Vibhanshu Awasthi Done

AS PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE IN
MASTERS OF BUSINESS ADMINISTRATIONS

FROM
DR. APJ ABDUL KALAM TECHNICAL UNIVERSITY, LUCKNOW,

UTTAR PRADESH
A, SUMMER INTERNSHIP REPORT ON THE TOPIC
“MARKETING STRATEGY OF
ULTRATECH CEMENT”
MBA 2nd YEAR 3rd SEMESTER SUBMITTED TO
DEPARTMENT OF MANAGEMENT STUDIES
BANSAL INSTITUTE OF ENGINEERING AND TECHNOLOGY,
LUCKNOW, UTTAR PRADESH
SUBMITTED BY:
VIBHANSHU AWASTHI
2204220700059
KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

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ACKNOWLEDGEMENT
I would like to express my gratitude to the mentors and industry professionals who generously shared
their knowledge and expertise during the developmentof this business plan.
Their insight and guidance have been invaluable in shaping our strategies andensuring feasibility of
our project
I would also like to thank my friends, and batch mates for their support and collaborative sprint.
VIBHANSHU AWASTHI
2204220700059

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INDEX
TITLE PAGE NO
ACKNOWLEDGEMENT 2
1. CEMENT AND ITS TYPES 4-6
2. INDIAN CEMENT INDUSTRY
2.1 OVERVIEW 6-7
2.2 STRUCTURE 8
2.3 MAJOR PLAYERS 9-18
2.4 GOVT. POLICIES 19-23
2.5 CEMENT EXPORTS 23-26
2.6 PORTER’S 5-FORCE MODEL 27-28
2.7 SWOT ANALYSIS 29-33
3. INTRODUCTION ULTRATECH CEMENT 34-36

3.1 PRODUCTION UNITS 37-38
3.2 ULTRATECH AND ADVANTAGES 39-41
3.3 AWARDS 40-42
3.4 EXPORTS 43
4. PROJECT WORK
4.1 OBJECTIVE OF THE STUDY 44
4.2 RESEARCH DESIGN 45-47
4.3 DATA ANALYSIS AND FINDINGS 48-52
4.4 LIMITATIONS 53
4.5 RECOMMENDATIONS 54-55
5. CONCLUSION 58
6. BIBLIOGRAPHY 59

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WHAT IS CEMENT?
 Cement is a mixture of limestone, Clay, Silica and Gypsum. It is a fine powder which
when mixed with water sets to a hard mass as a result of hydration of the constituent
compounds. It is the most commonly used construction material. Cement is
manufactured by burning a mixture of limestone and Clay at high temperatures in a
kiln, and then finely grinding the resulting clinker along with Gypsum. The end product
thus obtained is called Ordinary Portland Cement (OPC).
Different Types of Cement
There are different varieties of cement based on different compositions according to

specific end uses, namely Ordinary Portland Cement, Portland Pozzolona Cement,
Portland Blast Furnace Slag Cement, White Cement and Specialized Cement. The basic
difference lies in the percentage of clinker used.
1. Ordinary Portland cement (OPC):
 OPC, popularly known as grey cement, has 95% clinker and 5% of Gypsum and other
materials. It accounts for 70% of the total consumption. White cement is a variation of
OPC and is used for decorative purposes like rendering of walls, flooring etc. It contains
a very low proportion of iron oxide. Ordinary Portland cement is the most commonly
used cement for a wide range of applications. These applications cover dry-lean mixes,
general-purpose ready-mixes, and even high strength pre-cast and pre-stressed
concrete.
2. Portland Pozolona Cement (PPC):
 Portland pozzolana cement is Ordinary Portland Cement blended with pozzolanic

materials (power-station fly ash, burnt clays, ash from burnt plant material or Siliceous
earths), either together or separately. Portland clinker is ground with Gypsum and
Pozzolanic materials which, though they do not have cementing properties in
themselves, combine chemically with Portland cement in the presence of

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water to form extra strong cementing material which resists wet cracking, thermal
cracking and has a high degree of cohesion and workability in concrete. PPC has 80%
clinker, 15% pozolona and 5% gypsum and accounts for 18% of the total cement
consumption. It is cheaply manufactured because it uses fly ash/burnt clay/coal waste
as the main ingredient. It has a lower heat of hydration, which helps in preventing
cracks where large volumes are being cast.
3. Portland Blast Furnace Slag Cement (PBFSC):
 PBFSC consists of 45% clinker, 50% blast furnace slag and 5% Gypsum and accounts
for 10% of the total cement consumed. It has a heat of hydration even lower than PPC
and is generally used in construction of dams and similar massive constructions.
Portland blast-furnace slag cement contains up to 70 per cent of finely ground,
granulated blast-furnace slag, a nonmetallic product consisting essentially of Silicates
and Aluminum-silicates of Calcium. Slag brings with it the advantage of the energy
invested in the slag making. Grinding slag for cement replacement takes only 25 per
cent of the energy needed to manufacture 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 finish ability, higher compressive and
flexural strength, lower permeability, improved resistance to aggressive chemicals and
more consistent plastic and hardened consistency.
4. White Cement:
 White Portland cement has essentially the same properties as gray cement, except for
color, which is a very important quality control issue in the industry. It is manufactured
using fuel oil (instead of coal) and with iron oxide content below 0.4% to ensure
whiteness. Special cooling technique is used. It is used to enhance aesthetic value, in
tiles and for flooring. White cement is much more expensive than grey cement.

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5. Specialized Cement:
 Oil Well Cement: is made from clinker with special additives to prevent any
porosity.
 Rapid Hardening Portland cement: It is similar to OPC, except that it is ground
much finer, so that on casting, the compressible strength increases rapidly.
 Water Proof Cement: OPC, with small portion of calcium stearate or non-
saponifibale oil to impart waterproofing properties.
INDIAN CEMENT INDUSTRY-AN OVERVIEW
Cement production commenced in India as early as 1914. The first cement unit
was set up at Porbandar in 1914 with a capacity of 1,000 tones per annum. Cement is
the preferred building material in India. It is used extensively in household and industrial
construction. Earlier, government sector used to consume over 50% of the total cement
sold in India, but in the last decade, its share has come down to 35%. Rural areas
consume less than 23% of the total cement. Availability of cheaper building materials for
non-permanent structures affects the rural demand.
Demand for cement is linked to the economic activity in any country. Broadly, it can be
categorized into demand for housing construction (homes, offices etc.) and infrastructure
creation (ports, roads, power plants etc). The real driver of cement demand is creation of
infrastructure; hence cement demand in emerging economies is much higher than
developed countries where the demand has reached a plateau. In India too, the demand for
cement will be affected by spending on infrastructure (including housing).
With the boost given by the government to various infrastructure projects, road network
and housing facilities, growth in the cement consumption is anticipated in the coming year.
The favorable housing finance environment is expected to fulfill the vast housing
requirements, both in rural and urban areas. The increase in infrastructure projects by the

6
government coupled with the construction of the Golden Quadrilateral and the North-
South and East-West corridor projects have led to an increase in consumption of cement.
This increase is expected to continue in the future. The reduction in import duties is not
likely to affect the industry as the cement produced is at par with the international standards
and the prices are lower than those prevailing in international markets. The graph below
show the consumption of cement in different areas of housing, infrastructure and industries.

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Structure of the industry
Domestic players:
Associated Cement Companies Ltd (ACCL)

Associated Cement Companies Ltd manufactures ordinary Portland cement, composite
cement and special cement and has begun offering its marketing expertise and distribution
facilities to other producers in cement and related areas. It has twelve manufacturing plants
located throughout the country with exports to SAARC nations.
The company plans capital expenditure
through expansion of existing units and/or through acquisitions. Non-core assets are to be
divested to release locked up capital. It is also expected to actively pursue overseas project
engineering and consultancy services.
Birla Corp
Birla Corp's product portfolio includes acetylene gas, auto trim parts, casting, cement, jute
goods, yarn, calcium carbide etc. The cement division has an installed capacity of
4.78 million metric tonnes and produced 4.77 million metric tonnes of cement in 2003-04.
The company has two plants in Madhya Pradesh and Rajasthan and one each in West
Bengal and Uttar Pradesh and holds a market share of 4.1 per cent. It manufactures
Ordinary
Portland cement (OPC), Portland pozzolana cement, fly ash-based PPC, Low-alkali
Portland cement, Portland slag cement, low heat cement and sulphate resistant cement.
Large quantities of its cement are exported to Nepal and Bangladesh. Going forward, the
company is setting up its captive power plant to remain cost competitive.
Century Textiles and Industries Ltd (CTIL)
The product portfolio of CTIL includes textiles, rayon, cement, pulp & paper, shipping,
property & land development, builders and floriculture. Cement is the largest division of
CTIL and contributes to over 40 per cent of the company's revenues. The company has an
installed capacity of 4.7 million tones with a total cement production of 5.43 million tonnes
in 2003-04. CTIL has four plants that manufacture cement, one in Chhattisgarh, two

8
in Madhya Pradesh and one in Maharashtra. Going forward, the company has scripted a
three-pronged strategy closing down its shipping business, continuing with its chemicals
and adhesive division, and
Focusing on cement, rayon and paper as its long-term business plan.
Grasim-UltraTech Chemco
Grasim's product profile includes viscose staple fiber (VSF), grey cement, white cement,
sponge iron, chemicals and textiles. With the acquisition of UltraTech, L&T's cement
division in early 2004, Grasim has now become the world's seventh largest cement
producer with a combined capacity of 31 million tones. Grasim (with UltraTech) held a
market share of around 21 per cent in 2005-06. It has plants in Madhya Pradesh,
Chhattisgarh, Punjab,
Rajasthan, Tamil Nadu and Gujarat among others. The company plans to invest over US$
9 million in the next two years to augment capacity of its cement and fiber business. It also
plans to focus on its international ventures, ramping up the capacity of Alexandra Carbon
Black in Egypt to 1,70,000 tonne per annum (from 1,20,000 tpa) and raising the capacity
of the carbon black plant in China from 12,000 tpa to 60,000 tpa.
Gujarat Ambuja Cements Ltd (GACL)

Gujarat Ambuja Cements Ltd was set up in 1986 with the commencement of commercial
production at its 2 million tonne plant in Chandrapur, Maharashtra. The group has clinker
manufacturing facilities at Himachal Pradesh, Gujarat, Maharashtra, Chattisgarh, Punjab
and Rajasthan. The company has a market share of around 10 per cent, with a strong
foothold in the northern and western markets. Its total sales aggregated US$ 526 million
with a capacity of 12.6 million tonne in 2003-04. Gujarat Ambuja is one of
India's largest cement exporter and one of the most cost- efficient firms. GACL has a
14.45 per cent stake in ACC, making it the second largest cement group in the country,
after Grasim-UltraTech Cemco. The company has free cash flows that it is likely to use to
grow inorganically. The company is scouting for a capacity of around two million tonne

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in the northern and western markets. It has also earmarked around US$ 195-220 million
for acquisitions
India Cements
India Cements is the largest cement producer in southern India with a total capacity of
8.81 million tonne and plants in Andhra Pradesh and Tamil Nadu. The company has a
market share of 5.4 per cent with a total cement production of 6.36 million tonne in 2003-
04. Its product portfolio includes ordinary portland cement and blended cement. The
company has limited its business activity to cement, though it has a marginal exposure to
the shipping business. The company plans to reduce its manpower significantly
And exit non-core businesses to turnaround its fortune. It also expects the export market to
open up, with the Gulf emerging as a major importer.
Jaiprakash Associates Limited

Jaiprakash Industries, now known as Jaiprakash Associates Limited (JAL) is part of the
Jaypee Group with businesses in civil engineering, hospitality, cement, hydropower,design
consultancy and IT. It has an annual capacity of 4.6 million tonne with plants located in
Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar Pradesh). Thecompany has a
market share of 3.8 per cent with the cement division contributing US$ 172 million to
revenue
in 2003-04. The company is upgrading its capacity to 6.5 million tonne through the
modernizing of the existing units and the commissioning of a new grinding unit at Tanda
(Uttar Pradesh) with an investment of US$ 163 million. Jaiprakash Associates has decided
to concentrate on its core business of construction and engineering and leave its cement
plant to its subsidiary Jaypee Rewa Cement Ltd. The company manufactures a wide range
of world class cement of OPC grades 33, 43, 53, IRST-40 and special
Blends of pozzolana cement.
JK Synthetics
JK Synthetics, a Singhania Group company, started manufacturing nylon at Kota in 1962.
Subsequently, it diversified into PSY/PFY, nylon tyre-cord, cement (in 1975), acrylic and

10
white cement (in 1984). The company has a market share of 2.7 per cent. JK Synthetics
Limited is restructuring its business divisions into two separate entities- JK Cements and
JK Synthetics. After the restructuring, it will be left with a cement plant at Nimbahera in
Rajasthan, with a capacity of 3.26 million metric tonne and manufacturing white cement.
Madras Cements
Madras Cements Ltd is one of the oldest cement companies in the southern region and is
a part of the Armco group. The company is engaged in cement, clinker, dolomite, dry
mortar mix, limestone; ready mix cements (RMC) and units generated from windmills. The
company has three plants in Tamil Nadu, one in Andhra Pradesh and a mini cement plant
in Karnataka. It has a total capacity of 5.47 million tonne annually and holds a market share
of 3.1 per cent. Madras Cements plans to expand by putting up RMC plants. As Karnataka
is a promising market, the company is further expanding its capacity from the present 1.5
million tonne to 3.4 million tonne through an investment of US$ 9 million.
Foreign players:
Holcim
Holcim, earlier known as Holder bank, has a cement production capacity of 141.9 million
tonne. It is a key player in aggregates, concrete and construction related services. It has a
strong market presence in over 70 countries and is a market leader in South America and
in a number of European and overseas markets. Holcim entered India by means of a long-
term strategic alliance with Gujarat Ambuja Cements Ltd (GACL). The alliance aims to
strengthen their clinker and cement trading activities in South Asia, the Middle East and
the region adjoining the Indian Ocean. Holcim also intends to use India as an additional
base for its IT operations,
R&D projects as well as a procurement sourcing hub to generate additional synergies and
value for the group.
Italcementi Group

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The Italecementi group is one of the largest producers and distributors of cement with 60
cement plants, 547 concrete batching units and 155 quarries spread across 19 countries in
Europe, Asia, Africa and North America. Italcementi is present in the Indian markets
through a 50:50 joint venture company with Zuari Cements. All initiatives in southern
India are routed through the joint venture company, while Italcementi is free to buy deals
In its individual capacity in northern India. The joint venture company has a capacity of
3.4 million tonne and a market share of 2.1 per cent.
Lafarge India
Lafarge India Pvt Ltd, a subsidiary of the Lafarge Group, has a total cement capacity of 5
million tonne and a clinker capacity of 3 million tonne in the country. Lafarge commenced
operations in 1999 and currently has a market share of 3.4 per cent. Itexports clinker
and cement to Bangladesh and Nepal. It produces Portland slag cement, ordinary portland
cement and portland pozzolana cement. The Indian cement plants are located in
Chhattisgarh and
Rajasthan. Lafarge Cement has become the largest cement selling firm in the Indian
markets of West Bengal, Bihar, Jharkhand and Chhattisgarh.

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Two players call all the shots;
For the first time in India, two companies - Grasim and Gujarat Ambuja, along with their
associate companies, control almost 50% of India’s cement capacity and supply. In a
commodity business, where profits move disproportionately with even small changes in
cement prices, this is a significant development The emphasis laid by the government on
the development of physical infrastructure mainly roads, airports, seaports and railroads
and the boom in housing driven by easy availability of cheap housing credit have been
the key growth drivers for the sector.
Government is the single largest buyer of cement. Historically, in the last year, drive to
complete pending infrastructure project has driven demand growth. One of the major
cement consuming projects is the Golden Quadrilateral Project-Besides construction and
modernization of four airports and two seaports. Gujarat Ambuja has always traded at a
premium to its peers due to its higher operational efficiency, presence in high growth
markets and fiscal benefits. This edge got further sharpened post ACC acquisition that
added to scale as well as geographical diversity. Grasim and ultra tech on the other hand
are doing so well to capture the more and more market share.
Major Consolidations
With an installed capacity of around 157 million tonne per annum (mtpa) at end-March
2007, large cement plants accounted for 93% of the total installed capacity in India. The
installed capacity is distributed over across approximately 129 large cement plants owned
by around 54 companies. The structure of the industry is fragmented, although, the
concentration at the top is increasing. The fragmented structure is a result of the low entry
barriers in the post decontrol period and the ready availability of technology. However,
cement plants are capital intensive and require a capital investment of over Rs. 3,500 per
tonne of cement, which translates into an investment of Rs. 3,500 million for a 1 mtpa
plant. The cement industry has witnessed substantial reorganization of capacities during
the last couple of years.

13
Some examples of the consolidation witnessed during the recent past include: Gujarat
Ambuja taking a stake of 14% in ACC; Gujarat Ambuja taking over DLF Cements and
Modi Cement; India Cement taking over Raasi Cement and Sri Vishnu Cement; Grasim's
acquisition of the cement business of L&T; Indian Rayon's cement division merging with
Grasim; Grasim taking over Sri Dig Vijay Cements; L&T taking over Narmada Cements;
ACC taking over IDCOL. Multinational cement companies have also initiated the
acquisition process in the Indian cement market. Swiss cement major Holcim has picked
up 14.8% of the promoters stake in Gujarat Ambuja Cements (GACL). In January 2006,
Holderind Investments (Holcim Mauritius), an indirect, wholly-owned subsidiary of
Holcim, acquired 200 million equity shares of GACL at a price of Rs.105 per share from
the promoters. Post-sale, the share of promoters in the company is 9%. Holcim also made
an open offer to acquire an additional 20% stake in GACL at Rs. 90.64 per share. Earlier,
Holcim had entered into a strategic alliance with GACL, and acquired a 67% controlling
stake in Ambuja Cement India. Through this holding company, Holcim acquired a majority
in Ambuja Cement Eastern and a substantial stake in ACC. Ambuja Cement India holds a
34% share in ACC and a 97% share in Ambuja Cement Eastern. Holcim's acquisition has
led to the emergence of two major groups in the Indian cement industry, the Holcim-ACC-
Gujarat Ambuja Cements combine (capacity of 33.5 mt) and the
Aditya Birla group through Grasim Industries and Ultratech Cement (combined capacity
of 31.1 mt). Lafarge,
the French cement major, had acquired the cement plants of Raymond and Tisco in the
recent past, and has an installed capacity of 5 mtpa. Italy based Italcementi has acquired a
stake in the K.K. Birla promoted Zuari Industries' cement plant in AP, with a capacity of
3.4 mtpa. Recently, Heidelberg Cement has entered into an equal joint-venture agreement
with S P Lohia Group controlled Indo-Rama Cement. Heidelberg Cement is expected to
take a 50% controlling stake in Indo-Rama's grinding plant of 0.75 mtpa at Raigad in
Maharashtra. As on March 2006, ACC was the largest player with a capacity of 18.64 mtpa.
UltraTech CemCo Ltd.1 now occupies the second slot with a capacity of 17 mtpa (which
includes 1.5 mtpa of subsidiary Narmada Cement).
The Gujarat Ambuja group has emerged as the third largest player with a capacity of
14.86 mtpa. Grasim ranks fourth with a capacity of 14.12 mtpa. Other leading players

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include India Cements, Jaypee group, Century Textiles, Madras Cements, Lafarge, and
Birla Corp.
Reasons behind these consolidations;
As discussed above, the cement industry is witnessing a number of Mergers & Acquisitions
(M&As). The extent of concentration in the industry has increased over the years. This
concentration is mainly because of the focus of the larger and the more efficient units to
consolidate their operations by restructuring their business and taking over relatively
weaker units. The relatively smaller and weaker units are finding it difficult to withstand
the cyclical pressure of the cement industry. Some of the key benefits accruing to the
acquiring companies from these acquisition deals include:
❑ Economies of scale resulting from the larger size of operations
❑ Savings in the time and cost required to set up a new unit
❑ Access to new markets
❑ Access to special facilities / features of the acquired company
❑ And, benefits of tax shelter.
State wise Capacity
As cement is a low value commodity, freight costs assume a significant proportion of the final
cost. Transporting costs render the prices of cement in distant destinations uncompetitive. For
instance, it is financially infeasible to transport cement by road over 250 kms. Railways are
mostly used to transport cement over longer distances. However, its bulky nature and
infrastructure bottlenecks render even rail transport unviable over very long distances (that is
why Madras Cements or India Cements, located in the south, can hardly make a difference to
the fortunes of west-based companies like GujaratAmbuja). Therefore, manufacturers tend to
sell cement at the nearest market first and sell in distant markets only if additional realization
is greater than freight costs incurred. This is the reason for showing regional demand rather
than state demand in case of cement.

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Region wise Capacity
The Indian cement industry has to be viewed in terms of five regions:
 North (Punjab, Delhi, Haryana, Himachal Pradesh, Rajasthan, Chandigarh, J&K
and Uttaranchal);
 West (Maharashtra and Gujarat);
 South (Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, Pondicherry, Andaman
& Nicobar and Goa);
 East (Bihar, Orissa, West Bengal, Assam, Meghalaya, Jharkhand and
Chhattisgarh); and
 Central (Uttar Pradesh and Madhya Pradesh).
Northern Region
Punjab 2173.34
Delhi 500.00
Haryana 172.00
Himachal Pradesh 4060.00
Rajasthan 16299.34
J&K 200.00
TOTAL 23404.68
West

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Maharashtra 8950.00
Gujarat 12937.00
TOTAL 21887.00
South
Tamil Nadu 12913.18
Andra Pradesh 19831.02
Karnataka 9744.00
Kerala 420.00
TOTAL 42908.20
East
Bihar 1000.00
Orissa 2761.00
West Bengal 2291.66
Assam Meghalaya 400.00
Jharkhand 3475.01
Chhattisgarh 11287.33
TOTAL 21215.00
Central
U.P. 6297.00
M.P. 16185.00
TOTAL 20482.00
South accounts for 33.03% of cement production capacity of the country, with Andra
Pradesh accounting for 15.27% of the total production capacity of India. It has aninstalled
capacity of around 20mn tons of cement and ranks first in the country, followed by Tamil
Nadu with 9.94% of the total production capacity. North accounts for 18.02% of the total
production capacity, with Rajasthan at 12.55% of the total production capacity of the
country. West accounts for 16.85% of the total production capacity. Maharashtra and
Gujarat have production capacity of 6.89% and 9.96% respectively. East

17
and Central Regions account for 16.33% and 15.77% of the total production capacity of
the country respectively.
Trade between these regions is on a very low scale mainly because of the transportation
bottlenecks and uncompetitive cost of transportation. The Southern region dominated the
cement consumption at 44.5 mn tonnes in FY 07, accounting for about 30% of total
domestic cement consumption. During FY 03-07, Southern region has witnessed highest
CAGR of cement demand growth at 10.4% followed by Northern and Eastern regions at
8.9% and 9%, respectively
Mechanics of Distribution Channels of Sector

Companies invariably hire agents or transport cements to own or government warehouses
either via roadway or railways. In case of exports, cement reaches the nearest port via
roadways or railways and is then transferred to the importing country. Domestically, from
agents or warehouses the cement is transported to the dealers/distributors and
in turn to sub dealers who finally sell it to the end users. There may or may not be physical
ownership of goods. In the second case, dealers and sub dealers take order from buyers and
place it to the companies, co-ordinate and monitor the timely dispatch of said orders,
ENERGY AND TRANSPORT REQUIREMENTS
The cement industry is dependent on three major infrastructural sectors of the economy:
coal, power and transport. The inputs from these three sectors account for roughly 50% of
the cost of cement. Both the availability and the cost of these inputs have a vital bearing on
the fortunes of the cement players. All these sectors are largely in the State sector, and,
historically cement companies have had virtually no control on the cost or availability of
these inputs. Hence, the industry response has largely been in the form of achieving
efficiency gains and finding alternatives (captive power, use of waterways). One additional
external influencer of the cement industry performance is the taxes and

18
levies imposed by the Central and State Governments. These together account for around
30% of the selling price of cement in the Indian context.
The shortage in domestic coal production coupled with the poor quality has resulted in
cement companies resorting to importing coal, or going in for open market purchase of
coal, or using alternative fuel such as lignite or pet coke.
Use of imported coal has become an essential feature of the Indian cement industry and
has shown a rising trend during the last few years.
Power and Fuel cost form the largest proportion of the cost structure. This reflects the
effects of the trend in rising global oil and fuel prices. On the other hand Employee costs
form the smallest proportion of over all cost. This is essentially because cement industry is
a very capital intensive industry. This also accounts for the huge depreciation and

19
interest costs which accrue on the plant and machinery. Moreover, the labour employed is
essentially semi-skilled excluding the top management which bring down labour costs.
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 27.9 MT by the year 1980-
81.

20
21
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. For 1992-93, the industry
remained stagnant with no addition to existing capacity
The things 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.
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

22
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.
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.
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.
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.
Opening up the FDI channel:
The impact of government policies on cement demand has been
steadily decreasing with the sector being gradually deregulated. At

23
present, 100 per cent foreign direct investment (FDI) is permitted
in the cement industry. Lafarge was the first foreign company to
enter the Indian market in 1999.
The French
Declining Role of Public Sector:
Historically, cement has been one of the most important areas of operations for the Indian
private sector. Unlike much of heavy industry and utilities, cement was not deemed to be
the exclusive preserve of the State sector in the post-independence development strategy.
Cement was also the industry of choice of many corporate diversifying away from the
troubled traditional areas of jute and textiles.
Over the years, the share of the public sector in cement production has declined. While
the private sector (large companies) accounts for around 95% of the total installedcapacity,
the share of public sector companies has declined from a level of 11% in FY1996 to around
4.4% in FY2006. The share in production of the public sector companies is even lower at
1.2% in FY2006 as compared to 6.5% in FY1996.
Export of cement from India

The Indian cement industry exported around 6 mt of cement during FY2006, accounting
for around 4% of the total production. There has been a significant year on year variation
in the export trend, implying that Companies rely on cement exports to balance out the
domestic demand supply situation. As seen from above there is excess production, so the
difference in supply and demand is met by exporting. The export of Indian cement has
increased over the years, giving a boost to the Indian cement industry.
The demand for cement in the foreign countries is a derived demand, for it depends on
industrial activity, real estate, and construction activity. Since growth is taking place all
over the world in these sectors, Indian export of cement is also increasing.

24
The cement industry in India has around 300 mini cement plants and 130 large cement
plants. The total production capacity of these plants is around 167.36 million tons. The
India cement industry is technologically very advanced, as a result of which the quality of
Indian cement is now considered the second best in the world. This has given a major boost
to the Indian export of cement. The production of cement in India is not only ableto meet
the domestic demand, but large amounts are also exported. A fair amount of clinker and
cement by-products are also exported by India. As the quality of Indian cement is very
good, its demand in the international market is always high.
The graph shows that the production of cement in India is at 2 nd place after China, this
higher production is a good reason for exporting cement .
In 2001-2002, 3.38 million tons of cement was exported from India. That figure stood at
3.47 million tons in 2002-03, and 3.36 million tons in 2003-04. In 2001-2002, 1.76 million
tons of clinker was exported from India. In 2002- 2003 clinker exports amounted

25
to 3.45 million tons, and in 2003- 2004 the figure stood at 5.64 million tons. This shows
that the export of Indian cement has been increasing at a steady pace over the years.
The major companies exporting Indian cement are:

 Gujarat Ambuja
 Ultra Tech Cement
 L&T Limited
Export of Indian cement has registered growth a fair amount of growth, giving a boost to
the Indian economy. India has an immense potential to tap cement markets of countries in
the Middle East and South East Asia due to its strengths of locational advantage, large-
scale limestone and coal deposits,
Adequate cement capacity and world-class cement production with the latest technology.
India has an estimated total of 90 billion tonnes of limestone deposit in the country.

26
Indian technology advantage
The manufacturing process of cement consists of the mixing, drying
and grinding of limestone, clay and silica into a composite mass.
The mixture is then heated and burnt in a pre-heater and kiln to
be cooled in an air cooling system to form clinker, which is the
Semi-finished form. This clinker is cooled by air and subsequently
ground with gypsum to form cement. The dry and semi-dry processes are more fuel-
efficient. The wet process requires 0.28 tonne of coal and 110 kWh of power to
manufacture one tonne of cement, whereas the dry process
requires only 0.18 tonnes of coal and 100 kWh of power. Coal and power costs account for
35 per cent of the total cement production costs. With 95 per cent of the total capacity based
on the modern dry process technology, the Indian cement industry has become more cost
efficient.
Top companies in the cement

industry match quite well with
world standards in terms of
energy (thermal energy
Kcal/kg of clinker - India 665
against 690 of Japan)
and pollution norms (SPM of
40 in India against 20 in
Japan).

27
PORTER’S 5-FORCE MODEL FOR CEMENT INDUSTRY
Threat of New
Entrants: The high capital costs acts as a major entry barrier for the entry of new
players. The high freight costs make it difficult to import cement. Cement being a high
volume low value commodity results in high freight costs, which makes cement imports
economically unfeasible. Domestic Cement industry is highly insulated from global
cement markets. With GoI intervention, making cement duty free, cement is being
imported from neighboring countries. However, due to logistics issues and lack of port
handling capabilities, imports of cement will remain negligible and do not pose a threat to
domestic industry.
Bargaining Power of Suppliers: The major inputs are coal and power. The Prices of both

28
coal and power are determined by the government. To mitigate the high costs of power the
cement players have set up captive power plants.
Competitive rivalry
between existing players: Previously the rivalry was strong among the players, as the
industry was not consolidated. During the last few years the industry has become more
consolidated with the Top 3 players having a combined market share of 49 percent in 2005-
06 as compared to 32 percent in 1999-2000.
Bargaining power of
Buyers: Retail sales constitute about 80 percent of the total sales and the rest is institutional
sales. The retail buyers don’t have any bargaining power while the institutional buyers get
a discount of 5 to 10 percent as they buy cement in bulk.
Threat of Substitutes: There are no good substitutes for cement.

29
SWOT ANALYSIS
Strengths: Double digit growth rate

 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 Program
-Bharat Nirman Yojana for rural infrastructure
-Rise in industrial projects
-Export potential also demand driver
 Capacity utilization over 90%
Weakness: Low value commodity

 Cement Industry is highly fragmented
 Industry is also highly regionalized
 Low – value commodity makes transportation over long distances un-economical
Opportunities: Demand–supply gap

 Substantially lower per capita cement consumption as compared to developing
countries (1/3 rd of world average) Per capita cement consumption in India is 82
kgs against a global average of 255 kgs and Asian average of 200 kgs.

30
 Additional capacity of 20 million tons per annum will be required to match the
demand
 Limited green field capacity addition in pipeline for next two years, leading to
favorable demand – supply scenario 
Threats: Rising input costs
 Government intervention to adjust cement prices

 Possibility of over bunching of capacities in the long term as some of the players
have already announced new capacities
 Transportation cost is scaling high; bottleneck due to loading restrictions
 Coal prices climbing up; industry players say current shortage of coal in the
country is estimated to be over 10 million tonnes

31
PRICES
The regional variation in the Indian market has resulted in the cement prices across regions
witnessing movement within a band, with no appreciable increase in any region.
Differences in regional demand supply situation have translated into price differences
across regions. Prices are lower in Southern regions where there is normally a supply
surplus. However, prices are higher in Eastern and Western regions where shortages
exist. The surplus position had resulted in significant pressure on price realizations in recent
years.
.The cyclical trough in the late-1990s had a severe impact on the industry financials.
However, cement prices have firmed up during the last few years due to improvement in
demand-supply position and increasing consolidation in the industry. The Wholesale Price
Index (WPI) for cement increased 3.9% during FY2005, as compared with a growthof
1.2% during FY2004. The WPI for March 2006 was 11% higher than the WPI for March
2005.
Margins
Cement prices have firmed up during the last few years due to improvement in demand-
supply position and increasing consolidation in the industry. The trend in gross sales
realization is similar for the cement companies in our sample (comprising pure cement
companies accounting for around two-thirds of industry production and sales).

32
The operating profits and margins for cement companies are most sensitive to cement sales
realizations. During FY2004-05, riding on high average sales realizations, the cement
companies posted increased operating profits and margins. This reversed the decline in
operating profits and margins during FY2002-03. This was mainly because of excess
capacity and the consequent low price realizations. While sales volume of the sample
companies improved 7%, operating income (OI) increased 24.2% to Rs. 183.45 billion
RETURNS:
The key driver of profitability is cement prices, which fluctuate depending on outlook on
demand-supply gaps. The fluctuating fortunes of the Indian cement industry are very
typical of a commodity industry. The companies make bumper returns during the boom
years (FY1994-96, and FY2003-06) while the performance goes down drastically during
the lean years (FY1997-2001). The returns have improved significantly since FY2003
because of higher capacity utilizations, operational efficiency and cost control measures
supplemented with higher sales realizations.

33
the Indian cement industry has undergone vital changes through technological changes in
the pursuit of cost efficiency and drive for consolidations. Most of the companies are
making profits.

34
INTRODUCTION

35
ULTRA TECH CEMENT
UltraTech is the second largest cement manufacturer in India. It is the part of Aditya
Birla group and is subsidiary of Grasim. It has a capacity of 17 million tonnes. The
company is the largest exporter of cement and clinker from India. UltraTech has apresence
in the west, south, north and east. The western and southern regions are its major markets.
The company exports both clinker and cement. The company exports are moving towards
cement from clinker owing to the higher realization in the cement. In 2005-06 the company
exported 1.52 million tonnes of cement. With UltraTech Cement, the Aditya Birla Group
has established itself as not only the most respected domestic player but also among the
global leaders in cement. Now a look at
Aditya Birla group’s cement capacity:

Currently, the Aditya Birla Group is the 11th largest cement producer in the world and the
seventh largest in Asia and Ultra Tech and Grasim together, make it the largest cement
producer in India.
The group mainly has two cement units – Grasim and Ultra tech.
UltraTech Cement Limited, a Grasim subsidiary has an annual capacity of 17 million

tonnes. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace
Slag Cement and Portland Pozzolana Cement. It has five integrated plants. This also
includes the integrated plant and two grinding units of the erstwhile Narmada Cement
Company Limited, a subsidiary, which has been amalgamated with the company in May
2006.
Grasim, on the other hand, manufactures grey and white cement. In grey cement, the
company has the capacity to manufacture 14.20 mtpa. This includes Grasim’s capacity of
2.06 mtpa, Vikram Cement 4.2 mtpa, Aditya Cement 1.5 mtpa, Rajashree Cement 4.2

36
mtpa, the acquired and merged Dharni Cement 1.16 mtpa and the acquired Digvijay
Cement 1.08 mtpa.
Grasim and Ultra Tech together have a cement capacity of 31.20 mtpa. And when the B
K Birla cement companies also come into the fold, the Aditya Birla group would have a
cement capacity of 37.86 mtpa, making it clearly the largest cement maker of India.
The Aditya Birla Group bought over the cement business of L&T for around Rs. 2,200
crore. L&T allowed its name to be used for about a year. Then from 19 th November
2003,the name was changed to ultra tech cemco. This name also didn’t last for long and
finally the ultra tech cemco was changed to Ultra Tech cement. These stages of evolution
of ultra tech cement are listed below:
2001
:: Grasim acquires 10 per cent stake in L&T. Subsequently increases stake to 15.3 per
cent by October 2002
:: Durgapur grinding unit
2002
The Grasim Board approves an open offer for purchase of up to 20 per cent of the
:: equity shares of Larsen & Toubro Ltd (L&T), in accordance with the provisions and
guidelines issued by the Securities & Exchange Board of India (SEBI) Regulations,
1997.
:: Grasim increases its stake in L&T to 14.15 per cent
:: Arakkonam grinding unit
2003
:: The board of Larsen & Toubro Ltd (L&T) decides to demerge its cement business

37
into a separate cement company (CemCo). Grasim decides to acquire an 8.5 per cent
equity stake from L&T and then make an open offer for 30 per cent of the equity of
CemCo, to acquire management control of the company.
2004
:: Completion of the implementation process to demerge the cement business of L&T and
completion of open offer by Grasim, with the latter acquiring controlling stake in the
newly formed company UltraTech
2006
Narmada Cement Company Limited amalgamated with UltraTech pursuant to a
Scheme of Amalgamation being approved by the Board for Industrial & Financial
Reconstruction (BIFR) in terms of the provision of Sick Industrial Companies Act
(Special Provisions)
ULTRA TECH PRODUCTION UNITS:
Ultra Tech’s subsidiaries are Dakshin Cement Limited and UltraTech Ceylinco (P) Ltd.
UltraTech has five integrated plants, five grinding units and three terminals — two inIndia
and one in Sri Lanka. These include an integrated plant and two grinding units ofthe
erstwhile Narmada Cement Company Limited, a subsidiary, which has been amalgamated
with the company in May 2006.The details of its different production units is shown on the
next page.

38
Details of units:
PLANT/UNIT KILN CAPACITY(TPA) CAPACITIES(million TPA)
A. Composite integrated
Plants.
1. Andra Pradesh Cement 8000 2.3

Works.
2. Awarpur Cement works 9500 3.3
3. Gujrat cement works 15000 5.3
4. Hirmi cement works 8050 1.6
5. Narmada cement works 4350 0.4
B.Grinding Units
6. Arakkonam cements works 1.2
7. Jharsuguda cements works 0.8
8. Narmada cement (Ratnagri) 0.4

Works
9. Narmada cement(Magdala) 0.7

Works
10.West-Bengal cement works 1.0
TOTAL 17.0

39
THE ULTRATECH ADVANTAGE
UltraTech Cement Ltd is one of the largest premium quality cement producer in India.
UltraTech Cement is manufactured in the state of the art dry process plant at Tadipatri
(Andhra Pradesh) and grinding unit at Arakkonam (Tamil Nadu). Advanced
instrumentation systems, computerized process control and online quality control through
X-ray ensure consistently high quality product at UltraTech Cement plant. The quality of
UltraTech Cement has been globally accepted and is India's largest exporter of clinker
and cement.
UltraTech Cement due to its consistently superior quality has become the first choice
amongst discerning users and construction professionals.
Raw Material :
Careful selection and scientific proportioning of raw material with the use of latest
technology enables manufacturing of high quality cement. Rigorous hourly tests are
conducted on raw material. Laboratories at all plants are equipped with sophisticated
facilities.
World Class process Technology ensures Quality and Consistency :
Quality Assurance is an integral part of Ultra Tech’s manufacturing philosophy. The
quality attributes are consistently ensured through rigorous application of advanced
technology. Key features include:
 Use of good quality limestone and careful selection of other raw material
 Computerized mining operation and homogenization of crushed limestone
 Perfect proportioning of raw materials by QCX (Quality Control through X-ray)
 Online process control through CCR (Computerized Control Room)
 High-quality clinkerisation and close-circuit grinding for optimum particle size
distribution
UltraTech Cement plants have been accredited with ISO 9001, 14001, 18001
Certifications by DNV of Netherlands

40
Distinct Features:
 Higher Compressive strength
 Optimal fineness
 Balanced physical and chemical properties
 Optimal setting time
 Consistency in quality
 Low-level of Chloride
 High-soundness
Advantages:
 Higher workability
 Lower consumption
 Enhanced durability
 Quicker construction
 Overall economy
Customer Care and Guidance:

UltraTech Cement offers customers a range of "product plus" services. A full- fledged
Technical Services Network has been set up exclusively for technical advice and guidance
in usage of cement
UltraTech Cement is marketed nationwide through large network of stockist's, salesofficers
and representatives. Cement dumps have also been established at strategic locations to
facilitate faster delivery of cement.
Value Added Services:

 Mobile concrete lab services (Concrete cube testing facilities)
 Training Programmes for masons, site supervisors on good construction practices

41
 Field visits by qualified civil engineers
 Educating individual house builders on various aspects of building material and
construction
 Non-destructive testing of concrete
 Any other customer specific services
Applications:
1. All Kinds of constructions including precast and prestressed concrete, masonry
works
2. Slip form constructions
3. Rehabilitation and retrofitting works
4. Cement based products such as pipes, tiles, blocks, poles, etc.
5. Roads, runways, bridges and flyovers
6. Water retaining structures
AWARDS FOR ULTRA TECH
Export awards
Worldwide, clients have consistently endorsed Ultra Tech’s highest quality standards. The
list of export awards it has won is testimony to Ultra Tech’s uncompromising standards on
product quality. Ultra Tech has been on the roll call of top exporters of the Chemicals &
Allied Products Export Promotion Council (Capexil), year after year.
Ultratech won the Capexil Certificate of Export Recognition - Top Exporter - Cement,
Clinker, Asbestos and Cement Products for the years 2000, 2002 and 2003.
Other awards that have come its way have included:
Year Award
Capexil Certificate of Export Recognition - Highest Export in Non-
2001 and 1999
mineral Sector

42
Capexil Certificate of Outstanding Export Performance - Chemicals &
1999
Allied Products (for Portland cement)
Capexil Certificate of Export Recognition - Top Exporter- Cement,

1998
Asbestos, Cement Products
1998 Certificate of Outstanding Export Performance, Gujarat state
Capexil Certificate of Export Recognition - Certificate of Merit for

1997
Export Achievement in Cement and Clinker
National awards won by Awarpur Cement Works

Year Award
Indo-German Greentech Environment Excellence Awards by the

2000-2001
Greentech Foundation, New Delhi
1999-2000 Business / Trade Award Jamanalal Bajaj Uchit Vyavahar Purashkar
1999 ISO 14001 Certification By M/S Det Norske Veritas in November
ISO 9001 Certification By M/S Der Norske Veritas

1996
FIMI National Social Awareness Awards
1995-96 FIMI National Social Awareness Awards
Indira Priyadarshini Vrikshmitra (IPVM) National Award By Ministry

1995
of Environment & Forests, Goverment of India
Special Gold Award By The Council of Industry & Trade Development

1994-95
for Quality
Delhi Commendation Certificate - Rajiv Gandhi National Quality Award

1994
By Bureau of Indian Standards
Awards won by Gujarat Cement Works:
Year Award
2004 Bhartiya Udyog Ratan Award presented to Sh. KYP Kulkarni By

43
Indian Economic Development & Research Association (IEDRA),
New Delhi
2002-2003 Greentech Gold Safety Award By Greentech Foundation, New Delhi
Gujarat State Safety Award By Gujarat Safety Council (GSC),
2002
Vadodara
Greentech Environment Excellence Award By Greentech Foundation,
2001-2002
New Delhi
Awards for Excellence in "Industrial Relations" By Federation of
2001
Gujarat Industries (FGI), Vadodara
Awards won by Andhra Pradesh Cement Works:
Year Award
2004-2005 State and Zonal level I prize for overall performance in Mines safety
2003-2004 Energy efficient unit award from CII
Energy Conservation Award from PCRA
Excellence Award in Water Conservation & Pollution Control by
APPCB
2002-2003
Gold medal for Six Sigma Project on Optimisation of Compressed air
energy at HIMER National Conference
FIMI environment award for mines
Award for six sigma project on reduction in specific fuel
consumption at NIQR
2001-2002 Energy efficient unit award from CII

Best rural development effort award from FAPCCI
Appreciation award from NSC for achieving OHSAS-18001

44
Awards won by Hirmi Cement Works:
Year Award
2001-2002 Environment Energy Foundation award for water conservation.
Fuller Energy award for reduction in specific power consumption
2001-2002
(KWH/T) per tonne of cement
Ultra Tech Cement Exports

UltraTech Cement recently bagged an award for being the highest exporter of the year from
CAPEXIL for the eighth time in a row for its sterling performance. A leading cement
exporter, its plants have also received various awards for environment protection, social
awareness, safety and management of better industrial relations.
The company has been credited with boosting its exports of cement and clinker last year
by 25 per cent to 4 million tonnes from 2.8 million tonnes in 2005-2006. stringent quality
control and testing in the best laboratories ensure that cement and clinker produced from
its plants conform to and surpass international standards. The laboratory is equipped to test
cement as per ASTM, British and Euro standards. All the plants are ISO 9001 certified for
the latest production process and 14001 certified for environmental management. The
cement plant in Gujarat has an additional OHSAS 18001 certification as well for
occupation hazards and safety parameters.
The company has a captive jetty at the Gujarat plant. The jetty length of 337 meters and
width of 23 meters is capable of handling ships of 45,000 DWT with 11 meters draft.
Loading of cement and clinker onto the ship is carried out by a ship loader, which is fed by
a four km long conveyor belt that connects the plant to the jetty. The export markets span
countries around the Indian Ocean, Africa, Europe and the Middle East.
The Hirmi Cement Works in Chattisgarh and the Jharsuguda Cement Works in Orissa
make them ideal locations for export of cement and clinker to Nepal and Bangladesh.
With captive railway sidings to facilitate loading of railway rakes and a high-tech
production facility for cement and clinker, UltraTech Cement has found wide acceptance
in these neighboring countries

45
OBJECTIVE OF THE STUDY
Primary objective:
To study the distribution channel of Ultra Tech cement along with other brands.
Secondary objectives:
1. To find out the market share of Ultra Tech cement.
2. To find out the major competitors of Ultra Tech cement in a particular area.
3. To find out the problems faced by the Ultra Tech dealers/retailers and try to
minimize these problems.
4. To help the ultra tech dealers/retailers to increase their sales.
5. To find out the possible newer methods for advertisement and methods for
increasing sales of Ultra Tech cement.

46
RESEARCH DESIGN
(a) General Methodology:

The methodology adopted for this project was completely base on primary information.
The locale of the study was distt. Lucknow. The first stage included gathering information
about the general cement market of the two cities. That was, to find out which are major
players, what is general distribution pattern, what type of incentive schemes the different
brands are using.
The second stage comprised determining the objective
of the study and drafting the questionnaire. The questionnaire was designed keeping in
mind the objective of the study. It was designed with due guidance of the company guide.
It was assured that the questionnaire didn’t exceed more than 10 questions. Keeping in
mind the education level of the respondents who were mainly dealers/retailers, the
questionnaire was kept simple and precise.
b) Data Sources:
The research called for gathering primary data only. Hence, primary sources were
considered for the collection of data.
*Primary source
The primary data is gathered for specific purpose and is collected by the researcher himself.
It includes direct communication and feedback from the customers. For the purpose of
collecting information from customers a structured questionnaire was formulated and is
contacted directly.
c) Research Approach:
The research conducted was exploratory in nature and the goal was to gather preliminary
data to shed light on the real nature of problems and to suggest possible solutions. For the
purpose of this project, we went for a questionnaire- based survey of customers. A pilot
test of this questionnaire was done for the preparation of final questionnaire. It involved,
applying the draft questionnaire to a sample of 5 people.

47
(d) Research Instrument:
1. Personally administered questionnaire
2. Structured interview
3. Unstructured interview
For the purpose of this project, a questionnaire was designed to collect data that consisted
of close ended questions & open-ended questions. A survey technique is being used to
collect the data. During the project a survey of customers using personal interview was
done at random locations in Lucknow and a predetermined structured questionnaire was
administered to them.
e) Sampling Plan:
* Sampling Unit
The study was restricted to Lucknow only. Keeping in mind the objective of the
study we sampled dealers and retailers of each and every brand. We try to
explore out as many shops as could be possible.
*Sample Size
The sample size taken for the purpose of study was around 150 respondents
from the two distt.All the respondents were chosen randomly.
*Sampling Procedure
We try to find out almost all of the cement dealers and retailers in the market.
*Contact Method
I personally visited most of the customers after seeking prior appointment. Few
shopkeepers due to their busy schedule or loyalty for their brand refused to
respond at all.

48
f) Analytical tools:
The data, which was collected, was summarized and tabulated on MS-excel
for further analysis. The analysis performed was mainly comparative analysis
using statistical analytical tools. The tools that have been used are as follows:
 Bar Chart
 Pie Chart
 Line Graph

49
DATA ANALYSIS & FINDINGS
 Market share graph for Distt. Lucknow:
6%
9% ultra tech
26% Acc
J.k.
8%
J.P.
BINANI
9% Ambuja
4%
Shree Ultra
Tuff Cemento
12% 15%
Bangur
11%
The graph clearly shows that the Ultra Tech Cement has largest market share in Lucknow,
followed by J.K. cement and J.P. Cement.The main reason behind this excess market share
goes to the higher number of dealers of Ultra Tech cement than other brands.J.K. Cement
on the other hand is having a good market share due to a nicely balanced supply chain of
dealers along with many retailers. All the other brands like Sri Ram and Bangur are
struggling to find market in Lucknow.

50
Market Share Graph for Kurukshetra:
1%3% 3% 20% ultra tech

12% Acc
J.k.
J.P.
9%
BINANI
Ambuja
6% 25% Shree Ultra
Tuff Cemento
21% Bangur
The graph shows that the Ultra Tech is lagging behind ACC cement in
kurukshetra.although it has a good 20% share. The credit for ACC success goes to the no.
of dealers it has in kurukshetra.Its no. of dealers is almost double than the Ultra Tech
dealers plus retailers. The possibility behind Ultra Tech success lies at the chances of
getting some more retailers.

51
 Satisfaction level of Dealers/Retailers:
the graph clearly shows that most of the dealers are well satisfied with the services provided
to them by the brand they deal in. The services include timely supply of cement, regular
visits by the company officials, different type of incentive schemes meant for the dealers
etc.The other side of the fact can be that-being loyal to their respective cement brands, the
dealers didn’t want to give a poor image of the company.i.e.they were not satisfied with
the company but responded positively.

52
 Want to Shift to Other Brand?
The graph shows that about 84% of the dealers and retailers don’t want to shift to any
cement brand other than the one in which they are currently dealing. But the last portion of
the graph i.e. MAY BE part is of crucial importance for Ultra Tech.This portion shows the
dealers who may shift to a new brand if it proves beneficial for them. So if Ultra Tech
assures them some better services and mainly the better incentives then these can be the
new suppliers for it

53
The major competitor for Ultra Tech in Lucknow is J.K. Cement.The reason behind
this is the presence of more no. of retailers for J.K. Cement.The two brands under
J.K. i.e. J.K. SUPER & J.K. LUXMI are both well established here. J.K. Provides
the benefit of low cost and quality to the customers as compared to higher price of
Ultra Tech cement.
 The competitor for Ultra Tech in Kurukshetra is ACC cement. It seems that ACC
has given more importance to Kurukshetra. It has just 4 dealers in Lucknow but in
Kurukshetra it has about 12 dealers.
 The total cement consumption in Lucknow is much higher than that in Kurukshetra.
The reasons behind this are construction of a no. of malls, presence of major real
estate players like ANSAL, DLF etc and other Govt Projects in Lucknow. So Ultra
Tech need to concentrate more in Lucknow.
 Ultra Tech cement lags behind other brands only at the price point. It costs nearly
4-5 rupees higher than the other cements. This is the main reason for some lower
sales. On the other hand, customers are very sure about the thing that Ultra Tech
cement provides much better quality.
 Ultra Tech should try to increase the number of ‘MOBILE CONCRETE HELP’
vans. These vans are the feature that no other brand is offering. These are very
popular among the local customers. So Ultra Tech should introduce some more of
these vans.

54
LIMITATIONS OF THE STUDY
1. The major problem of the survey was that most of the respondents being very
loyal to their brands didn’t give exact answers like they didn’t talk much about what
problems they are facing, what are the different marketing schemes of the brand in
which they deal etc.
2. Once we got the questionnaire filled, we need to restart the conversation in a very
generalized way and talk about the local market conditions. Like who is the main
dealer, which cement is mostly sold in that area etc.so this survey demands a good
piece of time while talking to the respondent. Also Lucknow & Kurukshetra are
both big Distts. With a number of small towns and villages. So to complete the
survey within 2 months time seems to be a bit difficult.
3. Some of the respondents may have told their average monthly sale more than the
actual. Because all of them think that the monthly sale attached with the market
image of their shop.
4. Many of the dealers/retailers refused to answer any question atall.So the actual
figures can be somewhat different from the one that we have found out
.
5. Being new to the Distts of Lucknow & Kurukshetra, it is quite possible that I was
unable to explore some of the dealers/retailers.
RECOMMENDATIONS
Based upon the time spent by me in the market, useful suggestions of the dealers & retailers
and the findings from the survey, following recommendations can be suggested for
increasing sales and effectiveness of Ultra Tech Cement:

55
 What matters for most of the cement buyers is the price of the cement and then the
quality. While visiting market for cement purchase, they don’t care about which
brand they are going to buy. They simply know that X is ongoing price of the
cement, if any brand costs higher than X, they will not buy that brand. Ultra Tech
Cement usually costs 4-5 Rs. Higher than the other counterparts. So, the buyers,
too much extant not interested in buying Ultra Tech cement. This extra price is the
main reason behind lower sales. Therefore, Ultra Tech need to take some serious
steps to reduce the selling price somehow.
 The second thing is that a good percentage of buyers is still unaware of the fact that
Ultra Tech cement is the changed name of Birla cement. Birla Cement had a very
good image and it is still very popular among the customers. But people are not so
much sure about Ultra Tech cement. so Ultra Tech need to take some steps to make
people familiar with the’ Birla cement and Ultra Tech’ relation. Because this will
bring the old Birla loyal customers to Ultra Tech cement.
 The number of retailers and sub dealers for Ultra Tech cement is very less as
compared to the main competitors ACC, J.K. etc. So, Ultra Tech need to be
oriented in this direction. They need to increase the no. of retailers as much as
possible. Although Ultra Tech has taken a right step with the ‘retailer registration
scheme’ to increase the no. of retailers. but this scheme needs some improvements.
While working, I saw that the main condition for this new scheme was that the
retailer will not sell any other brand of cement. Most of the retailers refused the
scheme due to this particular reason. So Ultra Tech needs to give them some
relaxation in this case.
 Many of the Ultra Tech dealers used to shop other type of building materials along
with cement, in the same shop. This should not be permitted by Ultra Tech. Because
selling of these building materials is more profitable than cement, so the cement
selling becomes less important for these dealers. They don’t give proper attention
to the company officials and also to the various schemes of increasing sales. This
in turn brings reduced sales to the company

56
 Ultra Tech Cement has market image of a modern cement with very good quality.
It should try to incash this image. It’s mainly the younger section of people who
care about quality first and then the price. So Ultra Tech needs to give proper
attention to the youngsters. May be, they are not the cement buyers at present but
future possibility lies with them.
 Ultra Tech also should have a check on the upcoming threat of imported cement
from Pakistan. The import of cement from Pakistan has just started and very quickly
it has become successful in the southern markets. The main reason behind this
success is the lower price. The Pak cement brands like Lucky, Mapple Leaf and
Elephant costs 10-15 Rs. Lesser than the local Indian brands. Ultra Tech which is
already facing charges of higher price needs to be prepared for this.
 Some of the Ultra Tech dealers complained that they are losing the customers loyal
to their shops, due to the high price of the cement provided by them. So, at some
point, the dealers are not satisfied with the company. This need to be taken seriously
by Ultra Tech. Some more incentive schemes should be introduced for the dealers
and also the frequency of visits from company officials needs to be increased.

57
CONCLUSION
 Ultra Tech has two major competitors- J.K. CEMENT and ACC CEMENT.
 Ultra Tech is well established in the markets as far as quality is concerned.
 Introduction of new attractive incentive schemes can bring new dealers & retailers
for Ultra Tech cement.
 Price is the major factor that matters for a customer while purchasing cement
 Market share increases with the increase in no. of dealers.

58
BIBLIOGRAPHY
► www.cemnet.com
► www.pca.com
► www.ceicdata.com
► WWW.ULTRATECH.COM

59

Vibhanshu Awasthi Done

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AS PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE IN

MASTERS OF BUSINESS ADMINISTRATIONS

DR. APJ ABDUL KALAM TECHNICAL UNIVERSITY, LUCKNOW,

A, SUMMER INTERNSHIP REPORT ON THE TOPIC

MBA 2nd YEAR 3rd SEMESTER SUBMITTED TO

DEPARTMENT OF MANAGEMENT STUDIES

BANSAL INSTITUTE OF ENGINEERING AND TECHNOLOGY,

LUCKNOW, UTTAR PRADESH

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

3. INTRODUCTION ULTRATECH CEMENT 34-36

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Different Types of Cement

There are different varieties of cement based on different compositions according to

1. Ordinary Portland cement (OPC):

2. Portland Pozolona Cement (PPC):

 Portland pozzolana cement is Ordinary Portland Cement blended with pozzolanic

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

3. Portland Blast Furnace Slag Cement (PBFSC):

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

INDIAN CEMENT INDUSTRY-AN OVERVIEW

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Associated Cement Companies Ltd (ACCL)

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Gujarat Ambuja Cements Ltd (GACL)

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Jaiprakash Associates Limited

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Reasons behind these consolidations;

State wise Capacity

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Mechanics of Distribution Channels of Sector

ENERGY AND TRANSPORT REQUIREMENTS

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Price and Distribution Controls (1940-1981):

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Export of cement from India

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

The major companies exporting Indian cement are:

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Top companies in the cement

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Strengths: Double digit growth rate

Weakness: Low value commodity

Opportunities: Demand–supply gap

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

Threats: Rising input costs

 Government intervention to adjust cement prices

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059

KMBN308 SUMMER TRAINING PROJECT REPORT / VIBHANSHU AWASTHI / 2204220700059