MTPA and white cement capacity to 0.60
MTPA and wall putty capacity to 0.60 MTPA by se pt 2014.Jhajjar (Haryana): 105 MTPA
split grinding Gotan (Rajasthan): 0.20 MTPA white cement and 0.30 MTPA wall putty
Greenfield expansion in the middle east Fujairah (UAE): dual process plant – 0.6 MTPA
white cement or 1.0 MTPA grey cement J K cement‘s LT credit rating was recently
upgraded to AA – by care ratings Listed on national stock exchange (―NSE‖) and
Bombay stock exchange (―BSE‖) with a market capitalization of INR 23bn

TYPES OF PRODUCT

J k cement produces ordinary portland cement of 53-grade, 43-grade and 33-grade. It markets
these cements under the brand name J K cement and sarvashaktiman. It also manufactures
portland pozzoland cement and markets it under the name J K super. It markets white cement
under the name J K white and camel.

J.K cement has introduced water repellent material in powder form. It has also introduced
white cement based putty for plastering walls and ceiling and sells the same under the name
JK wall puty.

28
No representation or warranty, express or implied, is made as to, and no reliance should be
placed on, the fairness, accuracy, completeness or correctness of the information or opinions
contained in this presentation. Such information and opinions are in all events not current
after the date of this presentation. Certain statements made in this presentation may not be
based on historical information or facts and may be "forward looking statements" based on
the currently held beliefs and assumptions of the management of J. K. Cement Limited
(―Company‖ or ―JKC‖), which are expressed in good faith and in their opinion reasonable,
including those relating to the Company‘s general business plans and strategy, its future
financial condition and growth prospects and future developments in its industry and its
competitive and regulatory environment.

Forward-looking statements involve known and unknown risks, uncertainties and other
factors, which may cause the actual results, financial condition, performance or achievements
of the Company or industry results to differ materially from the results, financial condition,
performance or achievements expressed or implied by such forward-looking statements,
including future changes or developments in the Company‘s business, its competitive
environment and political, economic, legal and social conditions. Further, past performance is
not necessarily indicative of future results. Given these risks, uncertainties and other factors,
viewers of this presentation are cautioned not to place undue reliance on these forward-
looking statements. The Company disclaims any obligation to update these forward-looking
statements to reflect future events or developments.

This presentation is for general information purposes only, without regard to any specific
objectives, financial situations or informational needs of any particular person. This
presentation does not constitute an offer or invitation to purchase or subscribe for any
securities in any jurisdiction, including the United States. No part of it should form the basis
of or be relied upon in connection with any investment decision or any contract or
commitment to purchase or subscribe for any securities. None of our securities may be
offered or sold in the United States, without registration under the U.S. Securities Act of
1933, as amended, or pursuant to an exemption from registration therefrom.

This presentation is confidential and may not be copied or disseminated, in whole or in part,
and in any manner.

29
PRODUCTION CAPACITY

In the current economic and political scenario, setting up a new Greenfield project has
become challenging in view of the following:

• Long arduous process of environmental approvals

• Land acquisition

• Complexity of mineral composition in new areas

• Supporting infrastructure of rail connect and water availability

• Greenfield project cost in current context is $135-$150/ton, depending on the

site location

SEGMENT

J.K. Super Cement is one of the premium grey cement brands in the Country, available as
application friendly Portland Pozzolana Cement (PPC). The product complies with quality
standards specified by the Bureau of Indian Standards (BIS) and is much in demand, by both,
the retail and the institutional segment.

SWOT ANALYSIS

WMI‘s J.K. Cement Ltd. contains a company overview, key facts, locations and subsidiaries,
News and events as well as a swot analysis of company.

This SWOT Analysis company profile is a crucial resource for industry executives and
anyone looking to quickly understand the key information concerning J.K. Cement Ltd.‘s
business. WMI‘s ―J.K. Cement Ltd. SWOT Analysis & Company Profile‖ reports utilize
a wide range of primary and secondary sources, which are analyzed and presented in a
consistent and easily accessible format. WMI strictly follows a standardized research
methodology to ensure high levels of data quality and these characteristics guarantee a unique
report.
Examines and identifies key information and issues about (J.K. Cement Ltd.) for business
intelligence requirements.

30
Studies and presents J.K. Cement Ltd.‘s strengths, weaknesses, opportunities (growth
potential) and threats (competition). Strategic and operational business information is

Objectively reported.

The profile contains business operations, the company history, major products and services,
prospects, key competitors, structure and key employees, locations and subsidiaries.
Quickly enhance your understanding of the company.

Obtain details and analysis of the market and competitors as well as internal and external
factors which could impact the industry.

Increase business/sales activities by understanding your competitors‘ businesses better.

31
2.2 JK LAKSHMI CEMENT LTD

INTRODUCTION

Chronicle of the company thus began in the state of Rajasthan during the year 1938. One of
the established names in the cement industry, JK Lakshmi Cement (JKLC) Ltd has state-of-
the-art plant at Jaykaypuram, district of Sirohi, Rajasthan having an annual capacity of 3.65
million tonnes. With the use of the latest technology from M/s Blue Circle Industries and
modern equipment‘s from M/s Fuller International of USA, the company going from strength
to strength and produce JK Lakshmi Cement, JK Lakshmi plats and JK Lakshmi Power Mix.
It is also the first cement producer of Northern India to be awarded an ISO 9002 certificate
and be accredited by NABL (Department of Science & Technology, Government of India)
for its Lab Quality Management systems.

HISTORY

There is hardly any other product that has so greatly contributed to the growth of modern
human civilization as Cement. The massive urban infrastructure that we see today across the
world would have been unthinkable without cement. Cement is the root substance that has
given the essential element of strength and durability to our houses, schools, offices and other
buildings so that we can occupy them with peace of mind.

The word Cement literally means a substance that can bind material together and can acquire
strength on hardening. The cement as we know today is a specialised building material which
is a result of various innovations over the past and is made in sophisticated manufacturing
facilities.

The oldest use of cement dates back to the thousands of years old Egyptian civilisation. The
Egyptians used natural cement made by combining limestone and gypsum for the
construction of their massive and highly impressive pyramids. The fact that the Egyptian
Pyramids have proudly stood the test of time over such a long period of human history is a
testimony to the phenomenal strength of cement. However it must be stated that the ancient
Egyptian cement was very different from the cement in use today.

Later in the Roman era, the concept of cement advanced further. Romans used a combination
of slaked lime with Pozzolana, a volcanic ash from Mount Vesuvius. The Romans made

32
many impressive structures using this cement. The Basilica of Constantine is one popular
example of Roman construction in which they used such cement mortar.

In eighteenth century England, John Smeaton, a British engineer, was assigned the task of re-
constructing the Eddystone Lighthouse, a structure that had witnessed repeated structural
failure. In 1756, Smeaton conducted a number of experiments that led to the discovery that
cement made from limestone containing a considerable proportion of clay would harden
under water. Based on this discovery, Smeaton rebuilt this lighthouse in 1759 and this time, it
stood strong for 126 years.

Subsequently, until the early part of the nineteenth century, large quantities of natural cement
was used, that was made with a combination of naturally occurring lime and clay.

In 1824, Joseph Aspdin, a British mason obtained a patent on his hydraulic cement formula
that closely resembled the modern cement as we know today. He called this cement Portland
Cement, and it was made through the proportionate mixing, burning and the subsequent
grinding of a combination of clay and limestone. Cement went through many more
improvements and developments in the nineteenth and twentieth centuries. The industrial
revolution and the subsequent development of the rotary kiln paved the way for huge and
sophisticated cement manufacturing plants. These plants possess the capability of a
homogenous mixing and intense heating of the raw material thus vastly improving the quality
of the cement produced. The sophisticated quality-testing equipment employed by modern
cement plants further helps in ensuring the quality of the cement produced.

TYPES OF PRODUCT

Upholding the tradition of JK Organisation for maintaining the highest standards in quality,
JK Lakshmi Cement today is one of the most preferred brands in its marketing area with a
network of about 2200 dealers spread in the states of Rajasthan, Gujarat, Delhi, Haryana,
U.P., Punjab, J&K, MP and Mumbai. Our endeavour is always to give our best and maintain
the highest standards of customer satisfaction. No wonder the discernible buyers prefer this
cement over other brands owing to its consistency, higher level of quality and impeccable
customer service.

33
Also not surprising is the fact that the decision makers of the nation's important projects like
IGNP, SardarSarvorar Dam and major corporations like L&T, Reliance, Essar and Airport
Authority of India chose JK Lakshmi Cement over other brands.

JK Lakshmi Cement Ltd is also the first Cement Manufacturer in North India to use coloured
bags to help the customer in segregating different products. It also has a regular contact
program with masons, dealers and architects to keep in tune with their needs and
requirements. One of the many innovative initiatives the company took was to have a mason's
club that now has over 45,000 members. Under this program the masons are given an
insurance cover against accidents absolutely free of cost, besides educating them on the latest
in construction activities.

The high standard of advertising has been another feather in the cap of JK Lakshmi Cement
Ltd. This has not only helped it to reach out to its customers but also in connecting with them
at an emotional level. No wonder then that "Mazbooti Guaranteed" is now a term that is
synonymous with JK Lakshmi Cement.

PRODUCTION CAPACITY

JK Lakshmi Cement Limited's manufacturing facility at Sirohi, Rajasthan is equipped with

state-of-the-art equipment acquired from leading vendors from across the world. Rated
among the topmost Cement Plants in India, our manufacturing facility is well positioned to
deliver an extremely superior quality of product that adheres to the highest quality standards.

The JK Lakshmi cement manufacturing facility is spread across an area of

8 square kilometres among the lush green Arravali ranges at Jaykaypuram in Sirohi district of
Rajasthan. The plant uses ultra modern equipment acquired from M/s Fuller International of
USA and M/s Ventomatic of Italy.
The right combination of quality assurance, equipment and methodology form the base for
the Mazbootiadvantage offered by our Cement. With an annual production capacity of 3.5
million tonnes, our manufacturing plant has the following highlights:

 JK Lakshmi's manufacturing facility in Sirohi, Rajasthan has been rated among the top
Greenest Cement Plants of India.

34
 The variety of limestone used in the manufacturing of JK Lakshmi Cement is known to
be of a highly superior quality resulting in cement that is well recognised for strength and
durability.
 JK Lakshmi's manufacturing plant uses ultra-modern technology and imported
machinery.
 Use of high-end equipment such as the Gamma Metrics Machine and the X-ray Analyser
ensures that each product passing out of JK Lakshmi's manufacturing facility adheres to
global standards of quality and performance.
 Electronic packing machines obtained from M/s Ventomatic of Italy ensure that the
customers obtain accurate quantities of JK Lakshmi's products.
 The plant is fully computerised and centrally controlled by programmable logic controller
with colour VDU Control Stations

SEGMENT

JK Lakshmi Cement, a renowned and well-established name in the Indian cement industry,
now in its 31st year, has a formidable presence in North & Western India‘s cement markets.
Its current capacity stands at 5.3 million MT per annum. Modern and fully computerized
integrated plant at Jaykaypuram, in Sirohi district of Rajasthan. It also has two split location
grinding units – at Kalol, Gujarat, and at Jhamri ,Distt. Jhajjhar, Haryana.

Established a Waste Heat Recovery Power project to generate 12 MW of power from waste
heat gases, which does not use any fossil fuel, taking the company‘s total captive power
generation capacity to 66 MW

The operating parameters at par with international standards and trendsetter in various
initiatives, including usage of alternative fuels such as petcoke

Recognition for its outstanding efforts in various fields, by way of numerous awards such as
―India‘s Best Companies to Work for‖ Award, Gold Award - National Institute of Personal
Management, Star Brands 2011, Green Manufacturing Excellence Award by Frost &
Sullivan, Greentech Safety Gold Award by Greentech Foundation, Golden Peacock HR
Excellence Award, Safety Innovation Award, Leading Businesswoman of the Year Award,
Greentech HR Excellence Award by Greentech Foundation, Leading CEO of the Year

35
Award, Best Professionally Managed Company Award and Golden Peacock Award for CSR
initiatives.

It forayed into the Ready Mix concrete business, an emerging segment in construction sector,
with the brand name ―JK Lakshmi Power Mix‖. It operates 11 RMC plants. It also
markets Plaster of Paris under the brand name ―JK Lakshmiplast‖ – a market leader
in its product category Work is on at the 2.7 million MT-Greenfield-site plant at Durg in
Chattisgarh.

SWOT ANALYSIS

JK Lakshmi Cement Ltd. is engaged in manufacturing and distribution of construction

materials. It is engaged in the production of cement that include cement 53 blended, 53 grade
ordinary portland cement and 43 grade ordinary portland cement. The company caters its
product to civil and industrial works and operates in India. It is headquartered at New Delhi,
India.

This comprehensive SWOT profile of JK Lakshmi Cement Ltd. provides you an in-depth
strategic analysis of the company‘s businesses and operations. The profile has been compiled
by Global Data to bring to you a clear and an unbiased view of the company‘s key strengths
and weaknesses and the potential opportunities and threats. The profile helps you formulate
strategies that augment your business by enabling you to understand your partners, customers
and competitors better.
This company report forms part of Global Data‘s ‗Profile on Demand‘ service, covering over
50,000 of the world‘s leading companies. Once purchased, Global Data‘s highly qualified
team of company analysts will comprehensively research and author a full financial and
strategic analysis of JK Lakshmi Cement Ltd. including a detailed SWOT analysis, and
deliver this direct to you in pdf format within two business days. (Excluding weekends).

Upon ordering, this SWOT profile will be updated and delivered direct to your inbox within
two working days.

The company‘s core strengths and weaknesses and areas of development or decline are
analyzed and presented in the profile objectively. Recent developments in the company
covered in the profile help you track important events.

36
Equip yourself with information that enables you to sharpen your strategies and transform
your operations profitably.

Opportunities that the company can explore and exploit are sized up and its growth potential
assessed in the profile. Competitive and/or technological threats are highlighted.

Scout for potential investments and acquisition targets, with detailed insight into the
companies‘ strategic, financial and operational performance.

Financial ratio presented for major public companies in the profile include the revenue trends,
profitability, growth, margins and returns, liquidity and leverage, financial position and
efficiency ratios.

Gain key insights into the company for academic or business research.

Key elements such as SWOT analysis, corporate strategy and financial ratios and charts are
incorporated in the profile to assist your academic or business research needs.

37
 2.3 SHREE CEMENT

INTRODUCTION

Shree Cement Ltd is one of India's premier cement makers and the largest in North India. The
company is an energy conscious & environment friendly business organization. They have
three brands under their portfolio, namely Shree Ultra Jung Rodhak Cement, Bangur Cement
and Rockstrong Cement. Their manufacturing units are located at Beawar, and Ras in
Rajasthan. They are also having the grinding units in Khushkhera in Rajasthan. The company
is head quartered in Kolkata, India.

The company is in the process of setting up the 43 MW Green Power Projects (Waste Heat
Recovery Projects) at Bangur Nagar, Beawar and Bangur city, Ras. The projects are expected
to be completed by fourth quarter of FY 2009-10. The company is planning to consolidate
their presence in the high growth market with additional power generation capacity.
Shree Cement Limited (SCL) is a manufacturer and distributor of cement in India. It also
generates power from waste heat recovery. The company markets its cement under the brand
names of Shree Ultra Jung Rodhak, Bangur, and Rockstrong. It sells its cement through its
sales offices and dealers and retailers. The company owns and operates manufacturing
facilities at Beawar and Ras in Ajmer, and Pali district in Rajsthan. Its grinding units are
strategically located at Khushkhera, Suratgarh and Jaipur respectively in Rajasthan, and
Laksar in Uttarakhand. The company has an installed capacity of 13.50 million ton of
cement, and 560.00 megawatt of power. SCL is headquartered in Kolkata, West Bengal, India

HISTORY

YEAR EVENTS 1979 - The Company was incorporated on 25th October, at Jaipur. The
Company was promoted by members of the Bangur family and others. Shree Digvijay
Cement Co. Ltd., Graphite India, Ltd. and Fort Gloster Industries, Ltd. took active part in the
promotion of theCompany. The Company manufacture's cement & cement products.
To reduce fuel and power consumption, the Company adopted the latest dry process, four
stage preheater precalcination technology of clink erisation and air swept roller mill grinding
system for raw material and coal grinding. The Company entered into agreement with F.L.
Smidth & Co. A/s. Copenhagen, a designer and manufacture of cement plants, It associates

38
F.L. Smidth &Cia. Espanola S.A., Madrid and with Larsen& Toubro Ltd., Mumbai for the
supply of plant equipment and services for the proposed project.

1984 - 70 No. of equity shares subscribed for by the signatories to the Memorandum of
Association. In Oct./Nov. 1,53,99,930 No. of equity shares issued of which 1,06,99,930 shar
reserved for firm allotment as follows:

(i) 48,00,000 shares to Shree Digvijay Cement Co. Ltd.;

(ii) 11,00,000 shares each to Graphite India,Ltd. And Fort Gloster Industries, Ltd.and

(iii) 36,99,930 shares to Directors, their friends etc. including upto 25,00,000 shares to NRIs
with repatriation rights. The balance 47,00,000 shares offered to the public of which
18,80,000 shares offered for allotment on preferential basis to Non-Residents.

1991 - Production of clinker and cement declined due to a major shut down of the plant for
implementation of modernisation/renovation/modification work. The Company undertook to
set up a new cement plant of 0.6 million TPA capacity in Rajasthan.
7,96,000 No. of Equity shares issued to financial institution inconversion of loan.

1993 - The Company undertook a scheme of implementing second stage of its licensed
capacity to increase its capacity to 3300 tonnes per day. The Company issued 21975 - 16%
each with equity warrants and these will be converted as per institutional guidelines.
2,40,021 shares issued in pursuance of scheme of Amalgamation.

1994 - The Company issued 10,00,000-16% Secured Redeemable NCD of Rs 100 each on
private placement basis. A scheme of amalgamation of an existing leasing and finance
Company with the Company was prepared for undertaking leasing activities and other
financial services on large scale. M/s. Mannakrishna Investment, Ltd. is a subsidiary of the
Company.

1995 - The Company undertook the implementation of new unit of 124 MT capacity per
annum named "Raj Cement". 43,95,000 No. of Equity shares on surrender of detachable
optional share warrants attached with 16% unsubscribed non-Convertible Debentures of 100
each.

39
1996 - The Company commissioned its second cement plant - Raj Cement with a capacity of
12.4 lakh tonnes per annum in Beawar. 58,06,204 rights shares issued .(prem. Rs 10 per
share)
1998 - Shree Cement, the Calcutta-based PD-BG Bangur group company, has decided to
issue preference shares aggregating Rs 15 crore to mobilise long-term funds. Shree Cement's
expansion in capacity by 12.4 lakh tonnes at the new unit in Reawar, has made it a leading
cement manufacturer in North India. ICRA has downgraded the rating of the NCD
programme of Shree Cement Ltd (SCL) from LAA to LA. The Rs 372-crore 1.25 million
tonne cement plant near Ajmer was commissioned during the year after considerable delay
due to an explosion in the electro-static precipitator.

1999 - The company has been awarded the first prize for energy conservation in 1998 in the
cement sector. SCL, belonging to the house of Bangurs, is one of the largest cement
manufacturers in North India, having the installed capacity of 2 million tonnes. Its plants are
located in Rajasthan. The new plant was set up at Beawar with the capacity of 1.24 million.

-Unit I and Unit II of the company receives National Award for 'Best Electrical Energy
Performance' and 'Best Thermal Energy Performance' in the Cement Industry for the year
2000-01 Decides to change the Accounting year to April - March each year and accordingly
the current year is only for nine months. Appoints Mr M K Singhi as the Executive Director
of Shree Cements. In pursuance to the IDBI, company approve for early redemption of
privately placed under noted cummulative redeemable preference shares. Change in
Management Structure: Mr B G Bangur re-appointed as executive chairman and Shri H M
Bangur re-appointed as the Managing Director for a period of five years.

2003-Confers the Runner up National Safety Award by the Ministry of Labour,GOI, in

recognition of outstanding performance in Industrial Safety achieving longest accident free
period. Receives permission for delisting of shares from Delhi Stock Exchange. The company
has been conferred "National Award for Excellence in Energy Management 2003" instituted
by the Confederation of Indian Industry (CII) and Sohrabji Godrej Green Business Centre.

2004-Company conferred 'BEST PRODUCITY AWARD-2003' by the Rajasthan State

40
Productivity Council in recognition of productivity measures and productivity improvements
achieved. Rajasthan Chamber of Commerce & Industries, Jaipur presents 'RCCI Excellence
Award' to Shree Cement Ltd in recognition of Overall Best Corporate Governance Practices
and Disclosures in Annual Report among all companies having registered office in Rajasthan.

2005-Shree Cement commissions 6 MW captive Thermal Power Plant at Rajasthan

ShreeCement bags TERI corporate award

2007-Shree Cement - Best Corporate Governance Award by RCC. Shree Cement Ltd has
appointed Sheri. Amitabha Ghosh as Director of the Company w.e.f. May 14, 2007.
Shree Cement bags "National Awards for excellence in water Management" 2007

2008-Shree Cement - RCCI Excellence Award. Launch of Tuff Cement 3556 in March 2007.
National awards for Excellence in Water Management as ―Water efficient Unit by CII,
2007.

2009-The Company has commissioned an additional clinker capacity of 1 mntonnes.

2011-World Economic Forum (WEF), Switzerland has identified the Company as New
Sustainability Champion. The Company has recommended final Dividend @ Rs. 8 per share.

2012-The Company has recommended final Dividend @ Rs. 8 per share

TYPES OF PRODUCT

The company offers cement under various brands, including

Shree Ultra Jung Rodhak Cement,

Bangur Cement, and

Rockstrong Cement

41
PRODUCTION CAPACITY

In 2011-12 company changed its financial year closing to July. Since 2006, it has more than
quadrupled its production capacity both by expanding into new areas and increasing the
capacities of the existing plants. Plants are located in Beware, Rash, Khushkhera and
Suratgarh in Rajasthan and Laxer (Roorkee) in Uttarakhand

SEGMENT
Shree Cement Limited is a cement producer. The Company operates in two segments:
Cement and Power. As of June 30, 2012, the Company had the cement capacity of 13.5
million tons per annum and power capacity of 560 megawatt. This includes 300 megawatt
(150 megawatt x2) thermal power plant commissioned at Beawar. The Company's waste heat
recovery power plants have a total capacity of 46 megawatt. The Company‘s brands include
Shree Ultra, Bangur Cement and Rockstrong Cement. SCL has manufacturing facilities at
Beawar and Ras in Ajmer and Pali district and grinding units at Khushkhera, Suratgarh and
Jaipur, respectively, in Rajasthan and Roorkie in Uttarakhand.

SWOT ANALYSIS

Shree Cement Limited (500387) : Company Profile and SWOT Analysis' contains in depth
information and data about the company and its operations. The profile contains a company
overview, business description, financial ratios, SWOT analysis, competitive benchmarking,
key facts, key employees, location and subsidiaries as well as information on products and
services.
This SWOT analysis and company profile is a crucial resource for industry executives and
anyone looking to gain a better understanding of the company's business
Shree Cement Limited (500387) : Company Profile and SWOT Analysis' report utilizes a
wide range of primary and secondary sources, which are analyzed and presented in a
consistent and easily accessible format.

A standardized research methodology is followed to ensure high levels of data quality and
these characteristics guarantee a unique report .Examines and identifies key information and
issues about 'Shree Cement Limited' for business intelligence requirements
- Studies and presents the company's strengths, weaknesses, opportunities (growth potential)
and threats (competition). Strategic and operational business information is objectively

42
reported
- Provides analysis on financial ratios along with a competitor benchmarking section
- The profile also contains information on business operations, company history, major
products and services, key employees Buy Quickly enhance your understanding of the
company

4.4 ACC CEMENT

INTRODUCTION

ACC Ltd is India's foremost manufacturer of cement and concrete. The company is engaged
in the manufacture of cement and ready-mixed concrete. They manufacture a range of
portland cement for general construction and special applications. In addition, they also offer
two products namely, bulk cement and ready mix concrete. The company's operations are
spread throughout the country with 16 modern cement factories, more than 40 Ready mix
concrete plants, 20 sales offices, and several zonal offices. Their subsidiaries include ACC
Concrete Ltd, Bulk Cement Corporation (India) Ltd, ACC Mineral Resources Ltd, Lucky
Minmat Ltd, National Limestone Co Pvt Ltd and Encore Cements & Additives Pvt Ltd.

ACC Ltd was incorporated on August 1, 1996 as The Associated Cement Companies Ltd.
The company was formed by merger of ten existing cement companies. In the year 1944,
they established India's first entirely indigenous cement plant at Chaibasa in Bihar.

HISTORY

ACC Limited (Formerly The Associated Cement Companies Limited) one of the largest
producers of cement in India.It's registered office is called Cement House. It is located on
Maharishi Karve Road, Mumbai. The stock price of company contributes in calculating BSE
Sensex.

The management control of company was taken over by Swiss cement major Holcim in 2004.
On 1 September 2006 the name of The Associated Cement Companies Limited was changed
to ACC Limited. The company is only cement company to get Superbrand status in India.

43
In 1936 ten cement companies belonging to Tatas, Khataus, Kellick Nixon and F E Dins haw
groups merged to form a single entity, The Associated Cement Companies. Sir Nowroji B
Saklatvala was the first chairman of ACC. The first board of directors had some prominent
industrialists – J R D Tata, Ambalal Sarabhai, WalchandHirachand, DharamseyKhatau, Sir
Akbar Hydari, NawabSalar Jung Bahadur and Sir HomyMody.

TYPES OF PRODUCTS

ACC's brand name is synonymous with cement and enjoys a high level of equity in the Indian
market. Our range of cements and blended cements is marketed through a countrywide
network of Sales Units, Area Offices, and warehouses. This is backed by a vast distribution
network of over 9,000 dealer who, in turn, are assisted by their sub-dealers.

ACC‘s marketing, sales and distribution processes are industry standards. Although we take
immense pride in having supplied some of India‘s most admired projects, ACC is essentially
a people‘s brand of cement with more than 80 per cent of sales made through an extensive
dealer network that covers every state in India. Its customer base represents the masses of
India - individual homebuilders in small towns, rural and semi-urban India. ACC cement
enjoys an image of assuring consistency and of high quality backed by in-house research and
expertise.

Complementing this is a unique customer services cell comprising qualified civil engineers,
who assist and advise customers with prior and post sales service. This service begins with
selection of type and grade of cement (where applicable) to troubleshooting and on-site
assistance.

ACC manufactures the various kinds of Portland Cement for general construction and special
applications.

44
PRODUCTION CAPACITY

Enthused by rising cement demand from the eastern region, ACC will create additional five
million tonnes per annum capacity (mtpa), entailing an estimated investment of around Rs
3,000 crore. The expansion, which is likely to go on stream over the next three years, will
take the overall cement making capacity of the company to 35 million tonnes a year.

―The group company ACC will increase cement capacity in east India by additional
five million tonnes by early 2015,‖ Holcim, which is a majority stakeholder in ACC Ltd, said
in a release. When contacted, a company official declined to comment on the likely
investment. However, an industry official said that it takes around Rs 600 croreinvestment to
create a one million tonne cement manufacturing capacity. ACC has nine million tonnes per
annum cement making capacity in the country‘s eastern part, where the demand for cement is
of late going up by nearly double digits. Aiming to cash in on the increased demand, cement
makers are putting in 18 million tonnes per annum additional capacity between FY‘12 and
FY‘14 in the eastern India to its overall current capacity of 60 million tonnes. The cement
making capacity of the country is currently pegged at a little over 300 million tonnes per
annum, up from 200 million tonnes in 2008 and the industry is projected to add 72 million
tonnes a year capacity between FY‘12 and FY‘14.

Capacity utilisation is also one of the highest in the eastern region so far in the current fiscal
at 80 per cent. Holcim said the existing Jamul clinker making facility in Chhattisgarh would
be replaced by a latest plant and grinding capacity to be increased simultaneously. The Jamul
facility would have 2.79 million tonnes clinker manufacturing capacity with an estimated
investment of Rs 800 crore. In addition, capacity of the existing Sindri grinding plant would
also be increased. ‖... a new grinding plant will be built at Kharagpur (in West Bengal). Both
(Kharagpur and Sindri) installations will source clinker from the new Jamul plant. Therewith,
overall capacity of ACC will increase to 35 million tonnes,‖ it said. In the recent past, ACC
Ltd has increased capacity at its Chanda plant in Maharashtra and has begun operating
world‘s largest clinker kiln at its Wadi plant in Karnataka.

ACC‘s sister firm Ambuja Cements is also ramping up its clinker capacity at Rauri in
Himachal Pradesh and Bhatapara, near Raipur and setting up two new grinding stations.
Holcim holds majority stake in Ambuja Cement as well.

45
SEGMENT

In 2012, the cement industry added ~34 million tonnes of capacity talking its installed
capacity to ~ 360 million tonnes. The first half of the calendar year witnessed high demand
for cement at 10% YOY. This demand fell in the second half of the year following a
slowdown in the construction sector.

Cement industry is expected to gather momentum driven by a revival in the general

investment climent and by reduction in interest rates which will positively impact demand
from housing, infrastructure and industry segments. We, therefore expect a favourable rate of
growth in cement consumption. At the same time, there is a likelihood of mounting pressure
on costs mainly arising out of increases in the cost of coal, diesel, rail freight and exchange
rate fluctuations.

SWOT ANALYSIS

ACC Limited (ACC) is a manufacturer of cement and ready mix concretes. It manufactures
cement, blended cement, bulk cement and concrete mix. It manufactures different kinds of
portland cement for general construction and special applications. ACC operates through a
network of factories, marketing offices, sales units, area offices, and warehouses spread
across India. The company‘s products are distributed through a network of 9,000 dealers and
sub-dealers. It has manufacturing plants located in Bargarh, Orissa; Chaibasa, Jharkhand;
Chanda, Maharashtra; Damodhar, West Bengal; Gaga, Himachal Pradesh; Jamul,
Chhattisgarh; Kymore, Madhya Pradesh; Kudithini, Karnataka; Lakheri, Rajasthan;
Madukkarai, Tamil Nadu; Sindri, Jharkhand; New Wadi, Karnataka and Thondebhavi,
Karnataka. ACC is headquartered in Mumbai, India.

This comprehensive SWOT profile of ACC Limited provides you an in-depth strategic
analysis of the company‘s businesses and operations. The profile has been compiled by
GlobalData to bring to you a clear and an unbiased view of the company‘s key strengths and
weaknesses and the potential opportunities and threats. The profile helps you formulate
strategies that augment your business by enabling you to understand your partners, customers
and competitors better.

46
This company report forms part of GlobalData‘s ‗Profile on Demand‘ service, covering over
50,000 of the world‘s leading companies. Once purchased, GlobalData‘s highly qualified
team of company analysts will comprehensively research and author a full financial and
strategic analysis of ACC Limited including a detailed SWOT analysis, and deliver this direct
to you in pdf format within two business days. (excluding weekends).

2.5 ULTRA TECH CEMENT

INTRODUCTION

UltraTech Cement Ltd is an India-based company engaged in the production of cement. The
company manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag
Cement and Portland Pozzalana Cement. They also manufacture ready mix concrete. They
are having 11 integrated plants, one white cement plant, 12 grinding units and five terminals -
four in India and one in Sri Lanka. The company is the subsidiary of Grasim Industries Ltd

The company is the country's largest exporter of cement clinker. The export markets span
countries around the Indian Ocean, Africa, Europe and the Middle East. The export market
comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. The
company's subsidiaries are Dakshin Cements Ltd, UltraTech Cement Lanka Pvt Ltd

HISTORY
UltraTech Cement Ltd was incorporated on August 24, 2000 as a public limited company
with the name L&T Cement Ltd as a 100% subsidiary of Larsen & Toubro Ltd. In November
2003, the name of the company was changed from L&T Cement Ltd to UltraTech ChemCo
Ltd.
In the year 2004, pursuant to the scheme of arrangement, the cement business of Larsen &
Toubro Ltd was de-merged and got transferred to the company with effect from April 1,
2003. In May 14, 2004, the company acquired four crore equity shares of Larsen & Toubro
Ceylino (Pvt) Ltd from Larsen & Toubro Ltd at an aggregate consideration of Rs 23.03
crore.

47
 In July 2004, Grasim Industries Ltd acquired management control of the company and in
October 14, 2004, the name of the company was changed from UltraTech ChemCo Ltd to
UltraTech Cement Ltd. Also, Narmada Cement Company Ltd became a subsidiary of the
company by virtue of the scheme of arrangement for de-merger of cement business of
Larsen.
During the year 2005-06, the company increased the production capacity of Cement from
155 lakh tonnes to 170 lakh tonnes. As per the scheme of amalgamation, Narmada Cement
Company Ltd was amalgamated with the company. Thus, the entire undertaking of Narmada
Cement Company Ltd was transferred to the company with effect from October 1, 2005.

During the year 2007-08, the company increased the production capacity of Cement from
170 lakh tonnes to 182 lakh tonnes. They set up 15 Ready Mix Concrete plants across the
country.
During the year 2008-09, the company increased the production capacity of Cement from
182 lakh tonnes to 219 lakh tonnes as a result of expansion of capacity at the company's unit
at Andhra Pradesh Cement Works (APCW) together with a new split grinding unit at
Ginigera, Karnataka.

During the year, the company commissioned 192 MW captive TPPs at their units at APCW,
Hirmi Cement Works (HCW) in Chhattisgarh and Gujarat Cement Works (GCW) in Gujarat
in a phased manner. Also, they set up new Ready Mix Concrete (RMC) plants and thus
increased the RMC capacity to 4.76 million cubic metres per annum.

During the year 2009-10, the company increased the production capacity from 219 lakh
tonnes to 231 lakh tonnes. They incorporated a wholly-owned subsidiary company in UAE in
the name of 'UltraTech Cement Middle East Investments Ltd'. In May 2010, the cement
business of Grasim Industries Ltd was de-merged and vested in Samruddhi Cement Ltd. In
July2010, Samruddhi Cement Ltd was amal gamated with the company.

During the year 2010-11, the company's wholly-owned subsidiary, UltraTech Cement Middle
East Investments Ltd completed the acquisition of ETA Star Cement (ETA) and acquired
management control of ETA's operations in the UAE, Bahrain and Bangladesh. The
company's capacity stands augmented to 52 MMTPA placing it among the top 10 cement
companies in the world due to the merger and acquisition.

48
The company has proposed setting up a cement plant in West Bengal of two million tonne
capacity. The unit, to be second in the state, has received the clearance from the West Bengal
Pollution Control Board. The plant would have capacities of 6,000 tonne per day of Portland.

TYPES OF PRODUCT

Ordinary portland cement is the most commonly used cement for a wide range of
applications. These applications cover dry-lean mixes, general-purpose ready-mixes and even
high strength pre-cast and pre-stressed concrete.

Portland blast-furnace slag cement contains up to 70 percent of finely ground, granulated

blast-furnace slag, a nonmetallic product essentially consisting of silicates and alumino-
silicates of calcium. Slag brings with it the advantage of the energy invested in the slag
making process. Grinding slag for cement replacement takes only 25 per cent of the energy
needed to manufacture portland cement. Using slag cement to replace a portion of portland
cement in a concrete mixture is a useful method to make concrete better and more consistent.
Portland blast-furnace slag cement has a lighter colour, better concrete workability, easier
finishability, higher compressive and flexural strength, lower permeability, improved
resistance to aggressive chemicals and more consistent plastic and hardened consistency.
UltraTech Premium is UltraTech‘s new Concrete Special Cement composed of high quality
clinker blended with judicious amounts of superior blast furnace slag having high glass
content, gypsum devoid of deleterious materials and optimum PSD (Particle Size
Distribution).

Portland pozzolana cement is ordinary portland cement blended with pozzolanic materials
(power-station fly ash, burnt clays, ash from burnt plant material or silicious earths), either
together or separately. Portland clinker is ground with gypsum and pozzolanic materials
which, though they do not have cementing properties in themselves, theycombine chemically
with portland cement in the presence of water to form extra strong cementing material which
resists wet cracking, thermal cracking and has a high degree of cohesion and workability in
concrete and mortar.

UltraTech's bulk cement terminal in Sri Lanka is located at Colombo. Cement is received by
specially-engineered, self-discharging bulk cement carriers. It is then discharged at the port in
road bowsers which transport cement 10 km from port to the terminal. Cement is stored in 4 x
7500 T cement concrete silos. A sophisticated bulk cement terminal (which subscribes to all

49
environmental norms) despatches cement in bulk form to RMC and asbestos plants. The
terminal also has a modern Italian make Ventomatic packer to pack cement in 50 kg.
paperbags to services customers on this land. With its sharp focus on cement, the Aditya
Birla Group has always believed that like arrangements between countries in different parts
of the world for regional cooperation, the group too should be present in adjacent countries
with facilities to qualify as a local producer of cement. Two of the countries adjacent to India
have limited deposits of limestone, the basic raw material for cement. This position compels
the two to be dependent on import for their domestic construction activity. It was in this
context that a joint venture bulk cement terminal was established in Colombo, Sri Lanka.
Gujarat Cement Works (GCW) has a captive jetty engineered for exports. Accordingly, for
the past five years, bulk cement has been exported from GCW to UltraTech Cement Lanka
(Pvt.) Ltd,the group‘s joint venture(JV) in Sri Lanka. UltraTech Cement has been meeting
the cement requirements of Sri Lanka by supplying a good quality product. The company‘s
customer base has recognized the quality and service levels backed with a field force to
market cement along with qualified engineers in the technical cell who render technical
advice to customer sat thesite.

This recognition has enabled the company to achieve a substantial market share in a fiercely
competitive market teeming with multinational competitors including two of the largest
manufacturers in the world. In this competitive environment, the company‘s customer base
has given it brand equity and acknowledged it as a premium quality cement supplier in the
island.

PRODUCTION CAPACITY

UltraTech Cement Limited and its subsidiaries have an annual capacity of 53.90 million
tonnes, making it among the top 10 producers of cement globally. UltraTech is also the
largest manufacturer of White Cement in India. The company manufactures and markets
ordinary portland cement, portland blast furnace slag cement, portlandpozzalana cement,
ready mix concrete building products and building solutions.

UltraTech Cement has 11 integrated plants, 15 grinding units, five bulk terminals and 101
RMC plants – spanning India, UAE, Bahrain, Bangladesh and Sri Lanka. UltraTech Cement
is also India's largest exporter of cement clinker reaching out to meet demand in countries
around the Indian Ocean, Africa, Europe and the Middle East.

50
The company's subsidiaries are Dakshin Cements Limited, Harish Cements Limited,
UltraTech Cement Lanka (Pvt.) Ltd, and UltraTech Cement Middle East Investments
Limited, which completed the acquisition of ETA Star Cement together with its operations in
the UAE, Bahrain and Bangladesh, and acquired management control.

SEGMENTS

UltraTech's success is attributed to its diverse product offerings. Different products are
handled by different product groups, which are also known as profiles. Product groups
decentralise control and encourage innovation. They also ensure better customer
segmentation, which in turn leads to better customization of product offerings and guarantees
cent percent customer satisfaction. UltraTech Cement, Birla White, UltraTech Concrete,
UltraTech Building Products and UltraTech Solutions are the different profiles of UltraTech,
each catering to varied needs. This versatility has been a key competitive advantage for
UltraTech over the years.

SWOT ANALYSIS

The SWOT analysis about Ultra Tech cement and its position in the market. The company is
one of the best in the cement industry, analysing it through the different framework of
analysis in order to judge the actual situational and industrial position of the company in
order to find out how actually is the company doing.

The company is facing a lot of problem regarding its promotion and marketing techniques
due to which it faces a short of awareness in the market due to which people are not aware of
the product but instead of all the problems it is quite stable and maintain its position in the
market. After performing Swot analysis of the company by reviewing porter‘s 5 forces and
pestel analysis company‘s strategic standing and positioning have been analysed.

Currently the company is having a better standing as threat of entry is very low due to high
initial funds required to establish the factory setup.

Cement demand has grown in tandem with strong economic growth derived from: Growth in
housing sector (over 30%) key demand driver.Infrastructure projects like ports, airports,
power projects, dam & irrigation Projects.National Highway Development
Programme.Bharat NirmanYojana for rural infrastructure and rise in industrial projects.

51
Cement Industry is highly fragmented and it is also highly regionalized and Low value
commodity makes transportation over long distances uneconomical.

Not available in all the places: Ultra tech is not available at all the places as it is not
manufactured at all places and all plants are not available everywhere due to which people
cannot find it everywhere hence the profit margins are affected to a greater extend.

With the low per capita consumption of cement in India 102 kg compared to the global
average of 260 kg and the emphasis on infrastructure development, Ultra tech has ample
opportunity to ride the growth curve. Ultratech can develop new marketing area. It can sign
MOU‘s (memorandum of understanding) with government regarding supply of cement
for government work. Ultratech can also maintain the position of competition in the market.
Institutional market like corporate and offices, school society complexes are growing in large
scale, which will increase the requirement. People are opting for more stable structures and
good future, so large use of cement is taking place, so government is spending heavily on
infrastructure project as Indian industry base is growing rapidly Thus, this is the right time to
fully invest in these market. There is regular demand of cement which in turn will increase
foreign investment in this sector. As roads transformation process is going on through which
the traditional method of road building will be convert by modern concrete roads.
Substantially lower per capita cement consumption as compared to developing countries (1/3
rd of world average) Per capita cement consumption in India is 82 kgs against a global
average of 255 kgs and Asian average of 200 kgs. For green field capacity 20 million tons per
annum will be required to match the demand in pipeline for other two years leading to
favourable demand – supply scenario. (verma, 2008)

As huge cement industry emerge there is more competition for ACC (Associated Cement
Companies) to carefully enhanced its price , product and at the same time satisfy its dealers
and customers. Cheap priced brand are capturing like a mushroom to lower income
customer base. Players such as Jaypee Cement, Prism Cement, and Birla cement. ACC
cement are eating up considerable market share. Due to India‘ satisfy growth many new
international cement companies are expected in coming years which will bring enormous
change and can start price war. Government intervention to adjust cement prices
Transportation cost is upgrading. Due to loading restriction there is overloading industrialist
shows increase in costs due to the shortage in coal industry.

52
Many retailers are influence by better profit margin, and other Benefits because of small
industries increase competition among them, which in turn give heavy discount to customer
and start malpractices.

Timber is also being considered as one of the substitutes of cement, which is cheap and long
lasting. Due to continuous attack of earthquake, many countries like Japan, Indonesia,
Singaporeetc are now using timber in construction since those areas are high earthquake
affected. (Kalesh, 2009)

53
3.1 INDUSTRY LIFE CYCLE

The life of an industry can be separate into the pioneering stage , the expansion stage, the
stagnation stage, and the decay stage.

Figar-3.1

Pioneering stage

The entry and exit barriers for the cement industry are high due to very high cost of cement
production plants, be it cost of setting up new plants or operational costs of existing plants.
To exit a losing position in the cement industry would incur huge losses for the firm.

Price increase in driven by high demand growth and high capacity utilization, but contrast to
this, during the period (2008-2011), the capacity utilization has decreased considerably for
India cements Ltd., madras cement Ltd, kesoram industries Ltd, Dalmia Bharat sugar &
Indus. Ltd Ultratech Cement Ltd., Chettinad Cement Corpn.Ltd. and Penna Cement
Inds.Ltd.Only ACCLtd. and Grasim Industries Ltd. seem tohave appropriate capacity
utilization levels along with their financial numbers.

Capacity utilization levels remained high for Ultratech Cement Ltd., Grasim Industries Ltd.,
and Century Textiles &Inds. Ltd. and Lafarge India Pvt. Ltd. over the period.Ultratech
Cement Ltd.‘s capacity utilization has never been above 85% with the March-11 figure at

54
80% even after increasing their cement production consistently over the last six to seven
years. This may indicate a huge capacity build up by Ultratech Cement.
Expansion stage
The production of cement has seen a healthy increase by all the major companies in the east
zone.

During 2005-06 to 2010-11, the operating profit margin all the companies has soared to reach
new highs during 2007-2008, but has come back to 2005-06 levels or even below those levels
for all the companies. It may indicate that the cost of production and operation are higher
from 2009-10 onwards and though the slight decrease in selling price of cement must also
contribute to the low operating profit margin levels, this much amount of fluctuation in
operating profit margins (around 15-20% for almost all.

contrast to this, during the period (2008-2011), the capacity utilization has decreased for
ACC Ltd., Shree Cement Ltd., Grasim Industries Ltd., and JK Lakshmi Cement Ltd., when
retail prices have been steady (decreased ever so slightly in 2008-09 due to economic crisis)
if not increased in the same period. Capacity utilization levels for Ultratech Cement Ltd.
remain high and low for Binani Cement Ltd. due to late entrance in the north zone market
(2008-09).

Stabilization stage

Price increase is driven by high demand growth and high capacity utilization, but in contrast
to this, during the period (2008-2011), the capacity utilization has decreased for Sanghi
Industries Ltd. to be around 70% for the last two years from a high of 97% in Mar-08. The
production level for Sanghi Industries Ltd. have decreased considerable over the last three
years to be at a production index of 150 in Mar-11 from an index of over 200 in Mar-08, thus
signalling possible supply/production control of cement to maintain the price level.

55
Cement Industry life
cycle Table-3.1
Total sales Average Sales in Core
2009 25971 5194.2
2010 24370 4874
2011 28577 5715.4
2012 42569 8513.4
2013 47314 9462.8

10000

9000

8000

7000

6000
Indusry Life Cycle
5000
4000

3000

2000

1000

0 2009 2010 2011 2012 2013

Figar-3.2

It is one of the main industries that plays a pivotal role in the growth and expansion of a
nation. This industry is one of the main beneficiaries of the infrastructure boom in the
country. The Indian cement industry is huge, and it has great production capacity. Currently,
the total capacity of cement industry is about 165 million tones, which is the second largest in
the world.

56
Today, the cement industry in India is one of the most advanced and pioneering sectors in the
country, and the cement industry has a huge potential for growth and attracting new
investments. The cement industry in India uses the most modern and world-class technology.
Also, because India has a high quantity and quality of limestone deposits throughout the
country, the cement industry promises huge potential for growth.

In India, the cement industry in the initial stages grew very slowly and the supply struggled to
meet the demands. However, the scenario changed drastically after the liberalization period.
The cement industry began to grow and since then the supply of cement has always managed
to keep pace with its demand

During the financial year 2011-12 (FY12), India‘s cement production grew by 6.2% year
year. The muted growth was mainly attributable to slowdown in construction activities, exte
monsoon, delay in infrastructural projects and the overall downturn in the economy. As such
capacity utilization levels stood lower at 73.7%.

The industry witnessed high operating costs, particularly those of energy and freight. The
of imported coal went up sharply. The steep depreciation of the rupee and hike in diesel p
further aggravated the concerns. However, the industry witnessed some recovery in demand
November 2011 onwards.

Thegrowth of the Indian economy has slowed down in recent times on account of the ri
inflation, high interest rates, high prices of commodities and fuels. The growth prospects o
cement industry are closely linked to the growth of the overall economy in general and the
estate and construction sectors in particular. The importance of the housing sector in ce
demand can be gauged from the fact that it consumes nearly two-thirds of the country‘s
cement. If the slowdown in real estate persists for an extended period, it would impact
growth in consumption of cement.

However, the long term drivers for cement demand remain intact. Higher infrastru
spending, robust growth in rural housing and peaking interest rates are likely to augur wel
the cement industry. The government plans to spend US$ 1 trillion on infrastructure in the
five year plan period (2012-17). The same during the 11th plan period was US$ 514 bn.
focus on infrastructure development is expected to boost cement demand.

57
3.2 PORTERS FIVE FORCE MODEL

The Five Forces Model of Competition

Figure:-3.3

58
Threat of Substitutes – (Low)
Only bitumen in road, and engineering plastics in building offer some element of
competition, otherwise no close substitutes are popular in India.

Bargaining Power of Suppliers-(Low)

Monopolistic control of external cost element (coal, power, transportation and taxes) results
in high bargaining power with the government

Inter Firm Rivalry- (High)

Large number of players, intermittent over capacity; marginal product differentiation; high
storage costs, and high exit barrier in form of significant capital investment has led
to stiff competition in the industry.

Threat of New Entrants- (High)

High capital investment, broad distribution network and oversupplied market deter new
entrants. However, technology and manpower are easily available.

Bargaining Power of Buyers- (Low)

Rising share of retail purchase, declining share of bulk purchase by Government has taken
away the bargaining power of customers.

3.1.1 THREAT OF NEW ENTRANTS (High)

The existing companies are pushing hard to expand their production capacity to face the
rising competition. With the announcement of the Indian government in the budget for the
FY2013-2014 to pump in more than Rs.1.85 trillion in infrastructure the cement industry
becomes a very attractive market to enter thus increasing the threat of new entrants. Although
the investment to set up a cement plant is huge, still looking at the future opportunity Indian
steel and infrastructure giants like Jindal steel works and reliance group are also gaining a
share in this huge market.

59
  Brand equity : high in organized sector
 Switching costs or sunk costs : low
 Capital requirements : high in organized sector
 Access to distribution : strong distribution channel is required
 Customer loyalty to established brands : high in organized sector
 Government policies : moderate

3.1.1.1 Large Investments:

One of the factors is Large Investments needed for set-up of cement manufacturing unit.
Costs related to manufacturing or production, In the 11th Five Year Plan (2007-12), the
industry added 120 MT of new capacities and is expected to reach close to 470 MT by 2017.
units per month on an average needs a hung initial investment. Costs related to research and
development, marketing of product like advertising and promotion cost, sales and distribution
the cost is total investments. Thus, large investment is big barrier to the new entrant, but
government give liberalization to small cement plants that‘s why anybody will start business,
that‘s why threat of new entrants. Investment is large but we will start small sector, or small
business.

3.1.1.2 Economies of Scale:

There are a number of players prevailing in the cement industry in India. However, there are
around 20 big names that account for more than 70% of the total cement production in India.
The total installed capacity is distributed over around 129 plants, owned by 54 major
companies. Because of after china India is word largest cement pint . and also after
agriculture economic segment construction is second, like road, increasing or changing life
style, that‘s why more impact on economic second economic factor more contribute in India.

3.1.1.3 Distribution Channel:

Established players have high market penetration in terms of distribution system. They have
their dealers appointed in almost all the possible cities or towns of India. More deep and good
is the distribution channel system more good is the service provided and in turn increases the
image of a particular company. Now days, companies are increasing their efforts to enhance
and upgrade their distribution channel system to provide good customer product in a time. So,

60
the new entrants have to establish a good and an efficient distribution channel to serve its
customers in time, which will again require a high amount of investment in distribution
channel. When and profit margin exciting sellers have, well-functioning distributer and
retailer net-works a new comers has an uphill struggle in squeezing its way in. and also old
company give high markup and profit margin.

3.1.1.4 Industry Growth Rate:

Cement demand has continued to remain weak in Apr-May 2013 mainly due to lackluster
demand from end user industries. The domestic cement production grew by 8.2% Y or in Apr
2013 as compared to 12.5% Y or in Apr 2012. The growth slowed down further to 3.0% Y or
in May 2013 pulling down the overall growth rate to 5.6%Y or in Apr-May 2013. Although
the demand picked up temporarily from the end of May 2013, it does not reflect any
fundamental recovery in prospects. The cement demand in May end and June 2013 has been
supported by pre-monsoon increase in construction activities and is not likely to be sustained
going forward. With the onset of monsoons and consequent lull in construction activities, the
demand is likely to come under pressure in Q2 FY14 as well. Cement prices which
weakened during Mar and Apr 2013 due to weak demand saw some recovery from mid May
2013.

3.1.1.5Government Policies:

Government police is liberalization toward new enters, but some restriction on emission,
price, quality, etc. it is required high amount of investment but we will start small unit, and
also give support for stating business central as well as stats governments.

3.1.2 THREAT OF SUBSTITUTE PRODUCTS OR SERVICES (Low)

Relative price performance of substitutes : no substitute in

India Buyer switching costs : low and high
Perceived level of product differentiation : low level of differentiation
Now a day timber is also being considered as one of the substitutes, therefore cement it one
of cement. In many countries like japan, Indonesia, Singapore etc., are a now using timber in
construction since those areas are high earthquake affected. They now prefer timber which is
cheap and long lasting for years. But timber cannot be considered as one of the major
substitutes of cement, therefore cement is one of the main components of any construction,

61
without cement, construction work is next to impossible as it provides strength to the
building.

3.1.2.1 Product for product Substitution:

This means a substitute of the original product that is having same basic function. In cement
product not any substitute product in the Indian market, but in the word available substitute
product like timber.

3.1.2.2 Relative Price Substitute:

In this type of substitute price is compared. Substitute products, which have the same
function but not the same good quality like that of the original product but very near to it, are
available at cheaper prices than that of the original product. Than in this case the substitute
becomes threats to the original products or company and if substitutes like timber send is
substitute product and cheaper than cement product so that it is relative price product. And
send is free than other substitute product, but in old house build by send and chuna but new
hose build by cement.

3.1.2.3 Substitution of Need:

Substitution of need by a new product or service, rendering as existing product or service

redundant. In this the customer wants more reliable, cheaper and maintenance free products
to use. His/her need to use user friendly products which are cheaper in rates and have good
quality.Example:- before freedom Indian people use sand and chuna rater than cement but
after that people aware and changing life style and increasing income that‘s why people use
cement.

3.1.3 BARGANING POWER OF BUYER (Low)

The boom in the in the infrastructure industry of India has benefitted the cement industry
immensely. In the present day context, cement producers have become more powerful than
buyers, in the current situation, most of the companies are moving into direct marketing, thus
removing middlemen. Despite enough competition, due to high institutional demand of
cement, small time buyers are usually targeted as a secondly market by the cement
companies, thus buyers are not left with much bargaining power.

 Degree of dependency upon existing channels of distribution : high

62
  Buyer volume : based on customer demand.
 Buyer information availability : high( through advertisement and word of mouth)
 Availability of existing substitute products : high
 Buyer price sensitivity : moderate
 Differential advantage (uniqueness) of industry products : low ( because cement
product are almost same but Birla white cement use in different purpose).

3.1.3.1 Bargaining Power of the buyer is increasing as now days:

 Many choices cement brand are available now.

 Easy availability of finance and cement.
 Information is easily available now days through advertisement and word of mouth.

Buyers are a competitive force. They can bargain for price cut, ask for superior quality and
better Product, and also demanding more credit period from dealer, retailers, etc. customers
bargaining with price and more credit limit from retailers, dealer, its mean compete with
retailers and dealer.

3.1.4 BARGAGAINING POWER OF SUPPLIERS (Low)

The basic raw materials used in the cement manufacturing process are limestone, sand, shale,
clay and iron one. The main material, limestone, is usually mined on site which the other
minor materials may or may not be mined there. Since all the raw materials are natural
resources, they are under the governments control, companies have to buy rights from the
government to setup the cement plant. So there are no such suppliers in the cement industry.

 Degree of differentiation of inputs in term of raw materials : Low

 Same raw materials provider is high
 Presence of substitute inputs : low
 Employee solidarity (e.g. labor unions) : high in organized sector, but those company
use technology do not solidarity of employee, its low.
 Raw materials supplier is high available in market that way company is stronger for
bargaining power.
 That‘s way attractive price for company and end user have low price getting products.

63
  Whether supplier increasing price of raw materials price due to company switch off
and use other supplier those who give low price provide raw materials.

There were fewer suppliers who dominated the market and the switching cost for the buyers
were high. There were no substitutes present. But this scenario is changing now as the
suppliers have increased that‘s why increasing bargaining power for company.

3.1.5 RIVALRY AMONG EXISTING PLAYERS (High)

The Indian cement industry has large number of cement production thus making it low
concentration market. The four biggest cement players in the Indian cement industries.The
market share of the above mentioned four companies account to 39.80% currently. It is
believed that it these four companies do not increase their market share in the coming years.
Then their combine share could drop to 34%. The share of mid large players will remain
about 36%, small players will hold about 24%, and new players will account for 6% of the
market with focus on capacity addition, many small/medium players have been able to
capture more market share and consolidate their position in the industry in the fast last two
years. Market share of top five individual companies taken together show a decline to a level
of 44.3%in FY12 from 46.3% in FY13.

3.1.5.1 Exit Barriers:

The India cement industries has got high exist barriers for investing huge amount of money.
But small industries exist barriers is low. One of the main reasons is the high initial capital
investment required for starting up a manufacturing unit. Shutting down and switching over
to other industry may cost fortunes.

Thus in this way, with the help of Porter Five Force Model the Competitive Analysis of
cement industry is done. In regard to this some important success factors are also considered
which are helpful for the development of two wheeler industry in India.

64
3.1.5.2 Number of Competitors in the Industry:

If number of competitors in the industry are less than the competitive rivalry will be less and
conversely if there are more competitors in an industry, more will be the competitive rivalry
between them so as to acquire high market share. Where competitors are roughly of equal
size, there is danger of intense competition as one competitor attempts to gain dominance
over another. While the less competitive markets tend to be those with dominant
organizations within them and the smaller players have accommodated them to this situation.
Earlier market was dominated by Birla, Ambuja, Ultratech, etc.

 Number of competitors: The total installed capacity is distributed over around 129
plants, owned by 54 major companies.
 Rate of industry growth : high ( 15-17% p.a.)
 Exit barriers : low for small business and for large company exit barriers is high.
 Level of advertising expense : high
 Economies of scale : high
 Buyer demand is growing rapidly high
 Buyer costs to switch brand are high, if increasing price at that time, but customer are
brand loyal at that time switch is brand is mordent.

3.1.5.3 Factors affecting Cement Industry’ Competitiveness

¾ Cement is one of the highly taxed commodities in our country. Taxes and levies account
for around30% of sale price (and over 70% of ex-factory costs). Taxes and Levies as %age
of sale price ¾ High rail/road transportation costs add up to selling price. ¾ In view of the
uncertainty of Grid Power, being erratic and poor quality, most of the cement units installed
captive power to the extent of 60% and in some cases 100%. The new greenfield units install
100% captive power facility as part of the machinery and equipment. Some States impose
levies on captive power generation as also some minimum demand charges adding to cost of
cement. ¾ Procedural delays in obtaining clearances for limestone mining land acquisition,
environment etc. which takes more than 2 years causing time and cost over runs. ¾ Laws
are rigid towards exit of an industry.

65
3.3 OPPORTUNITIES AND THREATS

The cement industry is going through its boom period with full capacity utilization. Powered
by the GDP growth of 8-9%, the annual demand for cement in the country continues to grow
at 8- 10%. As per NCAER study, under high growth scenario, the demand for cement
(including exports) is expected to increase to 244.82 million tones by 2010-11. As per the
study, the demand is expected to be much higher at 311.37 million tones, if the optimistic
projections of the road and the housing sectors are met. The industry has responded to this
with substantial new capacity announcements. The materialization of these capacities,
however, is likely to be delayed due to a number of factors including timely delivery of
equipment and construction of the plant due to the heavy order book position of the suppliers.
It is expected that demand growth will outstrip supply till the materialization of such new
capacities. However, the current high level of international crude prices and its impact on the
domestic prices of petroleum products is likely to make a dent in the profitability but its
impact will have to be seen depending upon the ability of the economy to pass on such cost
increase to the consumer.
While the freight cost could be optimized on the imported coal through usage of company‘s
own ships for part of the quantity, the international prices of imported coal and its volatility
together with the strengthening of the dollar against rupee could derail this. This could impact
the delivery prices of imported coal and also the cost of production. The Government has
taken steps to increase the availability of indigenous coal for its expanded capacity across
various plants which can mitigate the impact of such high cost of imported coal for the plants
located near the coal fields in India. The Government‘s continuing efforts to rein in cement
prices by freeing imports and banning exports could artificially disable the normal market
price mechanisms for determining the price.
The rise in the price of cement is because of the gap of demand & supply in the market. The
demand for cement is much higher than its actual supply. But with the production
maximization, which can be encountered in next few year, this gap may narrow down, that
may ensure the market to be in equilibrium.Decreasing per capita consumption doesn‘t affect
the total consumption for the cement. It means the infrastructure; contacted housing is using
the bulk of the production. In spite of High price of the product, the hick of demand because
of the increasing rate of infrastructural development.

66
Domestic price of cement is rising as well as the imported cement price is lowering. So
altogether the supply of the cement, which is affordable, will increase. This may in decrease
the gap between supply and demand. Major Demand was from the housing sector, which may
shift to infrastructure as lots of infrastructural development processes has already being taken
up & due to the increased price, housing segment started showing a slowdown.

3.4 Driving Forces

On the canvas of the Indian economy, cement industry occupies a prominent place. Due to
its deep forward and backward linkages with several key segments of the economy, cement
industry has a strong multiplier effect and is capable of being the driver of economic growth.
A sound changing life style and increasing road, infrastructure, so that plays a pivotal role in
the country‘s rapid economic and industrial development. The well-developed Indian cement
industry ably fulfills this catalytic role by producing cement.

Cement Industry one of the key drivers of the national economy as it provides large-scale
employment, having a strong multiplier effect. Being one of the largest industries in India,
this industry has been witnessing impressive growth during the last two decades. It has been
able to restructure itself, absorb newer technology, align itself to the global developments and
realize its potential. This has significantly increased cement industry‘s contribution to overall
industrial growth in the country.

The convergence of government policies, economy‘s growth, people‘s purchasing power

have all contributed to the phenomenal growth of Indian cement industry. Some of the
important growth drivers are explained below:

67
3.3.1Key Drivers of Indian Cement Market:

 Rising industrial and agricultural output:

Rise in the industrial and agricultural output indirectly helps Indian cement Industry-
Industrial and agricultural output increase has reflected in higher GDP and overall growth of
the economy which is about 9% in the last three years. Higher GDP means more purchasing
power. Sales of cement for domestic and commercial consumption have seen high growth in
these three years too.

 Rising per capital income:

Rise in the per capita income increases cement sales. Industrial growth in the 70s, IT boom
in the 1980s and BPO boom in the 1990s have transformed the Indian middle class. The
present generation is able to earn the same levels of salary that their parents were earning
after years of work. This has pushed up the demand for home. A rise in per capita income is
also indirectly responsible for the retail boom and industrial boom for consumer nondurables.

 Favorable demographic distribution with rising working population and middle

class Urbanization:
Urbanization changes the face of Indian cement industry. Joint families in towns and villages
have given away to migration of the younger generation to cities in search of better
opportunities. The new-age educated migrants and nuclear families have a higher purchasing
power. Presently, the rate of spread of urbanization is 30% which is likely to increase by 40%
in 2030(UN).Urbanization has promoted infrastructural development and it is estimated to
spread at a rate of $500 billion in the next 5-6 years.

 Favorable government policies:

Favorable Government Policies for the cement sector. Apart from a healthy growing
economy, Indian cement industry has a lot to thank the government for the amazing growth
rates. The Indian government has introduced several industry specific programs.

68
 Production:

There are agriculture, infrastructure, energy& power, banking, & finance service sector.
Construction is the second largest economy activity after agriculture and is poised for
continuous growth due to industrialization, urbanization, and economic development with
expectation of improvement living standard of people in India. It account for nearly 65% of
the total investment in infrastructure, employee 33 million people approximately and
accounts for 6-8 percent of GDP. The construction industry is primarily drive by Government
of Indian investment on core infrastructure project and creation of urban infrastructure,
industries capital expenditure by corporate sector and development activities of real estates or
housing sector in urban as well as rural areas. the economic condition of Indian rural
population. the production of industrial machinery has also been on the rise and the
increasing flow of goods has spurred increases in rail, road and port traffic, necessitating
future infrastructure improvements.

Growth in the road infrastructure increases demand for vehicles. Indian highways and roads
have improved a lot in quality and connectivity in the last 20 years. Projects like the Golden
Quadrilateral aim to make even remote areas accessible by road. Some of the National
Highways are of international standards. This has made road transport a viable, cost effective
and speedy option both for goods and passenger traffic.

 Globalization impact on cement industry

The paper evaluates the effects of deregulation on the performance and structure of the Indian
Cement Industry. The implementation of the deregulation process is complex and varied.
Therefore the paper mainly focuses on the impact of liberalization on the growth and the
structure of the cement industry, where structure is primarily being captured by
concentration. In this paper, we contribute to the discussion on productivity growth and the
role of technological change within the context of global environment change.

The performance of the industry, under different policy regimes, truly establishes that
decontrol of the industry and liberalization of the economy has led to remarkable
improvement in the indicators such as installed capacity, capacity utilization

The Globalization of Indian Cement Industry has helped the industry to restructure itself
to coop up with the alterations in the global economic and trading system. The Indian cement
industry is one of the oldest industries. It has been catering to India's cement requirements

69
since its emergence during the British Raj in India. Though the majority of the players in the
Indian cement industry were private sector organizations, the industry was highly regulated.

With the rapid growth rate of the Indian economy after the 1990s, the infrastructural
developments within the country has been tremendous. The increase in the construction
activities has led to the increase in the demand for updated quality building materials and
other allied products. Cement being one of the major elements in the construction work, there
is a growth in the cement industry in India. The consumption of cement has increased in India
by nearly 7.5%. With the globalization of Indian cement industry many foreign cement
manufacturers are engaging themselves in agreements and deals with their India counter parts

To have a share of the growth.

Globalization of Indian Cement Industry includes several foreign companies engaging in

mergers and acquisitions of Indian cement companies. For example,

Heidelberg cement Indorama cement Ltd. Heidelberg Cement Company entered into an
agreement for a 50% joint venture with the Indorama Cement Ltd., situated in Mumbai,
originally possessed by the Indorama S P Lohia Group. Heidelberg Cement company is the
leading German cement manufacturing company. The Heidelberg Cement was set up in 1873
and has a long and prosperous history. Being one of the best in the world the Heidelberg
Cement Company has its bases in different countries. The Heidelberg Cement Company has
two manufacturing units in India. A grinding plant in Mumbai and a cement terminal near
Mumbai harbor. A clinker plant is coming up in the state on Gujarat.

Holcim cement Gujarat Ambuja cements Holcim Cement signed an agreement of 14.8% take
over with the Gujarat Ambuja Cements (GACL). With new products, skilled personnel,
superb management, and a outstanding market strategy gives this tie up good edge over the
other competitors. Holcim Cement Company is among the leading cement manufacturing and
supplying companies in the world. It is one of the major employers in the world, having a
work force of 90,000.The Holcim Cement Company has units in excess of 70 countries all
over the world.

Italcementi cement Zuari cement Limited Italcementi Cement Company with the help of the
Ciments Français, a subsidiary for its global activities, has acquired shares of the famous
Indian cement manufacturer - Zuari Cement Limited. The acquisition was of 50%

70
shareholding and the deal was of about 100 million Euros. Italcementi Cement is the 5th
largest cement manufacturing company in the world. The production capacity of the
Italcementi cement company is about 70 million tons in a year. With the construction boom
in India the company looks for a stable future. In 2001 the Italcementi cement entered the
Indian market scenario. It took over the plant of the Zuari Cement Limited in Andhra Pradesh
in southern India. The joint venture earned revenues of around 100 million Euros and an
operating profit of 4 million Euros.

Lafarge India is the subsidiary of the Lafarge Cement Company of France. It was established
in 1999 in India with the acquisition of the Tisco and the Raymond cement plants. Lafarge
Cement presently has three cement manufacturing units in India. One of them is in Jharkhand
which is used for the purpose of grinding and the other two are in Chhattisgarh used for
manufacturing. The Lafarge Cement Company was set up in the year 1833 by Leon Pavin.
Lafarge Cement Company situated in France is the leading cement producing company in the
world. It has plans for increasing the cement production through technological innovations
and maximization of the capacity of the plant. It has a large network of distributors in the
eastern part of India. The Lafarge Cement Company is presently producing nearly 5.5 million
tons of cement for the Indian cement market.

71
3.5 PEST ANALYSIS OF CEMENT INDUSTRY

Pest analysis is a useful tool for understanding the big picture of operating and takes
advantages of opportunities. Pest analysis includes political, environmental, social and
technological which affects both the companies as well as industry.

3.4.1 POLITICAL

The price of cement is primarily controlled by the coal rates, power tariffs, s railway tariff,
fright ,royalty and chess on limestone. Interestingly government control all of these prices.
Government is also one of the biggest consumers of the cement in the country. Most state
government in order to attract investment in their respective states. Offer fiscal incentive in
the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff
5 years, while Gujarat offers exemption from electric duty.

Firstly, we will discuss the political impact of cement industry. The 212-million tonne cement
industry's demands seem to have no end. After a healthy quarter (January-March 2009) due to
robust demand from the infrastructure segment, good dispatches and growth in profit the
industry seems to be wanting for more. With election results being declared in favor of the
UPA and the country moving on its way to form the new government, the cement industry is
expecting excise benefits and ban on imports to boost the cement demand which has taken a
hit due to slowdown in the real estate sector.

Says Sumit Banerjee, MD of ACC Ltd, "We need directional steps to correct anomalies in
excise taxes, the manner in which these are levied on our industry. We would also want a
customs duty rationalization that would rectify the current imperfection, whereby the inputs
are taxed but not the direct import of cement.

According to Vinod Juneja, MD of Binani Cement, "We are looking at reduction in excise
duty to 4% and a complete ban on import of cement, from the new government. Meanwhile,
taking into consideration the crisis the cement industry is going through, the government had,
in its stimulus package, imposed a 4% cut in excise duty to 8% along with cut in excise duty
on bulk cement from 14% to 8%. HM Bangur, president of Cement Manufacturers
Association (CMA) and CMD of Shree Cement however, declined to comment on the I
ndustry expectations from the new government.

72
The election results are positive but it is too early for me to comment on the industry's
expectations before the new government is formed, he said. Meanwhile, Vinita Singhania,
MD of JK Lakshmi Cement Ltd and vice president of CMA, expects that the infrastructure
development would have to be pursued with much more vigor to take India closer to its aim
of being a super economic power. This would entail building of modern ports, new super
express highways, concretization of roads, emphasis on canal lining etc. We would also
expect the new government to have a re-look at the high incidence of taxation on the cement
industry so that cement becomes more affordable to all sections of the society and fulfill the
dream of common people to have a home of their own, Singhania adds.

3.4.2 Economic

The industry is on the boom, with a lot of government infrastructure and housing project
under construction. The export segment of the industry is expected to grow again on account
of various infrastructure project that are being taken up all over the world and numerous
cement plants coming up in near future in the country.
Inportance Cement Industry to indian:
 Basic ingredient in construction work.
 Generation of employment.
 Contribution to national exchequer.
 Contribution to Indian railway revenues.
 Helpful in the development of other industries.
 Huge export potentialities and quick marketability
 Enhancement in the national income

Now we will discuss the economic impact of cement industry. India is the second largest
industry after china. A variety of studies on productivity growth and technological change in
Indian industries has been carried out so far. Originally these studies were driven by an
interest in understanding the capital vanishing phenomena in the Indian industry between
1950 and 1980. During that time, labor productivity as well as capital availability and use
increased considerably, while the overall growth rate of the economy stagnated at low levels
(see Ahluwalia, 1991). Concerned about the efficiency of resource use researchers started
investigating productivity growth and input factor substitutions for aggregate manufacturing
as well as various industries. The results of these analyses differed substantially depending on

73
the methodology, statistical specification employed as well as on the underlying sources of
data, levels of aggregation and time periods considered. Over time more sophisticated and
refined methodologies in connection with longer time series were employed to study
productivity change. The contribution of total factor productivity to output growth was of
primary interest to explain the continuously low economic development.

Partial factor productivity was investigated to better understand the importance of each factor
of production and to evaluate substitution possibilities. In this context, the role of energy
within the production process received increasing attention and consequently, besides the
primary factors of production (capital and labor), energy and materials were added as
secondary input factors into the analyses. Total factor productivity growth (TFPG) measures
the growth in gross value added(GVA) in excess of the growth of a weighted combination of
the two inputs capital and labor. For measuring output in form of gross value added all
intermediate inputs are deducted. Thus, gross value added only provides the value that is
actually added in the production process by using the two primary inputs of production:
capital and labor. Total Productivity Growth, in contrast, relates gross value of output (VO)
to the four input factors capital, labor, energy and materials. Since it accounts for
intermediate inputs as well as primary inputs, value of output provides the more appropriate
output measure if interested in analyzing energy and material as well as capital and labor.
Commonly, three major growth accounting approaches are considered for estimating total
factor productivity as well as total productivity growth: the Translog Index, the Solow Index
and the Kendrick Index. The three indices differ in their complexity and the 13 underlying
economic assumptions. A detailed derivation of the three indices is provided in a survey
report by Mongia and Sathaye (1998).

The Kendrick index is easy to understanding using an arithmetic aggregation scheme for the
inputs. It is restrictive in that it is based on the assumption of a linear production function and
in assigning constant (base year) shares in GVA (VO respectively) to the inputs. The Solow
index is slightly more general in assuming a neo-classical, Cobb-Douglas, specification of the
production function with constant returns to scale, perfect competition in the market and
factors being rewarded their marginal products. The translog measure is based on a more
complex production function associated with only a minimum numbers of assumptions. It is
therefore of more general nature and provides the preferably used measure for productivity
growth.Partial factor productivity (PP) indices are reported for all input factors. They are

74
obtained by simply dividing the value figure for each factor by the gross value of output or by
the gross value added respectively. Partial factor productivity growth indicates how much
output changes in relation to a fixed amount of each single input. It measures how
"productive‖ a factor is. The inverse means how much of a factor has to be used to produce a
specific amount of output - it measures the factor intensity of production.

India's economy is the third largest by GDP in terms of purchasing power parity but, with a
very large population, it ranks only 165th in GDP/capita terms. Gradual de-centralization of
the economy since the early 1990s has allowed the development of a more diverse market
economy that is increasingly driven by an educated and business-minded middle class. This is
highlighted by India's now world-famous telecommunications and service sector, which has
grown extensively over the past decade.

Increased variation has resulted in a reduction in India's agriculture dependency, although this
sector still supplies around 50% of the country's income. Manufacturing remains strong,
representing more than a quarter of output.

However, despite economic expansion and development of its service sector, economic
disparity remains a severe problem for India. Almost a third of Indians lived in poverty in
2011 and constant population growth makes it hard to increase living standards. For
illustration, India welcomed its 1 billionth inhabitant in 2000. In just 12 years since then the
population has increased to over 1.2 billion!.

Role of cemnt industry in india GDP

The Role of Cement Industry in India GDP is significant in the economic development of the
country. The cement industry in India is one of the oldest sectors in India.

The industry is driven by the immense growth in the housing sector, the infrastructure
development, and construction of transportation systems.

Role of Cement Industry in India GDP-Facts

 The Indian cement industry is one of the booming sectors of the Indian economy

 The infrastructure development of the country in the recent years is the demand driver
for the cement industry

75
  The Indian Cement Industry is experiencing the entry of many foreign players in the
Indian market

 The average monthly capacity utilization during the year 2006-07 was 94%

 The cement dispatches in the year 2006-07 was 155 million tonnes

 The growth of the cement sector pertaining to the total output was 10% in 2006-07

Role of Cement Industry in India GDP-Production

 India ranks second in the production of cement in the world

 The growth rate of the production of cement during the year 2006-07 was 9.1%

 The export of the cement in the year 2006-07 was 9.3 million tonnes

 The cement industry in India constitutes of 365 small cement manufacturing units and
130 large cement manufacturing units

 The total installed capability of the cement manufacturing is 165 million tonnes per
year

 The large manufacturing units accounts for 94% of the total output of cement

Role of Cement Industry in India GDP-Mergers and Acquisitions

 Heidelberg Cement-Indorama Cement Ltd

 Heidelberg Cement Company entered into an agreement for a 50% joint venture with
the Indorama Cement Ltd, situated in Mumbai, originally possessed by the Indorama
S P Lohia Group.

 Heidelberg Cement Company has two manufacturing units in India

 Italcementi cement-Zuari Cement Limited

 Italcementi cement company has acquired share of the famous Indian cement
manufacturer, the Zuari Cement Limited

 The acquisition was of 50% shareholding and the deal was of about 100 million

 It took over the plant of the Zuari Cement Limited in Andhra Pradesh

 Holcim Cement-Gujarat Ambuja Cements (GACL)

 Holcim Cement signed an agreement of 14.8% take over with the Gujarat Ambuja
Cements (GACL).

76
  Holcim Cement Company is among the leading cement manufacturing and supplying
companies in the world.

 Lafarge India

 Lafarge India is the subsidiary of the Lafarge Cement Company of France.

 It was established in 1999 with the acquisition of the Tisco and the Raymond cement
plants

 Lafarge Cement presently has three cement manufacturing units in India one of them
is in Jharkhand and two other in Chhattisgarh

3.4.3 Social

The cement industry in India consist of both organization sector and the unorganized sector.
Organized sector comprises of the well know cement manufacturing companies while the
main players of the unorganized sector are the regional and local cement producing branded
cement like ULTRATECH, JAYPEE, etc. A population of more than 100 billion people, it is
expected that cement industry will create another 25 lacks job in the next 4-5 years.

The cement industry has responded to the demands of infrastructure and consequent
increasing the production capacity enormously. This industry mainly rely on mining
operation for its product, impacting large number of people and the environment around it.
Hence, adequate responsibility has to move alongside its growth.

India, historically has been a society that has had a tradition of showing concern to others. As
the country industrialized, business houses also kept with these traditions. It is documented
that the oldest business houses have been the most just and hence respected companies in our
society.
Indian economy has grown leaps and bounds in recent years and today India is recognized by
the world as an emerging economy. Consequently, companies of all sizes have emerged,
grown and expanded in the last few decades, at times very quickly, with impacts on the
environment and the society. However, their responsibilities often have not kept pace with
their growth. Governance is often compromised and probably because of the sheer numbers
of people available, the dignity and value for human beings and their rights often ignored.

77
Many organizations have grown, often flouting norms, arriving at quick fix solutions with
sometimes with complete disregard for the environment or the impacts on its work force and

Its neighborhood owing to its operations.

Any quick fix models with a complete lack of concern for the society and environment can
only work in the short term. To survive, organizations need to be viewed as responsible
companies, both by their internal as well as external stakeholders. And this sentiment is being
echoed by all - the government, business forums, etc. and companies are encouraged to
understand this for their owe good. Different organizations have been using the terms CSR,
corporate citizenship and sustainability interchangeably. For example, Ambuja Cements
sees CSR as the social performance forming a significant aspect of the company's overall
sustainability. Sustainability is the broad umbrella and CSR is the company's performance
towards all its stakeholders - workforce , business partners, customer and the society which it
impact through its operations.

While there is no doubt that companies need to sprout and grow, especially to meet the
development demands of society, they also in turn directly or indirectly impact the societies
in which they exist. There is a need and a demand to monitor social impacts and performance.
Just projecting a strong financial bottom line is simply not enough. Hence, CSR is about
responsible management of business processes which produce an overall positive impact on
society.

3.4.4 Technology

The government of India plant to study and possibly acquire new technology from the cement
industry of world. The government is discussing technology transfer in the field of energy
conservation and environment protection to help improve efficiency of the India cement
industry. Cement industry has made tremendous strides in technological up gradation and
assimilation of latest technology. At present 93% of the total capacity in the industry is based
on modern and environment friendly dry process technology.

Continuous technological upgrading and assimilation of latest technology has been going on
in the cement industry. Presently 93 per cent of the total capacity in the industry is based on
modern and environment-friendly dry process technology and only 7 per cent of the capacity
is based on old wet and semi-dry process technology. There is tremendous scope for waste

78
heat recovery in cement plants and thereby reduction in emission level. One project for co-
generation of power utilizing waste heat in an Indian cement plant is being implemented with
Japanese assistance under Green Aid Plan. The induction of advanced technology has helped
the industry immensely to conserve energy and fuel and to save materials substantially.

India is also producing different varieties of cement like Ordinary Portland cement(OPC),
Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well
Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White
Cement etc. Production of these varieties of cement conform to the BIS Specifications. Also,
some cement plants have set up dedicated jetties for promoting bulk transportation and
export.

3.6 SWOT ANALYSIS

A scan of the internal and external environment is an important part of the strategic planning
process. Environmental factors internal to the firm usually can be classified as strengths (S)
or weaknesses (W), and those external to the firm can be classified as opportunities (O) or
threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.

The SWOT analysis provides information that is helpful in matching the firm's resources and
capabilities to the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection. The following diagram shows how a SWOT analysis fits
into an environmental scan

SWOT is an acronym for the internal strengths & weaknesses of a business & environmental
opportunities and threats facing that business. SWOT analysis is a systemic identification of
these factors and the strategy that reflects the best match between them. It is based on the
logic that an effective strategy maximizes a business‘s strengths and opportunities but at the
same time minimizes its weaknesses & threats.

3.5.1 Strengths

The cement industry has many strengths to be considered. Cement is, literally, the building
block of the construction industry. Almost every building constructed relies on cement for its
foundation.

79
The cement business is a $10 billion industry, measured by annual cement shipments. There
is also a strong reputation behind the cement industry.

Cement is a solid material and consumers rarely have complaints about the product. Regional
distribution plants have also made cement widely available to any type of buyer.

3.5.2 Weaknesses

The cement industry is not without its drawbacks. The cement industry relies on construction
jobs to create a profit. But the cement industry heavily relies on weather. About two-thirds of
cement production takes place between May and October.

Cement producers often use the winter months to produce and stockpile cement, to meet
demand. Another weakness is the cost of transport; the cost of transporting cement is high
and this keeps cement from being profitable over long distances. In other words, shipping
cement costs more than the profit from selling it.

3.5.3 Opportunities

The cement industries has opportunities as well. One such opportunity is the cement
industry's efficiency. The cement industry has recently streamlined its production efforts,
using dry manufacturing instead of wet, which is heavier and more time-consuming.

The cement industry has also invested about $6 billion in expansion efforts to meet unmet
cement needs. Projections show that by 2012, the cement industry will have 25 percent more
production capabilities.

3.5.4 Threats

The nature of the economy have uncovered a number of threats to the cement industry. The
cement industry greatly relies on construction. The current economy has lessened the number
of construction jobs, which in turn hurts the cement industry.

The cement industry controls the majority of the United States market, but not all of it. About
11.5 metric tons of cement are imported annually to support the unmet need. If other
countries can produce and ship cement for a reduced price, the U.S. cement industry is in
danger.

80
 The U.S. government is also attempting to regulate the cement industry's waste. The
Environmental Protection Agency has introduced regulations for the cement industry to cut
down emissions.

3.7 Economic Future of Indian Cement industry:-

Given the rampant growth of the Indian cement industry, few are betting against continued
capacity additions in the short- to medium-term. The extent of capacity addition, however,
and whether or not demand will rise to match it more closely than at present, is up for
debate.In November 2012 the India Brand Equity Foundation (IBEF) said that it expected
double-digit growth in the cement industry for the 2013 and 2014 fiscal years, which end on
31 March 2013 and 31 March 2014 respectively. It reported that the cement industry would
increase production by around 71Mt/yr over the same time-frame to reach over 300Mt/yr in
2014.Meanwhile, the Indian Government's 12th Five-Year Plan, which runs for 2013 to 2017,
states that India will require a cement capacity in the region of 480Mt/yr by the end of
2017.12 It states that a further 150Mt/yr of capacity will be required to accomplish this.
Separately, ACC expects India to have a capacity of 500Mt/yr by 2020.This represents more
than twice the cement that India currently consumes in a year and so it is worth asking, if this
capacity is reached, what will the capacity utilization rate be? The government promises
significant investment in infrastructure, although bureaucracy has hampered such investments
in the past."Land acquisition is a big issue," said H M Bangur, chairman and managing
director of north-based Shree Cement, in August 2012. "No state government is providing
land to set up units. Greenfield expansion is tough."

Sunil Singhania, equity head at Reliance Mutual Fund, said, "Capacity creation in India is
very difficult because there is no land (in some places) and no limestone deposits at others.
Several cement companies have written down assets. I believe capacity additions going
forward will not be as aggressive as in the past. Expansion will be slower than demand
growth. "With prices remaining low due to overcapacity and low demand, the potential for
future collusion between producers and the difficulty of setting up new capacity, it is possible
that producers, under pressure to meet the expectations placed on them by the Five-Year
Plan, will see increased pressure on margins in the next few years, especially if fuel prices
continue to rise .In the midst of this, smaller companies are likely to suffer more than most,
possibly making them acquisition targets for better-equipped multinationals. Indeed, in

81
January 2013 Prism Cement, one of India's smaller cement producers, actually reported a net
loss for the quarter to 31 December 2012. It cited low demand, high fuel costs and increased
electricity prices. How long can such producers continue as the Ultratechs, ACCs and
Ambujas of this world keep adding new capacity?

An academic report carried out for the Competition Commission of India in 2012 hints at this
possibility of future consolidation in the industry. The study found that, despite capacity
utilizations falling across all cement producers in India from 2006 to 2011, it was those with
the smallest market share that experienced by far the worst reduction. Binani Cement, for
example, recorded utilizations rates of only around 55-60%. Conversely mega-players like
Ultratech have been more stable, with rates of 80-95%. In January 2013 India Ratings
reported that smaller businesses were less likely to benefit from the expected improvement in
the industry.A major reason behind this phenomenon is rising fuel costs, which have hit
producers from two directions in the past year. Firstly, demand for power in India is high and
domestic fuels are dedicated predominantly to electrical generation. Industrial companies are
forced, in many cases, to import costly foreign fuel, which must be shipped inland to be used.
A second effect of increased fuel prices is that cement is more costly to transport once it has
left the factory.Due to their size allowing greater economies of scale, larger cement
companies are better positioned to import fuel on a large scale and are more likely to have
flexible vehicle fleets to respond as demand fluctuates in different areas. Another crucial
difference between the larger and smaller companies is that larger players are more likely to
have a pan-Indian presence. This enables them to ride-out periods of difficulty in one area
while maximizing margins elsewhere. Local producers do not have this luxury.Smaller local
producers are less well equipped to deal with expansion and their relative size will gradually
diminish compared to the top 12 producers. As this happens, it is likely that they will become
the acquisition targets of the larger firms.

82
3.8 Key Success Fasters in the cement Industry:-

Cement industry players a crucial role in the development in the infrastructure country. Due
to the various construction activity undertaken by the central government state government
public sector and other organization to meet need of the massive population in the country
generate huge demand for cement and also provision for housing is the first and foremost
requirement of every household and there for market demand of cement for private
consumption is increasing consultable. According to the ministry the liberalization process
provide the much desired demand to the cement industry and the growth was quit visible
leading to noticeable growth in term of 100 million tonnes capacity aiding during the decade
1999-2012.

Key point

Cement industry is second largest industry in India after china.

183 large cement plant and more than 360 mini plants.

328 million tonnes a years installed capacity.

97% of the installed capacity is accounted for by large producer.

21 top companies control 90% of the market.

40% of the market is controlled by group, holcim and aditya birla group.

 Brand Equity
 Satisfies customer needs
 Satisfies customer needs
 Provides better value for money than other competing brands
 Distribution Network
 Availability near the consumer
 Economies of scale
 Appropriate pricing strategy

83
3.9 INDUSTRY DOMINANT ECONOMIC FACTORS

3.8.1 Market Size:- A RNCOS report titled “Indian Cement Industry Outlook 2015‖
estimated that the total installed capacity of cement in India will increase with a compound
annual growth rate (CAGR) of around 7 per cent during 2012-13 to 2014-15. The production
of cement has increased at 10 per cent CAGR over FY07-11. The market size of the industry
is expected to grow from 223.4 MTPA during FY12 to 550 MTPA by FY20. The cement
companies in India are receiving full attention from the private equity (PE) firms for funding
their business plans. India‘s cement sector is with an overall capacity of 350 MTPA. The
compaies including UltraTech, ACC, Ambuja Cements, Jaiprakash and Shree Cement control
almost half the country‘s cement market. In the 11th Five Year Plan (2007-12), the industry
added 120 MT of new capacities and is expected to reach close to 470 MT by 2017.

3.8.2 Growth Rate

Cement demand has continued to remain weak in Apr-May 2013 mainly due to lackluster
demand from end user industries. The domestic cement production grew by 8.2% Y or in Apr
2013 as compared to 12.5% Y or in Apr 2012. The growth slowed down further to 3.0% Y or
in May 2013 pulling down the overall growth rate to 5.6%Y or in Apr-May 2013. Although
the demand picked up temporarily from the end of May 2013, it does not reflect any
fundamental recovery in prospects. The cement demand in May end and June 2013 has been
supported by pre-monsoon increase in construction activities and is not likely to be sustained
going forward. With the onset of monsoons and consequent lull in construction activities, the
demand is likely to come under pressure in Q2 FY14 as well. Cement prices which
weakened during Mar and Apr 2013 due to weak demand saw some recovery from mid May
2013. The hike in cement prices was supported by pre-monsoon increase in construction
activities which provided an opportunity to cement companies to raise prices before the lean
season sets in. The industry also increased prices to pass on the increase in coal prices by
Coal India Limited (CIL). As a result, the average wholesale cement prices increased by ~Rs.
10/bag in Delhi, Rs. 17/ bag in Chandigarh and Rs. 5/bag in Kolkata between April-Jun
2013. Prices in some parts of South India such as Bangalore and Chennai also saw hike of
Rs. 10-15/bag in June 2013. However, in last week of June, prices have come under
pressure in North, West and East with cement prices declining by Rs. 5-20 per bag in Delhi,
Chandigarh and Ahmedabad markets. The Hyderabad market, which had seen significant
downward pressure in prices in the last one year with average wholesale cement prices

84
declining by 20% from Rs. 283/bag in July 2012 to Rs. 228 -232/bag in April 2013, also saw
a steep recovery in prices in the last week of May 2013. The cement prices in Hyderabad
increased by 30% to Rs. 296/bag in June 2013 driven by slowdown in capacity addition in
South, efforts by cement players to rationalize production as per market demand and to pass
on the rise in costs to the customers. This rise in prices augurs well for South-based players
with significant exposure to Andhra Pradesh market. However, the ability of cement
companies to maintain prices at these levels will be challenging given the capacity
overhang in the state and lean monsoon season ahead. Going forward, with the busy season
coming to an end, demand scenario continuing to look muted and a seasonally weak monsoon
season ahead, the pricing power is expected to remain weak for the cement industry. On
the cost side, the cement industry was affected by increase in coal prices effected by CIL. In
May 2013, CIL reduced the prices of premium varieties of coal (G3 and G4) with Gross
Calorific Value in the range of 6100-6700 kcal/kg by 10% in line with decline in
international coal prices. To offset this, CIL increased the prices of low grade coal (G6 -
G17)-varieties that are commonly used by Indian cement companies- by an average 10%. The
increase in coal prices will affect the power and fuel cost for cement companies. The impact
of increase in coal prices will be more pronounced on companies which depend more heavily
on domestic coal.

3.8.3 Major Players in Indian Cement Industry

There are a number of players prevailing in the cement industry in India. However, there are
around 20 big names that account for more than 70% of the total cement production in India.
The total installed capacity is distributed over around 129 plants, owned by 54 major
companies.

85
Table:- 3.2 Following are some of the major names in the Indian cement industry:

Company Production Installed Capacity

ACC 17,902 18,640

Gujarat Ambuja 15,094 14,860

Ultratech 13,707 17,000

Grasim 14,649 14,115

India Cements 8,434 8,810

JK Group 6,174 6,680

Jaypee Group 6,316 6,531

Century 6,636 6,300

Madras Cements 4,550 5,470

Birla Corp. 5,150 5,113

3.8.4 Recent Investments in the Indian Cement Industry

 In a recent announcement, the second largest cement company in South India, Dalmia
Cement declared that it's going to invest more than US$ 652.6 million in the next 2-3
years to add 10 MT capacity.
 Anil Ambani-led Reliance Infrastructure is going to build up cement plants with a
total capacity of yearly 20 MT in the next 5 years. For this, the company will invest
US$ 2.1 billion.
 India Cements is going to set up 2 thermal power plants in Andhra Pradesh and Tamil
Nadu at a cost of US$ 104 billion.
 Anil Ambani-led Reliance Cementation is also going to set up a 5 MT integrated
cement plant in Maharashtra. It will invest US$ 463.2 million for that.

86
  Jaiprakash Associates Ltd has signed a MoU with Assam Mineral Development
Corporation Limited to set up a 2 MT cement plant. The estimated project cost is US$
221.36 million.
 Rungta Mines (RML) is also planning to invest US$ 123 million for setting up a 1
MT cement plant in Orissa

3.8.5 Cement Production and Growth.

Domestic demand plays a major role in the fast growth of cement industry in India. In fact the
domestic demand of cement has surpassed the economic growth rate of India. The cement
consumption is expected to rise more than 22% by 2009-10 from 2007-08. In cement
consumption, the state of Maharashtra leads the table with 12.18% consumption, followed by
Uttar Pradesh. In terms of cement production, Andhra Pradesh leads the list with 14.72% of
production while Rajasthan remains at second position.

The production of cement in India grew at a rate of 9.1% during 2006-07 against the total
production of 147.8 MT in the previous fiscal year. During April to October 2008-09, the
production of cement in India was 101.04 MT comparing to 95.05 MT during the same
period in the previous year. During October 2009, the total cement production in India was
12.37 MT compared to a production of 11.61 MT in the same month in the previous year.
The cement companies are also increasing their productions due to the high market demand.
The cement companies have seen a net profit growth rate of 85%. With this huge success, the
cement industry in India has contributed almost 8% to India's economic development.

3.8.6 Scope

This report provides a comprehensive analysis of the Indian cement industry, It provides
historical values for the Indian cement industry for the report's 2007–2011 review period and

Forecast figure for the 2012-2016 forecast period in offer a details analysis of production
capacity, It details the regulatory framework for the Indian cement industry
It covers an exhaustive summary on key trends, drivers and issues affecting the Indian
cement in industry, It details the competitive landscape in the Indian cement industry
It contains an analysis of market entry, growth and operational strategies of key players
Make strategic business decisions using historic and forecast market data related to the

87
Indian cement industry, Assess the growth opportunities and industry dynamics by viewing
production

Capacity , demand, import and export figure identify the key market tread and opportunity

Assess industry structure and competitive landscape the competitive in the Indian cement
industry enabling the formulation of effective market entry strategies.

88
 3.10 STRATEGIC GROUP MAPPING:-
Geographical Converge wise:

Ultrate Ultrate Ultrate

A
J. J.

High
V J.K J.K

J.

A J.K laxmi ACC ACC

Ultratech

Medium
I ACC

SHREE SHREE

J.K

A Low SHREE

J.K

AC

SHRE
Local Regional National Global

Figure:- 3.4
Geographical Coverage

89
 Based On Brand & Price:-

High
Ultrate

B
J.

Medium
A J.K
Laxmi

Shr

Low

High Medium Low

Figure:- 3.5
PRIC

90
Interpretation for Geographical Converge:-

Here in the above table of geographical coverage vice analysis of strategic group mapping,
we can analyse that ULTRATECH, J.K, contain higher availability on the local basis. and
mediums and low level available J.K LAXMI, ACC, SHREE

• But on the global level availability, ULTRATECH, J.K, J.K LAXMI, ACC, SHREE
all brands are at mediums and low level.

At the regional level, availability of all brands at high and medium position

Interpretation for brand vs. price

Here in the above table of brand vs. price analysis of group mapping , we can analyse that
Ulltratech, high price and brad value is also high. Second J.K cement price and brand are
medium.

J.K laxmi cement price and brand are medium, and Acc cement price and brand are average,
and Shree cement price and brand are low in the market.

91
 FINANCIAL ANALASIS

4.1 INTRODUCTION

4.2 Filtrations

4.3 TOOLS FOR FINANCIAL ANALYSIS

Ratio analysis

Tread analysis

92
4.1 INTRODUCTION

we highlighted the content and importance of the statement of change in financial position.
Management, creditors, investors and other use the information contained in these statements
to form judgment about the operating performance and financial position of the firm. User of
financial statement can get future insight about financial strength and weakness of the firm if
they properly analyse information reported in these statement. Management should be
particularly interested in knowing financial strength of the firm to make their best use and to
be able to spot out financial weakness of the firm to take suitable corrective action. The
future plan of the free should be laid down in view of the firm‘s financial strengths and
weakness. Thus financial analysis is the starting point for making plans, before using any
sophisticated forecasting and planning procedures. Understanding the past is a prerequisites
for anticipating the future.

93
4.2 FILTARETION

Interpretation

Currently there are about 3000 dairie in Gujarat, but four major players in the premium
organized segment dominate the industry. That is the reason for selecting four companies out
of several companies.

We selected these four companie on the basis of Sales Net Profit and. From all companies we
select five company which gives higher selse net profit and earning per share as a compare to
others.

In a pie chart it shows thesalse, net profit and earning par share it of selected five companies.

From four selected companies the first company is Ultatech Cement which highest in Sales
Net profit The last company is J K Lakshmi.

Table:- 4.1

Name Sales Net Profit EPS Rank

Acc cement 11357.96 1231.75 60.70 2
J k cement 2911.97 235.03 32.501 4
Jk laxmi cement 2054.95 158.25 13 5
Shree cement 5590.25 912.68 258.60 3
Ultra Tech 20174.94 2485.38 89.10 1

94
4.3 RATIO ANALISIS

4.3.1 Return on investment/ Return on capital employed

Meaning & Importance:-

It is an index of profitability of business & is obtained by comparing net profit with capital
employed. The ratio normally expressed in percentage.
The term capital employed includes share capital, reserves & surplus and long term loans
such as debentures.

Formula:-

Return on = Net profit before interest & tax (EBIT) X 100

Capital employed Total Capital employed

Table-4.2

Particular 2013 2012 2011 2010 2009

Acc cement 22.24 21.56 22.37 39.67 36

J k cement 17.67 16.76 8.61 20.98 21.06
J k Lakshmi cement 13.91 9.69 6.03 22.7 19.52
Shree cement 16.29 6.98 30 33.98 25.01
Ultra Tech 21.29 22.56 19.45 28.53 29.21
Total 91.4 77.55 86.46 145.86 130.8
Average 18.28 15.51 17.29 29.17 26.16

95
 160

140

120

100

80 Return on Investment

60

40

20

0
2009 2010 2011 2012 2013

Figur-4.1

Return on capital employee that indicates the efficiency profitability of the industry capital
investment. Above graph show the industry return of capital employee continually decrease.
This is not a good sign for the industry having such a reputed name in the market. It also
affects industry capital investment.

96
 4.3.2 Earning Par Share

The ratio measures the profit available to equity shareholder on per share basis. this ratio
show the profitability of the firm. It is not the actual amount paid to shareholders as dividend
but is the maximum that can be paid to them.

Profit After tax

Earnings per Share =

No. of Equity Shares

Table-4.3

Particular 2013 2012 2011 2010 2009

Acc cement 27.7 17.23 19.72 10.68 7.81

J k cement 8.2 6.55 15.8 5.7 2.01
J k Lakshmi Cement 6.71 7.61 11.03 3.75 1.5
Shree cement 21.63 35.86 11.99 4.32 14.71
Ultra Tech 19.6 17.13 22.25 13.32 7.1
Total 83.84 84.38 80.79 37.77 33.13
Average 16.76 16.87 16.16 7.55 6.62

97
 18

16

14

12

10 Earning par Share

8

0 2009 2010 2011 2012 2013

Figar-4.2

Financial analyst considers the earning per share as an important measure of profitability.
EPS measures the profit available to the equity share holders on a per share basis. That is the
amount that they can get on every share held.

The earnings per share has increase rapidly from 2009-10 to 2012-13 This Higher Ratio will
attract investors. This ratio shows that company Successfully increase profitability.

98
 4.3.3 Current Ratio

Meaning & Importance :-

This most widely used ratio shows the proportion of current assets to current liabilities. It is
also known as ― working capital ratio ― as it is a measure of working capital available of a
particular time.

Formula :-

Current Assets

Current ratio ------------------------------

=
Current Liabilities

Table-4.4

Particular 2013 2012 2011 2010 2009

Acc cement 0.76 0.77 0.67 0.77 0.88

J k cement 1 1.09 1.09 1.48 1.79
J k Lakshmi cement 0.44 0.55 0.96 1.62 2.12
Shree cement 1 1.39 1.5 1.84 2.02
Ultra Tech 0 .62 0.6 0.57 0.64 0.61
Total 3.82 4.4 4.79 6.35 7.42
Average 0.76 0.88 0.95 1.27 1.48

99
 1.6

1.4

1.2

1
current Ratio
0.8 Column2 Column3

0.6

0.4

0.2

0
2009 2010 2011 2012 2013

Figar-4.3

The current ratio is a financial ratio that measures whether or not a industry has enough
resources to pay its debts over the next 12 months. It compares a firm's current assets to its
current liabilities. Above graph show the current ratio Decrease rapidly from in the year of
2009-10. It means the industry next five year current assets and current liability was
decrease.

4.3.4 Debt- Equity Ratio

This ratio is only another from of proprietary ratio and establishes relationship between the
outside long- term liabilities and owners‘ funds. It showa the proportion of long-term external
equities and internal equities.

Debt Equity Ratio = Long term Liabilities

Shareholders‘ Funds

100
 Table-4.5

particular 2013 2012 2011 2010 2009

Acc cement 0.05 0.08 0.09 0.1 0.09

J k cement 0.9 1.04 1.07 0.82 0.64
J k Lakshmi cement 1.03 0.96 0.95 0.92 0.99
Shree cement 0.76 1.04 1.18 1.5 2.01
Ultra Tech 0.34 0.35 0.38 0.46 0.62
Total 3.08 3.47 3.67 3.8 4.35
Average 0.62 0.69 0.73 0.76 0.87

18

16

14

12
interest coverage tio
10 Series 2
Series 3
8
6

0
2009 2010 2011 2012 2013

Figar-4.4

A measure of an industry financial leverage calculated by dividing its total

liabilities by stockholders' equity. It indicates what proportion of equity and debt the industry
is using to finance its assets. Above graph show the industry debt equity ratio was decrease in
the year of the 2009-10 to 20012-13 it is good position in the market.

101
4.3.5 Interest Coverage Ratio

This ratio indicates as to how many times the profit covers the payment of interest on
debentures and other long- term loans. Hence, it is also known as ―times-interest
earned ratio‘‘ it measures the debt service capacity of the firm in respect of fixed interest on
long- term debts. This ratio is obtained by dividing profit of the firm before interest and taxes
by fixed interest charges.

Interest Coverage Ratio = Profit before Interest & Taxes

Interest

Table-4.6

Particular 2013 2012 2011 2010 2009

Acc cement 27.7 17.23 19.72 10.68 7.81

J k cement 8.2 6.55 15.8 5.7 2.01
J k Lakshmi cement 6.71 7.61 11.03 3.75 1.5
Shree cement 21.63 35.86 11.99 4.32 14.71
Ultra Tech 19.6 17.13 22.25 13.32 7.1
Total 83.84 84.38 80.79 37.77 33.13
Average 16.76 16.87 16.16 7.55 6.63

102
 18

16

14

12

10 Interest Coverage Ratio

8
6

0
2009 2010 2011 2012 2013

Figar-4.5

This ratio indicates as to how many times the profit covers the payment of interest on
debentures and other long- term loans. Hence, it is also known as ―times-interest
earned ratio‘‘ it measures the debt service capacity of the firm in respect of fixed interest on
long- term debts. Above graph show the industry Interest Coverage Ratio was increase in
the year of the 2009-10 to 20012-13 it ,s means that industry cover interest form profit.

103
 4.3.6 Stock Turnover

The number of times the average stock is turned over during the year is known as stock turn
over. It over during the year is known as stock turn over. It is computed by dividing the cost
of goods sold by the average stock of the business.

Formula :-

Stock turnover ratio = Cost of goods sold

Average Inventory

Average inventory = Opening stock + Closing stock

Table-4.7

Particular 2013 2012 2011 2010 2009

Acc cement 11.32 10.62 10.11 11.1 10.8

J k cement 8.13 8.46 8.53 12.03 14.97
J k Lakshmi cement
19.58 16.01 15.32 23.35 21.9
Shree cement 11.6 10.18 15.71 18.71 14.67
Ultra Tech 10.42 10.3 10.77 10.21 11
Total 61.05 55.57 60.44 75.4 73.34
Average 12.21 11.11 12.08 15.08 14.67

104
 16

14

12

10
Stock Turnover
8
6

0
2009 2010 2011 2012 2013

Figar-4.6

A ratio showing how many times a inventory is sold and replaced over a period. Here the
graph show the higher inventory turnover ratio in the year of the 2010-11.it means the
industry inventory is more sold and replaced over a period.

4.3.8 Debtors turnover ratio

The debtors turnover ratio suggests the number of times the amount of credit sale is collected
during the year, while debtors ratio indicates the number of days during which the dues for
credit sales are collected.

Formula :-

Debtors turnover ratio = Debtors + B/R

[in days] Average daily

sales

105
 Average Daily Sales = Credit sales

365
Table-4.8

2013 2012 2011 2010 2009

Acc cement 51.46 58.47 44.84 33.96 27.47

J k cement 33.68 40.04 33.42 33.33 34.02
J. k Laxmi
cement 52.07 58.06 52.39 52.87 66.97
Shree cement 36.38 40.7 57.21 57.51 64.51
Ultra Tech 25.64 30.08 36.57 37.72 34.88
Average 39.85 45.47 44.88 45.08 45.57

46
45
44
43
42
41

Debtors Turnover Ratio

40
39
38
37
36

2009 2010 2011 2012 2013

Figure - 4.7

Debtor turnover ratio or accounts receivable turnover ratio indicates the velocity of debt
collection of an industry. In simple words it indicates the number of times average debtors
(receivable) are turned over during a year. The graph show debtor turnover ratio in the year

106
2009-10 higher and in the year of 2012-13 is lower as camper to past .It means the debtor
turnover ratio decrease. It is the benefit of the industry.

4.4 TREND ANALYSIS

Trend analysis is an aspect of technical analysis that tries to predict the future movement of a
stock based on past data. Trend analysis is based on the idea that what has happened in the
past gives traders an idea of what will happen in the future.

Method for calculating trend:

Trend percentage Method:

We have utilized trend percentage method for the calculation of trend. For the trend analysis
index number is advocated. The procedure followed is to assign the number 100 to the item
of the base year and to calculate percentage change in each item of other years in the relation
to the base year. this procedure is called trend percentage method.

Base year for the trend analysis:

For the trend analysis, year dec 2006 is taken as base for the calculation of the trend of
different of balance sheet and income statement.

4.4.1 Total Income

Table-4.10

Particular 2013 2012 2011 2010 2009

Acc cement 11,602.76 9,946.59 8,130.84 8,296.36 7,503.69
J k cement 2,997.39 2,600.50 2,148.35 2,110.95 1,686.70
J k 107Lakshmi cement 2,093.57 1,780.92 1,390.35 1,537.58 1,257.56
Shree cement 5,793.98 5,943.61 3,613.44 3,790.33 2,788.43
Ultra Tech 20,598.13 18,660.46 13,529.88 7,169.43 6,577.68
Total 43086.53 38932.05 28812.86 22904.65 19814.06
Average 8617.31 7786.41 5762.57 4580.93 3962.81

107
 10000
9000
8000
7000
6000
5000
4000

Average Income

3000
2000
1000
0

2009 2010 2011 2012 2013

Figar-4.8

The Industry has a fluctuating flow of income over the 5 years. The industry has not been
able to improve its sell much. The difference of income from 2007-2008 to 2008-2009 is just
7014.92 crores. Next 4 year the industry has not increase their total income. This is not a
good sign for the industry having such a reputed name in the market. Also it affects the
earnings of shareholders.

4.4.2 Total Expenses

Table - 4.11

2013 2012 2011 2010 2009

Acc cement 9,477.74 7,833.96 6,219.93 5,575.58 5,432.95

J k cement 2,388.68 2,044.86 1,833.43 1,644.76 1,345.65
J K Lakshmi
Cement 1,609.41 1,389.55 1,166.47 1,071.70 912.26
Shree cement 4,045.79 4,147.41 2,651.98 2,222.89 1,782.97
Ultra Tech 15,617.65 14,141.17 10,708.33 5,076.17 4,768.17
Total 33139.27 29556.95 22580.14 15591.1 14242
Average 6627.85 5911.39 4516.02 3118.22 2848.4

108
 7000

6000

5000

4000
Total Expenses
3000 Column2 Column3

2000

1000

0
2009 2010 2011 2012 2013

Figar-4.9

Above graph show the industry fluctuating of expenses over the 5 year. The industry has not
able to decrease their expenses. The different of expenses from 20010-11 and 2012-13 is
increase This is not good sign for industry. In 2012-13 the industry has not control expenses.
This is not a good sign for the company having such a reputed name in the market. Also it
affects the earnings of shareholders.

4.4.3 Operating
Profit Table-4.10

Name of 2013 2012 2011 2010 2009

company
Acc cement 2,125.02 2,112.63 1,910.91 2,720.78 2,070.74
J k cement 608.71 555.64 314.92 466.19 341.05
J k Lakshmi
cement 484.16 391.37 223.88 465.88 345.3
Shree cement 1,748.19 1,796.20 961.46 1,567.44 1,005.46
Ultra Tech 4,980.48 4,519.29 2,821.55 2,093.26 1,809.51
Total 9946.56 9375.13 6232.72 7313.55 5572.06
Average 1989.31 1875.02 1246.54 1462.71 1114.41

109
 2500

2000

1500
Operating
Profit
1000

500

0
2009 2010 2011 2012 2013

Figar-4.10

Above graph show the industry different year operating profit over the 5 year. The graph
show the first 3 year profit continually increase. The industry show, they have achieved good
market share over the first 3 year. But the year of the 2010-11 the industry operating profit
was decrease. Because the J k cement and J K Laksmi Cement Company has decrease their
operating profit.

4.4.4 PBDT

Table-4.11

Particular 2013 2012 2011 2010 2009

Acc cement 2,010.37 2,015.72 1,854.13 2,636.48 2,030.78
J k cement 468.89 411.36 196.41 396.77 286.38
J k Lakshmi
cement 384.29 311.71 163.4 410.9 295.79
Shree cement 1,555.05 1,560.84 786.11 1,438.35 928.3
Ultra Tech 4,770.77 4,295.43 2,549.03 1,975.74 1,684.00
Total 9189.37 8595.06 5549.08 6858.24 5225.25
Average 1837.87 1719.01 1109.82 1371.65 1045.05

110
 2000
1800
1600
1400
1200
1000
800
600
400 PBDT
200
0

20092010201120122013

Figar-4.11

Above graph show the industry fluctuating of PBDT over the 5 year. The industry has not
able to improve their PBDT. But industry PBDT was decrease . Because the J k cement and
J K Lakshmi Cement Company has decrease their PBDT. in 2010-2011 . Hence it is not easy
to predict future of the industry.

4.4.5 Total Share Capital

Table-4.12

Particular 2013 2012 2011 2010 2009

Acc cement 187.95 187.95 187.95 187.94 187.88
J k cement 69.93 69.93 69.93 69.93 69.93
J k Lakshmi
cement 58.85 61.19 61.19 61.19 61.19
Shree cement 34.84 34.84 34.84 34.84 34.84
Ultra Tech 274.18 274.07 274.04 124.49 124.49
Total 625.75 627.98 627.95 478.39 478.33
Average 125.15 125.59 125.59 95.68 95.67

111
 140

120

100

80
Total Share capital
60
40

20

0
2009 2010 2011 2012 2013

Figar-4.12

Above graph show the industry fluctuating of Total share capital over the 5 year. The
industry has not able to improve their share capital in 2011-11. This is not a good sign for the
industry having such a reputed name in the market. Also it affects the industry volume and
profit

4.4.6 Total Liability

Table-4.13

Particular 2013 2012 2011 2010 2009

Acc cement 8,084.16 8,198.32 6,993.31 6,583.14 5,409.76
J k cement 3,070.49 2,834.70 2,788.94 2,427.49 1,750.48
J k Lakshmi
cement 2638.83 2279.44 2074.73 1942.43 1533.92
Shree cement 4,825.27 4,241.29 3,939.47 2,706.17 2,003.51
Ultra Tech 20,779.19 17,135.66 14,925.26 6,213.17 5,742.05
Total 39397.94 34689.41 30721.71 19872.42 16439.72
Average 7879.58 6937.88 6144.34 3974.48 3287.94

112
 8000

7000

6000

5000
Total Liability
4000
3000

2000

1000

0 2009 2010 2011 2012 2013

Figar-4.13

Above graph show that the industry total liability continually over the 5 year. Because all
three company has increase their liability.

4.4.7 Investment

Table-4.14

Particular 2013 2012 2011 2010 2009

Acc cement 2,553.55 1,624.95 1,702.67 1,475.64 679.08
J k cement 169.3 10.84 5.84 5.99 10.74
J k Lakshmi cement 406.46 453.75 527.76 480.53 88.91
Shree cement 2,535.20 1,196.46 1,592.24 844.83 591
Ultra Tech 5,108.72 3,788.77 3,730.32 1,669.55 1,034.80
Total 10773.23 7074.77 7558383 4476.54 2404.53
Average 2154.65 1414.95 1511.76 895.31 480.91

113
 2500

2000

1500

Invesment
1000

500

0
2009 2010 2011 2012 2013

Figar-4.14

At the initial level the industry is very poor in making investments at the year 2011-12
industry sold its investments but in 2011-12 and 2012-13 industry had done good business
And at 2012-13 industry had increase their investment compared past Year.

4.1.8 Total Assets

Table-4.15

Particular 2013 2012 2011 2010 2009

Acc cement 8,084.16 8,198.32 6,993.31 6,583.14 5,409.76
J k cement 3,070.49 2,834.70 2,788.94 2,427.49 1,750.48
J k Lakshmi
cement 2,638.83 2,279.44 2,074.73 1,942.43 1,533.92
Shree cement 4,825.27 4,241.29 3,939.47 2,706.17 2,003.51
Ultaech 20,779.19 17,135.66 14,925.26 6,213.17 5,742.05
Total 393978.69 34689.41 30721.71 19872.4 16439.72
Average 7879.74 6937.88 6144.34 3974.48 3287.94

114
 9000
8000
7000
6000
5000
4000

Total Assets

3000
2000
1000
0

2009 2010 2011 2012 2013

Figar-4.15

From the above trend of total assets of the company we can say that company has a good
growth rate. It has increased from 2009-10 to 2011-12 it is because of company overvalued
its fixed assets and investments. But in 2011-12 to 2012-13 is decrease Because company
undervalued its fixed assets.

115
5.1 FINDINGS

After preparing a MRP-1 report on Bakery industry with special focus on cement products,
we have finally reached to the following findings;

 We found that Cement Industry is right now prevailing in Growth stage, it is grow at the
rate of 15 – 17% every year.

 We have also found that in order to sustain the current market share all current market
players have to struggle a lot, they have to keep strong distribution channel to reach the
product in each place of the country and Ulltratech become successful to do this.

 Apart from strong distribution channel other factors like aggressive promotions and
advertisement, strong research and development, new innovations at regular interval on
continues basis etc. Also play a vital role in sustaining existing customers and attracting
new potential customers.

 After making Research on Customer Loyalty of five major brands of cements We have
also found that Customers of Ulltratech and J.K cement are more loyal compare to other
brands like J.K Laxmi, Acc, Shree Cement. But when we compare the loyalty of
Ulltratech and J.K, Ulltratech has upper hand.

116
5.2 CONCLUSION

With the change in the economic condition and opening up of the economy and India being a
signatory to the WTO, it can be observed that the Indian cement industry is in for a heavy
shakeup in addition to this the industry being a capital intensive one and a squeeze of
profitability margins it may be right for the Indian cement industry to look for some
innovative ideas to improve their margins. In addition to this as seen from the various facts
put forward in the previous chapter the demand supply gap exists and in some regions it is the
supply which exceeds demand and in some regions it is the demand which exceed supply, the
company may have to think of new strategies to improve their market share and with this also
improve the profitability margins.

The order of the day is ‗innovate or perish‘ and thus Indian cement companies need to
innovate new methods or some value added products, which may give some fillip to the
industry to improve its margins.

Thus the Indian cement company should try and manufacture a product at a lesser cost,
although it seems not feasible as the cost of cement depend on the power tariffs existing
ground the country. The company can look at the route of captive power generation, which
may be an answer to this problem of high power tariffs.

117
6.1 Introduction

We want to start own agency for cement in India and Northern part of Gujarat at Mehsana,
because of second largest growing economy in the world after China, and also various
industries are contributing for this growth. There are agriculture, infrastructure, energy&
power, banking, & finance service sector. Construction is the second largest economy activity
after agriculture and is poised for continuous growth due to industrialization, urbanization,
and economic development with expectation of improvement living standard of people in
India. It account for nearly 65% of the total investment in infrastructure, employee 33 million
people approximately and accounts for 6-8 percent of GDP. The construction industry is
primarily drive by Government of Indian investment on core infrastructure project and
creation of urban infrastructure, industries capital expenditure by corporate sector and
development activities of real estates or housing sector in urban as well as rural areas.

The Indian economy is booming, with rates of gross domestic product growth exceeding an
average of 7% ever year. This growth is due to rapidly developing service and manufacturing
sectors, increasing consumer demand and government commitment to the agriculture sector
and improve the economic condition of Indian rural population. the production of industrial
machinery has also been on the rise and the increasing flow of goods has spurred increases in
rail, road and port traffic, necessitating future infrastructure improvements.

Government Policies
118
Government policies have affected the growth of cement plants in India in various stages.
The control on cement for a long time and then partial decontrol and then total decontrol has
contributed to the gradual opening up of the market for cement producers. The stages of
growth of the cement industry can be best described in the following stages:

Price and Distribution Controls (1940-1981)

During the Second World War, 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. The installed capacity reached only 27.9 MT by the year 1980-81.

Partial Decontrol (1982-1988)

In February 1982, partial decontrol was announced. Under this scheme, 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, which can be seen from the increase in the
installed capacity to 59MT in 1988-89 in comparison with the figure of a mere 27.9MT in
1980-81, an increase of almost 111%.

Total Decontrol (1989)

In the year 1989, total decontrol of the cement industry was announced. By decontrolling the
cement industry, the government relaxed the forces of demand and supply. In the next two
years, the industry enjoyed a boom in sales and profits. By 1992, the pace of overall
economic liberalization had peaked; ironically, however, the economy slipped into recession
taking the cement industry down with it. For 1992-93, the industry remained stagnant with no
addition to existing capacity.

Government Controls
The prices that primarily control the price of cement are coal, power tariffs, railway, freight,
royalty and cess on limestone. Interestingly, all of these prices are controlled by government

REQUIREMENTS
119
Coal
The consumption of coal in a typically dry process system ranges from 20-25% of clinker
production. This means for per ton clinker produced 0.20-0.25 ton of coal is consumed. This
contributes 35-40% of the production cost. The cement industry consumes about 10mn tons
of coal annually. Since coalfields like BCCL supply a poor quality of coal, NCL and CCL the
industry has to blend high-grade coal with it. The Indian coal has a low calorific value
(3,500-4,000 kcal/kg) with ash content as high as 25-30% compared to imported coal of high
calorific value (7,000-8,000 kcal/kg) with low ash content 6-7%. Lignite is also used as a fuel
by blending it with coal. However this process is not very common.

Electricity
Cement industry consumes about 5.5bn units of electricity annually while one ton of cement
approximately requires 120-130 units of electricity. Power tariffs vary according to the
location of the plant and on the production process. The state governments supply this input
and hence plants in different states shall have different power tariffs. Another major
hindrance to the industry is severe power cuts. Most of the cement producing states like AP,
MP experience power cuts to the tune of 25-30% every year causing substantial production
loss.

Infrastructure
To reduce uncertainty relating to power, most of the leading companies like ACC, Indian
Rayon, and Grasim rely on captive power plants. A few companies are also considering
power-generating windmills.

Limestone
This constitutes the largest bulk in terms of input to cement. For producing one ton of
cement, approximately 1.6 ton of limestone is required. Therefore, the cement plant location
is determined by the location of limestone mines. The major cash outflow takes place in way
of royalty payment to the central government and cess on royalties levied by the state
government. The total limestone deposit in the country is estimated to be 90 billion tons. AP
has the largest share -- 34%, Karnataka 13%, Gujarat 13%, M.P 8%, and Rajasthan 6.5%.
The plants near the limestone deposit pay less transportation cost than others.

120
Transportation
Cement is mostly packed in paper bags now. It is then transported either by rail or road. Road
transportation beyond 200 kms is not economical therefore about 55% cement is being
moved by the railways. There is also the problem of inadequate availability of wagons
especially on western railways and southeastern railways. Under this scenario, manufacturers
are looking for sea routes, this being not only cheap but also reducing the losses in transit.
Today, 70% of the cement movement worldwide is by sea compared to 1% in India.
However, the scenario is changing with most of the big players like L&T, ACC and Grasim
having set up their bulk terminals.

Infrastructure for Future

The consumption of cement is determined by factors influencing the level of housing and
industrial construction, irrigation projects, and roads and laying of water supply and drainage
pipes etc. The level and growth of GDP and its sectoral composition, capital formation,
development expenditure, growth in population, level of urbanization, etc, in turn, determine
these factors. But the domestic demand for cement is mainly from the housing activities and
infrastructure development. The government paved the way for the entry of the private sector
in road projects. It has amended the National Highway Act to allow private toll collection and
identified projects, bridges, expressways and big passes for private construction. The budget
gave substantial incentives to private sector construction companies. Ongoing liberalization
will lead to an increase in industrial activities and infrastructure development. So it is hoped
that Indian cement industry shall boom again in near future.

Incentives in States
Most state governments, in order to attract investments in their respective states, offer fiscal
incentives in the form of sales tax exemptions/deferrals. In some states, this applies only to
intrastate sales, like Madhya Pradesh and Rajasthan. States like Haryana offer a freeze on
power tariff for 5 years, while Gujarat offers exemption from electric duty.

Installed Capacity
India is the world‘s second largest cement producing country after China. The industry is
characterized by a high degree of fragmentation that has created intense competitive pressure
on price realizations. Spread across the length and breadth of the country, there are 120 large
121
plants belonging to 56 companies with an installed capacity of around 135mn tons as on
March 2002.

Environmental Regulations in the Indian Cement Industry

Introduction

Environmental concern in design, operation and the up gradation of cement plants has been
increasing in recent years. Cement is the most essential ingredient in any kind of construction
activity and the cement industry, as one of the six core industrial sectors, plays a vital role in
infrastructure development, especially in a developing country like India. The Indian cement
industry is the second largest in the world, with an estimated installed capacity of around 349
million t, which is likely to reach 600 million t by 2020.

There are a number of environmental issues related to the cement sector, such as control of
air pollutants (dust and gaseous emissions), reduction of greenhouse gases (GHG), the control
of fugitive dust, utilisation of hazardous wastes as alternate fuels and the conservation of
natural resources. The Indian cement industry has shown phenomenal performance in terms
of improving air quality. Dust emissions are reduced and cement plants conform to the
environmental parameters set by statutory bodies. Government polices have energised and
motivated the industry to take innovative actions to protect the environment and improve the
lives of people working in the plant and living nearby. This article discusses environmental
regulations operating in India that have given new direction to the cement industry in terms
of environmental management.

Environmental Acts/Regulations

In India, both the Central Pollution Control Board (CPCB) and the respective State Pollution
Control Boards (SPCB) deal with environmental issues. SPCB regularly inspects the cement
plants/limestone quarries to verify compliance with emission norms. CPCB also inspects the
cement plants to check compliance with emission standards under environmental surveillance
squad activities. Cement plants also have to comply with the charter on Corporate
Responsibility for Environment Protection (CREP).

122
The Indian cement industry must comply with the various environmental acts and regulations
notified by the Ministry of Environment and Forests (MoEF), etc., which covers different
spheres of the environment, encompassing emissions of air pollutants, consumption of water,
generation and discharge of trade effluents, utilisation and storage of hazardous waste, noise
generation, utilisation of forest land and wildlife areas. Specifically, these are as follows:

 Water (Prevention & Control of Pollution) Act, 1974.

 Water (Prevention & Control of Pollution) Cess Act, 1977.
 Air (Prevention & Control of Pollution) Act, 1981.
 Environment (Protection) Act, 1986 (EPA).
 Hazardous Waste (Management Handling & Transboundary Movement), 2008.
 The Forest (Conservation) Act, 1980.
 The Factories Act, 1948.
 The Wildlife (Protection) Act, 1972.
 The Mines Act, 1952.

These Acts/Regulations, together with some of the stringent conditions that are relevant for
environment protection from industrial pollution and imposed by the pollution control boards,
are discussed in this article.

The full version of this article, written by the National Council for Cement and Building
Materials, India, appeared in the October 2013 issue of World Cement.

123
6.2 Objective

Vision:-

The vision of the our company is to provide batter quality and with comparatives price and
easily available .

Mission:-

Our mission is to large cement manufacturing company in India. We went to provide best
quality and at competitive price, develop brand image into customer mind.

Goal:-

Make largest manufacturing company in India with our vision and mission.

Our objectives

To build strong brand image.

To make our business profitability within a shortest period.

Office location and :

Rent base land : 10year on contract base, Rent is 100,000 per year.

Rent for Office: 5 year on contract base, rent is 100,000 per year

Office Address: Shop No:- 45, Classic Plaza, Between Radhanpur circle and Modher

Circle, Meshana High- way.

Warehouse Address: Dhinoj village, Nearest Government School, Dhinoj .

ADVANTAGEYS OF LOCATION:

 Easy transportation
 Conducive environment
 Low Cost of land for the production.
 Electricity and water availability
 Easy and cheaper labor availability

124
  Partners:

Ms.Hetal Mistry

Ms. Dhara Patel

Mr.Tosif Nandoliya

Mr. Jigar Patel

Ms. Vaibhavi Raval

Ms.Dixita Patel

Our Company Name:-

To cement company.

To cement Pvt. Ltd.

Logo:-

CEMENT PVT.LTD.
Build Make Strong Relation

125
 6.5 STP ANALYSIS
A Marketer can rarely satisfy everyone in market; therefore marketer starts by dividing up the
market into segment. Examining demographic, psychographics and behavioral difference
among buyers will do the identification of buyers.

Segmentation:

A company discovers different needs and groups in the market place and targets that needs
and groups that it can satisfy in a superior way. The Marketer than decides, which segments
present the greatest opportunity – which is target market. In our Product we are focusing on,

A. Geographic Segmentation:
Here, we are focusing in our country only and especially for the northern part of Gujarat like
Patan, Mehsana, Radhanpur, Harij, Chanasma, Siddhpur. In other word we can say that all
northern districts and villages covered.

Region: Northern part of Gujarat.

City and Villages: Patan, Mehsana, Radhanpur, Harij, Chanasma, Siddhpur, northern
districts villages covered
B. Demographic Segmentation:

Age: Up to 30 year above

Life cycle stage: Business man, Contractors, Farmer.
Education: Primary, secondary, High- Secondary, Graduate,
PG. Social class: Lower-Middle, Upper class.
C. Use Related segmentation
Usage rate: Non user, User, Medium User, Light user, Heavy User, Super Heavy Use.
Awareness status: Unawareness, Aware, Interested, Enthusiastic.
Brand loyalty: None, Some, Strong.

D. Benefit Segmentation
Convenience, Social Acceptance, Long lasting, Economy, Value for the Money.
Targeting:

126
we are target masons, contractors, architect, business men, farmer, retailer, distributer,
wholesaler, professional person, builders.

Positioning

The Positioning, which company offers, so that target market recognizes the company‘s
distinctive offerings and image. Positioning is the act of deciding the company‘s offerings
and image to occupy a distinctive place in the mind of target market. The goal is to locate the
brand in the mind of the customer to maximize the potential benefit to the firm.
Point-of-parity through we are positioning into market. And use different promotion mix .

4.3. MARKETING COMMUNICATION MIX:

Advertising
Advertising is a specific communication task and achievement level to be accomplished with
a specific audience in a specific period of time.
Advertising can be used to build up a long term image for a product or trigger quick sales.
Advertising can efficiently reach geographically depressed buyer. Certain forms of
advertising like electronic media in which television, radio, internet and many more but all
this requires large budget. And in print media, news papers, magazines, pamphlets, hoardings
which do not. Deciding advertising forms have effects on sales.
Our aim to providing advertising is a reinforcement advertising that is to convince current
purchasers to make the right choice by using additional features which we provide. By
considering the cost of advertising and to aware customers promptly we use in electronic
media television only because our target customers are kids and there parents who use to
watch TV and select their products. In Print media which is less costly we use news papers,
comics and hoardings.

Sales Promotions:

Advertising typically build brand loyalty and awareness to the customers, while sales
promotion enhance the brand image by offering the products with different sales promotion
tools like, coupons, contests, premiums, instant price of , deals to draw a stronger buyer
response.

127
Initially, we are providing discounts and contests as a Promotional tools to our customers.
This tool is for short run effect such as to highlight product offers and boost sagging sales.
Through which we get three distinctive benefits like, communication, incentive and
invitation.

ADVANTAGEYS OF LOCATION:

 Easy transportation
 Conducive environment
 Low Cost of land for the production.
 Electricity and water availability
 Easy and cheaper labor availability

DISTRIBUTION CHANNEL:

The producer and the end-users are the part of every channel. We can use the number of
intermediary levels to designate to length of channel there are zero level channel, one level
channel, two level channels, three level channels are available. But in our product we are
using one level distribution channel.
To provide greater service output by decreasing channel level cost and provide lesser price
for customers we have used two level distribution level.
The distribution channel of the company plays a vital role as the product is new to the market
and it is aimed at initially targeting the masons, contractors, architect, business men, farmer,
retailer, distributer, wholesaler, professional person.

Selecting this distribution system through because of covered all local market or approach to
customers, through distribution channel. And taking demand advantage or full fill market
demand.

128
 ORGENIZATION STRUCTURE

Marketing manager Financial manager HR R&D

Production manager
manager

3 sales persons 10 labors

129
6.7 PROJECTED INCOME STATEMENT

Table- 6.1 (Amount in )

P & L Account
PARTICULAR 2013-14 2014-15 2015-16 2016-17 2017-18
Sales 15,79,500 21,43,700 25,51,770 28,37,380 32,43,240

Less: Expenses 12,68,000 16,49,000 19,62,900 21,82,600 24,94,800

Rent 1,50,000 1,50,000 1,50,000 1,50 ,000 1,50,000

Salary& wages 4,98,000 5,17,000 5,36,400 5,55,600 5,74,800

Material Purchase 4,50,000 8,05,000 10,80,000 12,80,000 15,60,000
Electricity bills 70,000 68,000 73,000 65,000 72,000
Transportations cost 40,000 48,000 62,000 70,000 75,000
Miscellaneous expenses written off 50,000 50,000 50,000 50,000 50,000
Other expenses 10,000 11,000 11,500 12,000 13,000
Operating Profit 3,11,500 4,94,700 5,88,870 6,54,780 7,48,440
Interest 1,60,000 1,38,000 1,16,000 94,000 72,000
Gross Profit 1,51,500 3,56,700 4,72,870 5,60,780 6,76,440
Depreciation 1,24,000 1,24,000 1,24,000 1,24,000 1,24,000
Profit Before Tax (27,500) 2,32,700 3,48,870 4,36,780 5,52,480
Less tax@30%+3% - 71,904 1,07,801 134,965 1,70,716
Net profit/Loss (27,500) 1,43,037 4,17,364 5,18,941 7,06,893

130
6.8 PROJECTED BALANCE SHEET

Table- 6.2 (Amount in )

Particular 2014 2015 2016 2017 2018

capital 35,00,000 35,00,000 35,00,000 35,00,000 35,00,000
Reserves and surplus (27,500) 1,33,296 3,74,365 8,93,306 16,00,199
Total Shareholder
fund 35,00,000 36,33,296 38,74,365 43,93,306 51,00,199
Secured loans 10,00,000 9,00,000 8,00,000 7,00,000 6,00,000
unsecured loans 5,00,000 4,00,000 3,00,000 2,00,000 1,00,000
Total Debt 15,00,000 13,00,000 11,00,000 9,00,000 7,00,000
Total liabilities 49,72,500 49,73,296 49,74,365 52,93,306 58,00,199
LICATION OF
FUNDS:
Gross Block 6,20,000 4,96,000 3,72,000 2,48,000 1,24,000
Less: Depreciation 1,24,000 1,24,000 1,24,000 1,24,000 124,000
Net Block 4,96,000 3,72,000 2,48,000 1,24,000 -
Current Assets,
Loans & Advances

Finish good 4,50,000 8,05,000 10,80,000 12,80,000 15,60,000

Sundry debtors 4,00,000 7,36,000 10,00,000 5,00,000 10,00,000
Cash and Bank 60,56,500 65,12,000 69,44,204 79,85,135 88,15,320
Loans and Advances -
Total Current
Assets 69,06,500 80,53,000 90,24,204 97,65,135 1,13,75,320
Less: Current
Liabilities &
Provision
Current Liabilities
29,30,000 39,01,704 23,00,101 22,16,000 22,50,000
Total Current
Liabilities 29,30,000 26,68,037 46,97,839 49,45,826 58,75,121
Net Current Assets 39,76,500 41,51,296 43,26,365 48,19,309 55,00,199
Miscellaneous
Expenses not
5,00,000 4,50,000 4,00,000 3,50,000 3,00,000
Written Off
TOTAL ASSETS 49,72,500 49,73,296 49,74,365 52,93,309 58,00,199

131
 6.9 PROJECTED CASH FLOW
Table-6.3

Particular 2009-10 2010-11 2011-12 2010-11 2011-12

Sources of funds

Capital

profit befor taxation with interest added back 3,11,500 4,94,700 5,88,870 6,54,780 7,48,440

Depreciation 1,24,000 1,24,000 1,24,000 1,24,000 1,24,000

Preliminary expenses written off 50,000 50,000 50,000 50,000 50,000

Increase in secured medium and long-term borrowings 10,00,000 9,00,000 8,00,000 7,00,000 6,00,000

Increase in bank borrowings for working capital 5,00,000 4,00,000 3,00,000 2,00,000 1,00,000

Total (A) 19,85,500 19,68,700 18,62,870 17,28,780 16,22,440

Disposition of funds

Capital expenditure for the project 6,20,000 - -

Increase in working capital 8,50,000 15,41,000 20,80,000 17,80,000 25,60,000

Preliminary expenses 5,00,000 4,50,000 4,00,000 3,50,000 3,00,000

Decrease in secured medium and long-term borrowings 2,00,000 2,00,000 2,00,000 2,00,000 2,00,000

Interest on term loans 1,00,000 90,000 80,000 70000 60000

Interest on bank borrowing for working capital 60,000 48,000 36,000 24,000 12,000

Taxation 71,904 1,07,801 1,34,965 1,70,716

Total (B)

23,30,000 24,00,904 29,03,801 25,58,965 33,02,716

Opening balance of cash in hand and at bank 60,56,500 65,12,000 69,44,204 79,85,135 88,15,320

Net surplus/ deficit A-B 3,44,500 4,32,204 10,40,931 8,30,185 16,80,276

Closing balance of cash in hand and at bank 65,12,000 69,44,204 79,85,135 88,15,320 1,04,95,596

132
6.10 Source of the fund

Hetal Mistri 5,83,334

Dhara Patel 5,83,333

Dixita Patel 5,83,333

Vaibhavi Raval 5,83,333

Jigarbhai Patel 5,83,333

Tosifbhai Nandoliya 5,83,334

Loan 15,00,000

Total 50,00,000

Table-6.4

6.11 Depreciation schedules

Particular Book value Rate Dep Dep

A.C 1,20,000 20% 24,000

Furniture 3,00,000 20% 60,000

Computers 2,00,000 20% 40,000

Total 6,20,000 1,24,000

Table-6.5

6.12 Salary Structure

Particular No 2013-14 2014-15 2015-16 2016-17 2017-2018
Sales mane 2 1,44,000 1,48,800 1,53,600 1,58,400 1,63,200
Labour 5 2,70,000 2,82,000 2,94,000 3,06,000 3,18,000
Accountant 1 84,000 86,400 88,800 91,200 93,600
Total 4,98,000 9,50,000 13,25,000 14,50,000 17,00,000
expenses
Table-6.6

133
6.13 Net Present Value

Table-6.7

PAT Depreciation Cash Flow PVIT PV

(27,500) 1,24,000 96,500 0.909 87,718.5
1,43,037 1,24,000 2,67,037 0.826 2,20,572.56
4,17,364 1,24,000 5,41,364 0.751 4,06,564.36
5,18,941 1,24,000 6,42,941 0.683 4,39,128.70
7,06,893 1,24,000 8,30,893 0.621 5,15,984.55
Total 1,66,69,968.67

NPV =cash inflow –cash outflow

1,66,69,968.67-50,00,000

= 33,30,031

Profitability Index = PV of cash inflow

Cash outflow

1,66,69,968.67

50,00,000

= 3.3

134
 7. BIBLIOGRAPHY

Books Referred:

 Finacial Management

 Marketing Management
 Crafting and Strategic Management

News Papers:

 Business Standard

 Economic Times

Magazine:

 Business Todays

Websites visited:

 www.infoline.com

 www.cementsonline.com

 www.cmaindia.com

 www.wikipedia.com

 www.money control.com

 www.economicctimes.com

135
 9. LIMITETION OF THE REPORT

 In this report we are assuming that selected five companies are representing the whole
industry but it may not be.
 We select five companies on the basis of available financial data it may be possible
that major companies remain unconsidered because of lack of financial data.
 Here we selected five major companies on the basis of only net profit ratio so it may
be possible that other parameters of the companies are good compare to selected
companies.
 In the strategic analysis of the cement industry we used strategic analysis tool
dominant economic features, and critical success factors as per our understanding.
 In the PEST and porter‘s five force analysis we include all possible as per our
understanding but there may be chances of missing some variable.
 In case of financial analysis we had done five year financial analysis up to 2010.
 We try our best effort to apply all possible strategic tools and financial data to study
the performance of cement industry but it may possible that some portion of the
industry remain unanalyzed.