“CEMENT INDUSTRY”

A

Research Report

For

Management Research Project -I

Submitted

In the partial fulfillment of the Degree of

Master of Business Administration

Semester-III By

Name Exam No.

Hetal Mistri (12044311048) Tosifbhai Nandoliya (12044311056) Dhara Patel (12044311078) Dixita Patel (12044311083) Jigarbhai Patel (12044311094)

Vaibhavi Raval (12044311142)

Under the Guidance of:

Prof. (Dr.) Mahendra Sharma

Prof. & Head,

V. M. Patel Institute of Management.

&

Ms.Harsha Jariwala

Prof. Abhishek Parikh

Faculty Members,

V. M. Patel Institute of Management.

Submitted To:

V. M. Patel Institute of Management,

Ganpat University,

Kherva.

(December, 2013)

CERTIFICATE BY THE GUIDE

This is to certify that the contents of this report entitled “Cement Industry” by Hetal Mistri

(12044311048) Dhara Patel (12044311078) Dixita Patel (12044311083) Vaibhavi Raval

(12044311142 Jigarbhai Patel (12044311094), Tosifbhai Nandoliya (12044311056) submitted to V.

M. Patel Institute of Management for the Award of Master of Business Administration (MBA

Semester -III) is original research work carried out by him/her/them under my supervision.

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

of any degree or diploma.

Prof. (Dr.) Mahendra Sharma,

Professor & Head,

V. M. Patel Institute Of Management,

Ganpat University.

Ganpat Vidyanagar.

Date : 03/12/2013

Place : Kherva

CANDIDATE’S STATEMENT

I/We hereby declare that the work incorporated in this report entitled “Cement Industry ” in partial

fulfillment of the requirements for the award of Master of Business Administration (Semester - III ) is

the outcome of original study undertaken by me/us and it has not been submitted earlier to any other

University or Institution for the award of any Degree or Diploma.

Hetal Mistri

Dhara Patel

Dixita Patel

Vaibhavi Raval

Jigarbhai Patel

Tosifbhai Nandoliya

Date: 03/12/2013

Place: Kherva

PREFACE

One can deny for the importance of the practical exposure of the problem for its better understanding

and better grip of coming out with an industrially acceptable solution.

Being the Management student and performing small practical even is in itself an experience of

responsibility on our head. The project is certainly the best chance to work in the Management field

and have practical understanding of Management Strategic formulation and its implementation. This

exposure has really added a supplement and nourishment to our growing tree of management

knowledge- just like the fertilizer does to the plants.

In view of above, this report has been completed as a part of syllabus prescribed for the master of

business administration. This had been made in order to know Cement industry overview and its

strategic tools and its planning. This will help us to understand How Made Strategic Tools for

particular industry, which factor affected to Cement industry. We also know the Strengths, Weakness,

Opportunities, and Threats. This will help to understand financial overview of Cement industry. We

also know the Political, Economical, Social, Technology factor which affected to the Cement Industry.

It is matters of proud to be students of such great university where in students are helped to extract

hidden potentials from their selves. We are highly Thankful to all the Faculties of the department who

guided us all the way long as how the entire MRP 1 report is to be conducted.

The education institutions offering management programs play a significant part in un calculating the

much needed managerial skills in their students, the aspiring managers. The real success of

management lies in applying the professional management techniques in all managerial activities.

Practical study is eminent, and plays vital role for the students of management, because classroom

coaching and theoretical study alone are not enough. To survive in this highly competitive world,

practicality outweighs theoretic. Students are supposed to learn the various principles of business

administration conceptually but accuracy and efficiency in their implementation is possible only

through exposure to practical environment.

We have tried our best and have applied all our efforts, knowledge and sources available, in this

project.

Here we try our level best for finding data.

ACKNOWLEDGEMENT

It is with profound in depthless that we acknowledge the efforts of all the well-wishers who have in

some or the other way contributes in their own special way to the success of this project.

We would like to express deep sense of gratitude to Dr. Mahendra Sharma. We would also thankful

to Prof.Harsha Jariwala for their advise, constant encouragement and timely help throughout the

course of our project.

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

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

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

Hetal Mistri

Dhara Patel

Dixita Patel

Vaibhavi Raval

Jigarbhai Patel

Tosifbhai Nandoliya

EXECUTIVE SUMMARY

India's economy is the third largest by GDP in terms of purchasing power parity but, with a very large

population, it ranks only 165th in GDP/capita terms. Gradual de-centralization of the economy since

the early 1990s has allowed the development of a more diverse market economy that is increasingly

driven by an educated and business-minded middle class. This is highlighted by India's now world-

famous telecommunications and service sector, which has grown extensively over the past decade.

Increased variation has resulted in a reduction in India's agriculture dependency, although this sector

still supplies around 50% of the country's income. Manufacturing remains strong, representing more

than a quarter of output.

However, despite economic expansion and development of its service sector, economic disparity

remains a severe problem for India. Almost a third of Indians lived in poverty in 2011 and constant

population growth makes it hard to increase living standards. For illustration, India welcomed its 1

billionth inhabitant in 2000. In just 12 years since then the population has increased to over 1.2 billion!

In order to conduct this MRP-1 report we have done primary research to know the performance of four

major cement players with respect to customer loyalty. We have also done the financial analysis of

four major players of cement industry through secondary data for last five years, which includes

aggregate industry ratio analysis, separate company’s ratio analysis, aggregate industry sales trend of

last ten years and production trend of last five years. We have also done the various analysis like

Porter’s five force model, OT Analysis, PEST Analysis,

CONTENT

Certificate by the guide..........................................................................................I Candidate’s statements..........................................................................................II

Preface………………………………………………………………………….....III Acknowledgments………………………………………………………………...IV Executive summary………………………………………………………………..V

SR. NO. PARTICULARS PAGE

NO. CHAPTER-1 INTRODUCTION OF THE INDUSTRY

1.1 Current Scenarios 1 1.2 History of Cement 3 1.3 Process Technology 9 1.4 Development of The Cement Industry 10 1.5 Historical Synthetic Cement Production 15 1.6 Production Scenario 17 1.7 The Manufacturing Process 21 1.8 Environmental Regulation 24

CHAPTER-2 MAJAR PLAYER OF CEMENT INDUSTRY 2.1 J K Cement Ltd. 27-31 2.2 J K Lakshmi Cement Ltd. 32-37 2.3 Shree Cement Ltd. 38-43 2.4 ACC Cement Ltd. 43-47 2.5 Ultra Tech Cement Ltd. 47-53

CHEPTER-3 MAICRO ANALSIS OF CEMENT INDUSTRY 3.1 Industry Life Cycle 54-57 3.2 Porters Five Force Model 58-65 3.3 Opportunities and Threats 66-67 3.4 Driving Forces 67-71 3.5 PEST Analysis 72-79 3.6 SWOT Analysis 79-81 3.7 Economic Future of Indian Cement 81-82 3.8 Key Success factor in the Cement Industry 83 3.9 Industry Dominant Economic Factors 84-88

3.10 Strategic Group Mapping 89-91 CHAPTER-4 FINANCIAL ANALYSIS

4.1 Introduction 93 4.2 Filtrations 94 4.3 Ratio Analysis 95-106 4.4 Trade Analysis 106-115

CHAPTER-5 RESEARCH FINDINGS & CONCLUSION 5.1 RESEARCH FINDINGS 116

5.2 CONCLUSION 117 CHAPTER-6 BUSINESS-PLAN

6.1 INTRODUCTION 119-124 6.2 Objective 125-125

6.2.1 Vision 125 6.2.2 Mission 125 6.3 COMPANY DESCRIPTION 126 6.4 BRAND INFORMATION 126

6.4.1 Brand name 126 6.4.2 brand details 126 6.5 STP ANALYSIS 127 6.6 METHOD OF DISTRIBUTION & SALES

PROMOTION 127

6.7 Projected income statement 130 6.8 projected balance sheet 131 6.9 Projected cash flow statement 132

6.10 SOURCE OF FINANCE 133 6.11 Depreciation schedules 133 6.12 Salary structure 133

CHAPTER-7 BIBLIOGRAPHY 134 CHAPTER-8 ANNEXURE

Profit & Loss Account Balance Sheet

CHAPTER-9 LIMITATION OF REPOT

LIST OF TABLE

SR. NO.

PARTICULARS PAGE NO.

1.1 Cement Dispatches 5

1.2 Raw Materials For Portland Cement Manu faction 18

2.1 Major play Of Cement Industry 26

3.1 Cement Industry Life Cycle 56

3.2 Major Name Of Cement Industry 86

4.1 Capital Return on investment 94

4.2 Earnings Per Share 95

4.3 Current Ratio 97

4.4 Debt- Equity Ratio 99

4.5 Interest Coverage Ratio 101

4.6 Stock Turnover 102

4.7 Debtors turnover ratio 104

4.8 Total income 106

4.9 Total Expenses 107

4.10 Operating Profit 109

4.11 PBDT 110

4.12 Total Share Capital 111

4.13 Total Liability 112

4.14 Investment

113

4.15 Total Assets 115

LIST OF FIGURES & GRAPHS

SR. NO.

PARTICULARS PAGE NO.

1.1 Cement Dispatches 23

3.1 Industry Life Cycle

54

3.2 Cement Industry Life Cycle

56

3.3 Five Forces Model Of Competition 58

3.4 Geographical Coverage

89

3.5 Price VS. Brand 90

4.1 Capital Return on investment 96

4.2 Earnings Per Share 98

4.3 Current Ratio 100

4.4 Debt- Equity Ratio 101

4.5 Interest Coverage Ratio 103

4.6 Stock Turnover 105

4.7 Debtors turnover ratio 106

4.8 Total income 108

4.9 Total Expenses 109

4.10 Operating Profit 110

4.11 PBDT 111

4.12 Total Share Capital 112

4.13 Total Liability 113

4.14 Investment 114

4.15 Total Assets

115

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1. INDUSTRY ANALYSIS

1.1 CURRENT SCENARIOS

The Indian cement industry is the second largest producer of quality cement, which meets

global standards. The cement industry comprises 130 large cement plant sand more than 300

mini cement plants. The industry's capacity at the end of the year reached 188.97 million tons

which was 166.73 million tons at the end of the year 2006-07. Cement production during

April to March 2007-08 was 168.31 milliontons as compared to 155.66 million tons during

the same period for the year 2006-07.Despatches were 167.67 million tons during April to

March 2007- 08 whereas155.26 during the same period. During April-March 2007-08,

cement export was3.65 million tons as compared to 5.89 during the same period. Cement

industry in India is currently going through a consolidation phase. Some examples of

consolidation in the Indian cement industry are: Gujarat Ambujatakinga stake of 14 per cent

in ACC, and taking over DLF Cements and Modi Cement; ACCtaking over IDCOL; India

Cement taking over Raasi Cement and Sri Vishnu Cement; and Grasim's acquisition of the

cement business of L&T, Indian Rayon's cementdivision, and Sri Digvijay Cements. Foreign

cement companies are also picking upstakes in large Indian cement companies. Swiss cement

major Holcim has picked up14.8 per cent of the promoters' stake in Gujarat Ambuja Cements

(GACL).

The cement industry is one of the main beneficiaries of the infrastructure boom. With robust

demand and supply, the industry has bright future. The Indian Cement Industry with total

capacity of 165 million tones is the second largest after China. Cement industry is dominated

by 20 companies who account for over 70% of the market. Individually no company accounts

for over 12% of the market. The major players like L&T and ACC have been quiet successful

in narrowing the gap between demand and supply. Private housing sector is the major

consumer of cement (53%) followed by the government infrastructure sector. forecasted to

grow by over 22% by 2009-10 from 2007-08.Among the states, Maharashtra has the highest

share in consumption at12.18%,followed by Uttar Pradesh, In production terms, Andhra

Pradesh is leading with 14.72% of total production followed by Rajasthan. Cement

production grew at the rate of 9.1 per cent during 2006-07 over the previous fiscal's total

production of 147.8 mt (million tons). Due to rising demand of cement the sales volume of

cement companies are also increasing & companies reporting higher production, higher sales

and higher profits. The net profit growth rate of cement firms was 85%.Cement industry has

2

contributed around 8% to the economic development of India. Outsiders (foreign players)

eyeing India as a major market to invest in the form of either merger or FDI (Foreign Direct

Investment). Cement industry has a long way to go as Indian economy is poised to grow

because of being on verge of development

Economic Trends

India is among the fastest-growing economies in the world, with close to 8% annual

growth since 2002, and expected to be sustained for the next 5 years as well. Inflation rate

remained below 5% between 2001 to 2007, but has since increased, touching 8.75% in May

2008. The business regulatory environment is fairly open, and follows free-market

competition principles. All quantitative restrictions on trade were removed in 2001, except

for a few highly sensitive goods. Trade as a % of GDP has risen from 13% in 1991 to nearly

30.2% in 2005-06. The total cumulative foreign direct investment (FDI) received into India

up to March 2007 was US$ 54.63 billion, of which Italy‘s share is about 1.2%. The monetary

unit of India is Indian Rupee (1 Indian Rupee = 100 paise). The exchange rate of Indian

Rupee is Euro 1 = Rs. 63.20 and US$ 1 = Rs. 40.45 (March 2008 - Reserve Bank of India).

Demographics

India is a unique market on account of its diversity in age, income, and urban-rural

demographics. Nearly 58 million households, comprising 32.3% of India‘s dwelling units,

live in urban areas. Nearly 38% of urban households are in middle and higher income strata,

and only 14% of rural households have similar income levels.

Income Classification

Though the population is more than 1.1 billion, the real consuming class of 300 million

people outnumbers several of the world‘s large markets in terms of market potential. Of

these, around 150 million people (2 million very rich and 30 million rich households)

represent the consuming potential, particularly for lifestyle goods and services.

• There are close to 80,000 high net worth Individuals in India, with saving and Assets

exceeding US$1 million.

3

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

above)

• The market for luxury goods is estimated to be Rs 100 billion, with over 2 million

Indians estimated to be engaging in some luxury purchase or the other each year.

1.2 THE HISTORY OF CEMENT

The history of the cement industry in India dates back to the 1889 when a Kolkata-based

company started manufacturing cement from Argillaceous. But the industry started getting

the organized shape in the early 1900s. In 1914, India Cement Company Ltd was established

in Porbandar with a capacity of 10,000 tons and production of 1000 installed. The World War

I gave the first initial thrust to the cement industry in India and the industry started growing at

a fast rate in terms of production, manufacturing units, and installed capacity. This stage was

referred to as the Nascent Stage of Indian Cement Company. In 1927, Concrete Association

of India was set up to create public awareness on the utility of cement as well as to propagate

cement consumption.

The cement industry in India saw the price and distribution control system in the year 1956,

established to ensure fair price model for consumers as well as manufacturers. Later in 1977,

government authorized new manufacturing units (as well as existing units going for capacity

enhancement) to put a higher price tag for their products. A couple of years later, government

introduced a three-tier pricing system with different pricing on cement produced in high,

medium and low cost plants.

Cement Company, in any country, plays a major role in the growth of the nation. Cement

industry in India was under full control and supervision of the government. However, it got

relief at a large extent after the economic reform. But government interference, especially in

the pricing, is still evident in India. In spite of being the second largest cement producer in

the world, India falls in the list of lowest per capita consumption of cement with 125 kg. The

reason behind this is the poor rural people who mostly live in mud huts and cannot afford to

have the commodity. Despite the fact, the demand and supply of cement in India has grown

up. In a fast developing economy like India, there is always large possibility of expansion of

cement industry.

4

Cement Production and Growth

Domestic demand plays a major role in the fast growth of cement industry in India. In fact the

domestic demand of cement has surpassed the economic growth rate of India. The cement

consumption is expected to rise more than 22% by 2009-10 from 2007-08. In cement

consumption, the state of Maharashtra leads the table with 12.18% consumption, followed by

Uttar Pradesh. In terms of cement production, Andhra Pradesh leads the list with 14.72% of

production, while Rajasthan remains at second position.

The production of cement in India grew at a rate of 9.1% during 2006-07 against the total

production of 147.8 MT in the previous fiscal year. During April to October 2008-09, the

production of cement in India was 101.04 MT comparing to 95.05 MT during the same

period in the previous year. During October 2009, the total cement production in India was

12.37 MT compared to a production of 11.61 MT in the same month in the previous year.

The cement companies are also increasing their productions due to the high market demand.

The cement companies have seen a net profit growth rate of 85%. With this huge success, the

cement industry in India has contributed almost 8% to India's economic development.

Technology Up-gradation

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

gradation and assimilation is taking place. Currently, almost 93% of the total capacity is

based entirely on the modern dry process, which is considered as more environment-friendly.

Only the rest 7% uses old wet and semi-dry process technology. There is also a huge scope of

waste heat recovery in the cement plants, which lead to reduction in the emission level and

hence improves the environment.

Cement Dispatches

Cement industry in India has successfully maintained almost total capacity utilization levels,

which resulted in maintaining a 10% growth rate. In 2006-07, the total dispatch was 155 MT,

which rose up to 170 MT in 2007-08. The month of October 2009 saw a cement dispatch of

12.22 MT, which was almost 9% higher than the total cement dispatch of 11.21 MT in the

same month in the previous year.

5

Table-1.1

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

Production 101.04 95.05

Despatches (Excluding

Export)

100.24 94.33

Export 1.46 2.16

Capacity Utilization (%) 85 93

Mergers and Acquisitions in Cement Industry in India

UltraTech Cement is going to absorb its sister concern Samruddhi Cement to become

biggest cement company in India.

World's leading foreign funds like HSBC, ABN Amro, Fidelity, Emerging Market Fund

and Asset Management Fund have together bought 7.5% of India Cements (ICL) at a

cost of US$ 124.91 million.

Cimpor, a Cement company of Portugal, has bought 53.63% stake that Grasim

Industries had in Shree Digvijay Cement.

French cement company Vicat SA bought 6.67% share of Sagar Cement at a cost of

US$ 14.35 million.

Holcim now holds 56% stake of Ambuja Cement. Previously it held 22% of stake. The

company utilized various open market transactions to increase its stakes. It invested

US$ 1.8 billion for that.

Recent Investments in the Indian Cement Industry

In a recent announcement, the second largest cement company in South India, Dalmia

Cement declared that it's going to invest more than US$ 652.6 million in the next 2-3

years to add 10 MT capacity.

Anil Ambani-led Reliance Infrastructure is going to build up cement plants with a total

capacity of yearly 20 MT in the next 5 years. For this, the company will invest US$ 2.1

billion.

India Cements is going to set up 2 thermal power plants in Andhra Pradesh and Tamil

Nadu at a cost of US$ 104 billion.

6

Anil Ambani-led Reliance Cementation is also going to set up a 5 MT integrated cement

plant in Maharashtra. It will invest US$ 463.2 million for that.

Jaiprakash Associates Ltd has signed a MoU with Assam Mineral Development

Corporation Limited to set up a 2 MT cement plant. The estimated project cost is US$

221.36 million.

Rungta Mines (RML) is also planning to invest US$ 123 million for setting up a 1 MT

cement plant in Orissa

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

Government Policies

Government policies have affected the growth of cement plants in India in various stages.

The control on cement for a long time and then partial decontrol and then total decontrol has

contributed to the gradual opening up of the market for cement producers. The stages of

growth of the cement industry can be best described in the following stages:

Price and Distribution Controls (1940-1981)

During the Second World War, cement was declared as an essential commodity under the

Defense of India Rules and was brought under price and distribution controls which resulted

in sluggish growth. The installed capacity reached only 27.9MT by the year 1980-81.

Partial Decontrol (1982-1988)

In February 1982, partial decontrol was announced. Under this scheme, levy cement quota

was fixed for the units and the balance could be sold in the open market. This resulted in

extensive modernization and expansion drive, which can be seen from the increase in the

installed capacity to 59MT in 1988-89 in comparison with the figure of a mere 27.9MT in

1980-81, an increase of almost 111%.

Total Decontrol (1989)

In the year 1989, total decontrol of the cement industry was announced. By decontrolling the

cement industry, the government relaxed the forces of demand and supply. In the next two

years, the industry enjoyed a boom in sales and profits. By 1992, the pace of overall

economic liberalization had peaked; ironically, however, the economy slipped into recession

7

taking the cement industry down with it. For 1992-93, the industry remained stagnant with no

addition to existing capacity.

Government Controls

The prices that primarily control the price of cement are coal, power tariffs, railway, freight,

royalty and cess on limestone. Interestingly, all of these prices are controlled by government.

Opportunities and challenges

The glue that holds the infrastructure sector is cement and the growth of cement industry is

directly linked to the growth of infrastructure sector.

India today is the second fastest growing economy in the world with the cement and

construction sector being the prime movers. The Indian cement industry with a total installed

capacity of 219 million tonnes is the second largest producer in the world and has been

growing at a rate of 9 to 10 percent per annum. With a large percentage of Indian population

being below the age of 25, the construction activity is expected to make a significant

contribution in the context of growing housing needs, development of roads and other

infrastructure, urbanization, etc.

It is the construction sector which shares the blame of global economic slowdown leading to

slackening of demand for housing; but withstanding that hard time, our cement sector is still

growing at a 10 percent when compared to the global average of 5 percent. Indian industry is

fortunate in having an active support and services of the National Council for cement &

Building Materials with an excellent R&D Infrastructure and invaluable intellectual capital.

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

ShriJyotiraditya M. Scindia, Minister of State for Commerce & industry, said: "In spite of

global slowdown and reduction in demand, cement industry needs to be complimented for

weathering the downturn and recording a commendable growth of around 8 percent in 2007-

08 as well as in 2008-09. In the current year 2009-10 so far, the pace of growth of cement

industry has accelerated significantly above double digit."

The Indian cement industry has achieved an installed capacity of 242 million tonnes and is

targetted to reach 300 million tonnes by 2011-12 and 600 million by 2020. India has 97

percent of the installed capacity through dry process; the Indian cement industry has been

8

adopting latest technologies for energy conservation and pollution control as well as on-line

process of quality control based on expert systems and laboratory automation.

Despite having high demand in India, our per capita cement consumption is very low, where

the world average is 396 kg, in India the per capita consumption is only 156 kg. India being

the country of young population has a huge potential and its ushering social and economic

base will improve the domestic consumption.

Indian cement industry is efficient and eco-friendly, when it comes to energy conservation,

the best level is achieved by the industry as far as data goes of 687 kilo calories per kg of

clinker and 66 KWh per tonne cement are at par with the best achieved levels in the world.

The cement industry effort towards control of emissions, preservations of ecology and its

Corporate Social Responsibility for Environmental Protection are laudable. The sustainable

and long- standing efforts towards reduction of carbon footprint is commendable â€― CO2

emission of 0.82 tonnes per tonne of cement produced in 2006, a sustainable drop from the

level of 1.12 in 1996 and 0.94 in 2000.

On the technology front, the Indian cement industry has largely adopted state-of-art

manufacturing technologies, system for cogeneration of power and technologies for low NOx

and SO2 emission have yet to achieve many targets. The initiative taken by cement industry

for waste utilization are evident from the fact that production of blended cement in the

country in the year 2008-09 was as high as 74 percent as against only 36 percent in 2000-01.

The Indian cement industry annually recycles more that 30 million tones of fly ash, apart

from consuming the entire quality of granulated blast furnace slag- another waste generated

by steel plants in our country.

The rising cost of energy transportation and persistent raw material pressures have been

playing a heavy strain on the cement and construction industry. As a result, Indian

Companies have to not only explore alternate sources of energy and materials but also strive

to enhance operational efficiency. But India’s potential for growth remains intact. The

need of the hour is to spend invest adequately in developing human resources capable of

addressing the professional needs of construction industry like application of advanced

technologies and construction practices, project management construction, litigation,

insurance and finance, etc.

9

Indian cement industry is in search of competitive advantage, therefore, it is continuously

improving on the innovation and optimization front. While embracing its commitment to

grow and compete globally, it is however not neglecting the ecological and environmental

needs. Cement sector is adopting sustainable development practices and conservation

measures while harnessing energy for its use. The industry if fully committed and partner

global efforts to reduce Green House Gases impact and mitigating the evil of climate change.

1.3 PROCESS TECHNOLOGY

While adding fresh capacities, the cement manufacturers are very conscious of the

technology used. In cement production, raw materials preparation involves primary and

secondary crushing of the quarried material, drying the material (for use in the dry process) or

undertaking a further raw grinding through either wet or dry processes, and blending the

materials. Clinker production is the most energy-intensive step, accounting for about 80% of

the energy used in cement Production. Produced by burning a mixture of materials, mainly

limestone, silicon oxides, aluminum, and iron oxides, clinker is made by one of two

production processes: we tordry; these terms refer to the grinding processes although other

configurations and mixed forms (semi-wet, semi-dry) exist for both types. In the dry process,

the raw materials are ground, mixed, and fed into the kiln in their dry state. In the wet

process, the crushed and proportioned materials are ground with water, mixed, and fed into

the kiln in the form of slurry. Different types of cement that are produced in India are:•

Ordinary Portland cement (OPC):OPC, popularly known as grey cement, has 95 per cent

clinker and 5 per centgypsum and other materials. It accounts for 70 per cent of the total

consumption.• Portland Pozzolana Cement (PPC):PPC has 80 per cent clinker, 15 per cent

pozzolana and 5 per cent gypsum and accounts for 18 per cent of the total cement

consumption. It is manufactured because it uses fly ash/burnt clay/coal waste as the main

ingredient.• White Cement: White cement is basically OPC - clinker using fuel oil (instead of

coal) with iron oxide content below 0.4 per cent to ensure whiteness. A special cooling

technique is use din its production. It is used to enhance aesthetic value in tiles and flooring.

White cement is much more expensive than grey cement.

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1.4 DEVELOPMENT OF THE CEMENT INDUSTRY

Cement is an indispensable building material required for the construction of houses, bridges,

tunnels, dams etc.

The start of cement manufacturing in India goes back to 1904, when the first cement factory

was set up in Madras. Its production was as low as 30 tonnes a day, as such it failed.

The real beginning of this industry came up in 1913, when three units were set up at ICatni

(Madhya Pradesh) in 1915, Lekheri (Tamil Nadu) in 1916 and Porbander (Gujarat) in 1913.

The First World War gave incentive to the industry and a few more factories were set up at

Japla (Bihar), Dwarka (Gujarat) and Banmore (Madhya Pradesh). In 1934, ten out of eleven

cement manufacturing companies merged together and formed one Associated Cement

Company (A.C.C.).

The Dalmia Group entered in the field of cement manufacturing in 1937. This group set'up its

factories at Dalmianagar Bihar, Dadri (Haryana) and Dalmiapuram (Tamil Nadu). At the time

of partition, there were 18 cement factories with an annual installed capacity of 21-15 Lakh

tons.

Three more factories were established just after independence at Talaiyuthu (Tamil Nadu),

Kottayam (Kerala) and Sikka (Gujarat).

The production of cement was boosted up after 1950. It is because of developmental work in

the country, like construction of multipurpose river valley projects, means of transport,

industries and housing activity.

Percentage production of cement

In order to meet the growing demand of cement, a number of factories were set up in the

country. Presently, there are 120 factories.

The industry depends upon the availability of limestone, clay or shale and gypsum. These

natural materials are mined in different regions; as such factories are set up close to the

sources of raw material.

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Development of means of transport and availability of capital are other factors which

determine development of cement industry.

Although, in India, cement manufacturing has developed in different states except a few like

Punjab, yet 85% of the cement manufacturing is carried on in the states of Tamil Nadu,

Madhya Pradesh, Gujarat, Rajasthan, Andhra Pradesh and Bihar. Eleven types of cement is

manufactured in India like

Portland 71%

Pozollana 18%

Slag Cement 10%

Rest Others.

Tamil Nadu.

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

Tamil Nadu.

The state of Tamil Nadu has a very well developed cement industry. There are eight factories,

ThsTalukapatli cement factory is one of the largest in the country. Its annual capacity is about

10 lalchtonnes.

The industry is attributed to enormous reserves of raw material in the state, availability of

cheap labor and demand for cement.

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

Talaiyuthu, Sankaridurg and Aryalur.

Madhya Pradesh and Chhattisgarh.

These two states are the largest producer of cement in India. The centres are at Jamul, Satna,

Banmore, Katni, Gopalnagar, Durg, Kaymore, Tilda, Khor, Mandhar.

12

The Akaltara Cement Factory produces about 11 lakh tonnes of cement every year. New

plants are located at Rewa and Neemuch.

Gujarat.

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

Saurasthra Cement Company and Digvijay Company dominate cement production in the

state.

The Vadodra, Okha, Viraval, Bhavnagar factories are located at Ranavav, Sikka,

Ahmedabad, Dwarka, Porbander, Sevalia and Amiragarh. Gujarat state has rich resources of

raw material required for cement manufacturing.

Bihar.

Cement manufacturing in the Bihar state is done at Japla, Sindri, Dalmianagar, Kalyanpur,

Khalari and Chaibasa. Two new factories have been set up at Bhawanthpur. The rich coal and

lime-stone reserves are the major assets for the development of cement manufacturing.

Rajasthan.

Rajasthan has rich potentials for cement manufacturing. Cement factories are located at

Lakheri, SawaiMadhopur, Udaipur, Chittorgarh, Bundi, Banas, Beawar, Nimbaheda and

Sirohi.

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

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

Himachal Pradesh: Bilaspur (Gaggal) Paonta Sahib.

Kerala: Kottayam

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

Uttar Pradesh: Allahabad Churk, Dalla Chun

Maharashtra: Chanda, Ratnagiri, Mumbai, Kohlapur.

13

West Bengal: Prulia, Durgapur, Asansol.

Assam: Guwahti.

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

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

production.

The Cement Corporation of India, a public sector concern has set up a number of cement

factories, in die country, one each in Karnataka, Himachal Pradesh, Assam and Haryana, two

in Andhra Pardesh and three in Madhya Pradesh.

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

cement.

India has developed some export trade in cement. At times it exports cement and cement

products to the countries like Iraq, Iran, Afghanistan, Kuwait, Bangladesh, Mynmar, Sri

Lanka, E. African countries and South East Asian Countries.

However, at times the country has to import cement from Poland, Indonesia, Korea etc. to

meet the growing demand of cement in the country.

Cement industry of India faces problems like those of shortage of coal for running the

factories and at times shortage of railway wagons for the transportation of cement to the

markets.

Cement manufacturing is one of the most advanced industries in India. A decade back, the

country was having deficient production of cement and had to resort to import it from

different countries in order to meet country's demand of cement.

However, after March, 1989 due to changes in the policy, cement industry made rapid strides

both in capacity/production and process technology. At present there are

122 large cement plants with an installed capacity of 112-95 million tonnes per annum and

more than 300 mini cement plants with a combined estimated capacity of nine million tonnes

per annum. The production during 1999-2000 was 100-72 million tonnes (provisional). The

cement industry achieved a growth rate of 15 per cent in 1999-2000.

14

India is producing different varieties of cement like Ordinary Portland Cement (OPC),

Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well

Cement, White Cement, etc.

These different varieties of cement are produced strictly under BIS specifications and the

quality is comparable with the best in the world.

The cement industry has kept pace with technological advancement and modernization.

Export of cement was 3-14 million tonnes (provisional) in 1999- 2000. Improvement in the

quality of Indian Cement has found its ready market in a number of countries named earlier.

In order to meet the increasing trained manpower requirement of the Indian Cement Industry,

a Human Resource Development (HRD) Project has been implemented with assistance from

World Bank and DANIDA (Danish International Development Agency).

Under this Project, four Regional Training Centres have been set up at ACC -Jamul (M.P),

Dalmia Cement Dalmiapuram (T.N.), JK Cement Nimbahera (Rajasthan) and Gujarat

Ambuja, Ambuja Nagar (Gujarat).

15

1.5 HISTORICAL SYNTHETIC CEMENT PRODUCTION

A cement is a binder, a substance that sets and hardens independently, and can bind other

materials together. The word "cement" traces to the Romans, who used the term opus

caementicium to describe masonry resembling modern concrete that was made from crushed

rock with burnt lime as binder. The volcanic ash and pulverized brick additives that were

added to the burnt lime to obtain a hydraulic binder were later referred to as cementum,

cimentum, cäment, and cement.

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

hydraulic. Hydraulic cements (e.g.,Portland cement) harden because of hydration, a

chemical reaction between the anhydrous cement powder and water. Thus, they can harden

underwater or when constantly exposed to wet weather. The chemical reaction results in

hydrates that are not very water-soluble and so are quite durable in water. Non-hydraulic

cements do not harden underwater; for example, slaked limes harden by reaction with

atmospheric carbon dioxide.

The most important uses of cement are as an ingredient in the production of mortar in

masonry, and of concrete, a combination of cement and an aggregate to form a strong

building material.

Non-hydraulic cement such as slaked limes (calcium hydroxide mixed with water), harden

due to the reaction of carbonation in presence of the carbon dioxide naturally present in the

air. Calcium oxide is produced by lime calcination at temperatures above 825 °C (1,517 °F)

for about 10 hours at atmospheric pressure:

CaCO3 → CaO + CO2

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

CaO + H2O → Ca(OH)2

Once the water in excess from the slaked lime is completely evaporated (this process is

technically called setting), the carbonation starts:

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Ca(OH)2 + CO2 → CaCO3 + H2O

This reaction takes a significant amount of time because the partial pressure of carbon

dioxide in the air is small. The reaction of carbonation requires the air be in contact with the

dry cement, hence, for this reason the slaked lime is a non-hydraulic cement and cannot be

used under water.

Conversely, the chemistry ruling the action of the hydraulic cement is the hydration.

Hydraulic cements (such as the Portland cement) are made of a mixture of silicates and

oxides, the four main components being:

Belite (2CaO·SiO2);

Alite (3CaO·SiO2);

Celite (3CaO·Al2O3);

Brownmillerite (4CaO·Al2O3·Fe2O3).

The reactions during the setting of the cement are:

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

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

(4CaO·Al2O3·Fe2O3) + 7 H2O → 3 CaO·Al2O3·6H2O + CaO·Fe2O3·H2O

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

clear):

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

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

The silicates are responsible of the mechanical properties of the cement, the celite and the

browmillerite are essential to allow the formation of the liquid phase during the cooking. The

chemistry of the above listed reactions is not completely clear and is still the object of

research.

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1.6 PRODUCTION SCENARIO

The cement industry worldwide is facing growing challenges in the context of saving

material and energy resources as well as reducing its CO2 emissions. The International

Energy Agency highlighted in its 'Road Map for the Cement Industry' that the main levers for

the cement producers are the use of alternative materials, be it as fuel or raw material and in

addition the reduction of the clinker/cement factor by utilisation of well tried and proven

materials like slag, fly ash, pozzolanas or limestone fines. This underlines that in the years to

come cement will depend on OPC clinker to a high degree. New cements will therefore most

certainly first take into account higher amounts of main constituents besides clinker which

show pozzolanic or latent hydraulic properties.

Artificial materials that originate from natural or industrial resources but require additional

thermal treatment and/or activation may also have a role to play. It is not clear at present to

what extent cements based on magnesia can play a role. On the other hand, sulphoaluminate

cements may have a significant role to play. Unfortunately, due to their specific raw materials

as well as their performance in concrete they will most probably not be able to substitute

relevant parts of today's cement markets.

Raw Material

The first step in the manufacture of Portland cement is to combine a variety of raw

ingredients so that the resulting cement will have the desired chemical composition. These

ingredients are ground into small particles to make them more reactive, blended together, and

then the resulting raw mix is fed into a cement kiln which heats them to extremely high

temperatures.

Since the final composition and properties of Portland cement are specified within rather

strict bounds, it might be supposed that the requirements for the raw mix would be similarly

strict. As it turns out, this is not the case. While it is important to have the correct proportions

of calcium, silicon, aluminum, and iron, the overall chemical composition and structure of the

individual raw ingredients can vary considerably. The reason for this is that at the very high

temperatures in the kiln, many chemical components in the raw ingredients are burned off

and replaced with oxygen from the air. Table 3.3 lists just some of the many possible raw

ingredients that can be used to provide each of the main cement elements.

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Table-1.2 Examples of raw materials for Portland cement manufacturing

Calcium Silicon Aluminum Iron

Limestone Clay Clay Clay

Marl Marl Shale Iron ore

Calcite Sand Fly ash Mill scale

Aragonite Shale Aluminum ore refuse Shale

Shale Fly ash Blast furnace dust

Sea Shells Rice hull ash

Cement kiln dust Slag

The ingredients listed above include both naturally occurring materials such as limestone

and clay, and industrial byproduct materials such as slag and fly ash. From Table 3.3 it may

seem as if just about any material that contains one of the main cement elements can be

tossed into the kiln, but this is not quite true. Materials that contain more than minor (or in

some cases trace) amounts of metallic elements such as magnesium, sodium, potassium,

strontium, and various heavy metals cannot be used, as these will not burn off in the kiln and

will negatively affect the cement. Another consideration is the reactivity, which is a function

of both the chemical structure and the fineness. Clays are ideal because they are made of fine

particles already and thus need little processing prior to use, and are the most common source

of silica and alumina. Calcium is most often obtained from quarried rock, particularly

limestone (calcium carbonate) which must be crushed and ground before entering the kiln.

The most readily abundant source of silica is quartz, but pure quartz is very unreactive even

at the maximum kiln temperature and cannot be used.

Grinding and blending prior to entering the kiln can be performed with the raw ingredients in

the form of a slurry (the wet process) or in dry form (the dry process). The addition of water

facilitates grinding. However, the water must then be removed by evaporation as the first step

in the burning process, which requires additional energy. The wet process, which was once

standard, has now been rendered obsolete by the development of efficient dry grinding

equipment, and all modern cement plants use the dry process. When it is ready to enter the

kiln, the dry raw mix has 85% of the particles less than 90 £gm. in size

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The next step in the process is to heat the blended mixture of raw ingredients (the raw mix) to

convert it into a granular material called cement clinker. This requires maximum

temperatures that are high enough to partially melt the raw mix. Because the raw ingredients

are not completely melted, the mix must be agitated to ensure that the clinker forms with a

uniform composition.

This description refers to a standard dry-process kiln as illustrated in Figure 3-2. Such a kiln

is typically about 180 m long and 6 m in diameter, has a downward slope of 3-4%, and

rotates at 1-2 revolutions per minute.

Suspension preheaters and claimers

The chemical reactions that occur in the dehydration and calcination zones are

endothermic, meaning that a continuous input of energy to each of the particles of the raw

mix is required to complete the reaction. When the raw mix is piled up inside a standard

rotary kiln, the rate of reaction is limited by the rate at which heat can be transferred into a

large mass of particles. To make this process more efficient, suspension preheaters are used

in modern cement plants to replace the cooler upper end of the rotary kiln (see Figure 3-

2). Raw mix is fed in at the top, while hot gas from the kiln heater enters at the bottom. As

the hot gas moves upward it creates circulating ―cyclones‖ that separate the mix particles as

they settle down from above. This greatly increases the rate of heating, allowing individual

particles of raw mix to be dehydrated and partially calcined within a period of less than a

minute.

Grinding and the addition of gypsum

Once the nodules of cement clinker have cooled, they are ground back into a fine powder in

a large grinding mill. At the same time, a small amount of calcium sulfate such as gypsum

(calcium sulfate dehydrate) is blended into the cement. The calcium sulfate is added to

control the rate of early reaction of the cement, as will be discussed in Section 5.3. At this

point the manufacturing process is complete and the cement is ready to be bagged or

transported in bulk away from the plant. However, the cement is normally stored in large

silos at the cement plant for a while so that various batches of cement can be blended together

to even out small variations in composition that occur over time. Cement manufacturers go

to considerable lengths to maintain consistent behavior in their cements over time, with the

20

most important parameters being the time to set, the early strength development, and the

workability at a given water content.

Cement kiln dust

As the hot kiln gas moves through the kiln, it carries with it the smallest particles of the raw

mix as well as volatilized inorganic substances such as alkalis (sodium and potassium) and

chlorides. As the gas cools, the volatiles condense back round the small particles, and the

resulting powder is called cement kiln dust (CKD). In the old days, the CKD was simply

vented out of the smokestack, after which it would continuously settle out of the air to create

a thin coating of grey dust on the surrounding countryside. This is no longer allowed. In

fact, environmental restrictions even prevent CKD from being buried in landfills because of

the tendency for the alkalis and chlorides to leach into groundwater. In modern cement

plants, the CKD is removed in the suspension preheater and by and electrostatic precipitators

located near the base of the smokestack.

Tricalcium Silicate (C3S)

C3S is the most abundant mineral in Portland cement, occupying 40–70 wt% of the cement,

and it is also the most important. The hydration of C3S gives cement paste most of its

strength, particularly at early times.

Dicalcium Silicate (C2S)

As with C3S, C2S can form with a variety of different structures. There is a high temperature

tructure in that is in equilibrium at intermediate

An important aspect of C2 -C2S

has a very stable crystal structure that is completely unreactive in water.

structure is easil

is never present in portland cement. 2S is irregular, but

considerably less so than that of C3S, and this accounts for the lower reactivity of C2S. The

C2S in cement contains slightly higher levels of impurities than C3S. According to Taylor [2

], the overall substitution of oxides is 4-6%, with significant amounts of Al2O3, Fe2O3, and

K2O.

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Tricalcium Aluminate (C3A)

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

cement. Like C3S, it is highly reactive, releasing a significant amount of exothermic heat

during the early hydration period. Unfortunately, the hydration products of formed from C3A

contribute little to the strength or other engineering properties of cement paste. In certain

environmental conditions (i.e., the presence of sulfate ions), C3A and its products can actually

harm the concrete by participating in expansive reactions that lead to stress and cracking.

TetracalciumAluminoferrite (C4AF)

A stable compound with any composition between C2A and C2F can be formed, and the

cement mineral termed C4AF is an approximation that simply the represents the midpoint of

this compositional series. The crystal structure is complex, and is believed to be related to

that of the mineral perovskite. The actual composition of C4AF in cement clinker is generally

higher in aluminum than in iron, and there is considerable substitution of SiO2 and

MgO. Taylor reports a typical composition (in normal chemical notation) to be

Ca2AlFe0.6Mg0.2Si0.15Ti0.5O5. However, the composition will vary somewhat depending on

the overall composition of the cement clinker.

1.7THE MANUFACTURING PROCESS

What is cement?

Cement is a fine powder which sets after a few hours when mixed with water, and then

hardens in a few days into a solid, strong material. Cement is mainly used to bind fine

sand and coarse aggregates together in concrete. Cement is a hydraulic binder, i.e. it

hardens when water is added.

There are 27 types of common cement which can be grouped into 5 general categories

and 3 strength classes: ordinary, high and very high. In addition, some special cements

exist like sulphate resisting cement, low heat cement and calcium aluminate cement.

22

The quarry is the starting point

Cement plants are usually located closely either to hot spots in the market or to areas with

sufficient quantities of raw materials. The aim is to keep transportation costs low. Basic

constituents for cement (limestone and clay) are taken from quarries in these areas.

A two-step process

Basically, cement is produced in two steps: first, clinker is produced from raw materials.

In the second step cement is produced from cement clinker. The first step can be a dry,

wet, semi-dry or semi-wet process according to the state of the raw material.

Making clinker

The raw materials are delivered in bulk, crushed and homogenised into a mixture which is

fed into a rotary kiln. This is an enormous rotating pipe of 60 to 90 m long and up to 6 m

in diameter. This huge kiln is heated by a 2000°C flame inside of it. The kiln is slightly

inclined to allow for the materials to slowly reach the other end, where it is quickly

cooled to 100-200°C.

Four basic oxides in the correct proportions make cement clinker: calcium oxide (65%),

silicon oxide (20%), alumina oxide (10%) and iron oxide (5%). These elements mixed

homogeneously (called ―raw meal‖ or slurry) will combine when heated by the flame at a

temperature of approximately 1450°C. New compounds are formed: silicates, aluminates

and ferrites of calcium. Hydraulic hardening of cement is due to the hydration of these

compounds.

The final product of this phase is called ―clinker‖. These solid grains are then stored in

huge silos. End of phase one.

From clinker to cement

The second phase is handled in a cement grinding mill, which may be located in a

different place to the clinker plant. Gypsum (calcium sulphates) and possibly additional

cementitious (such as blastfurnace slag, coal fly ash, natural pozzolanas, etc.) or inert

materials (limestone) are added to the clinker. All constituents are ground leading to a

fine and homogenous powder. End of phase two. The cement is then stored in silos before

being dispatched either in bulk or bagged.

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What is concrete?

Concrete is a solid material made of cement, sand, water, aggregates and often with

admixtures. When fresh, it has a certain workability and takes the form of the mould into

which it is put. When set and hardened, it is as strong as natural stone and resists time,

water, frost, mechanical constraints and fire. Typically, concrete is the essential material

used in all types of construction [residential (housing), non-residential (offices) and civil

engineering (roads, bridges, etc.)].

Figar-1.1

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1.8 ENVIRONMENTAL REGULATION

Republicans have made clear that they don‘t think President Obama‘s jobs plan, including

$50 billion for transportation infrastructure, will create jobs. They would rather remove

regulations that cost industry money. They say reducing this ―regulatory burden‖ will create

jobs — and they want to start with the cement industry.

During floor debate on the Cement Sector Regulatory Relief Act, Rep. Waxman shows a

picture of an elementary school located right next to a cement kiln.

The House is currently debating the Cement Sector Regulatory Relief Act, which would

eliminate EPA standards, passed last August, to reduce hazardous air pollution. Industry

hacks say regulations currently facing the cement industry could force the closure of 18 of the

nearly 100 U.S. cement plants and result in the loss of 4,000 manufacturing jobs. Democrats

— and the Congressional Research Service — refute those numbers. Republicans have been

toiling away all year to gut EPA regulations of all stripes — indeed, California Democrat

Henry Waxman, ranking member of the Energy and Commerce Committee, today called it

―the most anti-environment Congress in history,‖ having voted 136 times this session to

block environmental measures.

But the GOP says this one in particular is a jobs-killer. ―The cement industry is in its weakest

economic condition since the 1930s,‖ said Jason Altmire (R-PA) on the floor of the House.

He says the bill would simply remove an unnecessary barrier to industry. About 40 percent of

the cement used in the U.S. in a given year is used to surface highways. According to

Earthjustice, cement plants are among the nation‘s worst toxic polluters. Cement kilns are the

second largest source of mercury emissions in the United States, after coal-fired power

plants. So essentially, this Republican bill is another government subsidy to the road industry,

only this time we‘re paying with the air we breathe, the water we drink, and the food we eat.

25

It‘s true, 20 percent of construction workers are currently unemployed, and that represents a

significant economic and human problem. To address that problem, Democrats and

transportation advocates, including industry representatives, continue to urge Congress to

pass a multi-year transportation reauthorization — not gut life-saving environmental

standards. ―If these bills are enacted,‖ Waxman said on the floor, ―there will be more cases of

cancer, birth defects, and brain damage. The ability of our children to think and learn will be

impaired because of their exposure to mercury and other dangerous air pollutants.‖

―Mercury is so toxic just one seventieth of a teaspoon of mercury — or .0024 ounces — can

contaminate a 20-acre lake and render the fish in that lake poisonous to eat,‖ said Rep. James

Moran (D-VA). Waxman offered three amendments to the bill. One uses the rhetoric

Republicans have been using to block bills all year — requiring that the money used to

authorize the bill be offset elsewhere in the budget. But instead of requiring that offset

upfront, it would require that the cost offset be examined after the bill passes, and render the

bill ineffective if there is no offset. The other amendment would continue government

emissions enforcement if those emissions ―are harming brain development or causing

learning disabilities in infants or children.‖

The NIH says exposure to even low levels of mercury can reduce a child‘s IQ. Moran made

an economic argument, saying that those children have a harder time getting and keeping

jobs. He quoted independent scientific studies saying the cost of mercury pollution ―is as high

as $22,300 per IQ point per child, which cumulatively amounts to $8.7 billion in lost

potential per year.‖ ―The majority constantly urges us to balance the costs and benefits of

environmental regulation,‖ Moran said. ―But when the benefits of regulating hazardous

pollution substantially outweigh the costs, as they do with mercury, all of a sudden that

doesn‘t become an issue for debate.‖

―If we do not defeat this bill — if it were to be enacted — children will suffer,‖ he went on.

―Our economy will become weaker. The fact is, we have both a moral and an economic

responsibility to defeat this bill.‖

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2. INTRODUCTION

There are a number of players prevailing in the cement industry in India. However, there are

around 20 big names that account for more than 70% of the total cement production in India.

The total installed capacity is distributed over around 129 plants, owned by 54 major

companies.

Table-2.1

No. Name production Installed capacity

1 J K Cement 12,782 16,000

2 J K Laksmi Cement 13,000 16,500

3 Acc cement

17,902 18,640

4 Shree cement 14,500 14,115

5 Ultatech cement 13,707 17,000

6 Gujarat ambuja 15,094 14,860

7 Grasim 14,649 14,115

8 Indin cement 8,434 8,810

9 Jaypee group 6,316 6,531

10 Century 6,636 6,300

11 Madrascement 4,550 5,470

12 Birla corp. 5,150 5,113

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2.1 J.K CEMENT LIMITED

INTRODUCTION

J.K. Cement Ltd. (JKC) is engaged in the cement production. The company produces two

types of cement, namely, White and Grey cement. It also produces and supplies water proof

cement. The company is the largest producer of grey cement in Northern India and the second

largest producer of white cement in India in terms of production capacity. The company's

manufacturing facilities are located in Nimbahera, Mangrol and Gotan, India. JKC exports its

products to countries including South Africa, Nigeria, Singapore, Bahrain, Bangladesh, Sri

Lanka, Kenya, Tanzania, UAE and Nepal. JKC is headquartered in Kanpur, India.

J K Cement Limited (JK Cement) is one of the largest cement manufacturers in Northern

India and also the second largest white cement manufacturer in India by production capacity.

It is an affiliate of the J.K. Organization, which was founded by LalaKamlapatSinghania in

the year 1994. The Company produces 53-grade, 43-grade and 33-grade Ordinary Portland

Cement (OPC) grey cement, Portland Pozzolana Cement ('PPC') under grey and white

cement. JK Water proof is another product from JK Cements used for flooring, wall

application and other specialized applications. The products are marketed under the brand

names J.K. Cement and Sarvashaktiman for OPC products, J.K. Super for PPC products and

J.J White and camel for white cement products.

HISTORY

J.K cement started its commercial production in may 1975 in its first plant nimbahera in

rajasthan. The company was incorporated in the year 1994.

Today J.K cement is one of the largest cement manufacturers in north india. It is also second

largest producer of white cement in india. The company export white cement to countries like

south Africa, Nigeria, Singapore, Bahrain, Bangladesh, srilanka, Tanzania, UAE and Nepal.

The company has two manufacturing facilities located at nimbahera and mangrol in the state

of rajsthan. The company produces white cement and its production unit is located in gotan at

rajasthan. During august 2009, Allahabad HC had sanctioned the scheme of amalgamation of

jaykaycem a wholly owned subsidiary with the company. Jaykaycem was implementing 3

million tones per annum green field grey cement plant at mudhol, district bagalkot, Karnataka

28

state which was at final stage of implementation. The installed capacity of grey cement of JK

cement with the merger incrased to 7.5 million tones per annum.

These plant have received various certifications ISO-9001:2000 for quality management

system. ISO-14001:2004 for environment management system and OHSAS-18001:2005 for

occupational health and safety systems. J.k cement ltd. Is part of the $3 billion conglomerate.

Jk organization. The company is promoted by DR.Gaurharisinghania& MR.

yadupatisinghania and entered cement business in 1975. 2ed largest white cement

manufacturer in india with 0.40 MTPA capacity and one of the leading grey cement

producers in north India with over 36 years of experience. And highly reputed brand with

extensive nation-wide distribution. Integrated cement manufacturing company with 7.5

MTPA grey cement capacity. Nimbahera, mangrol and gotan (rajashtan): 4.5 MTPA

Muddapur( Karnataka): 3 MTPA 105.5 MW of captive power Proximity and access to large

high quality reserves of limestone, sufficient to operate cement plants for the next 30 years.

Expanding domestic grey cement capacity to 10.5 MTPA and white cement capacity to 0.60

MTPA and wall putty capacity to 0.60 MTPA by se pt 2014.Jhajjar (Haryana): 105 MTPA

split grinding Gotan (Rajasthan): 0.20 MTPA white cement and 0.30 MTPA wall putty

Greenfield expansion in the middle east Fujairah (UAE): dual process plant – 0.6 MTPA

white cement or 1.0 MTPA grey cement J K cement‘s LT credit rating was recently

upgraded to AA – by care ratings Listed on national stock exchange (―NSE‖) and Bombay

stock exchange (―BSE‖) with a market capitalization of INR 23bn

TYPES OF PRODUCT

J k cement produces ordinary portland cement of 53-grade, 43-grade and 33-grade. It markets

these cements under the brand name J K cement and sarvashaktiman. It also manufactures

portland pozzoland cement and markets it under the name J K super. It markets white cement

under the name J K white and camel.

J.K cement has introduced water repellent material in powder form. It has also introduced

white cement based putty for plastering walls and ceiling and sells the same under the name

JK wall puty.

29

No representation or warranty, express or implied, is made as to, and no reliance should be

placed on, the fairness, accuracy, completeness or correctness of the information or opinions

contained in this presentation. Such information and opinions are in all events not current

after the date of this presentation. Certain statements made in this presentation may not be

based on historical information or facts and may be "forward looking statements" based on

the currently held beliefs and assumptions of the management of J. K. Cement Limited

(―Company‖ or ―JKC‖), which are expressed in good faith and in their opinion reasonable,

including those relating to the Company‘s general business plans and strategy, its future

financial condition and growth prospects and future developments in its industry and its

competitive and regulatory environment.

Forward-looking statements involve known and unknown risks, uncertainties and other

factors, which may cause the actual results, financial condition, performance or achievements

of the Company or industry results to differ materially from the results, financial condition,

performance or achievements expressed or implied by such forward-looking statements,

including future changes or developments in the Company‘s business, its competitive

environment and political, economic, legal and social conditions. Further, past performance is

not necessarily indicative of future results. Given these risks, uncertainties and other factors,

viewers of this presentation are cautioned not to place undue reliance on these forward-

looking statements. The Company disclaims any obligation to update these forward-looking

statements to reflect future events or developments.

This presentation is for general information purposes only, without regard to any specific

objectives, financial situations or informational needs of any particular person. This

presentation does not constitute an offer or invitation to purchase or subscribe for any

securities in any jurisdiction, including the United States. No part of it should form the basis

of or be relied upon in connection with any investment decision or any contract or

commitment to purchase or subscribe for any securities. None of our securities may be

offered or sold in the United States, without registration under the U.S. Securities Act of

1933, as amended, or pursuant to an exemption from registration therefrom.

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

and in any manner.

30

PRODUCTION CAPACITY

In the current economic and political scenario, setting up a new Greenfield project has

become challenging in view of the following:

• Long arduous process of environmental approvals

• Land acquisition

• Complexity of mineral composition in new areas

• Supporting infrastructure of rail connect and water availability

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

site location

SEGMENT

J.K. Super Cement is one of the premium grey cement brands in the Country, available as

application friendly Portland Pozzolana Cement (PPC). The product complies with quality

standards specified by the Bureau of Indian Standards (BIS) and is much in demand, by both,

the retail and the institutional segment.

SWOT ANALYSIS

WMI‘s J.K. Cement Ltd. contains a company overview, key facts, locations and subsidiaries,

News and events as well as a swot analysis of company.

This SWOT Analysis company profile is a crucial resource for industry executives and

anyone looking to quickly understand the key information concerning J.K. Cement Ltd.‘s

business. WMI‘s ―J.K. Cement Ltd. SWOT Analysis & Company Profile‖ reports utilize a

wide range of primary and secondary sources, which are analyzed and presented in a

consistent and easily accessible format. WMI strictly follows a standardized research

methodology to ensure high levels of data quality and these characteristics guarantee a unique

report.

Examines and identifies key information and issues about (J.K. Cement Ltd.) for business

intelligence requirements.

31

Studies and presents J.K. Cement Ltd.‘s strengths, weaknesses, opportunities (growth

potential) and threats (competition). Strategic and operational business information is

Objectively reported.

The profile contains business operations, the company history, major products and services,

prospects, key competitors, structure and key employees, locations and subsidiaries.

Quickly enhance your understanding of the company.

Obtain details and analysis of the market and competitors as well as internal and external

factors which could impact the industry.

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

32

2.2 JK LAKSHMI CEMENT LTD

INTRODUCTION

Chronicle of the company thus began in the state of Rajasthan during the year 1938. One of

the established names in the cement industry, JK Lakshmi Cement (JKLC) Ltd has state-of-

the-art plant at Jaykaypuram, district of Sirohi, Rajasthan having an annual capacity of 3.65

million tonnes. With the use of the latest technology from M/s Blue Circle Industries and

modern equipment‘s from M/s Fuller International of USA, the company going from strength

to strength and produce JK Lakshmi Cement, JK Lakshmi plats and JK Lakshmi Power Mix.

It is also the first cement producer of Northern India to be awarded an ISO 9002 certificate

and be accredited by NABL (Department of Science & Technology, Government of India)

for its Lab Quality Management systems.

HISTORY

There is hardly any other product that has so greatly contributed to the growth of modern

human civilization as Cement. The massive urban infrastructure that we see today across the

world would have been unthinkable without cement. Cement is the root substance that has

given the essential element of strength and durability to our houses, schools, offices and other

buildings so that we can occupy them with peace of mind.

The word Cement literally means a substance that can bind material together and can acquire

strength on hardening. The cement as we know today is a specialised building material which

is a result of various innovations over the past and is made in sophisticated manufacturing

facilities.

The oldest use of cement dates back to the thousands of years old Egyptian civilisation. The

Egyptians used natural cement made by combining limestone and gypsum for the

construction of their massive and highly impressive pyramids. The fact that the Egyptian

Pyramids have proudly stood the test of time over such a long period of human history is a

testimony to the phenomenal strength of cement. However it must be stated that the ancient

Egyptian cement was very different from the cement in use today.

Later in the Roman era, the concept of cement advanced further. Romans used a combination

of slaked lime with Pozzolana, a volcanic ash from Mount Vesuvius. The Romans made

33

many impressive structures using this cement. The Basilica of Constantine is one popular

example of Roman construction in which they used such cement mortar.

In eighteenth century England, John Smeaton, a British engineer, was assigned the task of re-

constructing the Eddystone Lighthouse, a structure that had witnessed repeated structural

failure. In 1756, Smeaton conducted a number of experiments that led to the discovery that

cement made from limestone containing a considerable proportion of clay would harden

under water. Based on this discovery, Smeaton rebuilt this lighthouse in 1759 and this time, it

stood strong for 126 years.

Subsequently, until the early part of the nineteenth century, large quantities of natural cement

was used, that was made with a combination of naturally occurring lime and clay.

In 1824, Joseph Aspdin, a British mason obtained a patent on his hydraulic cement formula

that closely resembled the modern cement as we know today. He called this cement Portland

Cement, and it was made through the proportionate mixing, burning and the subsequent

grinding of a combination of clay and limestone. Cement went through many more

improvements and developments in the nineteenth and twentieth centuries. The industrial

revolution and the subsequent development of the rotary kiln paved the way for huge and

sophisticated cement manufacturing plants. These plants possess the capability of a

homogenous mixing and intense heating of the raw material thus vastly improving the quality

of the cement produced. The sophisticated quality-testing equipment employed by modern

cement plants further helps in ensuring the quality of the cement produced.

TYPES OF PRODUCT

Upholding the tradition of JK Organisation for maintaining the highest standards in quality,

JK Lakshmi Cement today is one of the most preferred brands in its marketing area with a

network of about 2200 dealers spread in the states of Rajasthan, Gujarat, Delhi, Haryana,

U.P., Punjab, J&K, MP and Mumbai. Our endeavour is always to give our best and maintain

the highest standards of customer satisfaction. No wonder the discernible buyers prefer this

cement over other brands owing to its consistency, higher level of quality and impeccable

customer service.

34

Also not surprising is the fact that the decision makers of the nation's important projects like

IGNP, SardarSarvorar Dam and major corporations like L&T, Reliance, Essar and Airport

Authority of India chose JK Lakshmi Cement over other brands.

JK Lakshmi Cement Ltd is also the first Cement Manufacturer in North India to use coloured

bags to help the customer in segregating different products. It also has a regular contact

program with masons, dealers and architects to keep in tune with their needs and

requirements. One of the many innovative initiatives the company took was to have a mason's

club that now has over 45,000 members. Under this program the masons are given an

insurance cover against accidents absolutely free of cost, besides educating them on the latest

in construction activities.

The high standard of advertising has been another feather in the cap of JK Lakshmi Cement

Ltd. This has not only helped it to reach out to its customers but also in connecting with them

at an emotional level. No wonder then that "Mazbooti Guaranteed" is now a term that is

synonymous with JK Lakshmi Cement.

PRODUCTION CAPACITY

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

state-of-the-art equipment acquired from leading vendors from across the world. Rated

among the topmost Cement Plants in India, our manufacturing facility is well positioned to

deliver an extremely superior quality of product that adheres to the highest quality standards.

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

8 square kilometres among the lush green Arravali ranges at Jaykaypuram in Sirohi district of

Rajasthan. The plant uses ultra modern equipment acquired from M/s Fuller International of

USA and M/s Ventomatic of Italy.

The right combination of quality assurance, equipment and methodology form the base for

the Mazbootiadvantage offered by our Cement. With an annual production capacity of 3.5

million tonnes, our manufacturing plant has the following highlights:

JK Lakshmi's manufacturing facility in Sirohi, Rajasthan has been rated among the top

Greenest Cement Plants of India.

35

The variety of limestone used in the manufacturing of JK Lakshmi Cement is known to

be of a highly superior quality resulting in cement that is well recognised for strength and

durability.

JK Lakshmi's manufacturing plant uses ultra-modern technology and imported

machinery.

Use of high-end equipment such as the Gamma Metrics Machine and the X-ray Analyser

ensures that each product passing out of JK Lakshmi's manufacturing facility adheres to

global standards of quality and performance.

Electronic packing machines obtained from M/s Ventomatic of Italy ensure that the

customers obtain accurate quantities of JK Lakshmi's products.

The plant is fully computerised and centrally controlled by programmable logic controller

with colour VDU Control Stations

SEGMENT

JK Lakshmi Cement, a renowned and well-established name in the Indian cement industry,

now in its 31st year, has a formidable presence in North & Western India‘s cement markets.

Its current capacity stands at 5.3 million MT per annum. Modern and fully computerized

integrated plant at Jaykaypuram, in Sirohi district of Rajasthan. It also has two split location

grinding units – at Kalol, Gujarat, and at Jhamri ,Distt. Jhajjhar, Haryana.

Established a Waste Heat Recovery Power project to generate 12 MW of power from waste

heat gases, which does not use any fossil fuel, taking the company‘s total captive power

generation capacity to 66 MW

The operating parameters at par with international standards and trendsetter in various

initiatives, including usage of alternative fuels such as petcoke

Recognition for its outstanding efforts in various fields, by way of numerous awards such as

―India‘s Best Companies to Work for‖ Award, Gold Award - National Institute of Personal

Management, Star Brands 2011, Green Manufacturing Excellence Award by Frost &

Sullivan, Greentech Safety Gold Award by Greentech Foundation, Golden Peacock HR

Excellence Award, Safety Innovation Award, Leading Businesswoman of the Year Award,

Greentech HR Excellence Award by Greentech Foundation, Leading CEO of the Year

36

Award, Best Professionally Managed Company Award and Golden Peacock Award for CSR

initiatives.

It forayed into the Ready Mix concrete business, an emerging segment in construction sector,

with the brand name ―JK Lakshmi Power Mix‖. It operates 11 RMC plants. It also markets

Plaster of Paris under the brand name ―JK Lakshmiplast‖ – a market leader in its product

category Work is on at the 2.7 million MT-Greenfield-site plant at Durg in Chattisgarh.

SWOT ANALYSIS

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

materials. It is engaged in the production of cement that include cement 53 blended, 53 grade

ordinary portland cement and 43 grade ordinary portland cement. The company caters its

product to civil and industrial works and operates in India. It is headquartered at New Delhi,

India.

This comprehensive SWOT profile of JK Lakshmi Cement Ltd. provides you an in-depth

strategic analysis of the company‘s businesses and operations. The profile has been compiled

by Global Data to bring to you a clear and an unbiased view of the company‘s key strengths

and weaknesses and the potential opportunities and threats. The profile helps you formulate

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and competitors better.

This company report forms part of Global Data‘s ‗Profile on Demand‘ service, covering over

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The company‘s core strengths and weaknesses and areas of development or decline are

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37

Equip yourself with information that enables you to sharpen your strategies and transform

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Opportunities that the company can explore and exploit are sized up and its growth potential

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Scout for potential investments and acquisition targets, with detailed insight into the

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38

2.3 SHREE CEMENT

INTRODUCTION

Shree Cement Ltd is one of India's premier cement makers and the largest in North India. The

company is an energy conscious & environment friendly business organization. They have

three brands under their portfolio, namely Shree Ultra Jung Rodhak Cement, Bangur Cement

and Rockstrong Cement. Their manufacturing units are located at Beawar, and Ras in

Rajasthan. They are also having the grinding units in Khushkhera in Rajasthan. The company

is head quartered in Kolkata, India.

The company is in the process of setting up the 43 MW Green Power Projects (Waste Heat

Recovery Projects) at Bangur Nagar, Beawar and Bangur city, Ras. The projects are expected

to be completed by fourth quarter of FY 2009-10. The company is planning to consolidate

their presence in the high growth market with additional power generation capacity.

Shree Cement Limited (SCL) is a manufacturer and distributor of cement in India. It also

generates power from waste heat recovery. The company markets its cement under the brand

names of Shree Ultra Jung Rodhak, Bangur, and Rockstrong. It sells its cement through its

sales offices and dealers and retailers. The company owns and operates manufacturing

facilities at Beawar and Ras in Ajmer, and Pali district in Rajsthan. Its grinding units are

strategically located at Khushkhera, Suratgarh and Jaipur respectively in Rajasthan, and

Laksar in Uttarakhand. The company has an installed capacity of 13.50 million ton of

cement, and 560.00 megawatt of power. SCL is headquartered in Kolkata, West Bengal, India

HISTORY

YEAR EVENTS 1979 - The Company was incorporated on 25th October, at Jaipur. The

Company was promoted by members of the Bangur family and others. Shree Digvijay

Cement Co. Ltd., Graphite India, Ltd. and Fort Gloster Industries, Ltd. took active part in the

promotion of theCompany. The Company manufacture's cement & cement products.

To reduce fuel and power consumption, the Company adopted the latest dry process, four

stage preheater precalcination technology of clink erisation and air swept roller mill grinding

system for raw material and coal grinding. The Company entered into agreement with F.L.

Smidth & Co. A/s. Copenhagen, a designer and manufacture of cement plants, It associates

39

F.L. Smidth &Cia. Espanola S.A., Madrid and with Larsen& Toubro Ltd., Mumbai for the

supply of plant equipment and services for the proposed project.

1984 - 70 No. of equity shares subscribed for by the signatories to the Memorandum of

Association. In Oct./Nov. 1,53,99,930 No. of equity shares issued of which 1,06,99,930 shar

reserved for firm allotment as follows:

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

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

(iii) 36,99,930 shares to Directors, their friends etc. including upto 25,00,000 shares to NRIs

with repatriation rights. The balance 47,00,000 shares offered to the public of which

18,80,000 shares offered for allotment on preferential basis to Non-Residents.

1991 - Production of clinker and cement declined due to a major shut down of the plant for

implementation of modernisation/renovation/modification work. The Company undertook to

set up a new cement plant of 0.6 million TPA capacity in Rajasthan.

7,96,000 No. of Equity shares issued to financial institution inconversion of loan.

1993 - The Company undertook a scheme of implementing second stage of its licensed

capacity to increase its capacity to 3300 tonnes per day. The Company issued 21975 - 16%

each with equity warrants and these will be converted as per institutional guidelines.

2,40,021 shares issued in pursuance of scheme of Amalgamation.

1994 - The Company issued 10,00,000-16% Secured Redeemable NCD of Rs 100 each on

private placement basis. A scheme of amalgamation of an existing leasing and finance

Company with the Company was prepared for undertaking leasing activities and other

financial services on large scale. M/s. Mannakrishna Investment, Ltd. is a subsidiary of the

Company.

1995 - The Company undertook the implementation of new unit of 124 MT capacity per

annum named "Raj Cement". 43,95,000 No. of Equity shares on surrender of detachable

optional share warrants attached with 16% unsubscribed non-Convertible Debentures of 100

each.

40

1996 - The Company commissioned its second cement plant - Raj Cement with a capacity of

12.4 lakh tonnes per annum in Beawar. 58,06,204 rights shares issued .(prem. Rs 10 per

share)

1998 - Shree Cement, the Calcutta-based PD-BG Bangur group company, has decided to

issue preference shares aggregating Rs 15 crore to mobilise long-term funds. Shree Cement's

expansion in capacity by 12.4 lakh tonnes at the new unit in Reawar, has made it a leading

cement manufacturer in North India. ICRA has downgraded the rating of the NCD

programme of Shree Cement Ltd (SCL) from LAA to LA. The Rs 372-crore 1.25 million

tonne cement plant near Ajmer was commissioned during the year after considerable delay

due to an explosion in the electro-static precipitator.

1999 - The company has been awarded the first prize for energy conservation in 1998 in the

cement sector. SCL, belonging to the house of Bangurs, is one of the largest cement

manufacturers in North India, having the installed capacity of 2 million tonnes. Its plants are

located in Rajasthan. The new plant was set up at Beawar with the capacity of 1.24 million.

-Unit I and Unit II of the company receives National Award for 'Best Electrical Energy

Performance' and 'Best Thermal Energy Performance' in the Cement Industry for the year

2000-01 Decides to change the Accounting year to April - March each year and accordingly

the current year is only for nine months. Appoints Mr M K Singhi as the Executive Director

of Shree Cements. In pursuance to the IDBI, company approve for early redemption of

privately placed under noted cummulative redeemable preference shares. Change in

Management Structure: Mr B G Bangur re-appointed as executive chairman and Shri H M

Bangur re-appointed as the Managing Director for a period of five years.

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

recognition of outstanding performance in Industrial Safety achieving longest accident free

period. Receives permission for delisting of shares from Delhi Stock Exchange. The company

has been conferred "National Award for Excellence in Energy Management 2003" instituted

by the Confederation of Indian Industry (CII) and Sohrabji Godrej Green Business Centre.

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

41

Productivity Council in recognition of productivity measures and productivity improvements

achieved. Rajasthan Chamber of Commerce & Industries, Jaipur presents 'RCCI Excellence

Award' to Shree Cement Ltd in recognition of Overall Best Corporate Governance Practices

and Disclosures in Annual Report among all companies having registered office in Rajasthan.

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

ShreeCement bags TERI corporate award

2007-Shree Cement - Best Corporate Governance Award by RCC. Shree Cement Ltd has

appointed Sheri. Amitabha Ghosh as Director of the Company w.e.f. May 14, 2007.

Shree Cement bags "National Awards for excellence in water Management" 2007

2008-Shree Cement - RCCI Excellence Award. Launch of Tuff Cement 3556 in March 2007.

National awards for Excellence in Water Management as ―Water efficient Unit by CII, 2007.

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

2011-World Economic Forum (WEF), Switzerland has identified the Company as New

Sustainability Champion. The Company has recommended final Dividend @ Rs. 8 per share.

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

TYPES OF PRODUCT

The company offers cement under various brands, including

Shree Ultra Jung Rodhak Cement,

Bangur Cement, and

Rockstrong Cement

42

PRODUCTION CAPACITY

In 2011-12 company changed its financial year closing to July. Since 2006, it has more than

quadrupled its production capacity both by expanding into new areas and increasing the

capacities of the existing plants. Plants are located in Beware, Rash, Khushkhera and

Suratgarh in Rajasthan and Laxer (Roorkee) in Uttarakhand

SEGMENT

Shree Cement Limited is a cement producer. The Company operates in two segments:

Cement and Power. As of June 30, 2012, the Company had the cement capacity of 13.5

million tons per annum and power capacity of 560 megawatt. This includes 300 megawatt

(150 megawatt x2) thermal power plant commissioned at Beawar. The Company's waste heat

recovery power plants have a total capacity of 46 megawatt. The Company‘s brands include

Shree Ultra, Bangur Cement and Rockstrong Cement. SCL has manufacturing facilities at

Beawar and Ras in Ajmer and Pali district and grinding units at Khushkhera, Suratgarh and

Jaipur, respectively, in Rajasthan and Roorkie in Uttarakhand.

SWOT ANALYSIS

Shree Cement Limited (500387) : Company Profile and SWOT Analysis' contains in depth

information and data about the company and its operations. The profile contains a company

overview, business description, financial ratios, SWOT analysis, competitive benchmarking,

key facts, key employees, location and subsidiaries as well as information on products and

services.

This SWOT analysis and company profile is a crucial resource for industry executives and

anyone looking to gain a better understanding of the company's business

Shree Cement Limited (500387) : Company Profile and SWOT Analysis' report utilizes a

wide range of primary and secondary sources, which are analyzed and presented in a

consistent and easily accessible format.

A standardized research methodology is followed to ensure high levels of data quality and

these characteristics guarantee a unique report .Examines and identifies key information and

issues about 'Shree Cement Limited' for business intelligence requirements

- Studies and presents the company's strengths, weaknesses, opportunities (growth potential)

and threats (competition). Strategic and operational business information is objectively

43

reported

- Provides analysis on financial ratios along with a competitor benchmarking section

- The profile also contains information on business operations, company history, major

products and services, key employees Buy Quickly enhance your understanding of the

company

4.4 ACC CEMENT

INTRODUCTION

ACC Ltd is India's foremost manufacturer of cement and concrete. The company is engaged

in the manufacture of cement and ready-mixed concrete. They manufacture a range of

portland cement for general construction and special applications. In addition, they also offer

two products namely, bulk cement and ready mix concrete. The company's operations are

spread throughout the country with 16 modern cement factories, more than 40 Ready mix

concrete plants, 20 sales offices, and several zonal offices. Their subsidiaries include ACC

Concrete Ltd, Bulk Cement Corporation (India) Ltd, ACC Mineral Resources Ltd, Lucky

Minmat Ltd, National Limestone Co Pvt Ltd and Encore Cements & Additives Pvt Ltd.

ACC Ltd was incorporated on August 1, 1996 as The Associated Cement Companies Ltd.

The company was formed by merger of ten existing cement companies. In the year 1944,

they established India's first entirely indigenous cement plant at Chaibasa in Bihar.

HISTORY

ACC Limited (Formerly The Associated Cement Companies Limited) one of the largest

producers of cement in India.It's registered office is called Cement House. It is located on

Maharishi Karve Road, Mumbai. The stock price of company contributes in calculating BSE

Sensex.

The management control of company was taken over by Swiss cement major Holcim in 2004.

On 1 September 2006 the name of The Associated Cement Companies Limited was changed

to ACC Limited. The company is only cement company to get Superbrand status in India.

44

In 1936 ten cement companies belonging to Tatas, Khataus, Kellick Nixon and F E Dins haw

groups merged to form a single entity, The Associated Cement Companies. Sir Nowroji B

Saklatvala was the first chairman of ACC. The first board of directors had some prominent

industrialists – J R D Tata, Ambalal Sarabhai, WalchandHirachand, DharamseyKhatau, Sir

Akbar Hydari, NawabSalar Jung Bahadur and Sir HomyMody.

TYPES OF PRODUCTS

ACC's brand name is synonymous with cement and enjoys a high level of equity in the Indian

market. Our range of cements and blended cements is marketed through a countrywide

network of Sales Units, Area Offices, and warehouses. This is backed by a vast distribution

network of over 9,000 dealer who, in turn, are assisted by their sub-dealers.

ACC‘s marketing, sales and distribution processes are industry standards. Although we take

immense pride in having supplied some of India‘s most admired projects, ACC is essentially

a people‘s brand of cement with more than 80 per cent of sales made through an extensive

dealer network that covers every state in India. Its customer base represents the masses of

India - individual homebuilders in small towns, rural and semi-urban India. ACC cement

enjoys an image of assuring consistency and of high quality backed by in-house research and

expertise.

Complementing this is a unique customer services cell comprising qualified civil engineers,

who assist and advise customers with prior and post sales service. This service begins with

selection of type and grade of cement (where applicable) to troubleshooting and on-site

assistance.

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

applications.

45

PRODUCTION CAPACITY

Enthused by rising cement demand from the eastern region, ACC will create additional five

million tonnes per annum capacity (mtpa), entailing an estimated investment of around Rs

3,000 crore. The expansion, which is likely to go on stream over the next three years, will

take the overall cement making capacity of the company to 35 million tonnes a year.

―The group company ACC will increase cement capacity in east India by additional five

million tonnes by early 2015,‖ Holcim, which is a majority stakeholder in ACC Ltd, said in a

release. When contacted, a company official declined to comment on the likely investment.

However, an industry official said that it takes around Rs 600 croreinvestment to create a one

million tonne cement manufacturing capacity. ACC has nine million tonnes per annum

cement making capacity in the country‘s eastern part, where the demand for cement is of late

going up by nearly double digits. Aiming to cash in on the increased demand, cement makers

are putting in 18 million tonnes per annum additional capacity between FY‘12 and FY‘14 in

the eastern India to its overall current capacity of 60 million tonnes. The cement making

capacity of the country is currently pegged at a little over 300 million tonnes per annum, up

from 200 million tonnes in 2008 and the industry is projected to add 72 million tonnes a year

capacity between FY‘12 and FY‘14.

Capacity utilisation is also one of the highest in the eastern region so far in the current fiscal

at 80 per cent. Holcim said the existing Jamul clinker making facility in Chhattisgarh would

be replaced by a latest plant and grinding capacity to be increased simultaneously. The Jamul

facility would have 2.79 million tonnes clinker manufacturing capacity with an estimated

investment of Rs 800 crore. In addition, capacity of the existing Sindri grinding plant would

also be increased. ‖... a new grinding plant will be built at Kharagpur (in West Bengal). Both

(Kharagpur and Sindri) installations will source clinker from the new Jamul plant. Therewith,

overall capacity of ACC will increase to 35 million tonnes,‖ it said. In the recent past, ACC

Ltd has increased capacity at its Chanda plant in Maharashtra and has begun operating

world‘s largest clinker kiln at its Wadi plant in Karnataka.

ACC‘s sister firm Ambuja Cements is also ramping up its clinker capacity at Rauri in

Himachal Pradesh and Bhatapara, near Raipur and setting up two new grinding stations.

Holcim holds majority stake in Ambuja Cement as well.

46

SEGMENT

In 2012, the cement industry added ~34 million tonnes of capacity talking its installed

capacity to ~ 360 million tonnes. The first half of the calendar year witnessed high demand

for cement at 10% YOY. This demand fell in the second half of the year following a

slowdown in the construction sector.

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

investment climent and by reduction in interest rates which will positively impact demand

from housing, infrastructure and industry segments. We, therefore expect a favourable rate of

growth in cement consumption. At the same time, there is a likelihood of mounting pressure

on costs mainly arising out of increases in the cost of coal, diesel, rail freight and exchange

rate fluctuations.

SWOT ANALYSIS

ACC Limited (ACC) is a manufacturer of cement and ready mix concretes. It manufactures

cement, blended cement, bulk cement and concrete mix. It manufactures different kinds of

portland cement for general construction and special applications. ACC operates through a

network of factories, marketing offices, sales units, area offices, and warehouses spread

across India. The company‘s products are distributed through a network of 9,000 dealers and

sub-dealers. It has manufacturing plants located in Bargarh, Orissa; Chaibasa, Jharkhand;

Chanda, Maharashtra; Damodhar, West Bengal; Gaga, Himachal Pradesh; Jamul,

Chhattisgarh; Kymore, Madhya Pradesh; Kudithini, Karnataka; Lakheri, Rajasthan;

Madukkarai, Tamil Nadu; Sindri, Jharkhand; New Wadi, Karnataka and Thondebhavi,

Karnataka. ACC is headquartered in Mumbai, India.

This comprehensive SWOT profile of ACC Limited provides you an in-depth strategic

analysis of the company‘s businesses and operations. The profile has been compiled by

GlobalData to bring to you a clear and an unbiased view of the company‘s key strengths and

weaknesses and the potential opportunities and threats. The profile helps you formulate

strategies that augment your business by enabling you to understand your partners, customers

and competitors better.

47

This company report forms part of GlobalData‘s ‗Profile on Demand‘ service, covering over

50,000 of the world‘s leading companies. Once purchased, GlobalData‘s highly qualified

team of company analysts will comprehensively research and author a full financial and

strategic analysis of ACC Limited including a detailed SWOT analysis, and deliver this direct

to you in pdf format within two business days. (excluding weekends).

2.5 ULTRA TECH CEMENT

INTRODUCTION

UltraTech Cement Ltd is an India-based company engaged in the production of cement. The

company manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag

Cement and Portland Pozzalana Cement. They also manufacture ready mix concrete. They

are having 11 integrated plants, one white cement plant, 12 grinding units and five terminals -

four in India and one in Sri Lanka. The company is the subsidiary of Grasim Industries Ltd

The company is the country's largest exporter of cement clinker. The export markets span

countries around the Indian Ocean, Africa, Europe and the Middle East. The export market

comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. The

company's subsidiaries are Dakshin Cements Ltd, UltraTech Cement Lanka Pvt Ltd

HISTORY

UltraTech Cement Ltd was incorporated on August 24, 2000 as a public limited company

with the name L&T Cement Ltd as a 100% subsidiary of Larsen & Toubro Ltd. In November

2003, the name of the company was changed from L&T Cement Ltd to UltraTech ChemCo

Ltd.

In the year 2004, pursuant to the scheme of arrangement, the cement business of Larsen &

Toubro Ltd was de-merged and got transferred to the company with effect from April 1,

2003. In May 14, 2004, the company acquired four crore equity shares of Larsen & Toubro

Ceylino (Pvt) Ltd from Larsen & Toubro Ltd at an aggregate consideration of Rs 23.03

crore.

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In July 2004, Grasim Industries Ltd acquired management control of the company and in

October 14, 2004, the name of the company was changed from UltraTech ChemCo Ltd to

UltraTech Cement Ltd. Also, Narmada Cement Company Ltd became a subsidiary of the

company by virtue of the scheme of arrangement for de-merger of cement business of

Larsen.

During the year 2005-06, the company increased the production capacity of Cement from

155 lakh tonnes to 170 lakh tonnes. As per the scheme of amalgamation, Narmada Cement

Company Ltd was amalgamated with the company. Thus, the entire undertaking of Narmada

Cement Company Ltd was transferred to the company with effect from October 1, 2005.

During the year 2007-08, the company increased the production capacity of Cement from

170 lakh tonnes to 182 lakh tonnes. They set up 15 Ready Mix Concrete plants across the

country.

During the year 2008-09, the company increased the production capacity of Cement from

182 lakh tonnes to 219 lakh tonnes as a result of expansion of capacity at the company's unit

at Andhra Pradesh Cement Works (APCW) together with a new split grinding unit at

Ginigera, Karnataka.

During the year, the company commissioned 192 MW captive TPPs at their units at APCW,

Hirmi Cement Works (HCW) in Chhattisgarh and Gujarat Cement Works (GCW) in Gujarat

in a phased manner. Also, they set up new Ready Mix Concrete (RMC) plants and thus

increased the RMC capacity to 4.76 million cubic metres per annum.

During the year 2009-10, the company increased the production capacity from 219 lakh

tonnes to 231 lakh tonnes. They incorporated a wholly-owned subsidiary company in UAE in

the name of 'UltraTech Cement Middle East Investments Ltd'. In May 2010, the cement

business of Grasim Industries Ltd was de-merged and vested in Samruddhi Cement Ltd. In

July2010, Samruddhi Cement Ltd was amal gamated with the company.

During the year 2010-11, the company's wholly-owned subsidiary, UltraTech Cement Middle

East Investments Ltd completed the acquisition of ETA Star Cement (ETA) and acquired

management control of ETA's operations in the UAE, Bahrain and Bangladesh. The

company's capacity stands augmented to 52 MMTPA placing it among the top 10 cement

companies in the world due to the merger and acquisition.

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The company has proposed setting up a cement plant in West Bengal of two million tonne

capacity. The unit, to be second in the state, has received the clearance from the West Bengal

Pollution Control Board. The plant would have capacities of 6,000 tonne per day of Portland.

TYPES OF PRODUCT

Ordinary portland cement is the most commonly used cement for a wide range of

applications. These applications cover dry-lean mixes, general-purpose ready-mixes and even

high strength pre-cast and pre-stressed concrete.

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

blast-furnace slag, a nonmetallic product essentially consisting of silicates and alumino-

silicates of calcium. Slag brings with it the advantage of the energy invested in the slag

making process. Grinding slag for cement replacement takes only 25 per cent of the energy

needed to manufacture portland cement. Using slag cement to replace a portion of portland

cement in a concrete mixture is a useful method to make concrete better and more consistent.

Portland blast-furnace slag cement has a lighter colour, better concrete workability, easier

finishability, higher compressive and flexural strength, lower permeability, improved

resistance to aggressive chemicals and more consistent plastic and hardened consistency.

UltraTech Premium is UltraTech‘s new Concrete Special Cement composed of high quality

clinker blended with judicious amounts of superior blast furnace slag having high glass

content, gypsum devoid of deleterious materials and optimum PSD (Particle Size

Distribution).

Portland pozzolana cement is ordinary portland cement blended with pozzolanic materials

(power-station fly ash, burnt clays, ash from burnt plant material or silicious earths), either

together or separately. Portland clinker is ground with gypsum and pozzolanic materials

which, though they do not have cementing properties in themselves, theycombine chemically

with portland cement in the presence of water to form extra strong cementing material which

resists wet cracking, thermal cracking and has a high degree of cohesion and workability in

concrete and mortar.

UltraTech's bulk cement terminal in Sri Lanka is located at Colombo. Cement is received by

specially-engineered, self-discharging bulk cement carriers. It is then discharged at the port in

road bowsers which transport cement 10 km from port to the terminal. Cement is stored in 4 x

7500 T cement concrete silos. A sophisticated bulk cement terminal (which subscribes to all

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environmental norms) despatches cement in bulk form to RMC and asbestos plants. The

terminal also has a modern Italian make Ventomatic packer to pack cement in 50 kg.

paperbags to services customers on this land. With its sharp focus on cement, the Aditya

Birla Group has always believed that like arrangements between countries in different parts

of the world for regional cooperation, the group too should be present in adjacent countries

with facilities to qualify as a local producer of cement. Two of the countries adjacent to India

have limited deposits of limestone, the basic raw material for cement. This position compels

the two to be dependent on import for their domestic construction activity. It was in this

context that a joint venture bulk cement terminal was established in Colombo, Sri Lanka.

Gujarat Cement Works (GCW) has a captive jetty engineered for exports. Accordingly, for

the past five years, bulk cement has been exported from GCW to UltraTech Cement Lanka

(Pvt.) Ltd,the group‘s joint venture(JV) in Sri Lanka. UltraTech Cement has been meeting

the cement requirements of Sri Lanka by supplying a good quality product. The company‘s

customer base has recognized the quality and service levels backed with a field force to

market cement along with qualified engineers in the technical cell who render technical

advice to customer sat thesite.

This recognition has enabled the company to achieve a substantial market share in a fiercely

competitive market teeming with multinational competitors including two of the largest

manufacturers in the world. In this competitive environment, the company‘s customer base

has given it brand equity and acknowledged it as a premium quality cement supplier in the

island.

PRODUCTION CAPACITY

UltraTech Cement Limited and its subsidiaries have an annual capacity of 53.90 million

tonnes, making it among the top 10 producers of cement globally. UltraTech is also the

largest manufacturer of White Cement in India. The company manufactures and markets

ordinary portland cement, portland blast furnace slag cement, portlandpozzalana cement,

ready mix concrete building products and building solutions.

UltraTech Cement has 11 integrated plants, 15 grinding units, five bulk terminals and 101

RMC plants – spanning India, UAE, Bahrain, Bangladesh and Sri Lanka. UltraTech Cement

is also India's largest exporter of cement clinker reaching out to meet demand in countries

around the Indian Ocean, Africa, Europe and the Middle East.

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The company's subsidiaries are Dakshin Cements Limited, Harish Cements Limited,

UltraTech Cement Lanka (Pvt.) Ltd, and UltraTech Cement Middle East Investments

Limited, which completed the acquisition of ETA Star Cement together with its operations in

the UAE, Bahrain and Bangladesh, and acquired management control.

SEGMENTS

UltraTech's success is attributed to its diverse product offerings. Different products are

handled by different product groups, which are also known as profiles. Product groups

decentralise control and encourage innovation. They also ensure better customer

segmentation, which in turn leads to better customization of product offerings and guarantees

cent percent customer satisfaction. UltraTech Cement, Birla White, UltraTech Concrete,

UltraTech Building Products and UltraTech Solutions are the different profiles of UltraTech,

each catering to varied needs. This versatility has been a key competitive advantage for

UltraTech over the years.

SWOT ANALYSIS

The SWOT analysis about Ultra Tech cement and its position in the market. The company is

one of the best in the cement industry, analysing it through the different framework of

analysis in order to judge the actual situational and industrial position of the company in

order to find out how actually is the company doing.

The company is facing a lot of problem regarding its promotion and marketing techniques

due to which it faces a short of awareness in the market due to which people are not aware of

the product but instead of all the problems it is quite stable and maintain its position in the

market. After performing Swot analysis of the company by reviewing porter‘s 5 forces and

pestel analysis company‘s strategic standing and positioning have been analysed.

Currently the company is having a better standing as threat of entry is very low due to high

initial funds required to establish the factory setup.

Cement demand has grown in tandem with strong economic growth derived from: Growth in

housing sector (over 30%) key demand driver.Infrastructure projects like ports, airports,

power projects, dam & irrigation Projects.National Highway Development

Programme.Bharat NirmanYojana for rural infrastructure and rise in industrial projects.

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Cement Industry is highly fragmented and it is also highly regionalized and Low value

commodity makes transportation over long distances uneconomical.

Not available in all the places: Ultra tech is not available at all the places as it is not

manufactured at all places and all plants are not available everywhere due to which people

cannot find it everywhere hence the profit margins are affected to a greater extend.

With the low per capita consumption of cement in India 102 kg compared to the global

average of 260 kg and the emphasis on infrastructure development, Ultra tech has ample

opportunity to ride the growth curve. Ultratech can develop new marketing area. It can sign

MOU‘s (memorandum of understanding) with government regarding supply of cement

for government work. Ultratech can also maintain the position of competition in the market.

Institutional market like corporate and offices, school society complexes are growing in large

scale, which will increase the requirement. People are opting for more stable structures and

good future, so large use of cement is taking place, so government is spending heavily on

infrastructure project as Indian industry base is growing rapidly Thus, this is the right time to

fully invest in these market. There is regular demand of cement which in turn will increase

foreign investment in this sector. As roads transformation process is going on through which

the traditional method of road building will be convert by modern concrete roads.

Substantially lower per capita cement consumption as compared to developing countries (1/3

rd of world average) Per capita cement consumption in India is 82 kgs against a global

average of 255 kgs and Asian average of 200 kgs. For green field capacity 20 million tons per

annum will be required to match the demand in pipeline for other two years leading to

favourable demand – supply scenario. (verma, 2008)

As huge cement industry emerge there is more competition for ACC (Associated Cement

Companies) to carefully enhanced its price , product and at the same time satisfy its dealers

and customers. Cheap priced brand are capturing like a mushroom to lower income

customer base. Players such as Jaypee Cement, Prism Cement, and Birla cement. ACC

cement are eating up considerable market share. Due to India‘ satisfy growth many new

international cement companies are expected in coming years which will bring enormous

change and can start price war. Government intervention to adjust cement prices

Transportation cost is upgrading. Due to loading restriction there is overloading industrialist

shows increase in costs due to the shortage in coal industry.

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Many retailers are influence by better profit margin, and other Benefits because of small

industries increase competition among them, which in turn give heavy discount to customer

and start malpractices.

Timber is also being considered as one of the substitutes of cement, which is cheap and long

lasting. Due to continuous attack of earthquake, many countries like Japan, Indonesia,

Singaporeetc are now using timber in construction since those areas are high earthquake

affected. (Kalesh, 2009)

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3.1 INDUSTRY LIFE CYCLE

The life of an industry can be separate into the pioneering stage , the expansion stage, the

stagnation stage, and the decay stage.

Figar-3.1

Pioneering stage

The entry and exit barriers for the cement industry are high due to very high cost of cement

production plants, be it cost of setting up new plants or operational costs of existing plants.

To exit a losing position in the cement industry would incur huge losses for the firm.

Price increase in driven by high demand growth and high capacity utilization, but contrast to

this, during the period (2008-2011), the capacity utilization has decreased considerably for

India cements Ltd., madras cement Ltd, kesoram industries Ltd, Dalmia Bharat sugar &

Indus. Ltd Ultratech Cement Ltd., Chettinad Cement Corpn.Ltd. and Penna Cement

Inds.Ltd.Only ACCLtd. and Grasim Industries Ltd. seem tohave appropriate capacity

utilization levels along with their financial numbers.

Capacity utilization levels remained high for Ultratech Cement Ltd., Grasim Industries Ltd.,

and Century Textiles &Inds. Ltd. and Lafarge India Pvt. Ltd. over the period.Ultratech

Cement Ltd.‘s capacity utilization has never been above 85% with the March-11 figure at

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80% even after increasing their cement production consistently over the last six to seven

years. This may indicate a huge capacity build up by Ultratech Cement.

Expansion stage

The production of cement has seen a healthy increase by all the major companies in the east

zone.

During 2005-06 to 2010-11, the operating profit margin all the companies has soared to reach

new highs during 2007-2008, but has come back to 2005-06 levels or even below those levels

for all the companies. It may indicate that the cost of production and operation are higher

from 2009-10 onwards and though the slight decrease in selling price of cement must also

contribute to the low operating profit margin levels, this much amount of fluctuation in

operating profit margins (around 15-20% for almost all.

contrast to this, during the period (2008-2011), the capacity utilization has decreased for

ACC Ltd., Shree Cement Ltd., Grasim Industries Ltd., and JK Lakshmi Cement Ltd., when

retail prices have been steady (decreased ever so slightly in 2008-09 due to economic crisis)

if not increased in the same period. Capacity utilization levels for Ultratech Cement Ltd.

remain high and low for Binani Cement Ltd. due to late entrance in the north zone market

(2008-09).

Stabilization stage

Price increase is driven by high demand growth and high capacity utilization, but in contrast

to this, during the period (2008-2011), the capacity utilization has decreased for Sanghi

Industries Ltd. to be around 70% for the last two years from a high of 97% in Mar-08. The

production level for Sanghi Industries Ltd. have decreased considerable over the last three

years to be at a production index of 150 in Mar-11 from an index of over 200 in Mar-08, thus

signalling possible supply/production control of cement to maintain the price level.

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Cement Industry life cycle

Table-3.1

Total sales Average Sales in Core

2009 25971 5194.2

2010 24370 4874

2011 28577 5715.4

2012 42569 8513.4

2013 47314 9462.8

Figar-3.2

It is one of the main industries that plays a pivotal role in the growth and expansion of a

nation. This industry is one of the main beneficiaries of the infrastructure boom in the

country. The Indian cement industry is huge, and it has great production capacity. Currently,

the total capacity of cement industry is about 165 million tones, which is the second largest in

the world.

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2009 2010 2011 2012 2013

Indusry Life Cycle

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Today, the cement industry in India is one of the most advanced and pioneering sectors in the

country, and the cement industry has a huge potential for growth and attracting new

investments. The cement industry in India uses the most modern and world-class technology.

Also, because India has a high quantity and quality of limestone deposits throughout the

country, the cement industry promises huge potential for growth.

In India, the cement industry in the initial stages grew very slowly and the supply struggled to

meet the demands. However, the scenario changed drastically after the liberalization period.

The cement industry began to grow and since then the supply of cement has always managed

to keep pace with its demand

During the financial year 2011-12 (FY12), India‘s cement production grew by 6.2% year-on-

year. The muted growth was mainly attributable to slowdown in construction activities, extended

monsoon, delay in infrastructural projects and the overall downturn in the economy. As such, the

capacity utilization levels stood lower at 73.7%.

The industry witnessed high operating costs, particularly those of energy and freight. The price

of imported coal went up sharply. The steep depreciation of the rupee and hike in diesel prices

further aggravated the concerns. However, the industry witnessed some recovery in demand from

November 2011 onwards.

Thegrowth of the Indian economy has slowed down in recent times on account of the rising

inflation, high interest rates, high prices of commodities and fuels. The growth prospects of the

cement industry are closely linked to the growth of the overall economy in general and the real

estate and construction sectors in particular. The importance of the housing sector in cement

demand can be gauged from the fact that it consumes nearly two-thirds of the country‘s total

cement. If the slowdown in real estate persists for an extended period, it would impact the

growth in consumption of cement.

However, the long term drivers for cement demand remain intact. Higher infrastructure

spending, robust growth in rural housing and peaking interest rates are likely to augur well for

the cement industry. The government plans to spend US$ 1 trillion on infrastructure in the 12th

five year plan period (2012-17). The same during the 11th plan period was US$ 514 bn. The

focus on infrastructure development is expected to boost cement demand.

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3.2 PORTERS FIVE FORCE MODEL

Figure:-3.3

The Five Forces Model of Competition

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Threat of Substitutes – (Low)

Only bitumen in road, and engineering plastics in building offer some element of

competition, otherwise no close substitutes are popular in India.

Bargaining Power of Suppliers-(Low)

Monopolistic control of external cost element (coal, power, transportation and taxes) results

in high bargaining power with the government

Inter Firm Rivalry- (High)

Large number of players, intermittent over capacity; marginal product differentiation; high

storage costs, and high exit barrier in form of significant capital investment has led

to stiff competition in the industry.

Threat of New Entrants- (High)

High capital investment, broad distribution network and oversupplied market deter new

entrants. However, technology and manpower are easily available.

Bargaining Power of Buyers- (Low)

Rising share of retail purchase, declining share of bulk purchase by Government has taken

away the bargaining power of customers.

3.1.1 THREAT OF NEW ENTRANTS (High)

The existing companies are pushing hard to expand their production capacity to face the

rising competition. With the announcement of the Indian government in the budget for the

FY2013-2014 to pump in more than Rs.1.85 trillion in infrastructure the cement industry

becomes a very attractive market to enter thus increasing the threat of new entrants. Although

the investment to set up a cement plant is huge, still looking at the future opportunity Indian

steel and infrastructure giants like Jindal steel works and reliance group are also gaining a

share in this huge market.

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Brand equity : high in organized sector

Switching costs or sunk costs : low

Capital requirements : high in organized sector

Access to distribution : strong distribution channel is required

Customer loyalty to established brands : high in organized sector

Government policies : moderate

3.1.1.1 Large Investments:

One of the factors is Large Investments needed for set-up of cement manufacturing unit.

Costs related to manufacturing or production, In the 11th Five Year Plan (2007-12), the

industry added 120 MT of new capacities and is expected to reach close to 470 MT by 2017.

units per month on an average needs a hung initial investment. Costs related to research and

development, marketing of product like advertising and promotion cost, sales and distribution

the cost is total investments. Thus, large investment is big barrier to the new entrant, but

government give liberalization to small cement plants that‘s why anybody will start business,

that‘s why threat of new entrants. Investment is large but we will start small sector, or small

business.

3.1.1.2 Economies of Scale:

There are a number of players prevailing in the cement industry in India. However, there are

around 20 big names that account for more than 70% of the total cement production in India.

The total installed capacity is distributed over around 129 plants, owned by 54 major

companies. Because of after china India is word largest cement pint . and also after

agriculture economic segment construction is second, like road, increasing or changing life

style, that‘s why more impact on economic second economic factor more contribute in India.

3.1.1.3 Distribution Channel:

Established players have high market penetration in terms of distribution system. They have

their dealers appointed in almost all the possible cities or towns of India. More deep and good

is the distribution channel system more good is the service provided and in turn increases the

image of a particular company. Now days, companies are increasing their efforts to enhance

and upgrade their distribution channel system to provide good customer product in a time. So,

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the new entrants have to establish a good and an efficient distribution channel to serve its

customers in time, which will again require a high amount of investment in distribution

channel. When and profit margin exciting sellers have, well-functioning distributer and

retailer net-works a new comers has an uphill struggle in squeezing its way in. and also old

company give high markup and profit margin.

3.1.1.4 Industry Growth Rate:

Cement demand has continued to remain weak in Apr-May 2013 mainly due to lackluster

demand from end user industries. The domestic cement production grew by 8.2% Y or in Apr

2013 as compared to 12.5% Y or in Apr 2012. The growth slowed down further to 3.0% Y or

in May 2013 pulling down the overall growth rate to 5.6%Y or in Apr-May 2013. Although

the demand picked up temporarily from the end of May 2013, it does not reflect any

fundamental recovery in prospects. The cement demand in May end and June 2013 has been

supported by pre-monsoon increase in construction activities and is not likely to be sustained

going forward. With the onset of monsoons and consequent lull in construction activities, the

demand is likely to come under pressure in Q2 FY14 as well. Cement prices which

weakened during Mar and Apr 2013 due to weak demand saw some recovery from mid May

2013.

3.1.1.5Government Policies:

Government police is liberalization toward new enters, but some restriction on emission,

price, quality, etc. it is required high amount of investment but we will start small unit, and

also give support for stating business central as well as stats governments.

3.1.2THREAT OF SUBSTITUTE PRODUCTS OR SERVICES (Low)

Relative price performance of substitutes : no substitute in India

Buyer switching costs : low and high

Perceived level of product differentiation : low level of differentiation

Now a day timber is also being considered as one of the substitutes, therefore cement it one

of cement. In many countries like japan, Indonesia, Singapore etc., are a now using timber in

construction since those areas are high earthquake affected. They now prefer timber which is

cheap and long lasting for years. But timber cannot be considered as one of the major

substitutes of cement, therefore cement is one of the main components of any construction,

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

building.

3.1.2.1Product for product Substitution:

This means a substitute of the original product that is having same basic function. In cement

product not any substitute product in the Indian market, but in the word available substitute

product like timber.

3.1.2.2 Relative Price Substitute:

In this type of substitute price is compared. Substitute products, which have the same

function but not the same good quality like that of the original product but very near to it, are

available at cheaper prices than that of the original product. Than in this case the substitute

becomes threats to the original products or company and if substitutes like timber send is

substitute product and cheaper than cement product so that it is relative price product. And

send is free than other substitute product, but in old house build by send and chuna but new

hose build by cement.

3.1.2.3 Substitution of Need:

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

redundant. In this the customer wants more reliable, cheaper and maintenance free products

to use. His/her need to use user friendly products which are cheaper in rates and have good

quality.Example:- before freedom Indian people use sand and chuna rater than cement but

after that people aware and changing life style and increasing income that‘s why people use

cement.

3.1.3 BARGANING POWER OF BUYER (Low)

The boom in the in the infrastructure industry of India has benefitted the cement industry

immensely. In the present day context, cement producers have become more powerful than

buyers, in the current situation, most of the companies are moving into direct marketing, thus

removing middlemen. Despite enough competition, due to high institutional demand of

cement, small time buyers are usually targeted as a secondly market by the cement

companies, thus buyers are not left with much bargaining power.

Degree of dependency upon existing channels of distribution : high

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Buyer volume : based on customer demand.

Buyer information availability : high( through advertisement and word of mouth)

Availability of existing substitute products : high

Buyer price sensitivity : moderate

Differential advantage (uniqueness) of industry products : low ( because cement

product are almost same but Birla white cement use in different purpose).

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

Many choices cement brand are available now.

Easy availability of finance and cement.

Information is easily available now days through advertisement and word of mouth.

Buyers are a competitive force. They can bargain for price cut, ask for superior quality and

better Product, and also demanding more credit period from dealer, retailers, etc. customers

bargaining with price and more credit limit from retailers, dealer, its mean compete with

retailers and dealer.

3.1.4BARGAGAINING POWER OF SUPPLIERS (Low)

The basic raw materials used in the cement manufacturing process are limestone, sand, shale,

clay and iron one. The main material, limestone, is usually mined on site which the other

minor materials may or may not be mined there. Since all the raw materials are natural

resources, they are under the governments control, companies have to buy rights from the

government to setup the cement plant. So there are no such suppliers in the cement industry.

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

Same raw materials provider is high

Presence of substitute inputs : low

Employee solidarity (e.g. labor unions) : high in organized sector, but those company

use technology do not solidarity of employee, its low.

Raw materials supplier is high available in market that way company is stronger for

bargaining power.

That‘s way attractive price for company and end user have low price getting products.

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Whether supplier increasing price of raw materials price due to company switch off

and use other supplier those who give low price provide raw materials.

There were fewer suppliers who dominated the market and the switching cost for the buyers

were high. There were no substitutes present. But this scenario is changing now as the

suppliers have increased that‘s why increasing bargaining power for company.

3.1.5RIVALRY AMONG EXISTING PLAYERS (High)

The Indian cement industry has large number of cement production thus making it low

concentration market. The four biggest cement players in the Indian cement industries.The

market share of the above mentioned four companies account to 39.80% currently. It is

believed that it these four companies do not increase their market share in the coming years.

Then their combine share could drop to 34%. The share of mid large players will remain

about 36%, small players will hold about 24%, and new players will account for 6% of the

market with focus on capacity addition, many small/medium players have been able to

capture more market share and consolidate their position in the industry in the fast last two

years. Market share of top five individual companies taken together show a decline to a level

of 44.3%in FY12 from 46.3% in FY13.

3.1.5.1Exit Barriers:

The India cement industries has got high exist barriers for investing huge amount of money.

But small industries exist barriers is low. One of the main reasons is the high initial capital

investment required for starting up a manufacturing unit. Shutting down and switching over

to other industry may cost fortunes.

Thus in this way, with the help of Porter Five Force Model the Competitive Analysis of

cement industry is done. In regard to this some important success factors are also considered

which are helpful for the development of two wheeler industry in India.

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3.1.5.2 Number of Competitors in the Industry:

If number of competitors in the industry are less than the competitive rivalry will be less and

conversely if there are more competitors in an industry, more will be the competitive rivalry

between them so as to acquire high market share. Where competitors are roughly of equal

size, there is danger of intense competition as one competitor attempts to gain dominance

over another. While the less competitive markets tend to be those with dominant

organizations within them and the smaller players have accommodated them to this situation.

Earlier market was dominated by Birla, Ambuja, Ultratech, etc.

Number of competitors: The total installed capacity is distributed over around 129

plants, owned by 54 major companies.

Rate of industry growth : high ( 15-17% p.a.)

Exit barriers : low for small business and for large company exit barriers is high.

Level of advertising expense : high

Economies of scale : high

Buyer demand is growing rapidly high

Buyer costs to switch brand are high, if increasing price at that time, but customer are

brand loyal at that time switch is brand is mordent.

3.1.5.3Factors affecting Cement Industry’ Competitiveness

¾ Cement is one of the highly taxed commodities in our country. Taxes and levies account

for around30% of sale price (and over 70% of ex-factory costs). Taxes and Levies as %age

of sale price ¾ High rail/road transportation costs add up to selling price. ¾ In view of the

uncertainty of Grid Power, being erratic and poor quality, most of the cement units installed

captive power to the extent of 60% and in some cases 100%. The new greenfield units install

100% captive power facility as part of the machinery and equipment. Some States impose

levies on captive power generation as also some minimum demand charges adding to cost of

cement. ¾ Procedural delays in obtaining clearances for limestone mining land acquisition,

environment etc. which takes more than 2 years causing time and cost over runs. ¾ Laws

are rigid towards exit of an industry.

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3.3 OPPORTUNITIES AND THREATS

The cement industry is going through its boom period with full capacity utilization. Powered

by the GDP growth of 8-9%, the annual demand for cement in the country continues to grow

at 8- 10%. As per NCAER study, under high growth scenario, the demand for cement

(including exports) is expected to increase to 244.82 million tones by 2010-11. As per the

study, the demand is expected to be much higher at 311.37 million tones, if the optimistic

projections of the road and the housing sectors are met. The industry has responded to this

with substantial new capacity announcements. The materialization of these capacities,

however, is likely to be delayed due to a number of factors including timely delivery of

equipment and construction of the plant due to the heavy order book position of the suppliers.

It is expected that demand growth will outstrip supply till the materialization of such new

capacities. However, the current high level of international crude prices and its impact on the

domestic prices of petroleum products is likely to make a dent in the profitability but its

impact will have to be seen depending upon the ability of the economy to pass on such cost

increase to the consumer.

While the freight cost could be optimized on the imported coal through usage of company‘s

own ships for part of the quantity, the international prices of imported coal and its volatility

together with the strengthening of the dollar against rupee could derail this. This could impact

the delivery prices of imported coal and also the cost of production. The Government has

taken steps to increase the availability of indigenous coal for its expanded capacity across

various plants which can mitigate the impact of such high cost of imported coal for the plants

located near the coal fields in India. The Government‘s continuing efforts to rein in cement

prices by freeing imports and banning exports could artificially disable the normal market

price mechanisms for determining the price.

The rise in the price of cement is because of the gap of demand & supply in the market. The

demand for cement is much higher than its actual supply. But with the production

maximization, which can be encountered in next few year, this gap may narrow down, that

may ensure the market to be in equilibrium.Decreasing per capita consumption doesn‘t affect

the total consumption for the cement. It means the infrastructure; contacted housing is using

the bulk of the production. In spite of High price of the product, the hick of demand because

of the increasing rate of infrastructural development.

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Domestic price of cement is rising as well as the imported cement price is lowering. So

altogether the supply of the cement, which is affordable, will increase. This may in decrease

the gap between supply and demand. Major Demand was from the housing sector, which may

shift to infrastructure as lots of infrastructural development processes has already being taken

up & due to the increased price, housing segment started showing a slowdown.

3.4 Driving Forces

On the canvas of the Indian economy, cement industry occupies a prominent place. Due to

its deep forward and backward linkages with several key segments of the economy, cement

industry has a strong multiplier effect and is capable of being the driver of economic growth.

A sound changing life style and increasing road, infrastructure, so that plays a pivotal role in

the country‘s rapid economic and industrial development. The well-developed Indian cement

industry ably fulfills this catalytic role by producing cement.

Cement Industry one of the key drivers of the national economy as it provides large-scale

employment, having a strong multiplier effect. Being one of the largest industries in India,

this industry has been witnessing impressive growth during the last two decades. It has been

able to restructure itself, absorb newer technology, align itself to the global developments and

realize its potential. This has significantly increased cement industry‘s contribution to overall

industrial growth in the country.

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

have all contributed to the phenomenal growth of Indian cement industry. Some of the

important growth drivers are explained below:

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3.3.1Key Drivers of Indian Cement Market:

Rising industrial and agricultural output:

Rise in the industrial and agricultural output indirectly helps Indian cement Industry-

Industrial and agricultural output increase has reflected in higher GDP and overall growth of

the economy which is about 9% in the last three years. Higher GDP means more purchasing

power. Sales of cement for domestic and commercial consumption have seen high growth in

these three years too.

Rising per capital income:

Rise in the per capita income increases cement sales. Industrial growth in the 70s, IT boom

in the 1980s and BPO boom in the 1990s have transformed the Indian middle class. The

present generation is able to earn the same levels of salary that their parents were earning

after years of work. This has pushed up the demand for home. A rise in per capita income is

also indirectly responsible for the retail boom and industrial boom for consumer nondurables.

Favorable demographic distribution with rising working population and middle

class Urbanization:

Urbanization changes the face of Indian cement industry. Joint families in towns and villages

have given away to migration of the younger generation to cities in search of better

opportunities. The new-age educated migrants and nuclear families have a higher purchasing

power. Presently, the rate of spread of urbanization is 30% which is likely to increase by 40%

in 2030(UN).Urbanization has promoted infrastructural development and it is estimated to

spread at a rate of $500 billion in the next 5-6 years.

Favorable government policies:

Favorable Government Policies for the cement sector. Apart from a healthy growing

economy, Indian cement industry has a lot to thank the government for the amazing growth

rates. The Indian government has introduced several industry specific programs.

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Production:

There are agriculture, infrastructure, energy& power, banking, & finance service sector.

Construction is the second largest economy activity after agriculture and is poised for

continuous growth due to industrialization, urbanization, and economic development with

expectation of improvement living standard of people in India. It account for nearly 65% of

the total investment in infrastructure, employee 33 million people approximately and

accounts for 6-8 percent of GDP. The construction industry is primarily drive by Government

of Indian investment on core infrastructure project and creation of urban infrastructure,

industries capital expenditure by corporate sector and development activities of real estates or

housing sector in urban as well as rural areas. the economic condition of Indian rural

population. the production of industrial machinery has also been on the rise and the

increasing flow of goods has spurred increases in rail, road and port traffic, necessitating

future infrastructure improvements.

Growth in the road infrastructure increases demand for vehicles. Indian highways and roads

have improved a lot in quality and connectivity in the last 20 years. Projects like the Golden

Quadrilateral aim to make even remote areas accessible by road. Some of the National

Highways are of international standards. This has made road transport a viable, cost effective

and speedy option both for goods and passenger traffic.

Globalization impact on cement industry

The paper evaluates the effects of deregulation on the performance and structure of the Indian

Cement Industry. The implementation of the deregulation process is complex and varied.

Therefore the paper mainly focuses on the impact of liberalization on the growth and the

structure of the cement industry, where structure is primarily being captured by

concentration. In this paper, we contribute to the discussion on productivity growth and the

role of technological change within the context of global environment change.

The performance of the industry, under different policy regimes, truly establishes that

decontrol of the industry and liberalization of the economy has led to remarkable

improvement in the indicators such as installed capacity, capacity utilization

The Globalization of Indian Cement Industry has helped the industry to restructure itself

to coop up with the alterations in the global economic and trading system. The Indian cement

industry is one of the oldest industries. It has been catering to India's cement requirements

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since its emergence during the British Raj in India. Though the majority of the players in the

Indian cement industry were private sector organizations, the industry was highly regulated.

With the rapid growth rate of the Indian economy after the 1990s, the infrastructural

developments within the country has been tremendous. The increase in the construction

activities has led to the increase in the demand for updated quality building materials and

other allied products. Cement being one of the major elements in the construction work, there

is a growth in the cement industry in India. The consumption of cement has increased in India

by nearly 7.5%. With the globalization of Indian cement industry many foreign cement

manufacturers are engaging themselves in agreements and deals with their India counter parts

To have a share of the growth.

Globalization of Indian Cement Industry includes several foreign companies engaging in

mergers and acquisitions of Indian cement companies. For example,

Heidelberg cement Indorama cement Ltd. Heidelberg Cement Company entered into an

agreement for a 50% joint venture with the Indorama Cement Ltd., situated in Mumbai,

originally possessed by the Indorama S P Lohia Group. Heidelberg Cement company is the

leading German cement manufacturing company. The Heidelberg Cement was set up in 1873

and has a long and prosperous history. Being one of the best in the world the Heidelberg

Cement Company has its bases in different countries. The Heidelberg Cement Company has

two manufacturing units in India. A grinding plant in Mumbai and a cement terminal near

Mumbai harbor. A clinker plant is coming up in the state on Gujarat.

Holcim cement Gujarat Ambuja cements Holcim Cement signed an agreement of 14.8% take

over with the Gujarat Ambuja Cements (GACL). With new products, skilled personnel,

superb management, and a outstanding market strategy gives this tie up good edge over the

other competitors. Holcim Cement Company is among the leading cement manufacturing and

supplying companies in the world. It is one of the major employers in the world, having a

work force of 90,000.The Holcim Cement Company has units in excess of 70 countries all

over the world.

Italcementi cement Zuari cement Limited Italcementi Cement Company with the help of the

Ciments Français, a subsidiary for its global activities, has acquired shares of the famous

Indian cement manufacturer - Zuari Cement Limited. The acquisition was of 50%

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shareholding and the deal was of about 100 million Euros. Italcementi Cement is the 5th

largest cement manufacturing company in the world. The production capacity of the

Italcementi cement company is about 70 million tons in a year. With the construction boom

in India the company looks for a stable future. In 2001 the Italcementi cement entered the

Indian market scenario. It took over the plant of the Zuari Cement Limited in Andhra Pradesh

in southern India. The joint venture earned revenues of around 100 million Euros and an

operating profit of 4 million Euros.

Lafarge India is the subsidiary of the Lafarge Cement Company of France. It was established

in 1999 in India with the acquisition of the Tisco and the Raymond cement plants. Lafarge

Cement presently has three cement manufacturing units in India. One of them is in Jharkhand

which is used for the purpose of grinding and the other two are in Chhattisgarh used for

manufacturing. The Lafarge Cement Company was set up in the year 1833 by Leon Pavin.

Lafarge Cement Company situated in France is the leading cement producing company in the

world. It has plans for increasing the cement production through technological innovations

and maximization of the capacity of the plant. It has a large network of distributors in the

eastern part of India. The Lafarge Cement Company is presently producing nearly 5.5 million

tons of cement for the Indian cement market.

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3.5 PEST ANALYSIS OF CEMENT INDUSTRY

Pest analysis is a useful tool for understanding the big picture of operating and takes

advantages of opportunities. Pest analysis includes political, environmental, social and

technological which affects both the companies as well as industry.

3.4.1 POLITICAL

The price of cement is primarily controlled by the coal rates, power tariffs, s railway tariff,

fright ,royalty and chess on limestone. Interestingly government control all of these prices.

Government is also one of the biggest consumers of the cement in the country. Most state

government in order to attract investment in their respective states. Offer fiscal incentive in

the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff

5 years, while Gujarat offers exemption from electric duty.

Firstly, we will discuss the political impact of cement industry. The 212-million tonne cement

industry's demands seem to have no end. After a healthy quarter (January-March 2009) due to

robust demand from the infrastructure segment, good dispatches and growth in profit the

industry seems to be wanting for more. With election results being declared in favor of the

UPA and the country moving on its way to form the new government, the cement industry is

expecting excise benefits and ban on imports to boost the cement demand which has taken a

hit due to slowdown in the real estate sector.

Says Sumit Banerjee, MD of ACC Ltd, "We need directional steps to correct anomalies in

excise taxes, the manner in which these are levied on our industry. We would also want a

customs duty rationalization that would rectify the current imperfection, whereby the inputs

are taxed but not the direct import of cement.

According to Vinod Juneja, MD of Binani Cement, "We are looking at reduction in excise

duty to 4% and a complete ban on import of cement, from the new government. Meanwhile,

taking into consideration the crisis the cement industry is going through, the government had,

in its stimulus package, imposed a 4% cut in excise duty to 8% along with cut in excise duty

on bulk cement from 14% to 8%. HM Bangur, president of Cement Manufacturers

Association (CMA) and CMD of Shree Cement however, declined to comment on the I

ndustry expectations from the new government.

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The election results are positive but it is too early for me to comment on the industry's

expectations before the new government is formed, he said. Meanwhile, Vinita Singhania,

MD of JK Lakshmi Cement Ltd and vice president of CMA, expects that the infrastructure

development would have to be pursued with much more vigor to take India closer to its aim

of being a super economic power. This would entail building of modern ports, new super

express highways, concretization of roads, emphasis on canal lining etc. We would also

expect the new government to have a re-look at the high incidence of taxation on the cement

industry so that cement becomes more affordable to all sections of the society and fulfill the

dream of common people to have a home of their own, Singhania adds.

3.4.2 Economic

The industry is on the boom, with a lot of government infrastructure and housing project

under construction. The export segment of the industry is expected to grow again on account

of various infrastructure project that are being taken up all over the world and numerous

cement plants coming up in near future in the country.

Inportance Cement Industry to indian:

Basic ingredient in construction work.

Generation of employment.

Contribution to national exchequer.

Contribution to Indian railway revenues.

Helpful in the development of other industries.

Huge export potentialities and quick marketability

Enhancement in the national income

Now we will discuss the economic impact of cement industry. India is the second largest

industry after china. A variety of studies on productivity growth and technological change in

Indian industries has been carried out so far. Originally these studies were driven by an

interest in understanding the capital vanishing phenomena in the Indian industry between

1950 and 1980. During that time, labor productivity as well as capital availability and use

increased considerably, while the overall growth rate of the economy stagnated at low levels

(see Ahluwalia, 1991). Concerned about the efficiency of resource use researchers started

investigating productivity growth and input factor substitutions for aggregate manufacturing

as well as various industries. The results of these analyses differed substantially depending on

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the methodology, statistical specification employed as well as on the underlying sources of

data, levels of aggregation and time periods considered. Over time more sophisticated and

refined methodologies in connection with longer time series were employed to study

productivity change. The contribution of total factor productivity to output growth was of

primary interest to explain the continuously low economic development.

Partial factor productivity was investigated to better understand the importance of each factor

of production and to evaluate substitution possibilities. In this context, the role of energy

within the production process received increasing attention and consequently, besides the

primary factors of production (capital and labor), energy and materials were added as

secondary input factors into the analyses. Total factor productivity growth (TFPG) measures

the growth in gross value added(GVA) in excess of the growth of a weighted combination of

the two inputs capital and labor. For measuring output in form of gross value added all

intermediate inputs are deducted. Thus, gross value added only provides the value that is

actually added in the production process by using the two primary inputs of production:

capital and labor. Total Productivity Growth, in contrast, relates gross value of output (VO)

to the four input factors capital, labor, energy and materials. Since it accounts for

intermediate inputs as well as primary inputs, value of output provides the more appropriate

output measure if interested in analyzing energy and material as well as capital and labor.

Commonly, three major growth accounting approaches are considered for estimating total

factor productivity as well as total productivity growth: the Translog Index, the Solow Index

and the Kendrick Index. The three indices differ in their complexity and the 13 underlying

economic assumptions. A detailed derivation of the three indices is provided in a survey

report by Mongia and Sathaye (1998).

The Kendrick index is easy to understanding using an arithmetic aggregation scheme for the

inputs. It is restrictive in that it is based on the assumption of a linear production function and

in assigning constant (base year) shares in GVA (VO respectively) to the inputs. The Solow

index is slightly more general in assuming a neo-classical, Cobb-Douglas, specification of the

production function with constant returns to scale, perfect competition in the market and

factors being rewarded their marginal products. The translog measure is based on a more

complex production function associated with only a minimum numbers of assumptions. It is

therefore of more general nature and provides the preferably used measure for productivity

growth.Partial factor productivity (PP) indices are reported for all input factors. They are

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obtained by simply dividing the value figure for each factor by the gross value of output or by

the gross value added respectively. Partial factor productivity growth indicates how much

output changes in relation to a fixed amount of each single input. It measures how

"productive‖ a factor is. The inverse means how much of a factor has to be used to produce a

specific amount of output - it measures the factor intensity of production.

India's economy is the third largest by GDP in terms of purchasing power parity but, with a

very large population, it ranks only 165th in GDP/capita terms. Gradual de-centralization of

the economy since the early 1990s has allowed the development of a more diverse market

economy that is increasingly driven by an educated and business-minded middle class. This is

highlighted by India's now world-famous telecommunications and service sector, which has

grown extensively over the past decade.

Increased variation has resulted in a reduction in India's agriculture dependency, although this

sector still supplies around 50% of the country's income. Manufacturing remains strong,

representing more than a quarter of output.

However, despite economic expansion and development of its service sector, economic

disparity remains a severe problem for India. Almost a third of Indians lived in poverty in

2011 and constant population growth makes it hard to increase living standards. For

illustration, India welcomed its 1 billionth inhabitant in 2000. In just 12 years since then the

population has increased to over 1.2 billion!.

Role of cemnt industry in india GDP

The Role of Cement Industry in India GDP is significant in the economic development of the

country. The cement industry in India is one of the oldest sectors in India.

The industry is driven by the immense growth in the housing sector, the infrastructure

development, and construction of transportation systems.

Role of Cement Industry in India GDP-Facts

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

The infrastructure development of the country in the recent years is the demand driver

for the cement industry

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

Indian market

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

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

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

Role of Cement Industry in India GDP-Production

India ranks second in the production of cement in the world

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

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

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

130 large cement manufacturing units

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

year

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

Role of Cement Industry in India GDP-Mergers and Acquisitions

Heidelberg Cement-Indorama Cement Ltd

Heidelberg Cement Company entered into an agreement for a 50% joint venture with

the Indorama Cement Ltd, situated in Mumbai, originally possessed by the Indorama

S P Lohia Group.

Heidelberg Cement Company has two manufacturing units in India

Italcementi cement-Zuari Cement Limited

Italcementi cement company has acquired share of the famous Indian cement

manufacturer, the Zuari Cement Limited

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

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

Holcim Cement-Gujarat Ambuja Cements (GACL)

Holcim Cement signed an agreement of 14.8% take over with the Gujarat Ambuja

Cements (GACL).

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Holcim Cement Company is among the leading cement manufacturing and supplying

companies in the world.

Lafarge India

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

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

plants

Lafarge Cement presently has three cement manufacturing units in India one of them

is in Jharkhand and two other in Chhattisgarh

3.4.3 Social

The cement industry in India consist of both organization sector and the unorganized sector.

Organized sector comprises of the well know cement manufacturing companies while the

main players of the unorganized sector are the regional and local cement producing branded

cement like ULTRATECH, JAYPEE, etc. A population of more than 100 billion people, it is

expected that cement industry will create another 25 lacks job in the next 4-5 years.

The cement industry has responded to the demands of infrastructure and consequent

increasing the production capacity enormously. This industry mainly rely on mining

operation for its product, impacting large number of people and the environment around it.

Hence, adequate responsibility has to move alongside its growth.

India, historically has been a society that has had a tradition of showing concern to others. As

the country industrialized, business houses also kept with these traditions. It is documented

that the oldest business houses have been the most just and hence respected companies in our

society.

Indian economy has grown leaps and bounds in recent years and today India is recognized by

the world as an emerging economy. Consequently, companies of all sizes have emerged,

grown and expanded in the last few decades, at times very quickly, with impacts on the

environment and the society. However, their responsibilities often have not kept pace with

their growth. Governance is often compromised and probably because of the sheer numbers

of people available, the dignity and value for human beings and their rights often ignored.

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Many organizations have grown, often flouting norms, arriving at quick fix solutions with

sometimes with complete disregard for the environment or the impacts on its work force and

Its neighborhood owing to its operations.

Any quick fix models with a complete lack of concern for the society and environment can

only work in the short term. To survive, organizations need to be viewed as responsible

companies, both by their internal as well as external stakeholders. And this sentiment is being

echoed by all - the government, business forums, etc. and companies are encouraged to

understand this for their owe good. Different organizations have been using the terms CSR,

corporate citizenship and sustainability interchangeably. For example, Ambuja Cements

sees CSR as the social performance forming a significant aspect of the company's overall

sustainability. Sustainability is the broad umbrella and CSR is the company's performance

towards all its stakeholders - workforce , business partners, customer and the society which it

impact through its operations.

While there is no doubt that companies need to sprout and grow, especially to meet the

development demands of society, they also in turn directly or indirectly impact the societies

in which they exist. There is a need and a demand to monitor social impacts and performance.

Just projecting a strong financial bottom line is simply not enough. Hence, CSR is about

responsible management of business processes which produce an overall positive impact on

society.

3.4.4 Technology

The government of India plant to study and possibly acquire new technology from the cement

industry of world. The government is discussing technology transfer in the field of energy

conservation and environment protection to help improve efficiency of the India cement

industry. Cement industry has made tremendous strides in technological up gradation and

assimilation of latest technology. At present 93% of the total capacity in the industry is based

on modern and environment friendly dry process technology.

Continuous technological upgrading and assimilation of latest technology has been going on

in the cement industry. Presently 93 per cent of the total capacity in the industry is based on

modern and environment-friendly dry process technology and only 7 per cent of the capacity

is based on old wet and semi-dry process technology. There is tremendous scope for waste

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heat recovery in cement plants and thereby reduction in emission level. One project for co-

generation of power utilizing waste heat in an Indian cement plant is being implemented with

Japanese assistance under Green Aid Plan. The induction of advanced technology has helped

the industry immensely to conserve energy and fuel and to save materials substantially.

India is also producing different varieties of cement like Ordinary Portland cement(OPC),

Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well

Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White

Cement etc. Production of these varieties of cement conform to the BIS Specifications. Also,

some cement plants have set up dedicated jetties for promoting bulk transportation and

export.

3.6 SWOT ANALYSIS

A scan of the internal and external environment is an important part of the strategic planning

process. Environmental factors internal to the firm usually can be classified as strengths (S)

or weaknesses (W), and those external to the firm can be classified as opportunities (O) or

threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.

The SWOT analysis provides information that is helpful in matching the firm's resources and

capabilities to the competitive environment in which it operates. As such, it is instrumental in

strategy formulation and selection. The following diagram shows how a SWOT analysis fits

into an environmental scan

SWOT is an acronym for the internal strengths & weaknesses of a business & environmental

opportunities and threats facing that business. SWOT analysis is a systemic identification of

these factors and the strategy that reflects the best match between them. It is based on the

logic that an effective strategy maximizes a business‘s strengths and opportunities but at the

same time minimizes its weaknesses & threats.

3.5.1 Strengths

The cement industry has many strengths to be considered. Cement is, literally, the building

block of the construction industry. Almost every building constructed relies on cement for its

foundation.

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The cement business is a $10 billion industry, measured by annual cement shipments. There

is also a strong reputation behind the cement industry.

Cement is a solid material and consumers rarely have complaints about the product. Regional

distribution plants have also made cement widely available to any type of buyer.

3.5.2 Weaknesses

The cement industry is not without its drawbacks. The cement industry relies on construction

jobs to create a profit. But the cement industry heavily relies on weather. About two-thirds of

cement production takes place between May and October.

Cement producers often use the winter months to produce and stockpile cement, to meet

demand. Another weakness is the cost of transport; the cost of transporting cement is high

and this keeps cement from being profitable over long distances. In other words, shipping

cement costs more than the profit from selling it.

3.5.3 Opportunities

The cement industries has opportunities as well. One such opportunity is the cement

industry's efficiency. The cement industry has recently streamlined its production efforts,

using dry manufacturing instead of wet, which is heavier and more time-consuming.

The cement industry has also invested about $6 billion in expansion efforts to meet unmet

cement needs. Projections show that by 2012, the cement industry will have 25 percent more

production capabilities.

3.5.4 Threats

The nature of the economy have uncovered a number of threats to the cement industry. The

cement industry greatly relies on construction. The current economy has lessened the number

of construction jobs, which in turn hurts the cement industry.

The cement industry controls the majority of the United States market, but not all of it. About

11.5 metric tons of cement are imported annually to support the unmet need. If other

countries can produce and ship cement for a reduced price, the U.S. cement industry is in

danger.

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The U.S. government is also attempting to regulate the cement industry's waste. The

Environmental Protection Agency has introduced regulations for the cement industry to cut

down emissions.

3.7 Economic Future of Indian Cement industry:-

Given the rampant growth of the Indian cement industry, few are betting against continued

capacity additions in the short- to medium-term. The extent of capacity addition, however,

and whether or not demand will rise to match it more closely than at present, is up for

debate.In November 2012 the India Brand Equity Foundation (IBEF) said that it expected

double-digit growth in the cement industry for the 2013 and 2014 fiscal years, which end on

31 March 2013 and 31 March 2014 respectively. It reported that the cement industry would

increase production by around 71Mt/yr over the same time-frame to reach over 300Mt/yr in

2014.Meanwhile, the Indian Government's 12th Five-Year Plan, which runs for 2013 to 2017,

states that India will require a cement capacity in the region of 480Mt/yr by the end of

2017.12 It states that a further 150Mt/yr of capacity will be required to accomplish this.

Separately, ACC expects India to have a capacity of 500Mt/yr by 2020.This represents more

than twice the cement that India currently consumes in a year and so it is worth asking, if this

capacity is reached, what will the capacity utilization rate be? The government promises

significant investment in infrastructure, although bureaucracy has hampered such investments

in the past."Land acquisition is a big issue," said H M Bangur, chairman and managing

director of north-based Shree Cement, in August 2012. "No state government is providing

land to set up units. Greenfield expansion is tough."

Sunil Singhania, equity head at Reliance Mutual Fund, said, "Capacity creation in India is

very difficult because there is no land (in some places) and no limestone deposits at others.

Several cement companies have written down assets. I believe capacity additions going

forward will not be as aggressive as in the past. Expansion will be slower than demand

growth. "With prices remaining low due to overcapacity and low demand, the potential for

future collusion between producers and the difficulty of setting up new capacity, it is possible

that producers, under pressure to meet the expectations placed on them by the Five-Year

Plan, will see increased pressure on margins in the next few years, especially if fuel prices

continue to rise .In the midst of this, smaller companies are likely to suffer more than most,

possibly making them acquisition targets for better-equipped multinationals. Indeed, in

82

January 2013 Prism Cement, one of India's smaller cement producers, actually reported a net

loss for the quarter to 31 December 2012. It cited low demand, high fuel costs and increased

electricity prices. How long can such producers continue as the Ultratechs, ACCs and

Ambujas of this world keep adding new capacity?

An academic report carried out for the Competition Commission of India in 2012 hints at this

possibility of future consolidation in the industry. The study found that, despite capacity

utilizations falling across all cement producers in India from 2006 to 2011, it was those with

the smallest market share that experienced by far the worst reduction. Binani Cement, for

example, recorded utilizations rates of only around 55-60%. Conversely mega-players like

Ultratech have been more stable, with rates of 80-95%. In January 2013 India Ratings

reported that smaller businesses were less likely to benefit from the expected improvement in

the industry.A major reason behind this phenomenon is rising fuel costs, which have hit

producers from two directions in the past year. Firstly, demand for power in India is high and

domestic fuels are dedicated predominantly to electrical generation. Industrial companies are

forced, in many cases, to import costly foreign fuel, which must be shipped inland to be used.

A second effect of increased fuel prices is that cement is more costly to transport once it has

left the factory.Due to their size allowing greater economies of scale, larger cement

companies are better positioned to import fuel on a large scale and are more likely to have

flexible vehicle fleets to respond as demand fluctuates in different areas. Another crucial

difference between the larger and smaller companies is that larger players are more likely to

have a pan-Indian presence. This enables them to ride-out periods of difficulty in one area

while maximizing margins elsewhere. Local producers do not have this luxury.Smaller local

producers are less well equipped to deal with expansion and their relative size will gradually

diminish compared to the top 12 producers. As this happens, it is likely that they will become

the acquisition targets of the larger firms.

83

3.8 Key Success Fasters in the cement Industry:-

Cement industry players a crucial role in the development in the infrastructure country. Due

to the various construction activity undertaken by the central government state government

public sector and other organization to meet need of the massive population in the country

generate huge demand for cement and also provision for housing is the first and foremost

requirement of every household and there for market demand of cement for private

consumption is increasing consultable. According to the ministry the liberalization process

provide the much desired demand to the cement industry and the growth was quit visible

leading to noticeable growth in term of 100 million tonnes capacity aiding during the decade

1999-2012.

Key point

Cement industry is second largest industry in India after china.

183 large cement plant and more than 360 mini plants.

328 million tonnes a years installed capacity.

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

21 top companies control 90% of the market.

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

Brand Equity

Satisfies customer needs

Satisfies customer needs

Provides better value for money than other competing brands

Distribution Network

Availability near the consumer

Economies of scale

Appropriate pricing strategy

84

3.9 INDUSTRY DOMINANT ECONOMIC FACTORS

3.8.1 Market Size:- A RNCOS report titled “Indian Cement Industry Outlook 2015‖

estimated that the total installed capacity of cement in India will increase with a compound

annual growth rate (CAGR) of around 7 per cent during 2012-13 to 2014-15. The production

of cement has increased at 10 per cent CAGR over FY07-11. The market size of the industry

is expected to grow from 223.4 MTPA during FY12 to 550 MTPA by FY20. The cement

companies in India are receiving full attention from the private equity (PE) firms for funding

their business plans. India‘s cement sector is with an overall capacity of 350 MTPA. The

compaies including UltraTech, ACC, Ambuja Cements, Jaiprakash and Shree Cement control

almost half the country‘s cement market. In the 11th Five Year Plan (2007-12), the industry

added 120 MT of new capacities and is expected to reach close to 470 MT by 2017.

3.8.2 Growth Rate

Cement demand has continued to remain weak in Apr-May 2013 mainly due to lackluster

demand from end user industries. The domestic cement production grew by 8.2% Y or in Apr

2013 as compared to 12.5% Y or in Apr 2012. The growth slowed down further to 3.0% Y or

in May 2013 pulling down the overall growth rate to 5.6%Y or in Apr-May 2013. Although

the demand picked up temporarily from the end of May 2013, it does not reflect any

fundamental recovery in prospects. The cement demand in May end and June 2013 has been

supported by pre-monsoon increase in construction activities and is not likely to be sustained

going forward. With the onset of monsoons and consequent lull in construction activities, the

demand is likely to come under pressure in Q2 FY14 as well. Cement prices which

weakened during Mar and Apr 2013 due to weak demand saw some recovery from mid May

2013. The hike in cement prices was supported by pre-monsoon increase in construction

activities which provided an opportunity to cement companies to raise prices before the lean

season sets in. The industry also increased prices to pass on the increase in coal prices by

Coal India Limited (CIL). As a result, the average wholesale cement prices increased by ~Rs.

10/bag in Delhi, Rs. 17/ bag in Chandigarh and Rs. 5/bag in Kolkata between April-Jun

2013. Prices in some parts of South India such as Bangalore and Chennai also saw hike of

Rs. 10-15/bag in June 2013. However, in last week of June, prices have come under

pressure in North, West and East with cement prices declining by Rs. 5-20 per bag in Delhi,

Chandigarh and Ahmedabad markets. The Hyderabad market, which had seen significant

downward pressure in prices in the last one year with average wholesale cement prices

85

declining by 20% from Rs. 283/bag in July 2012 to Rs. 228 -232/bag in April 2013, also saw

a steep recovery in prices in the last week of May 2013. The cement prices in Hyderabad

increased by 30% to Rs. 296/bag in June 2013 driven by slowdown in capacity addition in

South, efforts by cement players to rationalize production as per market demand and to pass

on the rise in costs to the customers. This rise in prices augurs well for South-based players

with significant exposure to Andhra Pradesh market. However, the ability of cement

companies to maintain prices at these levels will be challenging given the capacity

overhang in the state and lean monsoon season ahead. Going forward, with the busy season

coming to an end, demand scenario continuing to look muted and a seasonally weak monsoon

season ahead, the pricing power is expected to remain weak for the cement industry. On

the cost side, the cement industry was affected by increase in coal prices effected by CIL. In

May 2013, CIL reduced the prices of premium varieties of coal (G3 and G4) with Gross

Calorific Value in the range of 6100-6700 kcal/kg by 10% in line with decline in

international coal prices. To offset this, CIL increased the prices of low grade coal (G6 -

G17)-varieties that are commonly used by Indian cement companies- by an average 10%. The

increase in coal prices will affect the power and fuel cost for cement companies. The impact

of increase in coal prices will be more pronounced on companies which depend more heavily

on domestic coal.

3.8.3 Major Players in Indian Cement Industry

There are a number of players prevailing in the cement industry in India. However, there are

around 20 big names that account for more than 70% of the total cement production in India.

The total installed capacity is distributed over around 129 plants, owned by 54 major

companies.

86

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

Company Production Installed Capacity

ACC 17,902 18,640

Gujarat Ambuja 15,094 14,860

Ultratech 13,707 17,000

Grasim 14,649 14,115

India Cements 8,434 8,810

JK Group 6,174 6,680

Jaypee Group 6,316 6,531

Century 6,636 6,300

Madras Cements 4,550 5,470

Birla Corp. 5,150 5,113

3.8.4 Recent Investments in the Indian Cement Industry

In a recent announcement, the second largest cement company in South India, Dalmia

Cement declared that it's going to invest more than US$ 652.6 million in the next 2-3

years to add 10 MT capacity.

Anil Ambani-led Reliance Infrastructure is going to build up cement plants with a

total capacity of yearly 20 MT in the next 5 years. For this, the company will invest

US$ 2.1 billion.

India Cements is going to set up 2 thermal power plants in Andhra Pradesh and Tamil

Nadu at a cost of US$ 104 billion.

Anil Ambani-led Reliance Cementation is also going to set up a 5 MT integrated

cement plant in Maharashtra. It will invest US$ 463.2 million for that.

87

Jaiprakash Associates Ltd has signed a MoU with Assam Mineral Development

Corporation Limited to set up a 2 MT cement plant. The estimated project cost is US$

221.36 million.

Rungta Mines (RML) is also planning to invest US$ 123 million for setting up a 1 MT

cement plant in Orissa

3.8.5 Cement Production and Growth.

Domestic demand plays a major role in the fast growth of cement industry in India. In fact the

domestic demand of cement has surpassed the economic growth rate of India. The cement

consumption is expected to rise more than 22% by 2009-10 from 2007-08. In cement

consumption, the state of Maharashtra leads the table with 12.18% consumption, followed by

Uttar Pradesh. In terms of cement production, Andhra Pradesh leads the list with 14.72% of

production while Rajasthan remains at second position.

The production of cement in India grew at a rate of 9.1% during 2006-07 against the total

production of 147.8 MT in the previous fiscal year. During April to October 2008-09, the

production of cement in India was 101.04 MT comparing to 95.05 MT during the same

period in the previous year. During October 2009, the total cement production in India was

12.37 MT compared to a production of 11.61 MT in the same month in the previous year.

The cement companies are also increasing their productions due to the high market demand.

The cement companies have seen a net profit growth rate of 85%. With this huge success, the

cement industry in India has contributed almost 8% to India's economic development.

3.8.6 Scope

This report provides a comprehensive analysis of the Indian cement industry, It provides

historical values for the Indian cement industry for the report's 2007–2011 review period and

Forecast figure for the 2012-2016 forecast period in offer a details analysis of production

capacity, It details the regulatory framework for the Indian cement industry

It covers an exhaustive summary on key trends, drivers and issues affecting the Indian

cement in industry, It details the competitive landscape in the Indian cement industry

It contains an analysis of market entry, growth and operational strategies of key players

Make strategic business decisions using historic and forecast market data related to the

88

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

production

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

Assess industry structure and competitive landscape the competitive in the Indian cement

industry enabling the formulation of effective market entry strategies.

89

3.10 STRATEGIC GROUP MAPPING:-

Geographical Converge wise:

High

Medium

Low

Local

Regional

National

Global

Figure:- 3.4

A

V

A

I

L

A

B

I

L

I

T

Y

Ultratech

J.K

J.K laxmi

J.K

Ultratech

J.K

Ultratech

J.K laxmi

ACC

J.K laxmi ACC

SHREE

ACC

SHREE

Ultratech

SHREE

J.K laxmi

J.K laxmi

ACC

SHREE

Geographical Coverage

90

Based On Brand & Price:-

High

Medium

Low

High

Medium

Low

Figure:- 3.5

PRICE

B

R

A

N

D

Ultratech

J.K

J.K

Laxmi

Acc

Shree

91

Interpretation for Geographical Converge:-

Here in the above table of geographical coverage vice analysis of strategic group mapping,

we can analyse that ULTRATECH, J.K, contain higher availability on the local basis. and

mediums and low level available J.K LAXMI, ACC, SHREE

• But on the global level availability, ULTRATECH, J.K, J.K LAXMI, ACC, SHREE

all brands are at mediums and low level.

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

Interpretation for brand vs. price

Here in the above table of brand vs. price analysis of group mapping , we can analyse that

Ulltratech, high price and brad value is also high. Second J.K cement price and brand are

medium.

J.K laxmi cement price and brand are medium, and Acc cement price and brand are average,

and Shree cement price and brand are low in the market.

92

FINANCIAL ANALASIS

4.1 INTRODUCTION

4.2 Filtrations

4.3 TOOLS FOR FINANCIAL ANALYSIS

Ratio analysis

Tread analysis

93

4.1 INTRODUCTION

we highlighted the content and importance of the statement of change in financial position.

Management, creditors, investors and other use the information contained in these statements

to form judgment about the operating performance and financial position of the firm. User of

financial statement can get future insight about financial strength and weakness of the firm if

they properly analyse information reported in these statement. Management should be

particularly interested in knowing financial strength of the firm to make their best use and to

be able to spot out financial weakness of the firm to take suitable corrective action. The

future plan of the free should be laid down in view of the firm‘s financial strengths and

weakness. Thus financial analysis is the starting point for making plans, before using any

sophisticated forecasting and planning procedures. Understanding the past is a prerequisites

for anticipating the future.

94

4.2 FILTARETION

Interpretation

Currently there are about 3000 dairie in Gujarat, but four major players in the premium

organized segment dominate the industry. That is the reason for selecting four companies out

of several companies.

We selected these four companie on the basis of Sales Net Profit and. From all companies we

select five company which gives higher selse net profit and earning per share as a compare to

others.

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

From four selected companies the first company is Ultatech Cement which highest in Sales

Net profit The last company is J K Lakshmi.

Table:- 4.1

Name Sales Net Profit EPS Rank

Acc cement 11357.96 1231.75 60.70 2

J k cement 2911.97 235.03 32.501 4

Jk laxmi cement 2054.95 158.25 13 5

Shree cement 5590.25 912.68 258.60 3

Ultra Tech 20174.94 2485.38 89.10 1

95

4.3 RATIO ANALISIS

4.3.1 Return on investment/ Return on capital employed

Meaning & Importance:-

It is an index of profitability of business & is obtained by comparing net profit with capital

employed. The ratio normally expressed in percentage.

The term capital employed includes share capital, reserves & surplus and long term loans

such as debentures.

Formula:-

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

Capital employed Total Capital employed

Table-4.2

Particular 2013

2012 2011 2010 2009

Acc cement 22.24 21.56 22.37 39.67 36

J k cement 17.67 16.76 8.61 20.98 21.06

J k Lakshmi cement 13.91 9.69 6.03 22.7 19.52

Shree cement 16.29 6.98 30 33.98 25.01

Ultra Tech 21.29 22.56 19.45 28.53 29.21

Total 91.4 77.55 86.46 145.86 130.8

Average 18.28 15.51 17.29 29.17 26.16

96

Figur-4.1

Return on capital employee that indicates the efficiency profitability of the industry capital

investment. Above graph show the industry return of capital employee continually decrease.

This is not a good sign for the industry having such a reputed name in the market. It also

affects industry capital investment.

0

20

40

60

80

100

120

140

160

2009 2010 2011 2012 2013

Return on Investment

97

4.3.2 Earning Par Share

The ratio measures the profit available to equity shareholder on per share basis. this ratio

show the profitability of the firm. It is not the actual amount paid to shareholders as dividend

but is the maximum that can be paid to them.

Profit After tax

Earnings per Share = -------------------------------------------------------------

No. of Equity Shares

Table-4.3

Particular 2013

2012 2011 2010 2009

Acc cement 27.7 17.23 19.72 10.68 7.81

J k cement 8.2 6.55 15.8 5.7 2.01

J k Lakshmi Cement 6.71 7.61 11.03 3.75 1.5

Shree cement 21.63 35.86 11.99 4.32 14.71

Ultra Tech 19.6 17.13 22.25 13.32 7.1

Total 83.84 84.38 80.79 37.77 33.13

Average 16.76 16.87 16.16 7.55 6.62

98

Figar-4.2

Financial analyst considers the earning per share as an important measure of profitability.

EPS measures the profit available to the equity share holders on a per share basis. That is the

amount that they can get on every share held.

The earnings per share has increase rapidly from 2009-10 to 2012-13 This Higher Ratio will

attract investors. This ratio shows that company Successfully increase profitability.

0

2

4

6

8

10

12

14

16

18

2009 2010 2011 2012 2013

Earning par Share

99

4.3.3 Current Ratio

Meaning & Importance :-

This most widely used ratio shows the proportion of current assets to current liabilities. It is

also known as ― working capital ratio ― as it is a measure of working capital available of a

particular time.

Formula :-

Current Assets

Current ratio = ------------------------------

Current Liabilities

Table-4.4

Particular 2013

2012 2011 2010 2009

Acc cement 0.76 0.77 0.67 0.77 0.88

J k cement 1 1.09 1.09 1.48 1.79

J k Lakshmi cement 0.44 0.55 0.96 1.62 2.12

Shree cement 1 1.39 1.5 1.84 2.02

Ultra Tech 0 .62 0.6 0.57 0.64 0.61

Total 3.82 4.4 4.79 6.35 7.42

Average 0.76 0.88 0.95 1.27 1.48

100

Figar-4.3

The current ratio is a financial ratio that measures whether or not a industry has enough

resources to pay its debts over the next 12 months. It compares a firm's current assets to its

current liabilities. Above graph show the current ratio Decrease rapidly from in the year of

2009-10. It means the industry next five year current assets and current liability was decrease.

4.3.4 Debt- Equity Ratio

This ratio is only another from of proprietary ratio and establishes relationship between the

outside long- term liabilities and owners‘ funds. It showa the proportion of long-term external

equities and internal equities.

Debt Equity Ratio = Long term Liabilities

Shareholders‘ Funds

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2009 2010 2011 2012 2013

current Ratio

Column2

Column3

101

Table-4.5

particular 2013

2012 2011 2010 2009

Acc cement 0.05 0.08 0.09 0.1 0.09

J k cement 0.9 1.04 1.07 0.82 0.64

J k Lakshmi cement 1.03 0.96 0.95 0.92 0.99

Shree cement 0.76 1.04 1.18 1.5 2.01

Ultra Tech 0.34 0.35 0.38 0.46 0.62

Total 3.08 3.47 3.67 3.8 4.35

Average 0.62 0.69 0.73 0.76 0.87

Figar-4.4

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

liabilities by stockholders' equity. It indicates what proportion of equity and debt the industry

is using to finance its assets. Above graph show the industry debt equity ratio was decrease in

the year of the 2009-10 to 20012-13 it is good position in the market.

0

2

4

6

8

10

12

14

16

18

2009 2010 2011 2012 2013

interest coverage tio

Series 2

Series 3

102

4.3.5 Interest Coverage Ratio

This ratio indicates as to how many times the profit covers the payment of interest on

debentures and other long- term loans. Hence, it is also known as ―times-interest earned

ratio‘‘ it measures the debt service capacity of the firm in respect of fixed interest on long-

term debts. This ratio is obtained by dividing profit of the firm before interest and taxes by

fixed interest charges.

Interest Coverage Ratio = Profit before Interest & Taxes

Interest

Table-4.6

Particular 2013

2012 2011 2010 2009

Acc cement 27.7 17.23 19.72 10.68 7.81

J k cement 8.2 6.55 15.8 5.7 2.01

J k Lakshmi cement 6.71 7.61 11.03 3.75 1.5

Shree cement 21.63 35.86 11.99 4.32 14.71

Ultra Tech 19.6 17.13 22.25 13.32 7.1

Total 83.84 84.38 80.79 37.77 33.13

Average 16.76 16.87 16.16 7.55 6.63

103

Figar-4.5

This ratio indicates as to how many times the profit covers the payment of interest on

debentures and other long- term loans. Hence, it is also known as ―times-interest earned

ratio‘‘ it measures the debt service capacity of the firm in respect of fixed interest on long-

term debts. Above graph show the industry Interest Coverage Ratio was increase in the year

of the 2009-10 to 20012-13 it ,s means that industry cover interest form profit.

0

2

4

6

8

10

12

14

16

18

2009 2010 2011 2012 2013

Interest Coverage Ratio

104

4.3.6 Stock Turnover

The number of times the average stock is turned over during the year is known as stock turn

over. It over during the year is known as stock turn over. It is computed by dividing the cost

of goods sold by the average stock of the business.

Formula :-

Stock turnover ratio = Cost of goods sold

Average Inventory

Average inventory = Opening stock + Closing stock

2

Table-4.7

Particular 2013

2012 2011 2010 2009

Acc cement 11.32 10.62 10.11 11.1 10.8

J k cement 8.13 8.46 8.53 12.03 14.97

J k Lakshmi cement 19.58 16.01 15.32 23.35 21.9

Shree cement 11.6 10.18 15.71 18.71 14.67

Ultra Tech 10.42 10.3 10.77 10.21 11

Total 61.05 55.57 60.44 75.4 73.34

Average 12.21 11.11 12.08 15.08 14.67

105

Figar-4.6

A ratio showing how many times a inventory is sold and replaced over a period. Here the

graph show the higher inventory turnover ratio in the year of the 2010-11.it means the

industry inventory is more sold and replaced over a period.

4.3.8 Debtors turnover ratio

The debtors turnover ratio suggests the number of times the amount of credit sale is collected

during the year, while debtors ratio indicates the number of days during which the dues for

credit sales are collected.

Formula :-

Debtors turnover ratio = Debtors + B/R

[in days] Average daily sales

0

2

4

6

8

10

12

14

16

2009 2010 2011 2012 2013

Stock Turnover

106

Average Daily Sales = Credit sales

365

Table-4.8

2013

2012 2011 2010 2009

Acc cement 51.46 58.47 44.84 33.96 27.47

J k cement 33.68 40.04 33.42 33.33 34.02

J. k Laxmi

cement 52.07 58.06 52.39 52.87 66.97

Shree cement 36.38 40.7 57.21 57.51 64.51

Ultra Tech 25.64 30.08 36.57 37.72 34.88

Average 39.85 45.47 44.88 45.08 45.57

Figure - 4.7

Debtor turnover ratio or accounts receivable turnover ratio indicates the velocity of debt

collection of an industry. In simple words it indicates the number of times average debtors

(receivable) are turned over during a year. The graph show debtor turnover ratio in the year

36

37

38

39

40

41

42

43

44

45

46

2009 2010 2011 2012 2013

Debtors Turnover Ratio

107

2009-10 higher and in the year of 2012-13 is lower as camper to past .It means the debtor

turnover ratio decrease. It is the benefit of the industry.

4.4 TREND ANALYSIS

Trend analysis is an aspect of technical analysis that tries to predict the future movement of a

stock based on past data. Trend analysis is based on the idea that what has happened in the

past gives traders an idea of what will happen in the future.

Method for calculating trend:

Trend percentage Method:

We have utilized trend percentage method for the calculation of trend. For the trend analysis

index number is advocated. The procedure followed is to assign the number 100 to the item

of the base year and to calculate percentage change in each item of other years in the relation

to the base year. this procedure is called trend percentage method.

Base year for the trend analysis:

For the trend analysis, year dec 2006 is taken as base for the calculation of the trend of

different of balance sheet and income statement.

4.4.1 Total Income

Table-4.10

Particular 2013 2012 2011 2010 2009

Acc cement 11,602.76 9,946.59 8,130.84 8,296.36 7,503.69

J k cement 2,997.39 2,600.50 2,148.35 2,110.95 1,686.70

J k 107Lakshmi cement 2,093.57 1,780.92 1,390.35 1,537.58 1,257.56

Shree cement 5,793.98 5,943.61 3,613.44 3,790.33 2,788.43

Ultra Tech 20,598.13 18,660.46 13,529.88 7,169.43 6,577.68

Total 43086.53 38932.05 28812.86 22904.65 19814.06

Average 8617.31 7786.41 5762.57 4580.93 3962.81

108

Figar-4.8

The Industry has a fluctuating flow of income over the 5 years. The industry has not been

able to improve its sell much. The difference of income from 2007-2008 to 2008-2009 is just

7014.92 crores. Next 4 year the industry has not increase their total income. This is not a

good sign for the industry having such a reputed name in the market. Also it affects the

earnings of shareholders.

4.4.2 Total Expenses

Table - 4.11

2013 2012 2011 2010 2009

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

J k cement 2,388.68 2,044.86 1,833.43 1,644.76 1,345.65

J K Lakshmi

Cement 1,609.41 1,389.55 1,166.47 1,071.70 912.26

Shree cement 4,045.79 4,147.41 2,651.98 2,222.89 1,782.97

Ultra Tech 15,617.65 14,141.17 10,708.33 5,076.17 4,768.17

Total 33139.27 29556.95 22580.14 15591.1 14242

Average 6627.85 5911.39 4516.02 3118.22 2848.4

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2009 2010 2011 2012 2013

Average Income

109

Figar-4.9

Above graph show the industry fluctuating of expenses over the 5 year. The industry has not

able to decrease their expenses. The different of expenses from 20010-11 and 2012-13 is

increase This is not good sign for industry. In 2012-13 the industry has not control expenses.

This is not a good sign for the company having such a reputed name in the market. Also it

affects the earnings of shareholders.

4.4.3 Operating Profit

Table-4.10

Name of

company

2013 2012 2011 2010 2009

Acc cement 2,125.02 2,112.63 1,910.91 2,720.78 2,070.74

J k cement 608.71 555.64 314.92 466.19 341.05

J k Lakshmi

cement 484.16 391.37 223.88 465.88 345.3

Shree cement 1,748.19 1,796.20 961.46 1,567.44 1,005.46

Ultra Tech 4,980.48 4,519.29 2,821.55 2,093.26 1,809.51

Total 9946.56 9375.13 6232.72 7313.55 5572.06

Average 1989.31 1875.02 1246.54 1462.71 1114.41

0

1000

2000

3000

4000

5000

6000

7000

2009 2010 2011 2012 2013

Total Expenses

Column2

Column3

110

Figar-4.10

Above graph show the industry different year operating profit over the 5 year. The graph

show the first 3 year profit continually increase. The industry show, they have achieved good

market share over the first 3 year. But the year of the 2010-11 the industry operating profit

was decrease. Because the J k cement and J K Laksmi Cement Company has decrease their

operating profit.

4.4.4 PBDT

Table-4.11

Particular 2013 2012 2011 2010 2009

Acc cement 2,010.37 2,015.72 1,854.13 2,636.48 2,030.78

J k cement 468.89 411.36 196.41 396.77 286.38

J k Lakshmi

cement 384.29 311.71 163.4 410.9 295.79

Shree cement 1,555.05 1,560.84 786.11 1,438.35 928.3

Ultra Tech 4,770.77 4,295.43 2,549.03 1,975.74 1,684.00

Total 9189.37 8595.06 5549.08 6858.24 5225.25

Average 1837.87 1719.01 1109.82 1371.65 1045.05

0

500

1000

1500

2000

2500

2009 2010 2011 2012 2013

OperatingProfit

111

Figar-4.11

Above graph show the industry fluctuating of PBDT over the 5 year. The industry has not

able to improve their PBDT. But industry PBDT was decrease . Because the J k cement and

J K Lakshmi Cement Company has decrease their PBDT. in 2010-2011 . Hence it is not easy

to predict future of the industry.

4.4.5 Total Share Capital

Table-4.12

Particular 2013 2012 2011 2010 2009

Acc cement 187.95 187.95 187.95 187.94 187.88

J k cement 69.93 69.93 69.93 69.93 69.93

J k Lakshmi

cement 58.85 61.19 61.19 61.19 61.19

Shree cement 34.84 34.84 34.84 34.84 34.84

Ultra Tech 274.18 274.07 274.04 124.49 124.49

Total 625.75 627.98 627.95 478.39 478.33

Average 125.15 125.59 125.59 95.68 95.67

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2009 2010 2011 2012 2013

PBDT

112

Figar-4.12

Above graph show the industry fluctuating of Total share capital over the 5 year. The

industry has not able to improve their share capital in 2011-11. This is not a good sign for the

industry having such a reputed name in the market. Also it affects the industry volume and

profit

4.4.6 Total Liability

Table-4.13

Particular 2013 2012 2011 2010 2009

Acc cement 8,084.16 8,198.32 6,993.31 6,583.14 5,409.76

J k cement 3,070.49 2,834.70 2,788.94 2,427.49 1,750.48

J k Lakshmi

cement 2638.83 2279.44 2074.73 1942.43 1533.92

Shree cement 4,825.27 4,241.29 3,939.47 2,706.17 2,003.51

Ultra Tech 20,779.19 17,135.66 14,925.26 6,213.17 5,742.05

Total 39397.94 34689.41 30721.71 19872.42 16439.72

Average 7879.58 6937.88 6144.34 3974.48 3287.94

0

20

40

60

80

100

120

140

2009 2010 2011 2012 2013

Total Share capital

113

Figar-4.13

Above graph show that the industry total liability continually over the 5 year. Because all

three company has increase their liability.

4.4.7 Investment

Table-4.14

Particular 2013 2012 2011 2010 2009

Acc cement 2,553.55 1,624.95 1,702.67 1,475.64 679.08

J k cement 169.3 10.84 5.84 5.99 10.74

J k Lakshmi cement 406.46 453.75 527.76 480.53 88.91

Shree cement 2,535.20 1,196.46 1,592.24 844.83 591

Ultra Tech 5,108.72 3,788.77 3,730.32 1,669.55 1,034.80

Total 10773.23 7074.77 7558383 4476.54 2404.53

Average 2154.65 1414.95 1511.76 895.31 480.91

0

1000

2000

3000

4000

5000

6000

7000

8000

2009 2010 2011 2012 2013

Total Liability

114

Figar-4.14

At the initial level the industry is very poor in making investments at the year 2011-12

industry sold its investments but in 2011-12 and 2012-13 industry had done good business

And at 2012-13 industry had increase their investment compared past Year.

4.1.8 Total Assets

Table-4.15

Particular 2013 2012 2011 2010 2009

Acc cement 8,084.16 8,198.32 6,993.31 6,583.14 5,409.76

J k cement 3,070.49 2,834.70 2,788.94 2,427.49 1,750.48

J k Lakshmi

cement 2,638.83 2,279.44 2,074.73 1,942.43 1,533.92

Shree cement 4,825.27 4,241.29 3,939.47 2,706.17 2,003.51

Ultaech 20,779.19 17,135.66 14,925.26 6,213.17 5,742.05

Total 393978.69 34689.41 30721.71 19872.4 16439.72

Average 7879.74 6937.88 6144.34 3974.48 3287.94

0

500

1000

1500

2000

2500

2009 2010 2011 2012 2013

Invesment

115

Figar-4.15

From the above trend of total assets of the company we can say that company has a good

growth rate. It has increased from 2009-10 to 2011-12 it is because of company overvalued

its fixed assets and investments. But in 2011-12 to 2012-13 is decrease Because company

undervalued its fixed assets.

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2009 2010 2011 2012 2013

Total Assets

116

5.1 FINDINGS

After preparing a MRP-1 report on Bakery industry with special focus on cement products,

we have finally reached to the following findings;

We found that Cement Industry is right now prevailing in Growth stage, it is grow at the

rate of 15 – 17% every year.

We have also found that in order to sustain the current market share all current market

players have to struggle a lot, they have to keep strong distribution channel to reach the

product in each place of the country and Ulltratech become successful to do this.

Apart from strong distribution channel other factors like aggressive promotions and

advertisement, strong research and development, new innovations at regular interval on

continues basis etc. Also play a vital role in sustaining existing customers and attracting

new potential customers.

After making Research on Customer Loyalty of five major brands of cements We have

also found that Customers of Ulltratech and J.K cement are more loyal compare to other

brands like J.K Laxmi, Acc, Shree Cement. But when we compare the loyalty of

Ulltratech and J.K, Ulltratech has upper hand.

117

5.2 CONCLUSION

With the change in the economic condition and opening up of the economy and India being a

signatory to the WTO, it can be observed that the Indian cement industry is in for a heavy

shakeup in addition to this the industry being a capital intensive one and a squeeze of

profitability margins it may be right for the Indian cement industry to look for some

innovative ideas to improve their margins. In addition to this as seen from the various facts

put forward in the previous chapter the demand supply gap exists and in some regions it is the

supply which exceeds demand and in some regions it is the demand which exceed supply, the

company may have to think of new strategies to improve their market share and with this also

improve the profitability margins.

The order of the day is ‗innovate or perish‘ and thus Indian cement companies need to

innovate new methods or some value added products, which may give some fillip to the

industry to improve its margins.

Thus the Indian cement company should try and manufacture a product at a lesser cost,

although it seems not feasible as the cost of cement depend on the power tariffs existing

ground the country. The company can look at the route of captive power generation, which

may be an answer to this problem of high power tariffs.

118

6.1 Introduction

We want to start own agency for cement in India and Northern part of Gujarat at Mehsana,

because of second largest growing economy in the world after China, and also various

industries are contributing for this growth. There are agriculture, infrastructure, energy&

power, banking, & finance service sector. Construction is the second largest economy activity

after agriculture and is poised for continuous growth due to industrialization, urbanization,

and economic development with expectation of improvement living standard of people in

India. It account for nearly 65% of the total investment in infrastructure, employee 33 million

people approximately and accounts for 6-8 percent of GDP. The construction industry is

primarily drive by Government of Indian investment on core infrastructure project and

creation of urban infrastructure, industries capital expenditure by corporate sector and

development activities of real estates or housing sector in urban as well as rural areas.

The Indian economy is booming, with rates of gross domestic product growth exceeding an

average of 7% ever year. This growth is due to rapidly developing service and manufacturing

sectors, increasing consumer demand and government commitment to the agriculture sector

and improve the economic condition of Indian rural population. the production of industrial

machinery has also been on the rise and the increasing flow of goods has spurred increases in

rail, road and port traffic, necessitating future infrastructure improvements.

Government Policies

119

Government policies have affected the growth of cement plants in India in various stages.

The control on cement for a long time and then partial decontrol and then total decontrol has

contributed to the gradual opening up of the market for cement producers. The stages of

growth of the cement industry can be best described in the following stages:

Price and Distribution Controls (1940-1981)

During the Second World War, cement was declared as an essential commodity under the

Defense of India Rules and was brought under price and distribution controls which resulted

in sluggish growth. The installed capacity reached only 27.9 MT by the year 1980-81.

Partial Decontrol (1982-1988)

In February 1982, partial decontrol was announced. Under this scheme, levy cement quota

was fixed for the units and the balance could be sold in the open market. This resulted in

extensive modernization and expansion drive, which can be seen from the increase in the

installed capacity to 59MT in 1988-89 in comparison with the figure of a mere 27.9MT in

1980-81, an increase of almost 111%.

Total Decontrol (1989)

In the year 1989, total decontrol of the cement industry was announced. By decontrolling the

cement industry, the government relaxed the forces of demand and supply. In the next two

years, the industry enjoyed a boom in sales and profits. By 1992, the pace of overall

economic liberalization had peaked; ironically, however, the economy slipped into recession

taking the cement industry down with it. For 1992-93, the industry remained stagnant with no

addition to existing capacity.

Government Controls

The prices that primarily control the price of cement are coal, power tariffs, railway, freight,

royalty and cess on limestone. Interestingly, all of these prices are controlled by government

REQUIREMENTS

120

Coal

The consumption of coal in a typically dry process system ranges from 20-25% of clinker

production. This means for per ton clinker produced 0.20-0.25 ton of coal is consumed. This

contributes 35-40% of the production cost. The cement industry consumes about 10mn tons

of coal annually. Since coalfields like BCCL supply a poor quality of coal, NCL and CCL the

industry has to blend high-grade coal with it. The Indian coal has a low calorific value

(3,500-4,000 kcal/kg) with ash content as high as 25-30% compared to imported coal of high

calorific value (7,000-8,000 kcal/kg) with low ash content 6-7%. Lignite is also used as a fuel

by blending it with coal. However this process is not very common.

Electricity

Cement industry consumes about 5.5bn units of electricity annually while one ton of cement

approximately requires 120-130 units of electricity. Power tariffs vary according to the

location of the plant and on the production process. The state governments supply this input

and hence plants in different states shall have different power tariffs. Another major

hindrance to the industry is severe power cuts. Most of the cement producing states like AP,

MP experience power cuts to the tune of 25-30% every year causing substantial production

loss.

Infrastructure

To reduce uncertainty relating to power, most of the leading companies like ACC, Indian

Rayon, and Grasim rely on captive power plants. A few companies are also considering

power-generating windmills.

Limestone

This constitutes the largest bulk in terms of input to cement. For producing one ton of

cement, approximately 1.6 ton of limestone is required. Therefore, the cement plant location

is determined by the location of limestone mines. The major cash outflow takes place in way

of royalty payment to the central government and cess on royalties levied by the state

government. The total limestone deposit in the country is estimated to be 90 billion tons. AP

has the largest share -- 34%, Karnataka 13%, Gujarat 13%, M.P 8%, and Rajasthan 6.5%.

The plants near the limestone deposit pay less transportation cost than others.

121

Transportation

Cement is mostly packed in paper bags now. It is then transported either by rail or road. Road

transportation beyond 200 kms is not economical therefore about 55% cement is being

moved by the railways. There is also the problem of inadequate availability of wagons

especially on western railways and southeastern railways. Under this scenario, manufacturers

are looking for sea routes, this being not only cheap but also reducing the losses in transit.

Today, 70% of the cement movement worldwide is by sea compared to 1% in India.

However, the scenario is changing with most of the big players like L&T, ACC and Grasim

having set up their bulk terminals.

Infrastructure for Future

The consumption of cement is determined by factors influencing the level of housing and

industrial construction, irrigation projects, and roads and laying of water supply and drainage

pipes etc. The level and growth of GDP and its sectoral composition, capital formation,

development expenditure, growth in population, level of urbanization, etc, in turn, determine

these factors. But the domestic demand for cement is mainly from the housing activities and

infrastructure development. The government paved the way for the entry of the private sector

in road projects. It has amended the National Highway Act to allow private toll collection and

identified projects, bridges, expressways and big passes for private construction. The budget

gave substantial incentives to private sector construction companies. Ongoing liberalization

will lead to an increase in industrial activities and infrastructure development. So it is hoped

that Indian cement industry shall boom again in near future.

Incentives in States

Most state governments, in order to attract investments in their respective states, offer fiscal

incentives in the form of sales tax exemptions/deferrals. In some states, this applies only to

intrastate sales, like Madhya Pradesh and Rajasthan. States like Haryana offer a freeze on

power tariff for 5 years, while Gujarat offers exemption from electric duty.

Installed Capacity

India is the world‘s second largest cement producing country after China. The industry is

characterized by a high degree of fragmentation that has created intense competitive pressure

on price realizations. Spread across the length and breadth of the country, there are 120 large

122

plants belonging to 56 companies with an installed capacity of around 135mn tons as on

March 2002.

Environmental Regulations in the Indian Cement Industry

Introduction

Environmental concern in design, operation and the up gradation of cement plants has been

increasing in recent years. Cement is the most essential ingredient in any kind of construction

activity and the cement industry, as one of the six core industrial sectors, plays a vital role in

infrastructure development, especially in a developing country like India. The Indian cement

industry is the second largest in the world, with an estimated installed capacity of around 349

million t, which is likely to reach 600 million t by 2020.

There are a number of environmental issues related to the cement sector, such as control of

air pollutants (dust and gaseous emissions), reduction of greenhouse gases (GHG), the control

of fugitive dust, utilisation of hazardous wastes as alternate fuels and the conservation of

natural resources. The Indian cement industry has shown phenomenal performance in terms

of improving air quality. Dust emissions are reduced and cement plants conform to the

environmental parameters set by statutory bodies. Government polices have energised and

motivated the industry to take innovative actions to protect the environment and improve the

lives of people working in the plant and living nearby. This article discusses environmental

regulations operating in India that have given new direction to the cement industry in terms

of environmental management.

Environmental Acts/Regulations

In India, both the Central Pollution Control Board (CPCB) and the respective State Pollution

Control Boards (SPCB) deal with environmental issues. SPCB regularly inspects the cement

plants/limestone quarries to verify compliance with emission norms. CPCB also inspects the

cement plants to check compliance with emission standards under environmental surveillance

squad activities. Cement plants also have to comply with the charter on Corporate

Responsibility for Environment Protection (CREP).

123

The Indian cement industry must comply with the various environmental acts and regulations

notified by the Ministry of Environment and Forests (MoEF), etc., which covers different

spheres of the environment, encompassing emissions of air pollutants, consumption of water,

generation and discharge of trade effluents, utilisation and storage of hazardous waste, noise

generation, utilisation of forest land and wildlife areas. Specifically, these are as follows:

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

Water (Prevention & Control of Pollution) Cess Act, 1977.

Air (Prevention & Control of Pollution) Act, 1981.

Environment (Protection) Act, 1986 (EPA).

Hazardous Waste (Management Handling & Transboundary Movement), 2008.

The Forest (Conservation) Act, 1980.

The Factories Act, 1948.

The Wildlife (Protection) Act, 1972.

The Mines Act, 1952.

These Acts/Regulations, together with some of the stringent conditions that are relevant for

environment protection from industrial pollution and imposed by the pollution control boards,

are discussed in this article.

The full version of this article, written by the National Council for Cement and Building

Materials, India, appeared in the October 2013 issue of World Cement.

124

6.2 Objective

Vision:-

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

easily available .

Mission:-

Our mission is to large cement manufacturing company in India. We went to provide best

quality and at competitive price, develop brand image into customer mind.

Goal:-

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

Our objectives

To build strong brand image.

To make our business profitability within a shortest period.

Office location and :

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

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

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

Circle, Meshana High- way.

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

ADVANTAGEYS OF LOCATION:

Easy transportation

Conducive environment

Low Cost of land for the production.

Electricity and water availability

Easy and cheaper labor availability

125

Partners:

Ms.Hetal Mistry

Ms. Dhara Patel

Mr.Tosif Nandoliya

Mr. Jigar Patel

Ms. Vaibhavi Raval

Ms.Dixita Patel

Our Company Name:-

To cement company.

To cement Pvt. Ltd.

Logo:-

CEMENT PVT.LTD.

Build Make Strong Relation

126

6.5 STP ANALYSIS

A Marketer can rarely satisfy everyone in market; therefore marketer starts by dividing up the

market into segment. Examining demographic, psychographics and behavioral difference

among buyers will do the identification of buyers.

Segmentation:

A company discovers different needs and groups in the market place and targets that needs

and groups that it can satisfy in a superior way. The Marketer than decides, which segments

present the greatest opportunity – which is target market. In our Product we are focusing on,

A. Geographic Segmentation:

Here, we are focusing in our country only and especially for the northern part of Gujarat like

Patan, Mehsana, Radhanpur, Harij, Chanasma, Siddhpur. In other word we can say that all

northern districts and villages covered.

Region: Northern part of Gujarat.

City and Villages: Patan, Mehsana, Radhanpur, Harij, Chanasma, Siddhpur, northern

districts villages covered

B. Demographic Segmentation:

Age: Up to 30 year above

Life cycle stage: Business man, Contractors, Farmer.

Education: Primary, secondary, High- Secondary, Graduate, PG.

Social class: Lower-Middle, Upper class.

C. Use Related segmentation

Usage rate: Non user, User, Medium User, Light user, Heavy User, Super Heavy Use.

Awareness status: Unawareness, Aware, Interested, Enthusiastic.

Brand loyalty: None, Some, Strong.

D. Benefit Segmentation

Convenience, Social Acceptance, Long lasting, Economy, Value for the Money.

Targeting:

127

we are target masons, contractors, architect, business men, farmer, retailer, distributer,

wholesaler, professional person, builders.

Positioning

The Positioning, which company offers, so that target market recognizes the company‘s

distinctive offerings and image. Positioning is the act of deciding the company‘s offerings

and image to occupy a distinctive place in the mind of target market. The goal is to locate the

brand in the mind of the customer to maximize the potential benefit to the firm.

Point-of-parity through we are positioning into market. And use different promotion mix .

4.3. MARKETING COMMUNICATION MIX:

Advertising

Advertising is a specific communication task and achievement level to be accomplished with

a specific audience in a specific period of time.

Advertising can be used to build up a long term image for a product or trigger quick sales.

Advertising can efficiently reach geographically depressed buyer. Certain forms of

advertising like electronic media in which television, radio, internet and many more but all

this requires large budget. And in print media, news papers, magazines, pamphlets, hoardings

which do not. Deciding advertising forms have effects on sales.

Our aim to providing advertising is a reinforcement advertising that is to convince current

purchasers to make the right choice by using additional features which we provide. By

considering the cost of advertising and to aware customers promptly we use in electronic

media television only because our target customers are kids and there parents who use to

watch TV and select their products. In Print media which is less costly we use news papers,

comics and hoardings.

Sales Promotions:

Advertising typically build brand loyalty and awareness to the customers, while sales

promotion enhance the brand image by offering the products with different sales promotion

tools like, coupons, contests, premiums, instant price of , deals to draw a stronger buyer

response.

128

Initially, we are providing discounts and contests as a Promotional tools to our customers.

This tool is for short run effect such as to highlight product offers and boost sagging sales.

Through which we get three distinctive benefits like, communication, incentive and

invitation.

ADVANTAGEYS OF LOCATION:

Easy transportation

Conducive environment

Low Cost of land for the production.

Electricity and water availability

Easy and cheaper labor availability

DISTRIBUTION CHANNEL:

The producer and the end-users are the part of every channel. We can use the number of

intermediary levels to designate to length of channel there are zero level channel, one level

channel, two level channels, three level channels are available. But in our product we are

using one level distribution channel.

To provide greater service output by decreasing channel level cost and provide lesser price

for customers we have used two level distribution level.

The distribution channel of the company plays a vital role as the product is new to the market

and it is aimed at initially targeting the masons, contractors, architect, business men, farmer,

retailer, distributer, wholesaler, professional person.

Selecting this distribution system through because of covered all local market or approach to

customers, through distribution channel. And taking demand advantage or full fill market

demand.

129

ORGENIZATION STRUCTURE

10 labors 3 sales persons

Production

manager

R&D Marketing

manager

HR

manager

Financial

manager

MD

130

6.7 PROJECTED INCOME STATEMENT

Table- 6.1 (Amount in )

P & L Account

PARTICULAR 2013-14 2014-15 2015-16 2016-17 2017-18

Sales 15,79,500 21,43,700 25,51,770 28,37,380 32,43,240

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

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

Salary& wages

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

Material Purchase 4,50,000 8,05,000 10,80,000 12,80,000 15,60,000

Electricity bills 70,000 68,000 73,000 65,000 72,000

Transportations cost 40,000 48,000 62,000 70,000 75,000

Miscellaneous expenses written off 50,000 50,000 50,000 50,000 50,000

Other expenses 10,000 11,000 11,500 12,000 13,000

Operating Profit 3,11,500 4,94,700 5,88,870 6,54,780 7,48,440

Interest 1,60,000 1,38,000 1,16,000 94,000 72,000

Gross Profit 1,51,500 3,56,700 4,72,870 5,60,780 6,76,440

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

Profit Before Tax (27,500) 2,32,700 3,48,870 4,36,780 5,52,480

Less tax@30%+3% - 71,904 1,07,801 134,965 1,70,716

Net profit/Loss (27,500) 1,43,037 4,17,364 5,18,941 7,06,893

131

6.8 PROJECTED BALANCE SHEET

Table- 6.2 (Amount in )

Particular 2014 2015 2016 2017 2018

capital 35,00,000 35,00,000 35,00,000 35,00,000 35,00,000

Reserves and surplus (27,500) 1,33,296 3,74,365 8,93,306 16,00,199

Total Shareholder

fund 35,00,000 36,33,296 38,74,365 43,93,306 51,00,199

Secured loans 10,00,000 9,00,000 8,00,000 7,00,000 6,00,000

unsecured loans 5,00,000 4,00,000 3,00,000 2,00,000 1,00,000

Total Debt 15,00,000 13,00,000 11,00,000 9,00,000 7,00,000

Total liabilities 49,72,500 49,73,296 49,74,365 52,93,306 58,00,199

LICATION OF

FUNDS:

Gross Block 6,20,000 4,96,000 3,72,000 2,48,000 1,24,000

Less: Depreciation 1,24,000 1,24,000 1,24,000 1,24,000 124,000

Net Block 4,96,000 3,72,000 2,48,000 1,24,000 -

Current Assets,

Loans & Advances

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

Sundry debtors 4,00,000 7,36,000 10,00,000 5,00,000 10,00,000

Cash and Bank 60,56,500 65,12,000 69,44,204 79,85,135 88,15,320

Loans and Advances -

Total Current

Assets 69,06,500 80,53,000 90,24,204 97,65,135 1,13,75,320

Less: Current

Liabilities &

Provision

Current Liabilities

29,30,000 39,01,704 23,00,101 22,16,000 22,50,000

Total Current

Liabilities 29,30,000 26,68,037 46,97,839 49,45,826 58,75,121

Net Current Assets 39,76,500 41,51,296 43,26,365 48,19,309 55,00,199

Miscellaneous

Expenses not

Written Off 5,00,000 4,50,000 4,00,000 3,50,000 3,00,000

TOTAL ASSETS 49,72,500 49,73,296 49,74,365 52,93,309 58,00,199

132

6.9 PROJECTED CASH FLOW

Table-6.3

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

Sources of funds

Capital

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

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

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

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

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

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

Disposition of funds

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

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

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

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

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

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

Taxation

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

Total (B)

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

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

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

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

133

6.10 Source of the fund

Table-6.4

6.11 Depreciation schedules

Particular Book value Rate Dep Dep

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

Furniture 3,00,000 20% 60,000

Computers 2,00,000 20% 40,000

Total 6,20,000 1,24,000

Table-6.5

6.12 Salary Structure

Particular No 2013-14 2014-15 2015-16 2016-17 2017-2018

Sales mane 2 1,44,000 1,48,800 1,53,600 1,58,400 1,63,200

Labour 5 2,70,000 2,82,000 2,94,000 3,06,000 3,18,000

Accountant 1 84,000 86,400 88,800 91,200 93,600

Total

expenses

4,98,000 9,50,000 13,25,000 14,50,000 17,00,000

Table-6.6

Hetal Mistri 5,83,334

Dhara Patel 5,83,333

Dixita Patel 5,83,333

Vaibhavi Raval 5,83,333

Jigarbhai Patel 5,83,333

Tosifbhai Nandoliya 5,83,334

Loan 15,00,000

Total 50,00,000

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6.13 Net Present Value

Table-6.7

PAT Depreciation Cash Flow PVIT PV

(27,500) 1,24,000 96,500 0.909 87,718.5

1,43,037 1,24,000 2,67,037 0.826 2,20,572.56

4,17,364 1,24,000 5,41,364 0.751 4,06,564.36

5,18,941 1,24,000 6,42,941 0.683 4,39,128.70

7,06,893 1,24,000 8,30,893 0.621 5,15,984.55

Total 1,66,69,968.67

NPV =cash inflow –cash outflow

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

= 33,30,031

Profitability Index = PV of cash inflow

Cash outflow

1,66,69,968.67

50,00,000

= 3.3

135

7. BIBLIOGRAPHY

Books Referred:

Finacial Management

Marketing Management

Crafting and Strategic Management

News Papers:

Business Standard

Economic Times

Magazine:

Business Todays

Websites visited:

www.infoline.com

www.cementsonline.com

www.cmaindia.com

www.wikipedia.com

www.money control.com

www.economicctimes.com

137

9. LIMITETION OF THE REPORT

In this report we are assuming that selected five companies are representing the whole

industry but it may not be.

We select five companies on the basis of available financial data it may be possible

that major companies remain unconsidered because of lack of financial data.

Here we selected five major companies on the basis of only net profit ratio so it may

be possible that other parameters of the companies are good compare to selected

companies.

In the strategic analysis of the cement industry we used strategic analysis tool

dominant economic features, and critical success factors as per our understanding.

In the PEST and porter‘s five force analysis we include all possible as per our

understanding but there may be chances of missing some variable.

In case of financial analysis we had done five year financial analysis up to 2010.

We try our best effort to apply all possible strategic tools and financial data to study

the performance of cement industry but it may possible that some portion of the

industry remain unanalyzed.