Professional Documents
Culture Documents
Introduction
Today it is fashionable to talk about the new economy. We hear that the business are operating in globalize economy; things are moving at a nanosecond pace our market are characterized by hyper competition and disruptive technologies are challenging every business and so business must adopt to empower consumer. To become successful in such a competitive environment the business organizations have to be customer oriented. Customers need and want must be taken care of. Build customer and not only products. Customer must be delighted. This information about the market could be collected by the way of proper market survey. Rom the market survey we get the feed about the good or services of the organization .For this purpose the said project work is undertaken. The project was carried out for knowing prevailing market condition of Shree Digvijay Cement in Ahmedabad Region .The second objective of the project was to study the sales promotion activities undertaken by other competitors. The project was carried out in the market of Ahmedabad of Gujarat state. There are many market players in cement industry. They are Ultratech, Ambuja, Hathi, Sidhee, JK Laxmi, Jaypee, Sanghi, Binani apart from these there are few local brands selling in the market. The information about the market was gathered by visiting retailers in the market. Interview of retailers was taken depending upon there accessibility. While doing the project attempt was made to collect maximum information about the marker. To get actual and correct information ,it was not told retailers that the survey is conducted by Shree Digvijay Cement for the obvious reasons .Number of retailers were visited to get the actual picture of the market. Again, the retailers of each grade (according to the performance) were visited, to get each and every detail about the market. Most of the time was spent in traveling for one retailer were reluctant to give the information , as they do not want to disclose their business details. Visits to such retailers were loss of time, money and energy. After collecting the derailed information about the market, analysis is done. In the analysis, the observations recorded during the project were carefully analyzed and the results are prepared. The findings and result of the project work are given at the later stage in the report.
Problem Statement:
Analyze the position of Shree Digvijay Cement in market of Ahmedabad city.
Objectives:
To analyze the market share of Shree Digvijay cement To know the Dealers preference for the various brands of cement To understand the effectiveness of various sales promotion activities of various cement players. To increase brand awareness of Shree Digvijay cement.
To get suggestions from the trade segments in order to improve the sale as
well as level of satisfaction in them.
Literature Review:
Key drivers of the Indian cement industry, copy right 2011 Inner score Investment. Management Pvt. Ltd. (http://www.valueequity.com/articles.php) The Indian Cement Industry (www.articlesbase.com) The Indian Cement Industry Set for Tremendous Growth, (www.sooperarticles.com )
Research Design:
Research design selected for this project is Descriptive in nature
Interviews
Secondary sources:
Companies literature Industry publications Business Articles Business Magazines Library Research
Internet Surfing
Population: Sampling unit: Sample size: Sampling method: Time Period:
Ahmedabad a cement dealer in Ahmedabad 100 Convenience and judgmental Sampling 01/06/2011 to 15/07/2011
Hypothesis:
Hypothesis is a tool that is used to test the validity of the assumption. First of all the assumption is made about the population parameter. Then sample data is collected, sample statistics is produced and based on this information, it is decided how likely it is that the hypothesized population parameter is correct. In short, the difference between the hypothesized value and the actual value of the sample mean is determined and validity of the assumption is tested.
H0: Incentives scheme is not an effective sales promotion activity. H1: Incentives scheme is an effective sales promotion activity.
H0: Gifts are not effective sales promotion activity. H1: Gifts are effective sales promotion activity.
H0: Foreign Tours are not effective sales promotion activity H1: Foreign Tours are effective sales promotion activity
H0: Gold scheme is not an effective sales promotion activity. H1: Gold scheme is an effective sales promotion activity.
Statistical
Descriptive statistics were used for analysis and interpretation, one sample Z test for means was used for hypothesis testing.
The organization which will show interest to help us carry out this project would also be benefited with the same.
The college would also benefit from the project report, as this would help the college to build the reputation within the corporate world.
Limitations:
1. Lack of co-operation from the retailers for interviews. 2. It was found in some cases dealers showed inclination towards certain brands which gave them more margins when compared to others. 3. The time constraint faced in the project might have affected the comprehensiveness of its findings.
Time Budget: Topic Finalization: June 11, 2011 Research Proposal submission: June 16, 2011 Secondary Data collected submission: June 26, 2011 Primary Data collected submission: July 1, 2011 Data Analysis submission: July 8, 2011 Rough Draft of the project: July 10, 2011
INDUSTRY PROFILE
Installed Capacity
The Indian cement industry is the second largest producer of quality cement, which meets global standards. The cement industry comprises 130 large cement plants with an installed capacity of 160.24 million tonnes and more than 365 mini cement plants with an estimated capacity of 11.10 million tonnes making a total installed capacity of 171.34 million tonnes. Cement is one of the core industries which plays a vital role in the growth and expansion of a nation. It is basically a mixture of compounds, consisting mainly of silicates and aluminates of calcium, formed out of calcium oxide, silica, aluminium oxide and iron oxide. The demand for cement, depends primarily on the pace of activities in the business, financial, real estate and infrastructure sectors of the economy. Cement is considered preferred building material and is used worldwide
for all construction works such as housing and industrial construction, as well as for creation of infrastructures like ports, roads, power plants, etc. Indian cement industry is globally competitive because the industry has witnessed healthy trends such as cost control and continuous technology upgradation. The Indian cement industry is extremely energy intensive and is the third largest user of coal in the country. It is modern and uses latest technology, which is among the best in the world. Also, the industry has tremendous potential for development as limestone of excellent quality is found almost throughout the country. Current Scenario The Indian cement industry is the second largest producer of quality cement. Indian Cement Industry is engaged in the production of several varieties of cement such as 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. They are produced strictly as per the Bureau of Indian Standards (BIS) specifications and their quality is comparable with the best in the world. The Indian cement industry is the second largest in the world.The industry occupies an important place in the national economy because of its strong linkages to other sectors such as construction, transportation, coal and power. The cement industry is also one of the major contributors to the exchequer by way of indirect taxes. Indian Cement industry is comprised of 148 large cement plants with around 46 member companies.The installed capacity of these large cement plants is estimated to be 219.17 million tonne during 2009-10 (as on March 2009).There are 95 large cement plants with capacity of of million tonnes and above and around 1,40,000 manpower is employed uder these plants (one Mn.T cement generates downstream employment to 50,000 persons). Also,there are 365 mini and white cement plants with an installed capacity of 11.10 million tonne (P).
Statistics Table 1 - Cement Production & Despatches (P) 2010-11 Description Jan-11 Dec-10 Jan-10 (Apr-Jan) Cement Production Cement Despatches 14.52 13.59 14.65 136.51 130.85 2009-10
14.47
13.60
14.59
135.56
130.09
Cement production during April to January 2010-11 was 136.51 million tonnes as compared to 130.85 million tonnes during the same period for the year 2009-10. Despatches were estimated at 135.56 million tonnes during April to January 201011 whereas during the same period for the year 2009-10, it stood at 130.09 million tonnes. Key Drivers of Cement Industry
Buoyant real estate market Increase in infrastructure spending Various governmental programmes like National Rural Employment Guarantee
Low-cost housing in urban and rural areas under schemes like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Indira Aawas Yojana
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Technological Advancements Modernization and technology up-gradation is a continous process for any growing industry and is equally true for the cement industry. At present, the quality of cement and building materials produced in India meets international standards and benchmarks and can compete in international markets. The productivity parameters are now nearing the theoretical bests and alternate means. Substantial technological improvements have been brought about and today, the industry can legitimately be proud of its state-of-the-art technology and processes incorporated in most of its cement plants. This technology up gradation is resulting in increased capacity, reduction in cost of production of cement.
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INTRODUCTION
What is cement?
Cement is a mixture of limestone, Clay, Silica and Gypsum. It is a fine powder which when mixed with water sets to a hard mass as a result of hydration of the constituent compounds. It is the most commonly used construction material. Cement is manufactured by burning a mixture of limestone and Clay at high temperatures in a kiln, and then finely grinding the resulting clinker along with Gypsum. The end product thus obtained is called Ordinary Portland Cement (OPC). Different Types of Cement There are different varieties of cement based on different compositions according to specific end uses, namely Ordinary Portland Cement, Portland Pozolona Cement, Portland Blast Furnace Slag Cement, White Cement and Specialized Cement. The basic difference lies in the percentage of clinker used. 1. Ordinary Portland cement (OPC): OPC, popularly known as grey cement, has 95% clinker and 5% of Gypsum and other materials. It accounts for 70% of the total consumption. White cement is a variation of OPC and is used for decorative purposes like rendering of walls, flooring etc. It contains a very low proportion of iron oxide. Ordinary Portland cement is the most commonly used cement for a wide range of applications. These applications cover dry-lean mixes, general-purpose ready-mixes, and even high strength pre-cast and pre-stressed concrete. 2. Portland Pozolona Cement (PPC): Portland pozzolana cement is Ordinary Portland Cement blended with pozzolanic materials (power-station fly ash, burnt clays, ash from burnt plant material or Siliceous earths), either together or separately. Portland clinker is ground with
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Gypsum and Pozzolanic materials which, though they do not have cementing properties in themselves, combine chemically with Portland
cement in the presence of water to form extra strong cementing material which resists wet cracking, thermal cracking and has a high degree of cohesion and workability in concrete. PPC has 80% clinker, 15% pozolona and 5% gypsum and accounts for 18% of the total cement consumption. It is cheaply manufactured because it uses fly ash/burnt clay/coal waste as the main ingredient. It has a lower heat of hydration, which helps in preventing cracks where large volumes are being cast. 3. Portland Blast Furnace Slag Cement (PBFSC): PBFSC consists of 45% clinker, 50% blast furnace slag and 5% Gypsum and accounts for 10% of the total cement consumed. It has a heat of hydration even lower than PPC and is generally used in construction of dams and similar massive constructions. Portland blast-furnace slag cement contains up to 70 per cent of finely ground, granulated 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
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value, in tiles and for flooring. White cement is much more expensive than grey cement. 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 nonsaponifibale oil to impart waterproofing properties.
The cement industry comprises of 125 large cement plants with an installed capacity of 148.28 million tonnes and more than 300 mini cement plants with an estimated capacity of 11.10 million tonnes per annum. The Cement Corporation of India, which is a Central Public Sector Undertaking, has 10 units. There are 10 large cement plants owned by various State Governments. The total installed capacity in the country as a whole is 159.38 million tonnes. Actual cement production in 2008-09 was 116.35 million tonnes as against a production of 106.90 million tonnes in 2007-08, registering a growth rate of 8.84%.
Keeping in view the trend of growth of the industry in previous years, a production target of 126 million tonnes has been fixed for the year 2009-10. During the period April-June 2009, a production (provisional) was 31.30 million tonnes. The industry has achieved a growth rate of 4.86 per cent during this period. The graph above shows the consumption of cement in different areas of housing, infrastructure and industries.
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Exports Apart from meeting the entire domestic demand, the industry is also exporting cement and clinker. The export of cement during 2007-08 and 2008-09 was 5.14 million tonnes and 6.92 million tonnes respectively. Export during April-May, 2009 was 1.35 million tonnes. Major exporters were Gujarat Ambuja Cements Ltd. and L&T Ltd
Recommendations on Cement Industry For the development of the cement industry Working Group on Cement Industry was constituted by the Planning Commission for the formulation of X Five Year Plan. The Working Group has projected a growth rate of 10% for the cement industry during the plan period and has projected creation of additional capacity of 40-62 million tonnes mainly through expansion of existing plants. The Working Group has identified following thrust areas for improving demand for cement;
Further push to housing development programs; Promotion of concrete Highways and roads; and Use of ready-mix concrete in large infrastructure projects.
Further, in order to improve global competitiveness of the Indian Cement Industry, the Department of Industrial Policy & Promotion commissioned a study on the global competitiveness of the Indian Industry through an organization of international repute, viz. KPMG Consultancy Pvt. Ltd. The report submitted by the organization has made several recommendations for making the Indian Cement Industry more competitive in the international market. The recommendations are under consideration.
Technology Up-gradation
Cement industry in India is currently going through a technological change as a lot of upgradation 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.
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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.
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 across the nation. Table 2 Following are some of the major names in the Indian cement industry: Company ACC Gujarat Ambuja Ultratech Grasim India Cements JK Group Jaypee Group Birla Corp. Production 17,902 15,094 13,707 14,649 8,434 6,174 6,316 5,150 Installed Capacity 18,640 14,860 17,000 14,115 8,810 6,680 6,531 5,113
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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.
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.
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Table 3 Region wise capacity Northern Region Punjab Delhi Haryana Himachal Pradesh Rajasthan J&K TOTAL West Maharashtra Gujarat TOTAL South Tamil Nadu Andra Pradesh Karnataka Kerala TOTAL East Bihar Orissa West Bengal Assam Meghalaya Jharkhand Chattisgarh TOTAL 1000.00 2761.00 2291.66 400.00 3475.01 11287.33 21215.00 12913.18 19831.02 9744.00 420.00 42908.20 8950.00 12937.00 21887.00 2173.34 500.00 172.00 4060.00 16299.34 200.00 23404.68
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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 an installed 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 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 million tonnes in FY 08-09, accounting for about 30% of total domestic cement consumption. During FY 08-09, 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
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dealers take order from buyers and place it to the companies, co ordinate and monitor the timely dispatch of said orders.
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 interest costs which accrue on the plant and machinery. Moreover, the labour employed is essentially semi-skilled excluding the top management which brings down labour costs.
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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:
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 FY2007-08, as compared with a growth of 1.2% during FY2006-0 T
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WPI for March 2008-09 was 11% higher than the WPI for March 2007-08.
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).
The operating profits and margins for cement companies are most sensitive to cement sales realizations. During FY2008-09, 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 FY2007-08. 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
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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 FY2005-08) while the performance goes down drastically during the lean years (FY1997-2001 and FY 2009-na). The returns have improved significantly since FY2003 because of higher capacity utilizations, operational efficiency and cost control measures supplemented with higher sales realizations. But at the present scenario have reduced during the first quarter of FY 2009 and is still going to continue for few more years.
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.
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Company
ROCE (%)
D/E (x)
16,446.59 15,243.55
12.35 9.49 19.82 9.68 9.03 5.28 10.94 6.00 5.67 8.16
2.54 2.53 2.64 2.27 3.57 1.56 2.29 2.43 1.14 1.55
7.11 5.90 0.00 7.60 3.44 4.07 7.16 3.87 4.70 2.57
20.0 29.4 23.3 26.6 61.4 36.4 27.4 49.0 22.6 19.0
23.9 40.0 24.7 28.5 34.0 38.9 31.2 32.8 21.0 24.2
0.04 0.10 0.55 0.46 1.50 0.32 0.44 1.58 0.82 0.01
Samruddhi Cem. 12,111.86 UltraTech Cem. Shree Cement Birla Corpn. Prism Cement Binani Cement J K Cements Heidelberg Cem. JK Cem. OCL India Sanghi Inds. Mangalam Cement Sh. Cem Digvijay Lakshmi 10,447.20 6,549.75 2,773.13 2,675.36 1,642.06 1,241.96 1,091.18
225.49
4.33
2.61
5.36
29.6
16.9
0.33
Source: www.financialexpress.com
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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.
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 able to 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.
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The graph shows that the production of cement in India is at 2nd place after China, this higher production is a good reason for exporting cement. In 2008-2009, 3.38 million tons of cement was exported from India. That figure stood at 3.47 million tons in 2006-07, and 3.36 million tons in 2007-08. In 2006-2007, 1.76 million tons of clinker was exported from India. In 2007- 2008 clinker exports amounted to 3.45 million tons, and in 2008- 2009 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.
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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
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 cem 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.
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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).
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GROUP PROFILE
MISSION
To produce, market and develop high construction materials whilst complying with principles of sustainability and maximizing / preserving shareholder value.
STRATEGIC VISION
CIMPOR plans to remain one of the main players worldwide in the trend toward consolidating the cement sector whilst maintaining its growth and internationalization policy. It plans to maintain excellent technical, economic and financial performance compatible with its adopted voluntary principles of sustainable development
GROUP VALUES
Shareholders: To defend shareholders legitimate interests through intrinsic appreciation of their investments in the company and adequate remuneration.
Clients: Focus on the full satisfaction of client expectations in accordance with the ethical principles of integrity and applicable standards.
Personnel: Fair remuneration for work performed, career advancement opportunities and fairness of treatment.
Organization: Constant search for excellence by establishing ambitious goals and by selecting leaders at all levels capable of taking responsibility and the meeting targets.
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Quality: Compliance with national and international standards, particularly regarding Product Certification and to the proper application of the Quality Management System
GROUP STRATEGY
To consolidation current positions through internal growth whilst increasing efficiency and capacity at industrial units - and greater penetration in markets where the Group already operates expansion to activities relating with the cement line (e.g., ready-mix concrete and operation of quarries). To make new acquisitions, with priority given to geographic areas of emerging on the emerging markets where the Group already operates, while maintaining the necessary balance through operations in consolidated and mature markets where the growth potential is offset by lower risk. To optimize operations by taking advantage of synergies, cost cutting (particularly energy costs), higher personnel productivity and investment in R&D. To develop trade between the Group companies so as to balance peaks in certain markets with supply in other areas.
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WORLDWIDE PRESENCE
Figure 1
CIMPOR - Cimentos de Portugal is the largest Portuguese cement group, operating in Portugal, Spain, Mozambique, Morocco, Brazil, Tunisia, Egypt, Cape Verde, South Africa, Turkey, China, Peru and India involved in manufacturing and marketing cement, hydraulic lime, concrete and aggregates, precast concrete and dry mortars. Cement production capacity with own clinker to 29.5 million tonnes per year.
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1982 The Maia distribution terminal is built. The 3rd line at the Souselas plant initiates activity, with a capacity for 1 million tonnes/year.
1983 The adaptation process, replacing fuel oil with coal, is initiated in all plants.
1985 The last wet production line is transformed from wet to dry process.
1988 Ready-mix concrete business is restructured. CIMPOR BETO, S.G.P.S., S.A. is created.
1991 The precast business area starts operating. PRECIMPOR, S.G.P.S., S.A. is created. 1991 The company becomes a public company, with the new name CIMPOR CIMENTOS DE PORTUGAL, S.A.
1992 The process of internationalization begins. The Spanish holding company CORPORACIN NOROESTE S.A., in Galicia, is acquired. C.M.P. - Cimentos Maceira e Pataias is created and the Maceira and Pataias plants are sold.
Strategic plan for total quality, the "Jump Project" was set up. 1992
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WORLDWIDE JOURNEY PORTUGAL SPAIN MOZAMBIQUE MOROCCO BRAZIL TUNISIA EGYPS SOUTH AFRICA CAPE VERDE TURKEY CHINA INDIA SINCE 1976 SINCE 1992 SINCE 1994 SINCE 1996 SINCE 1997 SINCE 1998 SINCE 2000 SINCE 2002 SINCE 2005 SINCE 2007 SINCE 2007 SINCE 2008
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(Plant)
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COMPANY PROFILE
Shree Digvijay Cement Co Ltd., established on November 6, 1949 at Sikka Jamnagar and one of the pioneers in the Cement business, is a flagship company of the Cimpor Group. Cimpor acquired management control of the company in the year 2008. Its basket of products includes special cements like Oil Well Cement, Sulphate Resisting Portland Cement and Railway Sleeper Manufacturing Cement in addition to other varieties of Ordinary Portland Cement etc. It has a fully computer controlled plant and has a production capacity of 1.30 million tones per annum. Well connected by Road, Rail, Air, and Sea, Digvijay has its own port. Digvijays prolific experience in the domestic and international markets is now further honed with the Cimpor Groups management skills and technology. The companys brand Kamal Cement is a well-known name in the cement industry. They have a significant market share in Gujarat and internationally in SAARC countries, Middle East and East Africa. The company backed by its prolific experience, management skills and commitment along with state of the art technology makes its products presence in the international business and quest to meet the requirement of discerning customers and a concrete ambition to build a stronger globe. The company had successfully established its presence by exporting varieties of cement & cement clinker to the following countries: UAE, Somalia ,Yemen, Bangladesh , Qatar, Srilanka, Iraq, Kuwait, Behrin, Philippines and other SAARC and African countries
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Ordinary Portland Cement 53 grade (OPC) as per BIS / BS / ASTM / SLS standards
Oridinary Portland Cement 43 grade (OPC) Sulphate Resisting Portland Cement (SRPC) Railway Sleeper Manufacturing Cement (53-S Grade OPC) Oil Well Cement Class 'G' Grade HSR (as per API specifications 10A) Portland Pozzolana Cement
Milestones:
1944 Digvijay traces its origin on 6th November by Bangurs. 1947 Started commercial production with 1 lakh M.T capacity per annum. 1953 First expansion making total capacity to 2 lac M.T per annuam. 1954 Construction of Aerial Ropeway, a unique system in the country for transportation of sea-sand from jetty to plant.
1956 Second expansion to increase the production capacity to 4 lac M.T per annum.
1957 Ropeway put into operation. 1958 West Cost Paper Mills Ltd commissioned with financial help of Digvijay. 1959 Clinker grinding plant commissioned at Mumbai known as Bombay Cement Mill with annual capacity of 1 lac M.T.
1964 Ropeway system installed for transportation of clinker and cement directly to Ship from factory.
1966
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1967 Enhancement of cement production capacity to 6 lac M.T per annum. 1979 Beawar cement project initiated with financial help of Digvijay. 1982 Amalgamation of Hastings Jute Mill, Shreeram Silk Mill and Relaxon. 1984 Conversion of metre gauge line into broad gauge line. 1985 Dry process plant commissioned Mill. Lockout at Bombay Cement
1989 Digvijay become Sick and registered with BIFR first time. 1992 Digvijay came out of BIFR through profit and Equity infusion. 1994 Demerger of Fibre Product Division, Ahmedabd Cement Mill, Shreeram Silk Mill and Relaxon from Digvijay.
2000 Installation of captive power plant (DG Sets) and upgradation of Cement Mill to reduce cost.
2001 Digvijay was badly affected in earthquake. 2002 Downsizing of manpower through VRS. 2007 Digvijay came out from BIFR. 2008 Cimpor acquired management control of Digvijay.
1982- National Productivity Award 1996- National productivity Award 2003- National Energy Conservation Award 2004- National Energy Conservation Award 2005- National Energy Conservation Award - Certificate of Merit 2006-National Energy Conservation Award
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1996- ISO - 9002 Accreditation 2002- Bharat Shell's Lubricant Excellency Award 2003- Century International Quality Era Award in Gold Category 2005- ISO 14001 (Environment Management System) Certification 2005 OHSAS 18001 Certification
1994- Recognition as 'Export House' 1995 Golden Jubilee Year 1995- Recognition of Merit for Meritorious Export Performance 1997- Certificate of Merit for Export Achievement 2005- Recognition as Two-star Export House by Ministry of Commerce, Govt. of India
2005- CAPEXIL Special Export Award 2006 CAPEXIL Special Export Award
Management
O
1 2 3 4 5 6
Name
Leonard D' Casta Alvaro Joao Serra Nazare Robert Pavrey Napoleon De La Colina
Designation
Chairman Director Director Director
Luls Filipe Sequeira Martins Director P A Nair Chief Executive Officer & Whole Time Director
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COMPETITORS
Ultratech Cement
UltraTech Cement Limited has an annual capacity of 52 million tonnes. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzalana Cement. It also manufactures ready mix concrete (RMC).
The company has 11 integrated plants, one white cement plant, one clinkerisation plant in UAE, 15 grinding units 11 in India, 2 in UAE, one in Bahrain and Bangladesh each and and five terminals four in India and one in Sri Lanka. UltraTech Cement is the countrys largest exporter of cement clinker. The export markets span countries around the Indian Ocean, Africa, Europe and the Middle East.
UltraTech's subsidiaries are Dakshin Cements Limited, Harish Cements Limited, UltraTech Ceylinco (P) Limited and UltraTech Cement Middle East Investments Limited
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Ambuja Cement
Ambuja Cements Ltd. (ACL) is one of the leading cement manufacturing companies in India. The Company, initially called Gujarat Ambuja Cements Ltd., was founded by Narotam Sekhsaria in 1983 with a partner, Suresh Neotia. Sekhsarias business acumen and leadership skills put the company on a fast track to growth. The Company commenced cement production in 1986. The global cement major Holcim acquired management control of ACL in 2006. Holcim today holds little over 46% equity in ACL. The Company is currently known as Ambuja Cements Ltd.
ACL has grown dynamically over the past decade. Its current cement capacity is about 25 million tonnes. The Company has five integrated cement manufacturing plants and eight cement grinding units across the country. ACL enjoys a reputation of being one of the most efficient cement manufacturers in the world. Its environment protection measures are on par with the finest in the country. It is one of the most profitable and innovative cement companies in India. ACL is the first Indian cement manufacturers to build a captive port with three terminals along the countrys western coastline to facilitate timely, cost effective and environmentally cleaner shipments of bulk cement to its customers. The Company has its own fleet of ships. ACL has also pioneered the development of the multiple bio-mass co-fired technology for generating greener power in its captive plants. ACL has always met tough challenges and seized the opportunities that have come its way. It has nurtured the same spirit of enterprise and search for cutting-edge technology with which it started. It thus continues to be the driving force and in many ways a benchmark for the cement industry in India.
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Jaypee Cement
The Jaypee group is the 3rd largest cement producer in the country. The group's cement facilities are located in the Satna Cluster (U.P), which has one of the highest cement production growth rates in India. The group produces special blend of Portland Pozzolana Cement under the brand name Jaypee Cement (PPC). Its Cement Division currently operates modern, computerized process control cement plants with an aggregate capacity of 21.3 MTPA. The company is in the midst of capacity expansion of its cement business in Northern, Southern, Central, Eastern and Western parts of the country and is slated to be 37.55 MTPA cement producer by 2012 with Captive Thermal Power Plants totaling 702MW. All the 156 cement dumps are networked using State-of-the-art TDM/TDMA VSATs along with a dedicated hub to provide 24x7 connectivity between the plants and all the 156 points of cement distribution in order to ensure track the truck initiative and provide seamless integration. This initiative is the first of its kind in the cement industry in India. In the near future, the group plans to expand its cement capacities via acquisition and greenfield additions to maximize economies of scale and build on vision to focus on large size plants from inception. The Group is committed towards the safety and health of employees and the public. Our motto is ' Work For Safe, Healthy, Clean & Green Environment.
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THEORETICAL BACKGROUND
Promotion is persuasive communication. It is a highly visible element in the marketing mix. It tells the target customer product, price, and place. It tells also known as marketing communication. Promotion consist of activities that facility exchanges with target customers through persuasive communication to stimulate demand. According to Professor Philip kotler:- Promotion includes all the activities the company undertakes to communicate and promote its products to the target market. In modern marketing the question is not whether to promote but rather what to say, to whom and how often. A good product, an attractive price and an accessible distribution must be supported by an effective promotion to satisfy customer needs. Promotion activity include advertising, sales promotion, public relation, and direct marketing. Promotion can also be viewed as the management of the customer buying process of pre-purchase, purchase and post purchase.
FUNCTION OF PROMOTION Promotion is a tool to influence target customer and to face competition. It performs four functions:Information Persuasion Reminding Reinforcing
PROMOTION MIX The promotion mix is the combination of advertising, public relations, sales promotion, personal selling and direct marketing tools that help achieve marketing objective 1) ADVERTISING Advertising in any paid form of nonpersonal communication by an identified sponsor to promote product.
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2) PUBLIC RELATION It refers to programmes designed to promote or protect a company image and products. Publicity is any unpaid form of communication through media about an organization, its policies and products. 3) PERSONAL SELLING Personal selling is personal communication with customers to persuade them to buy products. It permits interaction and relationship building. Sales persons provide feedback about the market, competitors and customers. 4) DIRECT MARKETING: - It is persuasion by manufacturer to specific customers. The tools of direct marketing are: 1.Face to face selling 2.Mail 3.Catalogue marketing 4.Telephone 5. E-mail 5) SALES PROMOTIONS: - Sales promotion has been increasing in popularity as a tool. Marketers are using it aggressively. Sales promotion refers to short term incentives to stimulate demand. It is used to create a stronger and quicker purchase response. It can be directed at consumers, middleman and sales personnel. It supplements advertising and facilitates personal selling. According to Professor William J. Stanton:- Sales promotion refers to demand stimulating devices designed to supplement advertising and facilitate personal selling. According to professor Philip kotler:- Sales promotion consists of diverse collection of incentives tools, mostly short term, designed to stimulate quicker and or greater purchase of particular product /services by consumer or trade.
NATURE OF SALES PROMOTION: 1. It is short term 2. It provides incentives 3. It aims at quicker response 4. It is directed at target audience
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1. Objective for consumer promotion: (a) Encourage greater purchase volume (b) Attract new customer (c) Introduce new products
2. Objective for trade promotion: (a) Carry and push new item (b) Increase resellers inventories (c) Attract new channel members (d) Offset competitive promotion (e) Better store display
3. Objective for sales force promotion (a) Motivate sales force (b) Support new product
METHOD OF SALES PROMOTION Sales promotion methods differ according to the target audience. They can be directed at consumer promotion, trade promotion, and sales force promotion
Consumer promotion method Free sample Coupons Rebates Premium Price off Contests Display/Demonstration
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Marketing mix
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Determine Your Target Market Determine Your Objectives Design Your Message Select Your Promotional Channels Determine Your Budget Determine Your Promotional Mix Measure the Results and Adjust
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Figure 4 Communication by manufacturer is not only directed towards consumers to create demand. A push strategy is where the manufacturer concentrates some of their marketing effort on promoting their product to retailers to convince them to stock the product. A combination of promotional mix strategies are used at this stage aimed at the retailer including personal selling, and direct mail. The product is pushed onto the retailer, hence the name. A pull strategy is based around the manufacturer promoting their product amongst the target market to create demand. Consumers pull the product through the distribution channel forcing the wholesaler and retailer to stock it, hence the name pull strategy. Organizations tend to use both push and pull strategies to create demand from retailers and consumers.
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Figure 5
The PEST Analysis is a framework that you can use to scan the external macro-environment in which a firm operates. PEST is an acronym for the following factors: Political factors Economic factors Social factors, and Technological factors
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In 2002 the world production of hydraulic cement was 1,800 million metric tons. The top three producers were China with 704, India with 100, and the United States with 91 million metric tons for a co mbined total of about half the world total by the world's three most populated states.
POLITICAL
The price of cement is primarily controlled by the coal rates, power tariffs, railway tariffs, freight, royalty and cess on limestone. Interestingly, government controls all of these prices. Government is also one of the biggest consumers of the cement in the country. Most state governments, in order to attract investments in their respective states, offer fiscal incentives in the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff for5 years, while Gujarat offers exemption from electric duty. (India Infoline Ltd n.d.)
ECONOMIC
Currently, the industry is on the boom, with a lot of government infrastructure and housing projects under construction. In spite of seeing a fall during 2008-09, the export segment of the industry is expected to grow again on account of various infrastructure projects that are being taken up all over the world and numerous utstanding cement plants coming up in near future in the country
SOCIAL
Usually, the cement industry in India consists of both the organized sector and the unorganized sector. Organized sector comprises of the well-known cement manufacturing companies while the main players of the unorganized sector are the regional and local cement-producing units in various states across the state. Indian consumers prefer buying branded cement like ULTRATECH, JAYPEE CEMENT,
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AMBUJA CEMENT etc. It has been seen in the past, as well, that mini cement plants with low brand value and image are not able to survive against the cement giants. With a population of more than 100 billion people, it is expected that cement industry will create another 25 lakhs jobs in the next 4-5 years.
TECHNOLOGY
From mining to production the entire process depends on technology. The Government of Indiaplans to study and possibly acquire new technologies from the cement industry of Japan. The government is discussing technology transfer in the field of energy conservation and environment protection to help improve efficiency of the Indian 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.
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SWOT ANALYSIS
Figure 6 To plan marketing and management strategies for businesses, it is important to perform a situations analysis. One such analysis, a SWOT analysis, examines "strengths, weaknesses, opportunities and threats" within a particular business or field. The cement industry is an example of a field for which a SWOT analysis would enhance marketing and management strategies.
1. Strengths
o
The cement industry has much strength to be considered. Cement is, literally, the building block of the construction industry. Almost every building constructed relies on cement for its foundation. 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.
Strengths of shree Digvijay cement
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o o o
Shree Digvijay Cement has good loyal stockiest Management of MNC that is Cimpor group is an add advantage to the company. Quality and other services like free sample testing for the buyers could be considered as strengths of the company.
Weaknesses
o
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.
For shree digvijay cement drawbacks would be
Limestone is available little far from the plant which ultimately results into higher input cost.
o o
No brand awareness in the Ahmedabad region. Comparetively less dealers in Ahmedabad region.
Opportunities
o
The cement industries have 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 timeconsuming. 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.
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Threats
o
The nature of the economy has 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. 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
New capacity expansion like JP, ABC cement may hurt the market share. Other brands like Ambuja and Ultratech have an extremely high percentage of brand loyalty, something that was evident from the survey that was conducted.
A huge amount of small players are grabbing a large chunk of lower income cement base.
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THREAT OF SUBSTITUTES:
There are no good substitutes for cement.
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60
Responses
Less than 5 years 13 6-10 years 28 11-15 years 36 More than 15 years 27
13% 26%
27%
35%
The above chart shows that most of the dealers who all are suryed have dealership of various brands since long time because 35% and 26% dealers are in the business since 11-15 years and more than 15 years respectively.
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Responses
53 grade cement PPC grade cement OPC grade cement All grades cement 60% 25% 11% 4%
4% 11%
25% 60%
As it can be seen that 60% of total dealers that is 60 dealers sell 53 grade cement and 25% ofdealers also sell PPC grade cement where as other grades such as oil well cement stands at only 11%.
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3) Rank the following brands according to your preference ? Ultratech Ambuja Jaypee Hathi Sidhee Kamal Sanghi
Ultratech
Ranks Responses
1 37
2 19
3 32
4 6
5 5
6 0
7 1
Ultratech
Rank 1 Rank 2 Rank 3 Rank 4 0% 1% 6% 5% 37% Rank 5 Rank 6 Rank7
32%
19%
The above chart shows 37% dealers ranked Ultratech as a number one brand. This clearly shows that the company has good brand image in the market.Only 1% dealers have given it the lowest rank.
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Ambuja
Ranks Responses
1 20
2 53
3 17
4 9
5 0
6 1
7 0
Ambuja
Rank 1 Rank 2 Rank 3 Rank 4 0% 1% 0% 9% 20% 17% Rank 5 Rank 6 Rank 7
53%
After Ultratech, Dealers preferred Ambuja as 53% dealers ranked it at second position, whereas 20 % ranked it number one brand which clearly shows that both Ultratech and Ambuja have cut throat competition in terms of brand image.
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Jaypee
Ranks Responses
1 16
2 6
3 42
4 21
5 11
6 3
7 1
Jaypee
Rank 1 Rank 2 Rank 3 Rank 4 3% 1% 11% 16% 6% 21% Rank 5 Rank 6 Rank 7
42%
Out of total dealers 42% ranked Jaypee at 3rd position and 16 % dealers ranked it number one brand which clearly shows that Jaypee though being only 2 years old in the market, has a considerably good brand image.
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Hathi
Ranks Responses
1 7
2 5
3 6
4 43
5 25
6 5
7 9
Hathi
Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Arank 7
9% 5%
7%
5% 6%
25%
43%
Most of the dealers that is 43% of total 100 dealers ranked Hathi at 4th position and 25% ranked it at 5th positon, therefore I can say that Hathi has not that good brand image but people more or less are aware about the brand.
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Kamal
Ranks Responses
1 7
2 4
3 2
4 6
5 8
6 50
7 23
Kamal
Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Rank7
4% 7% 23%
2%
6% 8%
50%
The above chart clearly shows that comparatively kamal is not that much popular in the ahemdabad region. Kamal as a brand stands at 6th position as highest that is 50% dealers have ranked it at 6th postion. This shows that not much dealers are aware about the brand. Only 7 % dealers ranked it at number one position and that may be because they were dealers of kamal cement.
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Sanghi
Ranks Responses
1 8
2 6
3 2
4 2
5 6
6 16
7 60
Sanghi
Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Rank 7
8% 6%
2% 2% 6%
60%
16%
Sanghi is the least preffered brand of all brands as it stands at 7th rank with highest number of dealers that is 60% of all ranked it at the last position.
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4) How much quantity of cement you sell per month? 10-50 tones 50-100 tones 100-150 tones More than 150 tones
Responses
Ultratech Ambuja Jaypee Hathi Sidhee Kamal Sanghi 80 tones 100 tones 50 tones 60 tones 60 tones 40 tones 30 tones
100 90 80 70 60 50 40 30 20 10 0
sales
From all the market players Ambuja is having the largest share in the sales followed by ultratech which is sells 80 tones on average per month, Hathi and Sidhee almost sells same per month where as kamal and Sanghi have low sales.
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5) Reason for selling particular brand of cement ? Customer Acceptance/Brand Image Pricing Quality
Responses
Brand Image Ultratech Ambuja Jaypee Hathi sidhee Sanghi Binani Kamal 8 7 5 4 4 3 4 1 Quality 3 5 4 5 5 4 3 5 Pricing 1 1 2 3 3 5 5 6
Ambuja as a brand is very famous in the market almost 90% of the dealers sell ambuja because of its brand image, Quality being the next important reason. Ultratech is just behind ambuja in terms of both brand image and quality. More over according to dealers customer is more
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interested in price rather than quality so dealers of Jaypee, Kamal, Hathi and Sidhee considers price as a reason for customer availability.
Responses
Days Ultratech Ambuja Jaypee Hathi Sidhee Sanghi Kamal Binani 0 5 2 3 3 15 7 3
Ultratech do no give credit at all. They need payments in advance. Whereas other brands such as Sanghi, Kamal, Ambuja give credit of 15,7,5 respectively
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7) Reason for selling particular brand of cement ? Customer Acceptance/Brand Image Quality Pricing
Ultratech
7 6 5 4 3 2 1 0 Extremly satisfied Satisfied Moderately satisfied Dissatisfied Extremely satisfied
The maximum numbers of dealers are satisfied with the quality and transport facility of ultratech cement, where as dealers who are dissatisfied with the price is also more in numbers.
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Ambuja
Pricing 2 3 4 2 1
Transport 2 2 3 3 2
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Extremely satisfied Satisfied Moderately Dissatisfied Extremely dissatisfied Quality Pricing Transport
Out of total 14 dealers of Ambuja 3 said that they are extremely satisfied with the quality of cement and 4 said that they are satisfied which shows that almost 50% dealers are satisfied with the quality of cement. Ambuja could be considered number one brand in terms of quality as not even a single dealer is extremely dissatisfied with the quality of cement. Overall if we see Ambujas dealers are satisfied with all the factors quality,pricing and transport.
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Jaypee
Quality 2 3 4 2 1
Pricing 3 4 2 2 1
Transport 2 3 3 2 2
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Extremely satisfied Satisfied Moderately satisfied Dissatisfied Extremely dissatisfied Quality Pricing Transport
Here, the chart shows that dealers are more satisfied with the pricing than other factors. Overall Jaypee provides good transport facility and good quality of cement.
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Hathi Quality Extremely satisfied Satisfied Moderately satisfied Dissatisfied Extremely dissatisfied 3 4 2 2 1 Pricing 2 3 4 3 2 Transport 2 4 4 1 1
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Extremely satisfied Satisfied Moderately satisfied Dissatisfied Extremely dissatisfied Quality Pricing Transport
In case of hathi dealers are satisfied with the quality and transport as out f 12 dealers 4 said that they are satisfied both with the quality of cement and transport or availability of the cement.
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Sanghi Column1 Extremelysatisfied satisfied Moderately satisfied dissatisfied Extremely dissatisfied Quality 1 3 4 3 1 Pricing 1 3 5 2 1 Transport 2 2 3 3 2
Dealers are more satisfied with the price at which the company offers the cement than other factors. There are dealers who are extremely dissatisfied with the transport and availability of the cement at Sanghi
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Kamal Quality Extremely satisfied Satisfied Moderately satisfied Dissatisfied Extremely satisfied 2 3 4 2 1 Pricing 3 4 3 2 1 Transport 2 4 3 1 2
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Extremely satisfied Satisfied Moderately satisfied Dissatisfied Extremely satisfied Quality Pricing Transport
Kamal s dealers are overall satisfied with the pricing and transport out of total of 12, 4 dealers are satisfied with transport and 4 satisfied with the pricing policy. As far as quality is considered only 2 out of 12 are extremely satisfied. The graph clearly shows where does the brand stands in terms of quality, transport and pricing policy.
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8) What is general prices gap between following companies Hathi Sidhee Laxmi Jp Kamal Ambuja ______________ ______________ ______________ ______________ ______________ ______________
Responses
For this question all the dealers had different perception about the price gaps, most of them assumed that Ultratech and Ambuja both the brands have premium price that is of atleast Rs. 5 and both the brands do not have that much price gaps. Some dealers gave preference to their brands by stating more price gaps between their brands and other small brands and assumed less gaps between their brands and top players like Ambuja. Further, there were some dealers who tried to give the correct scenario of the market by saying that there are not much price gaps between all the companies, on an average there is price gap of only Rs.5 to 7 not more than that.
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10) Rate sales promotion activities according to their effectiveness ( for dealers)
Activities Gifts Incentives Foreign tours Golds schemes Rate
Responses
Least effective
Less effective
Moderately effective
More effective
Most effective
15
22
26
10
27
Gifts
Least effective More effective less effective Most effective Moderately effective
The pie chart shows that gift is an effective sales promotion activity but not that much as there 22% dealers saying it is less effective and 27% says it is somewhat effective. So overall it couldnt be considered extremely effective.
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Responses
Least effective Less effective Moderately effective 3 6 29 More effective 39 Most effective 23
Incentives
Least effective Less effective 3% 6%
Incentives could be considered as an effective activity for sales promotion as more tha 60% dealers said that incentives are very effective as a sales promotion activity. There were only 3% who said it is least effective which is almost negligible.
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Responses
Least effective 0
Somewhat effective 2
Neutral
Effective
Very effective
16
52
30
Effective 52%
The chart clearly shows that that foreign tour is effective as 30% dealers said it is very effective and 52% said it is an effective sales promotion activity which altogether shows that foreign tours are very popular amongst the dealers.
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Responses
Least effective 0 Somewhat effective 1 16 41 Neutral Effective Very Effective 42
Gold Scheme
Least effective Somewhat effective 0% 1% Neutral Effective Very effective
16%
42%
41%
Gold scheme could be considered the most popular sales promotion activity as 42 % said that it is very effective though only Ambuja has taken up gold scheme as a sales promotion activity.
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11) Rate sales promotion activities according to their effectiveness ( for customers) Activities Rate Advertisement Wall paintings Hoardings Mouth selling
Responses
Least effective 5 Somewhat effective 10 12 58 Neutral Effective Very Effective 15
Advertisement
Least effective somewhat effective 5% 15% 10% 12% Nuetral Effective Very effective
58%
Advertisement is considered the important tool for sales promotion as 58% dealers said it effective and 15% considered it very effective which shows according to dealer customers could be gained through advertisement.
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Responses
Least effective 2 Somewhat effective 5 10 43 Neutral Effective Very Effective 40
Wall Paintings
Least effective Somewhat effective 2% 5% 10% Neutral Effective Very effective
40%
43%
Followed by advertisement wall painting is the most effective activity for sales promotion as far as customers are concerned. It plays an important role in buying decisions of customers as they are more likely to get attracted towards wall paintings which keeps them reminding about any particular brand.
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Responses
Least effective 1 Somewhat effective 4 15 30 Neutral Effective Very Effective 50
Hoardings
Least effective Somewhat effective 1% 4% 15% Neutral Effective Very effective
50%
30%
Hoardings are considered important sales activity after wall paintings, as almost 80 % dealers said that customers are more likely to notice hoardings placed at public areas. So according to dealers from customers point of view hoarding is very effective sales promotion activity.
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Responses
Least effective 3 Somewhat effective 17 10 25 Neutral Effective Very Effective 45
Mouth selling
Least effective Somewhat effective Neutral Effective Very effective
3% 17%
45% 10%
25%
Mouth selling is another sales promotion activity which can be taken up and which is effective also as customer is very likely to get influenced by engineers, contractors and shop keepers. The above chart also shows that according to 45% dealers mouth selling is an important sales promtion activity taken up.
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Hypothesis Analysis
Hypothesis 1
H0: Incentives scheme is not an effective sales promotion activity. H1: Incentives scheme is an effective sales promotion activity.
Responses
Least effective Less effective Moderately effective More effective Most effective
29
39
23
Here,
Z
X n
Zcal = 8.58 Ztab = 1.96 Therefore, as Zcal is greater than Ztab Ho is rejected. Conclusion :Incentives could be considered as an effective sales activity
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Hypothesis 2
H0: Gifts are not effective sales promotion activity. H1: Gifts are effective sales promotion activity.
Responses
Least effective
Less effective
Moderately effective
More effective
Most effective
15
Mean Sd N Standard error zcal ztab 3.10 1.42 100 0.14 3 0.71 -1.96
22
Here,
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X
10
27
X n
Therefore, as Zcal is less than Ztab Ho is accepted Conclusion :Gifts couldnt be considered as an effective sales activity.
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Hypothesis 3
H0: Foreign Tours are not effective sales promotion activity H1: Foreign Tours are effective sales promotion activity
Responses
Least effective
Somewhat effective
Neutral
Effective
Very effective
16
52
30
Here,
Z
X n
Zcal = 15.03, Ztab= 1.96 Therefore as Zcal is greater than Ztab Ho is accepted. Conclusion:-Foreign tour could be considered as an effective sales activity
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Hypothesis 4
H0: Gold scheme is not an effective sales promotion activity. H1: Gold scheme is an effective sales promotion activity.
Responses
Least effective 0 Somewhat effective 1 16 41 Neutral Effective Very Effective 42
Here,
X n
Zcal = 16.45 Ztab= 1.96 Therefore as Zcal is greater than Ztab Ho is accepted. Conclusion:Gold scheme could be considered as an effective sales activity
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FINDINGS
Kamal Cement has few major competitors ULTRATECH CEMENT, AMBUJA CEMENT and JAYPEE CEMENT. The company can face a lot of competition in near future due to introduction of many more competitors. KAMAL CEMENT is well established in the markets as far as quality is concerned. Introduction of new attractive incentive schemes can bring new dealers and retailers for KAMAL cement. Price &promotion are the major factors that matters for a customer while purchasing cement Market share increases with the increase in no. of dealers. Brand ambassador has also influence in sale of cement for an example Sachin Tendulkar of JP cement and Amitabh Bachchan of Binani Cement.
HATHI
Better quality Good name in the market Timely available Immediately respond on the competitors strategy. Relatively less price. Better packaging
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ULTRATECH Sells easily in the market the customer demand for them. Customer choice. Good name in the market as it carries the goodwill of L&T High market awareness. Sells more
JAYPEE Good relationship with the company people. Price is low and affordable for people Low price helps to sell easily. Quality is good. More profit selling the brand. Good service and relationship Good Incentives
AMBUJA Brand image Customers preference Good cement, plastering work is good Good quality Incentives
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Recommendations
This project has been prepared keeping in mind the format as prescribed by the college. While the survey was being conducted, there were quite a no. of issues and observations that had invariably led to certain recommendations, as part of changes that I found were necessary and needed to be looked into. What needs to be noted is that these changes are merely suggestive in nature and I sincerely hope that a few of them could be seriously considered. There was a sense of resentment amongst the cement dealers that they dont have that much of power in their hands when it comes to making decisions that are in a way slightly strategic in nature. E.g. they need to be consulted when there is a shift in the way the packaging needs are taken care of. The business model of cement industry needs a big overhaul. For instance, the return on investment in the cement industry is as low as Rs. 5 for Rs. 500 that a dealer invests. That is abysmally low and again it would make sense if the same could be taken care of. Lesser amount of investment on part of the investor as a part of the cement model would probably make a bit more sense as compared to the high rate or investment that is currently followed now. The price determination of the cement industry is not something that is completely determined by the owners themselves. There is a huge element of demand supply determinance that is the price being determined by the interaction of the market forces. This is the prime reason why there has been a huge no of cement shops that are located in or around a particular area, and this makes the competition associated with it kind of extremely cut throat. I had proposed a business model in which the no of shops that are operating in a particular location be brought down. This is done on the basis of say people who dont deal with x no of tonnes of cement are not allowed to work on the same. This will make the dealers market a lot more cartelized, but at the same time one thing to be noted is that since they will start dealing in bulk, they will be able to book higher profits and accordingly
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be able to make the necessary adjustments that are otherwise so difficult at the sales part. On the part of the company, it is not that much of an issue, as there they are still having their profits guaranteed, no matter what. They can always control the supply side of the model by limiting the supply in case any kind of problem arises. Even though my survey was to centre with the fact that I wasnt to show any inherent bias towards any particular brand of cement, I made it a point to find out about the performance of Kamal Cement. The reason for Kamal Cement not doing well is because although company is having quality products but its unable to harvest it as they have not projected their advertisement on quality. Thus company should project its image through advertisement. There is a rising concern over the gradual rise of the mini plant dealers in the state. These manufacturers are the one who dont follow all the traditional methods that are involved in the manufacturing process especially when it comes to the extracting process. Thus on account of the fact that they have discounted a part of the processing stage and hence have not incurred any capital expense, they are able to make considerably higher amount of margins as compared to their other counterpart. In accordance to the same, there is a rising issue that has come up with regards to the issue of quality. Cement is one commodity on whose quality people are not willing to compromise. Still the question of profits is something that has interested a lot of dealers in stocking these cements which are a ready hit in the suburban areas of Gujarat. Cement industry is something that is dependent a lot on other natural resources that are present in the nation. Thus if there could have been ways by which the same could have been controlled then it would have made a significant impact to the way the raw materials was handled.
Some of the Kamal Cement dealers complained that they are losing the customers loyal to their shops, due to the other strong brands of the cement in the market. So at some point, the dealers are not satisfied with the company. This need to be taken
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seriously by Shree Digvijay cement.Some more incentive schemes should be introduced for the dealers and also the frequency of visits from company officials need to be increased.
POSSIBLE ADVERTISEMENT METHODS All of the cement brands use the similar methods of advertising like-painting walls, use banners, giving free gifts to the dealers and masons etc. There are still many possible methods of advertisement and creatingbrand awareness, which areuntouched. Some of these methods are as below:
Local cable T.V. can be used for advertising as well as to give detailsabout the major dealer/dealers in the city. Details like address, contactno. of the dealer, different schemes, current market price etc can beshown.
Local F.M. stations of sonepat and Karnal are also reaching a good part of listeners. So these can also be used for the same purpose. Banners, paintings are used mainly on the tractor trolleys, dealers shop and on walls only. We can think about using banners on rickshaws and autos also.
Different type of incentive schemes, free gifts are mainly for dealersand sometimes for the masons. As a change, we can also try to attractthe customers directly. For ex discount coupons, small free gifts,scratch cards etc can be made available for the customers.
A number of meetings are organized by all the cement companies with the local masons. Most of the masons are very less educated. They attend many meetings. So it may become difficult for them to recognize a particular cement brand. What we can do in this case is to take help of Handvertising i.e. we need to put the Ultra Tech logo
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onthe hands of these masons. So that next time they saw this logo, they found themselves a bit familiar with the company. The masons meet are organized by the company regularly. This needs some improvements. We need to decrease the frequency of these meets. What we can do is that organize a big meet with a no. of people, higher company officials, entertainment, and snacks for all. The presence of company officials in the meeting is not alone sufficient. We need to call some big personalities from that city only. The people like these masons are more impressed by the presence of Govt.officials.
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Conclusion
In this modern era when globalization and liberalization has brought a tide of change and only those companies can survive, which will ride on it or which will keep them isolated and let the tide go. No company can be untouched from the storm of changes and the pace of adaptive-ness will decide its success. The market share of company will be decided from the value it gives to the customer, the relation it has with its channel partners and end customers, the number of innovative products it has in its basket and its position in consumers mind.
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Biblography
www.cement.com www.cem.com www.shreedigvijaycement.com www.cma.com
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Annexture
Questionnaire
I am student of MBA studying in NRIBM-GLS AHMEDABAD and carrying out a survey for my academic project.
So please fill this questionnaire. All the information will only be used for academic purpose and it is going to be a White research paper analysis, which can be beneficial to you also.
1) No. of years in Business Less than 5 years 6-10 years 11-15 years More than 15 years
3) Which brands of cement are you aware of ? Hathi Sidhee J K Laxmi Kamal Ambuja
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Ultratech Sanghi Binani 4) Rank the following brands according to your preference ? Hathi Sidhee J K Laxmi Kamal Ambuja Ultratech Sanghi
5) Reason for selling particular brand of cement ? Customer Acceptance/Brand Image Availability of product Quality Margin Pricing
6) How much quantity of cement you sell per month ? 200-400 tones 400-600 tones 600-800 tones More than 800 tones
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9) What is general prices gap between following companies Hathi Sidhee Laxmi Jp Kamal Ambuja ______________ ______________ ______________ ______________ ______________ ______________
10 ) Rate sales promotion activities according to their effectiveness ( for dealers) Activities Gifts Incentives Foreign tours Golds schemes Rate
11 ) Rate sales promotion activities according to their effectiveness ( for customers) Activities Advertisement Wall paintings Hoardings Mouth selling Rank
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Others 12) Are you satisfied on the following factors ? Extremely Quality Pricing Transport 13) How much is your margin per bag ? __________________________________________________________ 14) What are your suggestions ? __________________________________________________________ 15) Personal Details Name (optional) : ________________________________________ Name of the shop : _______________________________________ satisfied Moderately satisfied dissatisfied Extremely dissatisfied
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