ABSTRACT

This project report entitled: A study on dealer level of satisfaction on Konark cement Is intended to determine the dealer satisfaction, Products awareness, fluctuation of demand and needs and wants of the dealers. Primarily the well defined objectives are framed according to the study. Then questionnaire is prepared based on the defined objectives. The prepared questionnaire is used to get way of personal interview from the dealers. The response given by the customers are analyzed and interpret using different types of statistical tools such as percentage analysis, weighted average method and by frequency. From the analysis some general findings one raised and that one more related with the framed objectives for this study. According to the findings the suggestion are given and the conclusions one also based on the findings which will be more helpful for the organizations

TABLE OF CONTENTS
LIST OF TABLES LIST OF CHARTS CHAPTER 1 TITLE INTRODUCTION ABOUT CEMENT INDUSRTY IN INDIA COMPANY & PRODUCT PROFILE REVIEW OF LITERATURE PAGE NO. 9-33

2
3

35-45

47-51

OBJECTIVES AND SCOPE OF THE PROJECT RESEARCH METHODOLOGY

53-64

66-67

6 7 8

DATA ANALYSIS AND INTERPRETATION PROJECT FINDINGS CONCLUSION

69 71 73

ANNEXURES REGIONAL DEMEND AND SUPPLY BALANCE LIST OF COMPANIES WITH ICRARATINGS BIBLOGRAPHY QUESTIONNARIES

LIST OF TABLES
TABLES 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 TITLES Growth in cement demand Cement supply-demand indicator. Cement supply-demand indicator all India Share of capacity of top players in the Northern Region Demand-supply indicators for Northern Region Share of capacity of top players in the Eastern Region Demand-supply indicators for Eastern Region Demand-supply indicators for Northern+Eastern Region Available capacity for Northern+Eastern Region Share of capacity of top players in the Wertern Region Demand-supply indicators for Western Region Share of capacity of top players in the Southern Region Demand-supply indicators for Southern Region Demand-supply indicators for Southern+Western Region List of companies with IACR ratings PAGE NO. 8 9 12 14 14 16 16 17 18 19 20 20 21 21 22 48 48 48 49 49 51 51 52 52 53 54 54 56 57 57 58 58 59 59 60

Overview of Policies regarding the cement industry

Nature of shop Quantity of cement sold by the dealers per month Since how many years you are in this business Highest selling brand from counter (customer pull)? Factors affecting highest selling brand. Recommendation by dealer Personal visits by marketing peoples Credit enjoyed by dealers Profit margin Availability throughout the year Effective promotional activities. Effective method of sales promotion Quality and packaging of brands Quick delivery system

Brands which satisfy most on damage claim settlement Small quantity supply directly to customers faster The incentive schemes which satisfy dealer. Test certificates and vouchers for customers about different grades and quality effective technical services After sale service satisfy the dealer most?

LIST OF CHARTS
CHARTS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TITLES Growth in cement consumption in major states Trend in cement capacity utilisation All India Quarterly capacity addition Region-wise capacity Distribution All India Yearly capacity addition All India effective capacity addition Monthly capacity utilisation trend Inventory level as % of monthly dispatch Overall Demand-Supply Balance at 10% demand Growth Overall Demand-Supply Balance at 8% demand Growth Share of OPC in product mix(2001-09) Share of OPC in product mix(2008-09) Price trend in key northern market Capacity utilisation in northern region Price trend in key Eastern market Capacity utilisation in Eastern region Capacity utilisation for Northern+Eastern region Price trend in key Western market Capacity utilisation in Western region Price trend in key Southern market Capacity utilisation in Southern region PAGE NO. 9 10 11 11 11 11 12 12 13 13 14 14 16 16 17 17 18 20 20 22 22 49 49 49 50 50,51 52 52 53 53 54 55 55,56 56 57 57 58 58 59 59 60

Nature of shop Quantity of cement sold by the dealers per month Since how many years you are in this business Highest selling brand from counter (customer pull)? 26,27,28,29,30 Factors affecting highest selling brand. 31 Recommendation by dealer 32 Personal visits by marketing peoples 33 Credit enjoyed by dealers 34 Profit margin 35 Availability throughout the year 36 Effective promotional activities. 37,38,39,40,41,42,43 Effective method of sales promotion 44 Quality and packaging of brands 45 Quick delivery system
46 47 48 49 50 51

Brands which satisfy most on damage claim settlement Small quantity supply directly to customers faster The incentive schemes which satisfy dealer. Test certificates and vouchers for customers about different grades and quality effective technical services After sale service satisfy the dealer most?

CHAPTER-1 INTRODUCTION

1.1INDIAN CEMENT INDUSTRY

Cement Industry originated in India when the first plant commenced production in 1914 at Porbandar, Gujarat. The industry has since been growing at a steady pace, but in the initial stage, particularly during the period before Independence, the growth had been very slow. Since indigenous production was not sufficient to meet the entire domestic demand, the Government had to control its price and distribution statutorily. Large quantities of cement had to be imported for meeting the deficit. The industry was partially decontrolled in 1982 and this gave impetus to its pace of growth. Installed capacity increased to more than double from 27 million tons in 1980-81 to 62 million tons in 1989-90.

The cement industry responded positively to liberalization policy and the Government decontrolled the industry fully on 1st March 1989. From 1991 onwards cement industry got the status of a priority industry in schedule III of the industry policy statement, which made it eligible for automatic approval for foreign investment up to 51% and also for technical collaboration on normal terms of payment of royalty.

After the globalization and liberalization of Indian economy, the cement industry has been growing rapidly at an average rate of 9 percent. The country is now the second largest producer of cement in the world next only to China with a total capacity of 217.80 million tonnes. Additionally, in the last two decades, the industry has undergone rapid technological up gradation and growth, and now, some of the cement plants in India are comparable to the worlds best operating plants in all respects.

Till a few years ago India was importing cement from other countries, as the production could not meet the demand for the whole country. Now the tables have turned as India has started exporting large quantities of cement and clinker to Bangladesh, Nepal, Sri Lanka, Maldives, Mauritius, Africa, Seychelles, Burma, UAE, and Singapore etc.

India is today the second largest producer of cement in world with an installed capacity of close to 217.80 million tons per year. 95 % is consumed domestically and only 5% is exported. Demand is growing at more than 10 % per annum. More than 90 % of production comes from large cement plants. There are a total of 146 large and more than 350 small

cement manufacturing units in the country. More than 80% of the cement manufacturing units use modern environment friendly dry process. In the cement industry there are two sectors one consisting of large plants and the other consisting of mini cement plants. A factory with an installed capacity exceeding 2,97,000 tonnes per annum (900 tons per day) is a large plant and with capacity up to and including 2,97,000 tons is a mini cement plant. At present, there are 146 large plants and about 365 mini cement plants. Since mini cement plants are scattered all over the country with a number of associations representing different types of processes, sizes etc. And some of them are even tiny units; it has not been possible to obtain correct data of this sector. The present installed capacity of large plants is 217.80 million tons and the estimated capacity of mini cement plants is 11.8 million tons.

1.2 OVERVIEW OF PERFORMANCE OF CEMENT INDUSTRY

The Indian cement Industry not only ranks second in the production of cement in the world but also produces quality cement, which meets global standards. However, the industry faces a number of constraints in terms of high cost of power, high railway tariff; high incidence of state and central levies and duties; lack of private and public investment in infrastructure projects; poor quality coal and inadequate growth of related infrastructure like sea and rail transport, ports and bulk terminals. In order to utilize excess capacity available with the cement industry, the government has identified the following thrust areas for increasing demand for cement: Housing development programmers & Promotion of concrete highways and roads; Use of ready-mix concrete in large infrastructure projects; Construction of concrete roads in rural areas under Prime Ministers Gram Sadak Yojana.

In India, the different types of cement are manufactured using dry, semi-dry, and wet processes. In the production of Clinker Cement, a lot of energy is required. It is produced by using materials such as limestone, iron oxides, aluminum, and silicon oxides. Among the different kinds of cement produced in India, Portland Pozzolana Cement, Ordinary Portland Cement, and Portland Blast Furnace Slag Cement are the most important because they account for around 99% of the total cement production in India.

The types of cement in India have increased over the years with the advancement in research, development, and technology. The Indian cement industry is witnessing a boom as a result of which the production of different kinds of cement in India has also increased. By a fair estimate, there are around 11 different types of cement that are being produced in India. The production of all these cement varieties is according to the specifications of the cement.

1.3 CURRENT SCENARIO

The Indian cement industry is the second largest producer of quality cement. Indian Cement Industry is engaged in the production of several varieties of cement such as Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement, etc. They are produced strictly as per the Bureau of Indian Standards (BIS) specifications and their quality is comparable with the best in the world. The industry occupies an important place in the national economy because of its strong linkages to other sectors such as construction, transportation, coal and power. The cement industry is also one of the major contributors to the exchequer by way of indirect taxes.

1.4 FACTS OF INDIAN CEMENT INDUSTRY (1982 2009)

The Industry recorded an exponential growth with the introduction of partial decontrol in 1982 culminating in total decontrol in 1989.

The capacity, which was 29 Mn.t in 1981-82, rose to 219 Mn.t at the end of FY09. While it took 8 decades to reach the 1st 100 Mn.t capacity, the 2 nd 100 Mn.t was added in just 10 years.

India ranks second in world cement producing countries. It contributes to environmental cleanliness by consuming hazardous wastes like Fly Ash (around 30 Mn.t) from thermal power plants and the entire 8 Mn.t of slag produced by steel manufacturing units.

As a part of Corporate Social Responsibility (CSR), the cement Industry employs around 0.1 million people and takes care of the social needs not only of the

employees but also adopts several villages around the factories providing free drinking water, electricity, medical and educational facilities.

The cement Industry produces a variety of cement to suit a host of applications matching the world's best in quality.

Exports Cement/Clinker to around 30 countries across the globe and earns precious foreign exchange.

1.5 STATISTICS
Figures in Million Tonnes Description January 2012 December 2011 January 2012 20112012 (Apr-Jan) Cement Production Cement Despatches 16.47 16.27 15.72 15.76 14.82 14.73 145.00 143.96 137.16 136.18 20102011

1.6 KEY DRIVERS OF THE CEMENT

Buoyant real estate market Increase in infrastructure spending Various governmental programmes like National Rural Employment Guarantee Low-cost housing in urban and rural areas under schemes like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Indira Aawas Yojana

1.7 TECHNOLOGICAL ADVANCEMENTS

Modernization and technology up-gradation is a continuous process for any growing industry and is equally true for the cement industry. At present, the quality of cement and building materials produced in India meets international standards and benchmarks and can compete in international markets. The productivity parameters are now nearing the theoretical bests and alternate means. Substantial technological improvements have been brought about and today, the industry can legitimately be proud of its state-of-the-art technology and processes incorporated

in most of its cement plants. This technology up gradation is resulting in increased capacity, reduction in cost of production of cement.

1.8 MAJOR PLAYERS ON CEMENT INDUSTRY

1.8.1 ULTRATECH CEMENT UltraTech is the second largest cement manufacturer in India. It is the part of Aditya Birla group and is subsidiary of Grasim. It has a capacity of 17 million tonnes. The company is the largest exporter of cement and clinker from India. UltraTech has a presence in the west, south, north and east. The western and southern regions are its major markets. The company exports both clinker and cement. The company exports are moving towards cement from clinker owing to the higher realization in the cement. In 2005-06 the company exported 1.52 million tonnes of cement. With UltraTech Cement, the Aditya Birla Group has established itself as not only the most respected domestic player but also among the global leaders in cement. 1.8.2 CENTURY CEMENTS Century Cement is a division of Century Textiles and Industries Ltd, a flagship company of BK Birla Group. The company is well diversified having interest in cement, textiles, rayon, chemicals, pulp and paper. Century Cement is situated at Baikunth (Tilda), Dist. Raipur in the State of Chhattisgarh. Baikunth is 35 Kms east of Raipur on Mumbai - Howrah (via Nagpur), South East Central Railway Main Line. The name 'Baikunth' was formed out of letter/s of adjacent villages in sequence i.e. 'Ba' of Bahesar, 'Kun' of Kundru and 'T' of Tandwa Village. The installed capacity of Century Cement is 2.10 Million TPA. Apart from this, company has cement plants namely Maihar Cement & Maihar Cement Unit no. 2 at Sarlanagar, Dist. Satna, in the State of Madhya Pradesh with an installed capacity of 4.20 Million TPA and Manikgarh Cement at Gadchandur, Dist. The

Chandrapur, Maharashtra with an installed capacity of 2.20 Million TPA. combined Capacity of all cement plants taken altogether is 8.50 Million TPA

Company is expanding its cement manufacturing capacity by setting up grinding unit at Sagardighi, Dist. Murshidabad, West Bengal of 1.5 Million TPA capacity namely Sonar Bangla Cement and brown field expansion of 2.8 Million TPA capacity adjacent to the company's existing plant Manikgarh Cement at Gadchandur. After expansion, capacity will stand increased to 12.8 Million TPA by September 2013. All Cement plants are equipped with captive thermal power plants, for uninterrupted power supply, with synchronized support of grid power. The company sells its cement under its premium brand name - BIRLA GOLD. Century Cement is pioneer in producing Blended Cement i.e. Portland Pozzolana Cement. The motivation for the production of Blended cement has been primarily with the aim of preserving limestone reserves and environment. 1.8.3 MADRAS CEMENTS Madras Cements Ltd is one of the oldest cement companies in the southern region and is a part of the Armco group. The company is engaged in cement, clinker, dolomite, dry mortar mix, limestone; ready mix cements (RMC) and units generated from windmills. The company has three plants in Tamil Nadu, one in Andhra Pradesh and a mini cement plant in Karnataka. It has a total capacity of 5.47 million tonne annually and holds a market share of 3.1 per cent. Madras Cements plans to expand by putting up RMC plants. As Karnataka is a promising market, the company is further expanding its capacity from the present 1.5 million tonne to 3.4 million tonne through an investment of US$ 9 million. 1.8.4 ACC ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's operations are spread throughout the country with 16 modern cement factories, more than 40 Ready mix concrete plants, 21 sales offices, and several zonal offices. It has a workforce of about 9,000 persons and a countrywide distribution network of over 9,000 dealers. Since inception in 1936, the company has been a trendsetter and important benchmark for the cement industry in many areas of cement and concrete technology. ACC has a unique track record of innovative research, product development and specialized consultancy

services. The company's various manufacturing units are backed by a central technology support services centre - the only one of its kind in the Indian cement industry. ACC has rich experience in mining, being the largest user of limestone. As the largest cement producer in India, it is one of the biggest customers of the domestic coal industry, of Indian Railways, and a considerable user of the countrys road transport network services for inward and outward movement of materials and products. Among the first companies in India to include commitment to environmental protection as one of its corporate objectives, the company installed sophisticated pollution control equipment as far back as 1966, long before pollution control laws came into existence. Today each of its cement plants has state-of-the art pollution control equipment and devices. 1.8.5 GUJARAT AMBUJA CEMENT LIMITED Cement Industry originated in India when the first plant commenced production in 1914 at Porbandar, Gujarat. The industry has since been growing at a steady pace, but in the initial stage, particularly during the period before Independence, the growth had been very slow. Since indigenous production was not sufficient to meet the entire domestic demand, the Government had to control its price and distribution statutorily. Large quantities of cement had to be imported for meeting the deficit. The industry was partially decontrolled in 1982 and this gave impetus to its pace of growth. Installed capacity increased to more than double from 27 million tons in 1980-81to 62 million tons in 1989-90. The cement industry responded positively to liberalization policy and the Government decontrolled the industry fully on 1st March 1989. From 1991 onwards cement industry got the status of a priority industry in schedule III of the industry policy statement, which made it eligible for automatic approval for foreign investment up to 51% and also for technical collaboration on normal terms of payment of royalty. After the globalization and liberalization of Indian economy, the cement industry has been growing rapidly at an average rate of 9 per cent. The country is now the second largest producer of cement in the world next only to China with a total capacity of 217.80 million tones. Additionally, in the last two decades, the industry has undergone rapid technological up gradation and growth, and now, some of the cement plants in India are comparable to the worlds best operating plants in all respects.Till a few years ago India was importing

cement from other countries, as the production could not meet the demand for the whole country. Now the tables have turned as India has started exporting large quantities of cement and clinker to Bangladesh, Nepal, SriLanka, Maldives, Mauritius, Africa, Seychelles, Burma, UAE, and Singapore etc. 1.8.6 GRASIM INDUSTRIES Grasim's product profile includes viscose staple fiber (VSF), grey cement, white cement, sponge iron, chemicals and textiles. With the acquisition of UltraTech, L&T's cement division in early 2004, Grasim has now become the world's seventh largest cement producer with a combined capacity of 31 million tones. Grasim (with UltraTech) held a market share of around 21 percent in 2005-06. It has plants in Madhya Pradesh, Chattisgarh, Punjab, Rajasthan, Tamil Nadu and Gujarat among others. The company plans to invest over US$ 9 million in the next two years to augment capacity of its cement and fiber business. Its also plans to focus on its international ventures, ramping up the capacity of Alexandra Carbon Black in Egypt to 1,70,000 tone per annum (from 1,20,000 tpa) and raising the capacity of the carbon black plant in China from 12,000 tpa to 60,000 tpa. 1.8.7 INDIA CEMENTS LIMITED India Cements is the largest cement producer in southern India with a total capacity of 8.81 million tonne and plants in Andhra Pradesh and Tamil Nadu. The company has a market share of 5.4 per cent with a total cement production of 6.36 million tonne in 2003-04. Its product portfolio includes ordinary portland cement and blended cement. The company has limited its business activity to cement, though it has a marginal exposure to the shipping business. The company plans to reduce its manpower significantly. And exit non-core businesses to turnaround its fortune. It also expects the export market to open up, with the Gulf emerging as a major importer. 1.8.8 JAIPRAKASH ASSOCIATES Jaiprakash Industries, now known as Jaiprakash Associates Limited (JAL) is part of the Jaypee Group with businesses in civil engineering, hospitality, cement, hydropower, design consultancy and IT. It has an annual capacity of 4.6 million tonne with plants located in Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar Pradesh). The company has a market share of 3.8 percent with the cement division contributing US$ 172 million to

revenue in 2003-04. The company is upgrading its capacity to 6.5 million tonne through the modernizing of the existing units and the commissioning of a new grinding unit at Tanda (Uttar Pradesh) with an investment of US$ 163 million. Jaiprakash Associates has decided to concentrate on its core business of construction and engineering and leave its cement plant to its subsidiary Jaypee Rewa Cement Ltd. The company manufactures a wide range of world class cement of OPC grades 33, 43, 53, IRST-40 and special Blends of pozzolana cement. 1.8.9 JK CEMENTS. JK Synthetics, a Singhania Group company, started manufacturing nylon at Kota in 1962. Subsequently, it diversified into PSY/PFY, nylon tyre-cord, cement (in 1975), acrylic and white cement (in 1984). The company has a market share of 2.7 per cent. JK Synthetics Limited is restructuring its business divisions into two separate entities- JK Cements and JK Synthetics. After the restructuring, it will be left with a cement plant at Nimbahera in Rajasthan, with a capacity of 3.26 million metric tonne and manufacturing white cement.

1.8.10 HOLCIM Holcim, earlier known as Holder bank, has a cement production capacity of 141.9 million tonne. It is a key player in aggregates, concrete and construction related services. It has a strong market presence in over 70 countries and is a market leader in South America and in a number of European and overseas markets. Holcim entered India by means of a longterm strategic alliance with Gujarat Ambuja Cements Ltd (GACL). The alliance aims to strengthen their clinker and cement trading activities in South Asia, the Middle East and the region adjoining the Indian Ocean. Holcim also intends to use India as an additional base for its IT operations, R&D projects as well as a procurement sourcing hub to generate additional synergies and value for the group. 1.8.11 LAFARGE The beginning (1833 to 1914): In 1833, Lon Pavin, launched an industrial lime production operation, having taken over a business acquired by his family in 1749 with the purchase of the Lafarge domain in south-eastern France, an area known for generations for the quality of its limestone deposits. The company signed its first major international

contract in 1864, delivering 110,000 tonnes of lime for the construction of the Suez Canal. Lafarge opened its first central research laboratory in 1887, the Le Teil Laboratory, with which highly reputed scientists collaborated. In 1908, the Central Laboratory filed a patent for Cement Fondue calcium aluminates, obtained by fusing a mixture of bauxite and limestone. This new high alumina binder gradually established a reputation as a rapidhardening cement resistant to both high temperatures and corrosion. In the years until 1914, favoring a strategy of horizontal integration, the company now the "Socit des Chauxet des Ciments de Lafarge du Teil" set about acquiring lime and cement companies in all parts of France. In 2004, the Group: Acquired in Ecuador Cementos Selva Alegre. Acquired The Concrete Company of Columbus, Georgia, United States with operations in both cement and concrete. Acquired Hupfer Holdings with operations in France and Switzerland in aggregates activities. Acquired an additional 10.2% stake in Lafarge Halla Cement, in South Korea. Acquired an additional 14% stake in our gypsum operations in Lafarge Gypsum in Asia, in a joint venture with Boral.

1.9 FORGEIN DIRECT INVESTMENTS

The cement sector has been gradually liberalized. 100 per cent FDI is permitted in the cement industry.

1.9.1 Future Outlook

Growth in domestic cement demand is expected to remain strong, given the revival in the housing markets, continued Government spending on the rural sector, and the gradual increase in the number of infrastructure projects being executed by the private sector. Thus, the trend in demand growth seen during the last five years is expected to continue over the medium term. Also, with Government targeting an over 8% GDP growth rate, cement demand should grow at 8-10% over the next few years.

The industry may be expected to add another 130-135 million tonnes of cement capacity in phases during the period 2009-10 to 2012-13. 1.9.2 Strong consumption growth driven by secular growth across sector. The Indian cement industry reported a strong CAGR of 9.3% during the period 2004-05 to 2008-09. Even during the economic slowdown in 2008-09, growth in cement demand remained at a healthy 8.4%. In the current fiscal (2009-10) cement consumption has shot up, reporting, on an average, 12.5% growth in consumption during the first eight months with the growth being aided by strong infrastructure spending, especially from the govt sector. The trends in all-India consumption and the growth in consumption in the major cement-consuming States over the last five years are presented in Table 1.1 and Chart 1.1.
Table 1.1: Growth in Cement Demand (All-India)
In million tonnes Domestic Consumption Year-on-Year Growth (%) 200102 99 9.7 200203 108 8.7 200304 114 5.8 200405 123 8.1 200506 136 10.1 200607 149 9.9 200708 164 10.1 200809 178 8.4 AprNov 09 100* 12.5*

*Excluding ACC and Ambuja Cement Source: Cement Manufacturers Association (CMA), ICRA Research Chart 1.1: Growth in Cement Consumption in Major States (CAGR between 2005 and 2009)
18 16 14 12 10 8 6 4 2 0

All India

Source: Cement Manufacturers Association (CMA), ICRA Research

The increase in cement demand over the last few years has been driven by a buoyant real estate market (the dip in 2008-09 notwithstanding) and an increase in infrastructure spending. Further, various governmental programmes like National Rural Employment Guarantee and low-cost housing in urban and rural areas under schemes like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Indira Aawas Yojana have also provided a fillip to rural demand for housing. Within the country, the top five States in terms of cement consumption, viz. Maharashtra, Andhra Pradesh (AP), Uttar Pradesh (UP), Tamil Nadu (TN) and Gujarat, accounted for almost 50% of the total domestic consumption of cement during 2008-09. This is largely a factor of the population levels in these States as well as the development activities being undertaken there. Within these high consuming States, AP and TN reported very high growth rates during the last five years, mainly because of the real estate buoyancy and increased Government spending on infrastructure. Haryana, the 11th largest cement consuming State in the country (according to 2008-09 consumption), posted a high consumption growth rate of more than 14% over the last five years, largely on the strength of the upturn in real estate. Going forward, ICRA expects growth in domestic cement demand to remain strong, given the revival in the housing markets, continued Government spending on the rural sector, and the gradual increase in the number of infrastructure projects being executed by the private sector. Thus, the trend in demand growth seen during the last five years is expected to continue over the medium term. 1.9.3 Capacity additions to impact utilisation levels over the medium term The period 2002-03 to 2006-07 saw strong demand growth along with very slow capacity addition, the latter being an outcome of the weak financial position that cement companies had got into because of the significant surpluses in the system during 2000-01 to 2003-04. With capacity addition being limited and demand continuing to grow, capacity utilisation levels in the cement industry touched almost 100% in 2006-07 and supply constraints surfaced. To improve domestic supply, Government resorted to an export ban in April 2008 and also allowed duty-free imports of cement. With supply constraints cropping up, the pricing power and profitability of cement companies improved significantly during 2006-09.

Table 1.2: Cement Demand Supply Indicators (All-India)

In million tonnes Domestic Consumption Year-on-Year Growth (%) Export Capacity for the Year Year-on-Year Growth (%) Surplus/(Defic it) Capacity utilisation (%)

200102 99 9.7 5 130 14 26 80

200203 108 8.7 7 137 5 22 84

200304 114 5.8 9 144 6 22 85

200405 123 8.1 10 154 6 20 87

200506 136 10.1 9 153 0 9 94

200607 149 9.9 9 158 3 0 100

200708 164 10.1 5 176 11 7 96

2008 Apr-09 Nov 09 178 100* 8.4 3 201 15 20 90 12.5* 3* 125* 16.5* 22 83

*Excluding ACC and Ambuja Cement Source: Cement Manufacturers Association (CMA), ICRA Research Chart-1.2: Trend in Cement Capacity Utilisation (All India)

Source: Cement Manufacturers Association (CMA), ICRA Research

Almost all the major players in the Indian cement industry announced capacity expansion programmes 2005-06 onwards, being encouraged by the improving economic outlook, buoyant demand conditions, strong industry profitability, and anticipated supply constraints. Such announcements continued all the way till mid-2008-09 when the economic conditions started deteriorating. The expansion projects have now started coming on stream (the gestation period being of 24-36 months), and as in March 2009, the country had an installed capacity of around 209 million tonnes, of which around 43 million tonnes were added during the last two years alone. A part of the capacity addition over the last two years also came from debottlenecking of existing capacities and increase in the share of blended cement. According to ICRAs estimates, the industry may be expected to add another 130-135 million tonnes of cement capacity in phases over the next four years,

that is, during the period 2009-10 to 2012-13. Of the announced capacity additions, regionwise, SR is expected to account for almost 42% (highest share) of the additions proposed, followed by NR (around 29%). Capacity addition in WR and ER, which is expected to be 17% and 12% of the total announced additions respectively, has been constrained primarily by the lack of availability of limestone reserves in these regions. Of the total capacities announced, almost 63% are scheduled for commissioning in 2009-10 and 2010-11, which means capacity additions, would get bunched up during this period. Going forward, ICRA expects the pace of capacity addition to slow down in 2011-12, which should stabilise capacity utilisation levels that year onwards. However, should cement manufacturers continue with capacity additions, recovery in utilisation may get delayed. Charts 3 to 6 bring out the distribution of the scheduled capacity additions over various time periods and regions, taking into account the announcements made by the various industry players so far.
Chart-1.3: All India Quarterly capacity Addition Chart-1.4: Region-wise capacity distribution

Chart-1.5: All India yearly capacity Addition

Chart-1.6: All India Effective capacity Addition

As Charts 5 and 6 show, a significant part of the announced capacities is scheduled for completion in 2009-10 and 2010-11. The impact of the resulting increase in supply has already started showing up in the capacity utilisation levels, which declined to around 80% in November 2009 (83% for April-November 2009) from around 90% during 2008-09 and 96% during 2007-08. The inventory in the system (cement plus clinker) has also seen a build-up (Chart 8), rising to 74% of monthly dispatches in November 2009 from 36% in March 2009.
Chart-1.7: Monthly Capacity Utilisation Trend Chart-1.8: Inventory levels as % of Monthly Dispatch

Source: CMA, ICRA Research, (the above data is excluding ACC and Ambuja Cement data)

1.9.4 With capacity utilisation declining, prices start softening since Q3, 2009-10 Cement prices showed a steady hardening trend from 2003-04 up to H1 2009-10 with the supply-demand scenario remaining tight (refer Annexure I for the regionwise price trends). Although capacity substantially outstripped demand by 2008-09 them, this was not reflected in the prices during 2008-09 and H1, 2009-10 because much of these capacities were still in the stabilisation phase with the result that the effective capacity was substantially lower and the capacity utilisation level higher than what the figures in Table 2 indicate. However with many of these capacities being fully operational now, pricing pressures have started building since Q3, 200910. The decline in prices has been the most severe in SR, especially AP (chart 20, annexure I).

1.9.5 Significant oversupplies seen in the medium term, but supply-demand balance likely to show considerable variations across regions

ICRA has projected the cement supply-demand scenario for 2009-13 on the basis of company announcements for capacity additions, using two different assumptions on annual demand growth: 8% and 10%. The region-wise projections have been presented in Annexure I. Table 3 presents the overall demand-supply balance for the country as a whole, using the estimates of supply and demand growth that ICRA has worked out.
Table1.3: Cement Demand-Supply Indicators (All-India), Actual and Estimated (E)
In million tonnes Domestic Consumption Year-on-Year Growth (%) Export Surplus@8% Growth (%) Utlisation@8% Growth (%) Surplus@10% Growth utilisation@10% Growth (%) 200405 154 6 10 20 87 20 87 200506 153 0 9 9 94 9 94 200607 158 3 9 0 100 0 100 200708 176 11 5 7 96 7 96 200809 201 15 3 20 90 20 90 200910E 250 24 5 53 79 49 80 201011E 291 17 5 79 73 71 76 201112E 317 9 5 89 72 76 76 201213E 342 8 5 96 72 77 78

Source: Cement Manufacturers Association (CMA), ICRA Research Chart-1.9: Overall Demand-Supply Balance at 10% Demand-Growth

Source: Cement Manufacturers Association (CMA), ICRA Research

Chart-1.10: Overall Demand-Supply Balance at 8% Demand-Growth

Source: Cement Manufacturers Association (CMA), ICRA Research

While ICRA expects the overall capacity utilisation level to fall below 80% even under optimistic assumptions on demand growth (Chart 9), the actual capacity utilisation, price corrections, and the impact of the same on profitability would also be influenced by regional supply-demand balances (refer Annexure I for details). Also, any delay, deferment or phasing out of capacities, were that to happen, would lower the supply-side pressures as envisaged in Chart 9. Another variable that could impact the demand-supply scenario is the shift in the industrys product mix. Over the last few years, the Indian cement industry has successfully shifted its product mix towards Pozzalana Portland Cement (PPC), with the result that the share of OPC has shrunk, declining from 63% in 2000-01 to 25% in 2008-09 (Chart 11). The shift in product mix has also been necessitated by the tight supply-demand scenario (implying limitations in clinker availability). Greater production of PPC provides for optimisation of capacity utilisation, as clinker capacity is often the primary constraint in cement production. Thus the shift towards PPC led to high capacity utilisation for the industry during the period 2005-06 to 2007-08 as compared with the 80% or so seen during much of the late 1990s and early 2000s. The manufacturing cost of OPC is generally higher by Rs. 200-300/tonne than that of PPC because PPC consumes blending material, which is usually cheaper than clinker. Further, as fly ash is finely ground, the grinding cost (mainly the cost of power) is lower for PPC than for OPC. However, while the cost of manufacturing OPC tends to be higher versus PPC, an analysis of past cement prices by ICRA shows that OPC prices also tend to be higher than PPC prices, thereby largely offsetting the higher manufacturing cost of OPC. ICRA has witnessed a slight reversal of this long term trend during the past few months, whereby the share of OPC in the industrys product mix has increased from 24% in April 2008 to 31% in November 2009 (refer Chart 12).

Chart-1.11: Share of OPC in Product Mix (All-India, 2001-09)

Chart-1.11: Share of OPC in Product Mix (All-India, 2008-Oct 09)

Source: Cement Manufacturers Association (CMA), ICRA Research

The change in the long-term trend can be is attributable to the industrys strategic shift to OPC, which is aimed at curtailing supply-side pressures. Further, as OPC tends to set faster thereby expediting construction, the higher cost of OPC may be acceptable to most buyers. In ICRAs view, while the trend of shifting to OPC may raise the cost of production and lower capacity utilisation for the industry, it may also help in reducing supply-side pressures, which in turn could protect prices. A shift in product mix, along with a significant correction in prices, may however have an adverse effect on profitability, as it will not only raise the cost of production, but also pull down capacity utilisation. Given that competition is largely regional in the cement market, regional demand-supply dynamics play a crucial role in determining price trends. Additionally, since large interregional transfers of cement take place between NR and ER and between SR and WR, ICRA also takes into account the demand-supply dynamics prevailing in these regions combined to ascertain the projected level of capacity utilisation. The following details are presented in Annexure I.

1.9.6 Summarised Regional Demand Supply Balance For the purpose of regional demand-supply balances, ICRA divides the country into four regions: NR, ER, WR and SR. Uttar Pradesh and Madhya Pradesh, which are classified under the central region by CMA, are considered to a part of the Northern region, whereas Goa, which is considered a part of the Sothern region by CMA, is considered a part of the Western region by ICRA. 1.10 ANNEXURE I: REGIONAL DEMEND AND SUPPLY BALANCE 1.10.1 Northern Region States included in NR: Uttarakhand, Haryana, Punjab, Rajasthan, Himachal Pradesh, Chandigarh, Delhi, Jammu and Kashmir, UP, MP, and Chhattisgarh. NR is the largest cement consuming region in the country and accounted for almost 37% of the all-India consumption and 42% of the available capacity during 2008-09. Within NR, UP, Rajasthan, MP and Haryana are the largest cement consuming States, and accounted for 75% of the regional consumption in 2008-09. Over the last five years, cement demand in NR reported a CAGR of 8.7%, as against the all-India average of 9.3%. Within NR, demand was driven by Rajasthan and Haryana, which reported CAGRs of 10.7% and 14.3%, respectively. Cement demand in NR is being driven by the Commonwealth Games in Delhi, the Delhi Metro Rail project, construction of roads, airports, and hydro-power plants, and the real estate boom. The major players in NR include ACC + Ambuja Cement (Part of the Holcim Group), Gasim + Ultratech (part of the A V Birla Group), Jaypee Cement, Shree Cement, the J K Group, Binani Cement, Century Textiles, and Birla Corporation. Within the region, the top five players/groups accounted for around 70% of the total operating capacity during 2008-09.

Table 1.4: Share of capacity of top 5 cement players in Northern Region In million Tonnes 201213E ACC + Ambuja (Holcim Group) ACC + Ambuja (Holcim 25.89 Group) Grasim + Ultratech (A V Birla 13.55 16% Grasim + Ultratech (A V 22.45 Group) Birla Group) Jaypee Cement 9.93 12% Jaypee Cement 17.73 Shree Cement 9.10 11% Shree Cement 11.60 J K Group 7.77 9% J K Group 10.47 Total for top 5 players 60.74 71% Total for top 5 players 88.14 Source: Cement Manufacturers Association (CMA), ICRA Research 200809 20.39 2008 -09 24% 201213E 21% 18% 14% 9% 9% 72%

Table 1.5: Demand-Supply Indicators for Northern Region, Actual and Estimated (E)
In million tonnes Consumption Capacity Year for the 2004-05 47 63 17 74 200506 51 65 14 78 200607 56 63 8 88 200708 61 74 12 83 200809 66 85 19 77 200910E 72 96 24 75 201011E 79 111 32 71 201112E 87 120 32 73 201213E 96 123 27 78

Surplus/ (Deficit) Capacity Utilisation (%)

Source: Cement Manufacturers Association (CMA), ICRA Research Chart-1.13: Price Trend in Key Northern Markets Chart-1.14: Capacity Utilisation in Northern Region, Actual and Estimated

Source: Centre for Monitoring Indian Economy CMIE, ICRA Research

As against an available capacity of 85 MTPA during 2008-09, the capacity addition expected in NR over the next four years is around 38 MTPA, which would increase the total availability in the region to 123 MTPA by the end of 2012-13. Assuming an optimistic growth rate of 10%, capacity utilisation in NR is expected to decline marginally from 77% in 2008-09 to around 71% in 2010-11, but recovers thereafter, provided no fresh capacity addition is done by the industry. While cement prices in some markets of NR such as Chandigarh and Delhi have witnessed a correction of Rs. 10-15/bag over the past few months, large corrections are not envisaged in the future and price volatility is also likely to be lower. This pricing is also expected to be aided by the stable shares of the capacities attributable to top five players in the region. The top five players in NR are expected to continue dominating the market with a cumulative market share of around 70% in the medium term. However, pricing pressures may arise in future in case the currently strong demand growth is not sustained and ER reports lower deficits than anticipated. 1.10.2 Eastern Region States included in ER: Assam, Meghalaya, Bihar, Jharkhand, Orissa, West Bengal (WB), Tripura, Manipur, Nagaland, Arunachal Pradesh, and Mizoram. ER is the least cement consuming region in the country and accounted for about 14% of the all-India consumption and only 9% of the available capacity during 2008-09. In the absence of adequate limestone reserves in most eastern States, the region has remained a net importer of cement, relying most on NR, especially Chhattisgarh, for cement imports. Within ER, WB, Bihar and Orissa are the largest cement consuming States and accounted for 76% of the total regional consumption in 2008-09. Over the last five years, cement demand in ER reported a CAGR of 8.4% as against the all-India average of 9.3%. Within ER, the demand was driven by Bihar and Orissa, which reported CAGRs of 10.3% and 10.1%, respectively. Demand in ER has been driven largely by industrial activity, given the abundance of natural resources in the region, as well as by the increase in governmental focus on further development of the North-Eastern States. The major players in the region include ACC + Ambuja Cement (Part of Holcim Group), Lafrage, OCL India, Gasim + Ultratech (part of A V Birla Group) and Birla Corporation. Within the region, the top five players/groups accounted for around 84% of the total operating capacity during 2008-09.

Table 1.6: Share of Capacity of top 5 cement Players in the Eastern Region In million Tonnes 2008-09 2008-09 30% 17% 15% 13% 9% 84% 2012-13E 2012-13E ACC + Ambuja (Holcim 6.57 Group) Lafarge Jaypee Cement OCL India 6.00 4.20 3.80 19% 18% 12% 11% 9% 71%

ACC + Ambuja (Holcim 5.27 Group) Lafarge 3.00 OCL India 2.63 Grasim + Ultratech (A V 2.20 Birla Group) Birla Group 1.60 Total for top 5 players 14.69

Cement Manufacturing 3.20 Corp. Total for top 5 players 23.77

Table 1.7: Demand-Supply Indicators for Eastern Region, Actual and Estimated (E)
In million tonnes Consumption Capacity for the Year Surplus/ (Deficit) Capacity Utilisation (%) 2004-05 18 12 -6 151 200506 20 12 -8 168 200607 20 14 -6 141 200708 22 16 -5 133 200809 24 17 -7 138 200910E 26 22 -5 121 201011E 29 27 -2 108 201112E 32 33 1 97 2012-13E 35 34 -2 104

Source: Cement Manufacturers Association (CMA), ICRA Research Chart-1.15: price Trend in Key Eastern Mar Chart-1.16: Capacity Utilisation in Eastern Region, Actual and Estimated

Source: Cement Manufacturers Association (CMA), ICRA Research

As against an available capacity of around 17.5 MTPA during 2008-09, the capacity addition expected in ER over the next four years is around 16 MTPA, which would

increase the total availability in the region to around 34 MTPA by the end of 2012-13. Since the region has remained a net importer of cement from NR, such a significant increase in supply would reduce ERs import dependence over the medium term and lower its deficit levels significantly. Despite a deficit situation in ER, cement prices have seen a decline of around Rs. 10/bag in the Kolkata market over the last few months, as pricing in the region is also influenced by the demand-supply balance in NR. While ER is expected to remain a cement-deficit region in the long run, the extent of consolidation here is expected to weaken as new players enter the industry. This is expected to lead to a decline in the capacity share of the five leading players in ER from around 84% in 2008-09 to 71% in 2012-13. A decline in the extent of consolidation and an overall increase in surplus in NR may cause pricing pressures to arise in ER, although the same is not likely to be significant. Further, players in ER would continue to benefit from the regions freight cost advantage as compared with players in NR for exporting cement to the region. As a result, players in ER are expected to continue benefiting from the regions cement-deficit status. 1.10.3 Northern plus Eastern Region With NR historically being a cement-surplus region and ER traditionally a cement-deficit one, the extent of inter-regional cement transfer from NR to ER is considerable. A significant quantity of cement is exported from States such as Chhattisgarh and MP (eastern part) to parts of Orissa, West Bengal and even some North-Eastern States. As a result, the overall supply-demand balance of NR + ER as a whole impact prices in these two regions. Any significant surplus in NR would lead to pricing pressures in ER, while any reduction in deficits in ER would create pricing pressures in NR as well as ER. According to ICRAs estimates, the overall capacity utilisation levels for NR and ER as a whole are not expected to decline below 80% or so in the near to medium term from the 87% levels reported in 2008-09. Further, the extent of consolidation in the industry for NR plus ER is not likely to deteriorate significantly, as the top five players here are expected to hold over 70% of the available capacity in the region post-completion of the announced expansions.

Table 1.8: Demand-Supply Indicators for Northern plus Eastern Region, Actual and Estimated (E)
In million tonnes Consumption Capacity for the Year Surplus/ (Deficit) Capacity Utilisation (%) 200405 65 76 11 86 200506 70 76 6 92 200607 76 78 2 98 2007-08 83 90 7 92 2008-09 90 102 13 87 2009-10E 99 118 19 84 201011E 108 138 30 78 2011-12E 119 153 33 78 2012-13E 131 157 26 84

Source: Cement Manufacturers Association (CMA), ICRA Research

Chart-1.17: capacity Utilisation in Northern plus Eastern Region, Actual and Estimated

Table 1.9: Demand-Supply Indicators for Northern plus Eastern Region, Actual and Estimated (E) FY 09 North 71% East 84% North + East 74% Source: Cement Manufacturers Association (CMA), ICRA Research FY 13E 72% 71% 71%

. 1.10.4 Western Region States included in WR: Gujarat, Maharashtra, and Goa. WR accounted for almost 19% of the total domestic consumption of cement and 15% of the available cement capacity in the country during 2008-09. The largest cement consumer within WR, Maharashtra, which alone was responsible for almost 60% of the regional consumption in 2008-09, is also the largest cement consuming State in the country, and accounted for 12.3% of the total domestic cement consumption in 2008-09. However, Maharashtra lacks significant limestone deposits, and the demand is largely met by the only limestone cluster in the State, that is, the Chandrapur cluster, as well as by imports

from States in SR, viz. North AP and North Karnataka. The state of Gujarat in WR is largely self sufficient for its cement requirements and moreover, given its advantage of having cement plants located near the sea, it is also able to export the surplus to other countries in the Middle East region. Over the last five years, cement demand in WR reported a CAGR of 8.4% as against the national average of 9.3%. Within WR, Maharashtra posted a CAGR of 8.3% in cement consumption, while Gujarat came up with 9.1%. Given the significant levels of industrialisation in these States, the demand for cement here is being driven mostly by industrial activities. Besides, cities like Mumbai, Pune and Nagpur, which are also areas of increasing focus for service sector entities, have contributed significantly to the pickup in demand. Further, the real estate boom in Mumbai, Pune, Nagpur and Ahmadabad has led to the proliferation of shopping malls, commercial complexes and housing projects, all of them reinforcing the demand trend. The major players in the region include ACC + Ambuja Cement (Part of Holcim Group) and Gasim + Ultratech (part of A V Birla Group), which together held almost 70% of the available capacity in WR in 2008-09. The top five players/groups accounted for around 92% of the total available capacity in the region in 2008-09, highlighting the fact that the level of consolidation is the highest in WR among all regions. As against an available capacity of around 31 MTPA in 2008-09, the capacity addition expected in WR over the next four years is around 23 MTPA, which would increase the total availability in the region to 56 MTPA by the end of 2012-13. With capacity addition during the last five years having been limited (around 2 MTPA), WR turned into a cementdeficit region during 2007-09. Going forward, given the significant capacity planned, cement availability is expected to improve within WR, which however could bring down the capacity utilisation levels to around 90% in the medium term.
Table1.10: Share of Capacity of top 5 cement Players in the Western Region In million Tonnes Grasim + Ultratech (A V Birla Group) ACC + Ambuja (Holcim Group) Sanghi Industries Mehta Group Century Textiles Total for top 5 players 2008-09 12.80 8.90 2.60 2.36 1.90 28.56 2008-09 41% 29% 8% 8% 6% 92% Grasim + Ultratech (A V Birla Group) ACC + Ambuja (Holcim Group) Sanghi Industries Jaypee Group Binnani Cement Total for top 5 players 2012-13E 12.80 11.90 7.60 5.40 2.50 40.22 2012-13E 23% 21% 14% 10% 4% 72%

Despite capacity utilisation levels remaining close to 100% in WR during 2009-10 so far (104% during April-November 2009), cement prices in one of the key markets of the region, Mumbai, have declined by almost Rs. 20/bag over the past few months. The reason for this is the sharp decline in cement prices in SR during this period. Since SR has historically been a cement-surplus region (because of its large limestone clusters), it exports its surplus to WR, with the result that cement prices in WR are influenced significantly by the demand-supply balance in SR. Over the past few months, some of the key markets in SR have reported a significant drop of Rs. 50-60/bag in cement prices and this has led to pricing pressures in WR. Following completion of the announced expansions in WR, the level of consolidation in this region is likely to moderate with the top five players accounting for around 70% of the available capacities as against 92% now. Decline in consolidation levels along with the likely decline in capacity utilisation levels in WR and the expected surplus in SR could lead to cement prices coming under pressure in WR over the near to medium term.
Table 1.11: Demand-Supply Indicators for Western Region, Actual and Estimated (E)
In million tonnes Consumption Capacity for the Year Surplus/ (Deficit) Capacity Utilisation (%) 200405 25 29 4 86 200506 26 29 3 90 200607 29 29 0 100 200708 33 29 -3 112 2008-09 34 31 -4 112 200910E 38 37 0 101 2010-11E 42 47 5 90 201112E 46 50 4 92 201213E 50 56 6 90

Source: Cement Manufacturers Association (CMA), ICRA Research Chart-1.18: Price Trend in Key Western market

Chart-1.19: Capacity Utilisation in Western Region, Actual and Estimated

1.10.5 Southern Region States included in SR: Andhra Pradesh (AP), Tamil Nadu (TN), Karnataka, Kerala, Pondicherry, and Andaman & Nicobar. SR accounted for 30% of the total domestic consumption of cement in 2008-09. It is the second largest cement consuming region in the country after by NR. Holding 34% of the domestic available capacity during 2008-09, SR is also the second largest production base for cement in India after NR. Within SR, AP reported the highest CAGR of 17.5% in cement consumption over the last five years with the State Government stepping up infrastructure spending, mainly on irrigation projects. The figure is the highest among all States in the country for the period concerned. With cement consumption growing at a brisk pace in AP and TN (the largest consuming state in SR) reporting an 11.8% CAGR in consumption over the last five years, SR posted a CAGR of 11.3% over the same period, which is not only higher than the national average but also the highest among all regions in the country. SR is also among the most fragmented regions in terms of capacity concentration in India. The top five players in SR held around 55% of the available capacity in the region during 2008-09, which is the lowest among all regions in the country. The largest player, India Cement, held 15% of the available capacity, which again is the lowest for the largest player in any region. The other major players in SR include Grasim + Ultratech (part of A V Birla Group), Madras Cement, ACC + Ambuja Cement (Part of Holcim Group), and Kesoram Industries.

Table 1.12: Share of Capacity of top 5 cement Players in the Southern Region In million Tonnes 2008-09 200809 India Cement Grasim + Ultratech (A V Birla Group) Madras cement ACC + Ambuja (Holcim Group) Kesoram Industries 10.37 8.46 7.09 6.15 5.43 15% 12% 10% 9% 8% Dalmia Cement Grasim + Ultratech (A V Birla Group) India Cement Madras cement 14.17 13.36 12.97 8.92 9.15 58.57 11% 10% 10% 7% 7% 45% 2012-13E 2012-13E

ACC + Ambuja (Holcim Group) Total for top 5 players 37.49 55% Total for top 5 players Source: Cement Manufacturers Association (CMA), ICRA Research

Table 1.13: Demand-Supply Indicators for Southern Region, Actual and Estimated (E)
In million tonnes Consumption Capacity for the Year Surplus/ (Deficit) Capacity Utilisation (%) 200405 33 49 16 67 200506 39 48 9 81 200607 44 51 7 86 200708 49 57 8 86 200809 54 68 15 79 200910E 59 95 35 63 201011E 65 107 42 61 201112E 72 116 44 62 201213E 79 130 51 61

Source: Cement Manufacturers Association (CMA), ICRA Research

Given the abundant limestone reserves in SR (of the seven major limestone clusters in India, four are in SR), the region has historically been cement-surplus and an exporter to WR. With demand growing at 11.3% during the last five years, capacity utilisation in SR improved from around 67% in 2004-05 to almost 80% in 2008-09. Encouraged by the buoyancy in demand, cement companies in the region have drawn up significant expansion plans and of the total expected addition of 133 MTPA (all-India) over the next four years, almost 42% is expected to come up in SR. As against an available capacity of 54 MTPA in 2008-09, the capacity addition expected in SR over the next four years is 56 MTPA. With that, the utilisation levels may be expected to decline to around 60% in the medium term. Further, the level of fragmentation in SR is also expected to increase further, with the capacity concentration (top five players) likely to decline to around 45% in 2012-13 from

55% in 2008-09. Low capacity utilisation along with greater fragmentation may be expected to lead to severe price pressures in SR in the medium term. Pricing pressures have already come into play in SR as is evident from the price trends in a few key markets in the region; the reason for this is the decline in capacity utilisation levels (63% during April-November 2009). Cement prices in Hyderabad markets declined to almost Rs. 145/bag in November 2009 from the peak of Rs. 225/bag in July 2009. Similarly, in Chennai markets cement prices declined by almost Rs. 45/bag to Rs. 230/bag in last few months from the peak witnessed in June 2009. Going forward, with new capacities being commissioned, capacity utilisation levels as well as cement prices in SR may be expected to remain under pressure and impact prices and capacity use in WR as well. 1.10.6 Southern plus Western Region
Chart-1.20: Price Trend in Key Southern Markets Chart-1.12: Capacity utilisation in Southern Region, Actual and Estimated

Source: Cement Manufacturers Association (CMA), ICRA Research

Given the significant inter-regional transfer of cement from SR (especially North AP and North Karnataka) to the deficit areas in WR (especially Maharashtra), cement prices in these two regions are influenced by the demand-supply balance in SR + WR as a whole. A deficit in WR generally leads to improved prices and capacity utilisation in SR, while a surplus in SR adversely impacts prices in WR. In ICRAs assessment, the capacity utilisation level in SR + WR combined could decline significantly to around 70% in the near to medium term from the 89% level reported in 2008-09. During April-November 2009, capacity utilisation in SR + WR as a whole stood at 73%. The level of consolidation is also likely to weaken in both SR and WR, which along with the expected decline in

capacity utilisation could increase the intensity of competition and pricing pressures further. Table 1.14: Demand-Supply Indicators for Southern + Western Region, Actual and Estimated (E)
In million tonnes Consumption Capacity for the Year Surplus/ (Deficit) Capacity Utilisation (%) 200405 58 78 20 74 200506 65 77 12 85 200607 73 80 7 91 200708 81 86 5 95 200809 88 99 11 89 200910E 97 132 35 74 201011E 107 153 46 70 201112E 117 165 48 71 201213E 129 186 56 70

Source: Cement Manufacturers Association (CMA), ICRA Research

1.11 ANNEXURE-II
Table 1.16: List of Cement Companies with ICRA-Assigned Ratings Outstanding (on Jan 7, 2010) Long Term Bhavya Cement Limited Bheema Cement Limited Calcom Limited Cement LBB+ LBB+ Medium Term MAAShort Term A4+ A2+ A1+ A2+ A1 A1+ A3 A1+ A1+ A3 A1+@ -

India LBB+

Cement manufacturing LBBB+ Company Limited Dalmia Cement Limited Deccan Cement Limited Jaiprakash Limited LAA+ LBBB+

Associates LA LA+ LBBBLAA-

Madras Cement Limited NCL Cement Limited OCL India Limited

Orient Paper & Industries Limited Parasakthi Cement LBBBIndustries Limited Prism Cement Limited Vinay cement Limited LAA-@ LBB+

Source: Cement Manufacturers Association (CMA), ICRA Research

1.12 DIFFERENT TYPES OF CEMENT PRODUCED IN INDIA Ordinary Portland cement (OPC): OPC, popularly known as grey cement, has 95 per cent clinker and 5 per cent Gypsum 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 used in its production. It is used to enhance aesthetic value in tiles and flooring. White cement is much more expensive than grey cement. Portland Blast Furnace Slag Cement (PBFSC): PBFSC consists of 45 per cent clinker, 50 per cent blast furnace slag and 5 per cent gypsum and accounts for 10 per cent of the total cement consumed. It has a heat of hydrations even lower than PPC and is generally used in the construction of dams and similar massive constructions. Rapid Hardening Portland cement: Rapid Hardening Portland Cement is similar to OPC, except that it is ground much finer, so that on casting, the compressible strength increases rapidly. Water Proof Cement: Water Proof Cement is similar to OPC, with a small portion of calcium stearate or nonsponifibale oil to impart waterproofing properties.

Raw material required for Cement Limestone - extracted from own mines Laterite - readily available from nearby mines Gypsum - purchased from Bikanar & Nagore Pet Coke - imported from foreign countries Fly Ash - brought from Kota Thermal Power Plant

Table-1.17: Overview of Policies regarding the cement industry

Period 1951-1982 April 1975 Policy Price and distribution Control Specifics 14% tax return on capital employed 12% post tax return on net worth Uniform retention price Three tier price system (different retention prices for low, medium, and high cost plants) Levy Obligation, uniform Retention Price Notes Did not show any noticeable impact on industry Showed effect on output -

1977 Until 1978 May 1979

Feb 1982

Partial Decontrol

Retention price slightly lower for PPC than OPC, specific mini units exempted from price and distribution control. -

1982-1988

Since 1986 March 1989

Withdrawal of all price and distribution controls Freight Pooling

Progressive decrease in levy and increase in retention price. Rebate in excise duty for new plants. -

Until 1989

No freight pooling for non levy cement since 1982 -

Until 1991

Industrial licensing

CHAPTER-2 COMPANY & PRODUCT PROFILE

2.1 HISTORY OF OCL

OCL is the flag ship company of Dalmia Group of companies, set up and operating from eastern India. The emergence of Dalmia group on the industrial scene of India can be traced back to pre-independence era. Prominent among the early entrepreneurs who laid the industrial foundation of India was Dalmia family. Established in 1932 with a sugar factory, the Dalmia group gradually diversified into a broad spectrum of activities and were involved in many pioneering ventures. For reasons of operational efficiency, during fifties the Group split into separate entities. The origin of OCL was seeded in the time that signalled India's independence. A dream unleashed. A blue print of growth was drawn. Endeavours to reconstruct economy set in. Indian industry woke up to the key challenge of self- reliance. Agriculture took a turn to modernity with construction of dams across the country. Against such a bubbling background Sjt. Jaidayalji Dalmia, an industrialist of farsighted vision set up a cement plant at Rajgangpur during 1950 - 51 at the request of government of Odisha to manufacture super grade cement for use in the construction of Hirakud dam. The plant that went on steam as Orissa cement limited during 1952 transformed itself into OCL India Limited during 1996 to better reflect its multifarious activities. OCL commissioned its Refractory plant in the year 1954, which today has grown into one of the largest composite refractory plants in the country. It manufactures Silica, Basic Burnt Magnesia Carbon, Fireclay & High Alumina Bricks, Continuous Casting, Slide Gate Refractorys, Castables and Precast blocks Basic, Silica high alumina Ramming Mases/Mortars. OCL's Refractory division is the first Indian refractory manufacturer to have secured the coveted ISO 9001 certification for all its refractory products. Globally OCL is amongst the few select producers of coke oven silica bricks. Over years OCL has collaborated with other world leaders in the respective fields and secured a place of pride for itself.

The company changed its name from Orissa Cement Ltd to OCL India Limited w.e.f. 15.01.1996 to reflect its multifarious activities. During the year 2002 OCL set up its Sponge Iron unit at Rajgangpur State of Odisha, with an installed capacity of 1, 20,000 MT P.A and later on developed Steel making facility by installing 3 sets of Induction Furnaces each of 250 MT/ day capacity and Steel Billet Casting Machine as a forward integration activity for the Sponge Iron plant & Pig Iron plant. In the year 2007 the Honble High Courts of Odisha and Guahati have approved the Scheme of Arrangement involving demerger of Steel Undertaking of the Company with OCL Iron and Steel Limited and Real Estate Undertaking of the Company with Landmark Property Development Company Limited (formerly Konark Minerals Limited) and merger with Dalmia Cement (Meghalaya) Limited. OCL's Cement Plant is one of the most modern dry process cement plants in India. Konark brand cement manufactured by OCL is the market leader in the State of Odisha and has emerged as a brand synonym of premium quality cement. Presently its installed capacity for the factories located at Rajgangpur Cement Works & Kapilas Cement Works is 5.35 Million Tonne per annum. OCLs Refractory plant is situated at Rajgangpur with a total installed capacity of 106400 MT per annum to produce the various types of refractoriness. Presently the equity shares of the Company having face value of Rs.2/-each are listed on National Stock Exchange Limited and Bombay Stock Exchange Limited. OCL Refractoriness have world wide acceptance with exports to Americas as well as many Euro-Africa- Asian Nations. A wide range of products manufactured at Rajgangpur and its associate company in China has given it the unique opportunity of perpetual customer base in Iron, Steel, and Copper, Precious Metal extraction, Aluminium and many more refractory consuming processes. Presently the Group's activities include Cement, Refractory, Industrial Machines, Computer Software, Travel and Investments, with OCL India Ltd heading the list a the Group's flagship company. While thus contributing its mite in helping India build and strengthen infrastructure facilities and make advances in other related fields, the OCL Group has been consistently building for itself an enviable reputation worldwide for the

quality of its products and services. OCL is today a company of Indian roots with Global reputation.

2.2 MISSION & VISION

Mission: OCL is in the business of Cement and Refractoriness. These will continue to be our prime business focus areas We shall strive to improve our image in the eyes of all stakeholders - present and potential We shall endeavour to build a vibrant and responsive organization with a team of motivated people driving for excellence, achievement and high performance We will create conditions and climate for empowerment through enhancement of Knowledge, Attitudes and Skills with emphasis on multiskilling. Vision: Grow profitably with commitment to customer satisfaction Strive for excellence Be # 1 in chosen areas Continuously develop a committed team of people Build good corporate image & high customer esteem Endeavour to serve society.

2.3 AWARDS & RECOGNITION:

National award for energy efficiency in Indian Cement Industry. OCL Refractory Division has once again bagged the prestigious CAPAXILMinistry of Commerce, Government of India higher category Special Export Award for the 4th consecutive year for 2008-09. During the celebration of 47th Annual Mines Safety Week, our Lanjiberna Mines have been awarded with the following prizes amongst Limestone & Dolomite Group. Ministry of Commerce & Industry issued STAR EXPORT HOUSE Certificate against our export performance during 2006-07, 07-08, 08-09 & 09-10.

 15th All Orissa Quality Circle Convention organized by NALCO at Bhubaneswar Quality circle BASUNDHARA from Concast finishing section of our Refractory division bagged Runners up Trophy (Silver Plaque). This is the first ever distinction for the team on its maiden external presentation. Quality Circle GABESHANA from Laboratory and UTPADAN from Production made excellent performance in the above forum. Quality circle ANWESHAN from Kiln & Utility department, refractory division bagged Silver award. Sri J N Tiwari, ED/R OCLs refractory Chief and Executive Director, Sri J N Tiwari is felicitated with the coveted award by IRMA in a gala function held in Hotel Taj Bengal, Kolkata on 19th August 2010 for his devoted service in the development and application of refractories.

2.4 CORPORATE SOCIAL RESPONSIBILITY:

In its 60 years of untiring service to Nation, OCL has always given priority to community development. In its endeavour to uplift the conditions of poor and hapless tribals of this locality, OCL has undertaken various developmental activities in peripheral areas of its plant at Rajgangpur and Captive Mines at Lanjiberna. 2.4.1 Health

Our aim is to provide free health care services to poor tribal people of this locality and create awareness among them about health and hygiene. In this direction we are: Providing free treatment and medicine to villagers in our dispensary at Lanjiberna. Operating a Mobile Medical Unit for providing health care services to people at their door step in Rajgangpur and Lanjiberna. A similar unit is also functioning in Kapilas Cement Works. Operating a charitable allopathic dispensary in village Sonakhan through Bharatiya Jana Seva Sansthan, New Delhi. Organising General Health Check-up Camps, Eye Camp, E & T Camp, Dental Camp etc in Rajgangpur and Lanjiberna every year.

 Renovated the hospital building of Govt. Hospital, Rajgangpur and improved infrastructure facilities like supply of water, construction of additional toilets, rooms etc. Organising awareness program on General Health and Hygiene, Malaria, Dengu, Chikungunia etc every year and distributing mosquito nets free of cost. 2.4.2 Education

Our aim is to improve standard of education, infrastructure facilities and other basic needs of children in schools. In this direction we are: Constructing/ renovating buildings play grounds etc in schools. Arranging drinking water facilities by sinking bore well, laying pipe, installing pump etc. Providing furniture like bench, desk, table, chair etc and other study materials. Reimbursing salaries of teachers in some schools. Operating thirty One Teacher Schools called EKALA VIDAYALAYA in villages in collaboration with Friends of Tribal Society.

2.4.3 Drinking Water

Water supply facility in Rajgangpur and Lanjiberna area is extremely poor. The problem becomes more acute during summer. To address this problem we have: Sunk 118 Tube Wells in Rajgangpur & Lanjiberna in last 5 Years. Repaired 58 Tube wells & made them functional in last 5 Years. Dug/renovated Ponds, Ring Wells, constructed platform etc. Facilitated in implementing Sajal Dhara Scheme village Khatang and Dharuda. Made arrangement for supply of drinking water by sinking deep bore well, laying pipe etc in Ghoghar Temple and Sub Jail, Rajgangpur. Providing mines water for irrigation to four villages.

2.4.4 Community Development

We aim at creating/improving/maintaining infrastructure facilities in the area for uplifting the quality of life of people. We have: Constructed a 900 meter long concrete road in Rajgangpur. Constructed a three storied building, kitchen, Namasankirtan Mandap, toilet etc for the inmates of Kalpataru Ashram, Lamloi, where poor orphan children are residing. Renovated and maintaining Theme Park at Sundargarh. The park depicts rich cultural heritage of local tribals and is one of the best of its type in Odisha. Constructed thirteen Community Centres in villages. Also supplied furniture, utensils etc to these centres where villagers conduct community meetings and social/cultural functions. Provided electricity in four villages. Supplied street lights in Rajgangpur Municipality area. Constructing Community Bath Rooms for ladies with water supply facility in villages. Constructed a Cause Way over Naktinalla in Babudhi village. Donated Rs. 23 Lakh in last 5 years to Sundargarh District Peripheral Development Committee for undertaking various development work in the district. Also granted a financial assistance of Rs. 66 Lakh to the committee for constructing bridges in village Malidhi and Jhagarpur in 2009-10. Donated Rs. 31 Lakh for construction of a Community Kalyan Mandap in Rajgangpur. Donated Rs 4.5 Lakh to HOPE for construction of a school building for mentally retarded children in Rajgangpur. Donating Rs. 5000/- every month for remuneration of a teacher in the said school. Donated Rs. 3.5 Lakh to Vedvyas Gosala for proper upkeep of old cows. Also donated Rs. 1.5 Lakh to Sree Vir Pratap Gosala, Rajgangpur for sinking a deep bore well.

2.5 BOARD OF DIRECTORS Shri Pradip Kumar Khaitan Chairman Shri Gaurav Dalmia- Managing Director Shri Damodar Das Atal - Whole Time Director Shri Puneet Yadu Dalmia Shri Ved Prakash Sood Dr. Sheo Raj Jain - Independent Director Shri Dharmendra Nath Davar - Independent Director Dr. Ramesh Chandra Vaish- Independent Director 2.6 RESEARCH & DEVELOPMENT Up gradation of the quality of chemical gypsum for use as set controller. Development of ternary and quaternary blended cement for improved quality and performance. Development of X-Ray Diffraction method for real time estimation of Slag/Flyash content in blended cement. Development of high strength hollow Fly ash blocks using wastes from our captive mines, cement & refractory units. Use of industrial waste as alternate raw material and fuel. Use of waste wood chips, bags, waste paper, waste oil as alternate fuel 2.7 QUALITY POLICY & ESH POLICY OCL, believe and aim at total quality in our products and services to satisfy our Customers, and are committed to Adhere strictly to quality parameters at all stages to provide products / services conforming to customers requirements

 Meet requirements of quality management system and strive to continually improve its effectiveness Develop competent human resource through planned training Establish quality objectives and review periodically to achieve continual improvement

2.8 ENVIRONMENT, OCCPUTATIONAL HEALTH & SAFETY POLICY

We, at OCL India Limited (Cement Division), Rajgangpur, Odisha engaged in captive Mining of Limestone and Manufacturing of Cement are committed to continually improve Performance of our Environment and Occupational Health and Safety Management System for sustainable development. Integrating EHS criteria in all our planning & operational activities Prevention, Minimization and Control of Workplace Injury, Ill health and Pollution Complying with legislation & other requirement applicable to us and to which we subscribe Communication of EHS policy to all our Employees and other Interested party Strengthening competence & EHS awareness of employees and business associates through continuous training Optimization of resources, particularly Raw materials, Water, Fuel & Power Reclamation & Rehabilitation of mined out areas by utilization of solid waste and develop green belt in the area Promote safe behaviour and practices to nurture and sustain safe and healthy work environment Establish the EHS objectives and review periodically to achieve continual improvement 2.9 PRODUCT PORTFOLIO At Rajgangpur cement works we manufacture eight varities of cement viz OPC 53 grade, OPC 53-S grade, OPC 43 Grade, PSC, PPC (Flyash Based), SRPC, OWC Class G Type HSR and Masonry Cement. At Kapilash Cement works we manufacture PSC at present.

2.9.1 OPC 33 grade This cement is used for general civil construction work under normal environmental conditions. The compressive strength of cement after 28 days test as per BIS specification is 33 MPa. Due to low compressive strength, this cement is normally not used where high grade of concrete viz, M-20 and above is required. The availability of higher grades of OPC in the market impacts the usage of 33 grades OPC as these days 43 grade OPC is normally used for general construction work. This grade of cement is more useful for mass concreting and plain cement concreting and can also be used for plastering and single storied individual houses. 2.9.2 53 & 53-S -grade OPC (IS: 12269-1987):

53-grade OPC is high strength cement. According to the BIS requirements, 53-grade OPC must have a 28-day compressive strength of no less than 53 MPa For certain specialized products, such as pre-stressed concrete and certain pre-cast concrete items requiring high strength, 53-grade OPC is considered useful as it can produce high- grade concrete at lower cement content levels. We produce 53-grade OPC by exposing the clinker to the grinding process for longer period of time, which results in a higher density and stronger cement.

53-grade OPC is a high strength OPC, and can be used for the following applications: Pre-cast concrete items such as paving blocks, tiles and building blocks Pre-stressed concrete components; and Runways, concrete roads and bridges High-rise buildings, Flyovers and Concrete structures where high grade concrete is normally required.

53-S grade OPC can be used for the following application: Manufacturing of Railway sleeper

2.9.3 43-grade OPC (IS-8112:1989): According to the BIS requirements, 43-grade OPC must have a 28-day compressive strength of no less than 43 MPa.

43-grade OPC is commonly used in the following applications: General civil engineering construction work including residential, commercial & Industrial buildings Roads, Bridges, Flyovers and Irrigation projects Pre-cast items such as blocks, tiles and pipes Asbestos products such as sheets and pipes; and Non-structural works such as plastering and flooring

2.9.4 Portland Slag Cement (IS-455:1989) :

Portland slag cement is manufactured by intergrinding Portland cement clinker, gypsum and Blust furnace granulated slag. It is also manufactured by blending OPC with ground Granulated Blast furnace slag through mechanical blending.

Portland Slag Cement is commonly used for the following applications General civil engineering construction works but mainly preferred for construction of marine structures and in coastal areas where excessive amount of chloride and sulphate are present. It can also be used for mass concrete works.

Features of Konark PSC: It has high ultimate strength with higher rate of gain of strength than normal OPC available in market. Lower water demand Lower Shrinkage With high compressive strength Konark PSC ensures substantial savings in cement consumption.

2.9.5 Portland Pozzolana Cement-Fly ash based (IS: 1489 Part-1 1991):

Portland Pozzolana cement is manufactured by intergrinding Portland cement clinker, gypsum and fly ash a by-product of thermal power plants.

Portland Pozzolana Cement is normally used for the following applications: Useful for general construction works and especially suitable for works in aggressive environmental conditions, employed for water retaining structures, marine works, mass concreting such as dams, retaining walls and sewage pipes. Features of Konark PPC: It is manufactured with carefully selected particle sizes of pozzolana (Flyash) ideal for denser and more durable concrete. It is having low heat of hydration and corresponding resistance to exposure in various environmental chemicals such as salt water. It is particularly suitable for marine and hydraulic construction and other mass concrete structures. This cement has durability that is equivalent to OPC and can be used most of the applications where OPC is used. \ 2.9.6 Sulphate Resisting Portland cement (IS-12330:1988):

Sulphate resisting portland cement is produced by inter-grinding special quality of cement clinker and gypsum.

Sulphate Resisting Portland cement is normally used for the following applications: Used for underground structures in sulphate-salts rich environment, effluent treatment plants, sugar and other chemical industries where civil works are likely to be subjected to sulphate attack which induces stresses in concrete, leading to cracks and disruption. Being specially formulated cement with lower C3A content SRPC is free from these sulphate attacks.

Features of Konark SRPC Konark SRPC with low C3A content and higher strength is ideal cement for laying foundation of a building in any aggressive environment containing sulphate.

2.9.7 Oil Well Cement Class G Type HSR (IS-8229-1986):

Oil well cement is produced by inter-grinding special quality of cement clinker with very low C3A prepared in a rotary cement kiln and gypsum. Class G Oil Well Cement is intended for use as basic well cement for surface 2440m (8000ft.) depth as Manufactured or can be used with accelerators and retarders to cover a wide range of well depths and temperature.

Oil Well Cement is used for the following application:

This product is used by the petroleum industry for cementing the steel casing to the walls of the Oil Wells. The temperature of the wells range from 180 C to 250 C while the pressure varies from 1300 to 2000 kg/cm2. This cement is specially formulated so that its slurry remains pump able at this high temperature and pressure for a required length of time and then hardens rapidly.

2.9.8 Masonry Cement (IS-3466-1988):

Masonry cement is produced by intimately grinding a mixture of Portland cement clinker with pozzolanic materials or inert materials, and gypsum. It is special cement for exclusive use in plastering and brick work. Konark brand masonry cement gives: Very smooth and super surface finish of the plasters More plastic mortar mix Minimum fall of mortar while plastering walls or ceiling Least wastage of mortar mix hence cost saving Ease of work (towelling and finishing) Leak proof plaster

 Less water consumption for making mix More coverage while plastering. 2.10 CUSTOMER SERVICES & SUPPORT OCL provides SMS service for every transaction made by the Customers, Dealers SMS in Vogue: OCL provides SMS service for every transaction made by the Customers, Dealers, with an auto generated SMS sent to their registered mobiles, intimating the transaction value, Outstanding Balance and Lorry number with time of despatch. Apart from this Dealers also get direct information about New Offers and Schemes, including other information related to Target etc. Unique Dedicated fleet arrangement: To provide assured & timely delivery to esteemed customers and dealers OCL has made State-of-the-art Dedicated Fleet arrangement, unique in India and first in Eastern Region. Available in different capacities these fleet of trucks are centrally tracked with modern Vehicle Tracking Systems (GPS based) to keep track of the consignment and ensure delivery to desired locations. Tankers for Cement: To facilitate fast & efficient usage of cement in upcoming Projects sites, Industries and users of Bulk cement, OCL has supported consumers by chartering BULK tankers to their services. OCL Customers Web Portal: For entertaining & serving the Net savvy Customers, OCL provides them the opportunity of ordering cement from the comforts of their homes through their latest Web-Ordering Portal http://konarkcement.ocl.in

ORGANIZATION CHART
Chart-2.1-organization chart

PRESIDENT WTD

ED
(PRODUC TION)

ED
(HR)

ED
(MARKE TING)

ED
(PUBLIC RELATIONS)

ED
(FINANC E)

ED
(COMMER CIAL)

STRATEGIC PLANNER & TRAINNING

SALES HEAD STATE HEAD UNIT HEAD DISTRICT OFFICER

BRANDING & ADVERTISEMENT

LOGIST ICS

CHAPTER-3
REVIEW OF LITERATURE

REVIEW OF LITERATURE
Marketing is The management process which identifies anticipates and supplies customer requirements efficiently and profitably. Marketing is a total system of interesting business activities defined to Plan, piece, promote and distribution want satisfying products & services to present and potential consumers Marketing is the performance of business activities that direct the follow of goods and services from the producer to the consumer or user

3.1 Achieving high satisfaction in Supplier-dealer working relationships ( Patrik Jonsson, Mosad Zineldin (2003))

The level of perceived satisfaction is an important measure of an inter-organizational relationship. Evaluating existing supplier relationships and determining the major factors that affect satisfaction could lead a manufacturer or dealer to question and change the method of working with suppliers, resulting in an increase in relationship satisfaction in the long term. Previous researchers have shown that there is a positive relationship between cooperation and satisfaction. The cooperative efforts of channel member should result in greater trust, commitment, channel efficiency and achievement of goals, thus leading to higher levels of satisfaction. However, situations may exist where the supplier or customer is forced to cooperate with the other party, despite a lack of trust and commitment. Gronhaug and Gilly (1991), for example, argue that dissatisfied customers may remain loyal due to high switching costs. The switching costs could lead to dissatisfaction, but if the outcomes of the relationship are good, the relationship. In general, partnerships, alliances, Collaboration, and buyer/supplier relationships have received much attention during the 1990s. Industry reports of shorter cycle times, fewer quality defects, reduced costs, and streamlined processes resulting from closer working relationships with suppliers have suggested a clearer understanding of the major factors affecting buyer/supplier relationship. Establishing, developing and maintaining long-term business relationships is usually a very complex process. To establish effective relationships with suppliers, organizations may use supplier selection criteria (i.e. product

quality, product availability, delivery reliability, and product performance) supplier involvement in product development activities and mutual continuous improvement effort. The vital point is that the outcome of a working relationship is a function of a number of factors or elements. These are: Communication Adaptation Reputation Coercive power Non-coercive power Cooperation Relationship bonds Dependency Relationship benefits

3.2 Attributes of Overall Satisfaction (Alexander Staus, Tilman Becker (2012)):

Research on satisfaction, especially customer satisfaction, is a large field within market research. Studies have shown that satisfaction might lead to increased loyalty, reduced price. Elasticitys, increased cross-buying, and positive word-of-mouth (Matzler et al., 2004). Customer satisfaction can be generally defined by the difference between a customer's expectations and a customer's perceptions. Job satisfaction is similarly defined by Locke (1976) as a target/actual comparison of expectations and experiences on the job. This comparison can be a dynamic process, allowing expectations to change. A very famous satisfaction model is the two-factor model of Herzberg et al. (1959), which was developed as part of research on job satisfaction. The model distinguishes between the two factors, satisfiers and dissatisfiers. Dissatisfiers, also called basic factors, hygiene factors or mustbes, are minimum requirements, which do not increase satisfaction if fulfilled or exceeded but do decrease satisfaction if they are not fulfilled. These factors are taken for granted (e.g., safety of a plane). Satisfiers, also called excitement factors or motivators, increase satisfaction if they exist or are available, but they do not decrease satisfaction if they are missing (e.g., added service in a plane or design of the plane). The body of theoretical and empirical research on customer satisfaction and job satisfaction is very large; Locke (1976) estimates there to have been around 3,350 articles based on job satisfaction as of 1976.

Some of these studies have established a positive relationship between customer and job satisfaction. On the other hand, dealer satisfaction is a relatively new research area. Dealers are the link between producers and customers and, thus, might play an important role in the success of producers. On one side, dealers are in direct contact with customers and are better aware of their needs than the producer. On the other side, dealers are experts in their supplied products and, thus, have a better knowledge of the quality of the products. Dealer satisfaction is based on the research on customer and job satisfaction, and it is used e.g. in the computer and the automobile industry (Decker, 2000; Meinig, 1995). Measuring the (overall) satisfaction of dealers and detecting the variables (dimensions) that influence this satisfaction is the main focus of research on dealer satisfaction (Decker, 2000). Several factors have been detected, depending on the industry, which affect the overall satisfaction of dealers: Cooperation (Whipple & Gentry, 2000), communication, familiarization, innovation and quality (Jonsson & Zineldin, 2003; Zineldin, 1998), or relation, service, accessory and spares (Decker, 2000; Meinig, 1995). For the agricultural machinery industry, the following five characteristics are important for the purchasing decision of agricultural machinery in Britain from the customers' perspective (Walley et al., 2007): brand, price, dealers proximity, quality of dealer service and the experience of the buyer with the dealer. In three out of these five characteristics, dealers play an important role for the customer. Also, in Germany, dealers are more important than the brand or the price according to customers buying agricultural machinery (Top Agrar, 2005, 2008); satisfied dealers may lead to satisfied customers, and unsatisfied dealers may negatively affect customers' satisfaction.

3.3 Dealer satisfaction and its significance (Wolfgang Meinig(1998)):

Considering the fact that the way in which a dealer is treated by its manufacturer has decisive influence on the dealer's commitment to the brand as well as on the dealer's business success, an examination of dealer satisfaction or dissatisfaction has become strikingly important during the last few years. For this purpose a questionnaire has been developed by the Forschungsstelle Automobilwirtschaft (FAW), Bamberg with the aim to assess the Dealer Satisfaction Index (OSI). The main objective of this questionnaire is to evaluate the significance of various factors with regard to business success for all brands

and dealerships, and to provide a profound result concerning satisfaction or dissatisfaction of all dealers with their brand. Since its start in 1995, the OSI has gained increasing importance throughout both trade and industry. With regard to the development the dealer satisfaction has undergone since 1995, it is highly remarkable that the dissatisfaction still persisting in 1996 did not continue in 1997. The overall satisfaction has increased markedly. A social and managerial process, by which individuals and groups obtain what they need and want, through creating and exchanging product and value with others. Customer satisfaction begins with a difficult faith; it starts with a commitment to deliver the result for each customer which is also a concern of the dealers. Hence for a manufacturing company, in order to satisfy its customers, it is highly important to satisfy its dealers, as they are the direct customers to them. Establishing satisfaction as the ultimate goal is like the other ultimate goals of business pursuit of higher profits or shareholders wealth. Perfect dealer service or satisfaction is one that meets the combined need satisfaction is a systemized service that involves the entire organization. But many organizations have yet to develop this kind of awareness of dealer satisfaction strategy. Dealer is a person or firm engaged in commercial purchase and sale. Dealer may signify firms that buy or resell products at retail or wholesale basis. A producer cannot sell all his products directly to consumer; he has to depend upon intermediaries to push, off, his products. A dealer is an intermediary who helps to market a product. A dealer is one who purchase and sells products. A dealer may be a wholesaler or a retailer or a distributor or any agents. The volume of sales depends on the efficiency of a dealer who assesses the psychology of consumers and takes appropriate steps to sell a product. It is the dealer who suggests to the manufacturers the suitable media of advertisement and other promotional tools. Dealers are searching for new marketing strategies to attract and hold customers. Dealers include all activities involved in selling goods and services to those buying for resale or business use. Dealers buy mostly producers and sell mostly to retailers or industrial consumers.

3.4 DEALER SATISFACTION Dealer Satisfaction begins with the following specific assumptions about companys relationship with the customers.

1. The dealer service activities focus mainly on existing dealers. 2. Some dealers are more important than others 3. They are the assets. 4. The dealer is always specific. The dealer needs and value should influence every aspect of the organization strategy, employee safety and performance, product and organization strategy, employee safety and performance, product and service development, sales and marketing programs, operational procedures and information and measurement system. Understanding the dealer is critical to the success of any customer focus initiative, the first step in understanding the dealers is to listen to them. A company needs to hear what its dealers are saying about its people, product service and vision. Their information helps to develop meaningful product and service.

Organizations need to listen to their dealer satisfied, dissatisfied neutral and prospective. As one company executive said, talking to a satisfied customer is talking to me. In the past, dealer satisfaction and service was the responsibility of a separate organization that supported the dealer primarily after the sale. Today, service is also likely to be interested with the every product accompany offers. High dealer satisfaction comes from providing effective services. But giving that service is a continuous activity. It means being efficient, reliable, courteous, curing and professional every time.

Marketing is a communication process that has the purpose of individuals or groups - that are directly or indirectly able to purchase - aware of products and services that may satisfy their existing or newly-identified needs and wants. The Chartered Institute of Marketing, which is the world's largest marketing body, defines marketing as "The management process responsible for identifying, anticipating and satisfying customer requirements profitably." 3.4.1 Dealer Any person who carries on business in purchasing, selling, supplying or distributing goods and also includes works contractor, company, Co-operative Society,

Broker, Commission Agent, Auctioneer or any other mercantile Agent for the consideration of cash, commission and deferred payment.

There are two types of dealer such as: 1) Registered dealer. 2) Casual dealer

Dealer wants high marginal gain from manufacturers. The main objective of dealership is earning profits. Dealership business is different from other business. The peculiar feature of a dealer is dealing with one or more similar products. Dealers earn profit for goods sold from the manufacturers. The profit depends upon the value of sales both cash and credit. Now a days the demand for cement increases every year. The manufacturers are not able to cover all the consumers directly. With the help of dealers only they can reach the consumers. Dealer accepts income from business because there is some guarantee of getting more profit from this business. Dealers demand more commission from the manufactures; they cover the entire market within their locality. They also sell cement in credit to regular customer.

3.4.2 PROMPT DELIVERY

For every business competition is inevitable, Knowledge, about the direct, reasonable price, prompt delivery etc., are the only ways in which one can attract more consumers. Delivery of every goods to the place of consumers will attract every consumer. When there is a delay a small delay of one or two days or even hours may cause a great set back in consumer satisfaction. There are various ways we can satisfy the consumers. One among them is a regular supply and prompts delivery of goods to customers. Even though quality is excellent and the price is reasonable we cannot satisfy the consumers, unless there is prompt delivery of goods.

3.4.3 IMMEDIATE REALIZATION OF PROFIT AFTER SALES

Dealers will get their profit after sales. There are many promotional schemes offered by the company to motivate the dealers to increase the sales volume by giving gifts like, gold

coins, tours, annual incentive, award programs etc. This type of motivation helps company to increase their sales volume.

3.4.4 CRM ACTIVITIES FROM THE COMPANY

Under CRM activities company use to organise different type of programmes to create goodwill in mind of customers by organising Manson meetings, P.O.P items, and gift coupons etc. So that they can realize that they are valuable customers for the company.

3.4.5 GIFTS FROM THE COMPANY

Some reputed companies will provide a number of gifts to its dealers and distributors. Their gifts are allowed to improved sales in all areas. Dealers will be much motivated when gifts are offered by manufactures. Gifts are a special kind of incentives, which will pursue the dealers to increase their sales. The main objectives of offering gifts to dealer and distributors are to enhance or improve sales to the maximum level. The competition can be easily managed when gifts are offered to dealer; the number of types of gifts is as follows. Value of sales in Rupees. Value of sales in units Seasonal gifts.

3.5 Brand A brand is a name or trademark connected with a product or producer. Brands have become increasingly important components of culture and the economy, now being described as "cultural accessories and personal philosophies 3.5.1 Brand identity A product identity, or brand image are typically the attributes one associates with a brand, how the brand owner wants the consumer to perceive the brand - and by extension the branded company, organization, product or service. The brand owner will seek to bridge the gap between the brand image and the brand identity. Effective brand names build a connection between the brand personalities as it is perceived by the target audience

and the actual product/service. The brand name should be conceptually on target with the product/service (what the company stands for). Furthermore, the brand name should be on target with the brand demographic. Typically, sustainable brand names are easy to remember, transcend trends and have positive connotations. Brand identity is fundamental to consumer recognition and symbolizes the brand's differentiation from competitors. Brand identity is what the owner wants to communicate to its potential consumers. However, over time, a products brand identity may acquire (evolve), gaining new attributes from consumer perspective but not necessarily from the marketing communications an owner percolates to targeted consumers. Therefore, brand associations become handy to check the consumer's perception of the brand. 3.5.2 Brand Image Brand Image is not something you have or you don't! A brand is unlikely to have one brand image, but several, though one or two may predominate. The key in brand image research is to identify or develop the most powerful images and reinforce them through subsequent brand communications. The term "brand image" gained popularity as evidence began to grow that the feelings and images associated with a brand were powerful purchase influencers, though brand recognition, recall and brand identity. It is based on the proposition that consumers buy not only a product (commodity), but also the image associations of the product, such as power, wealth, sophistication, and most importantly identification and association with other users of the brand. In a consumer led world, people tend to define themselves and their Jungian "persona" by their possessions. According to Sigmund Freud, the ego and superego control to a large extent the image and personality that people would like others to have of them.Good brand images are instantly evoked, are positive, and are almost always unique among competitive brands. Brand image can be reinforced by brand communications such as packaging, advertising, promotion, customer service, word-of-mouth and other aspects of the brand experience. Brand images are usually evoked by asking consumers the first words/images that come to their mind when a certain brand is mentioned (sometimes called "top of mind"). When responses are highly variable, non-forthcoming, or refer to non-image attributes such as cost, it is an indicator of a weak brand image.

CHAPTER-4 OBJECTIVES AND SCOPE OF THE PROJECT

4.1 NEED OF STUDY:

To study the level of dealers satisfaction towards OCL cements regarding promotional activities, Supply, quality and quantity of cement and to know demand level of OCL cements in the market by the Dealers & consumers.

4.2 OBJECTIVE OF THE STUDY

To study the level of dealers satisfaction on OCL Cement under Bhubneshwar Region. To assess the effectiveness of promotional tools to improve the sales. To analyze the factors that affects the dealers preference in dealing with cement. To understand the strength and weakness of OCL Cement distribution.

Objective-1- level of dealers satisfaction on OCL Cement This objective helps to understand up to what extend dealers are satisfied and what is the factors affecting them for their satisfaction and dissatisfaction. This is taken into consideration because OCL cement had made a survey for their dealers satisfaction and result was dealers are not satisfied with OCL cement. So for further implication I have taken objective that what are the factors which satisfies the dealers most and made a comparison that was provided by the OCL cement to their dealers and also with their competitors. Objective-2- Effectiveness of promotional tools to improve the sales

This objective helps to understand the promotional tool used by the company and up to what extend it is benefiting to the company or any new strategy had to be used to make promotion more effective and to measure the depth of promotion so to decide what next can improve the sales of the company. By which promotional tool dealers can be satisfied and attract more number of market shares to stay ahead from the competitors.

Objective-3- Factors that affects the dealers preference in dealing with cement.

This objective helps to understand what are the different factors affects to the dealers for dealing with the product and what make them more satisfied on dealer and suppliers side.

Objective-4- SWOT Analysis A SWOT analysis is an analysis of the strengths and weaknesses of your business, the opportunities and threats it faces and how these factors influence your business.

4.3 SCOPE OF THE STUDY:

The study is confined on the selected dealers in Bhubneshwar region. To know the dealers satisfactory levels with quality, supply, packing, service of OCL Cements and promotional activities by the company. The study enables to know the expectation of the dealers and consequently the customers. The project highlights the scope for future improvements on the basis of present scale. The study can help in analyzing certain weak point, improving on which a company can overcome the low sales of its cement but only in Bhubaneshwar region

CHAPTER-5 RESEARCH METHODOLOGY

5.1 RESEARCH METHODOLOGY

Project Research Type Data Sources Research Approach Research Instrument Data Analysis Sampling Procedure Sample Size Geographical Coverage Duration of the Survey Descriptive Research Primary Data , Secondary Data Survey Method Questionnaire Logical analysis Random Sampling 150 Respondents Bhubneshwar 60 days

5.1.1 DATA COLLECTION:

The descriptive nature of research necessitates collection of primary data from Dealers through market survey, personal interview technique was used and interview was conducted through structured questionnaire the question was asked in prearranged manner. The market research was conducted over a period of 30 days. Data was tabulated, analyzed and suggestion and recommendation were given.

5.1.2 DESCRIPTIVE RESEARCH:

Descriptive studies, as their name implies, are designed to describe something, for example, the characteristics of users of a given product; the degree to which product use varies with income, age or other characteristics: or the number who saw a specific television commercial. A majority of marketing research studies are of this type.

5.1.3 RESEARCH INSTRUMENTS:

The Research instrument chosen for conducting the survey was structured questionnaire was prepared as show as in the annexure. The questionnaire includes open ended as well as close ended question, few open ended question were included to obtain the perception of

the Dealers. The questionnaire designed and a pilot survey was made with the questionnaire and then changes were made accordingly with the questionnaire.

5.1.4 SAMPLE PLAN:

A sampling technique was chosen for the study was Random Sampling Technique. This is the most common method of selecting the sample. This is because the Dealers are localized in different part of the marker a group of Dealers are chosen randomly from large group. It gives all Dealers in a group and equal chance of being selected for the purpose of the survey.

5.1.5 SAMPLE SIZE:

Out of nearly 200 Dealers and sub-dealers in cement market of Bhubaneshwar and its region around randomly 75% of total population was considered as the sample size.

5.1.6 CONTACT METHOD:

Both personal interview methods were used for conducting the market survey. Personal interview had the benefit one to one communication between the researcher and the respondent. If the respondent is having any doubt or queries in their mind, they can get their doubts clarified from the researcher on the spot and so superior of data was collected from the survey was collected from the survey.

5.2 ANALYSIS AND INFORMATION:

Detailed information was collected for the project marker survey for marketing and sales promotion activities of Konark Cement for the area of Bhubaneshawar market. The information was collected by visiting the retailers of cement present in Bhubaneshawar market. The interview of retailer taken in a friendly atmosphere so as to encourage them to give right information, without any hesitation.

5.2.1 ANALYSIS:

The analysis of the collection information was made in scientific manner. Different manner rank was given to each alternative of particular questions, in the questionnaire. A particular rank was given in the following manner, Rank- 1(5 points): for the most favourable alternative Rank- 2(4 points): for the moderately favourable alternative Rank- 3(3 points): for unfavourable alternative Rank- 4(2 points): for most unfavourable alternative Rank- 5(1 point): Unfavourable To come at the conclusion, total of each alternative of all the sample size Dealers was made. Thus the sum of an alternative having least score considered to be most favourable. In this manner, result is prepared for various important parameters of the survey. With the help of results so obtained, the findings are recorded in the form of graphs. The market of cement Changes as the area changes. The demand for particular cement for particular cement is much less. This is because of the crazier Trend of particular market. Thus the demand for the cement is not that price sensitive. Price is not the criterion for selection of rejection of particular brand is adapted on the type of application of cement and the brand name in market. Thus the awareness among the customers about the particular cement plays a vital role. The major types of customers are the builders and masons. The individual customers are there, but their demand is not more. The customers are ready to give slightly high price, but he wants quality cement. The customer perceives quality of cement as good quality because of effective marketing. So effective marketing is necessary. The Dealer in the marker plays an important role in the sale of the cement. They have some expectation from the cement companies; they expected credit facility, good sales promotion schemes, and timely delivery of cement, etc among the plastic bag and paper bag of cement, Customer prefer bag. This is because the paper bag prevents it from moisture and quantity remains intact. In brief cement market is sensitive to marketing. The better & more the marketing the more is possibility of sales. The observations and findings of the market survey about market share and sales promotion activities are given at the next stage, in the report.

5.3 STATISTICAL TOOLS Percentage Weighted average There are briefly explained, in following

5.3.1 PERCENTAGE

Percentage refers to special kind of ratio percentage are used in marketing Comparison between two more series of data. Percentage is used to describe relationship. Since the percentage reduce everything to a common base & these by allow meaningful comparison to be made.

5.3.2 WEIGHTED AVERAGE

If something is distribution is more important than order, then their point must be born in mind, in order that average completed is representatives of the distribution. In such case proper weight age is to be given to various items the weight attached to each item being professional to the importance of the item to be the distribution.

Formula

Average weight

Total weight Total no. Of respondents

100

5.4 LIMITATIONS Lack of cooperation from the dealers and sub-dealers in regard to giving interview. As they dosent understands the importance of survey. It was found in some cases dealers showed inclination towards certain brands which gave them more margins when compared to others. As the sub-dealers and dealers thought that it was unwise for that to give their details of business as they feared competitors would take advantage.

CHAPTER-6 ANALYSIS & INTERPRETATION

6.1 Nature of shop.

Nature Retail Wholesale Total No. dealers 123 27 150 TABLE-6.1
retail 82%

of

whole sale 18%

CHART-6.1

Interpretation: This show that wholesale is less and retail is more from dealers counter also. 6.2. Quantity of cement sold by the dealers per month.
Quantity >50tons 50-100tons 100-200tons 200-400tons Total No. of dealers 12 39 24 75 150 TABLE-6.2
200400tons 50% >50 tons 8% 50-100 tons 26% 100-200 tons 16%

CHART-6.2

Interpretation: This shows that maximum dealers sales are more than 200 tons per month. 6.3. Number of years in this business.
Experience >5yrs 6-15yrs <15yrs Total No. Of dealers 18 90 42 150 TABLE-6.3 CHART-6.3
60% 12% 28% >5yrs 6-15yrs <15 yrs

6.4. Highest selling brand from counter (customer pull)?

Brands
LAFARGE KONARK AMBUJA

Tonnes/month
6400 7625

JYPEE RASI 2% 0% RAMCO 4%

MAHA 6%

2470 790 BIRLA 4420 ACC ULTRATECH 6280 2540 RAMCO 2220 JAYPEE 180 RASI 2740 MAHA
TABLE-6.4

LAFARGE 26% ULTRATEC H 18% ACC 11% BIRLA AMBUJA 1% 4% KONARK 28%

CHART-6.4

Interpretation: This analysis shows that konark & Lafarge cements are the most preferable brand among the customers .Maha & Ramco are the brands selected by the customers & dealers because of its low price and more profit. 6.5. Rank the factors affecting the highest selling brand (Dealers perception) Factors Quality Price Brand Image Margin Customer Demand LAFARGE 75 65 73 61 75 KONARK 79 78 79 71 80 AMBUJA 25 23 24 21 21 BIRLA 0 0 0 0 0 ACC 20 20 20 18 19 ULTRATECH 25 22 24 22 24 RAMCO 5 5 5 5 5 JYPEE RASI MAHA 10 4 10 4 10 3 8 10 5 4
TABLE-6.5

Quality Perception
RAMCO 2% ULTRATECH 10% ACC 8% AMBUJA 10% JYPEE 4% MAHA 2%

LAFARGE 31%

CHART-6.5

KONARK 33%

Price perception
RAMCO 2% ULTRATECH 10% ACC 9% JYPEE MAHA 4% 2%

Brand Image perception

RAMCO 2% ULTRATECH 10% JYPEE MAHA 1% 4%

LAFARGE 29%

ACC 9% AMBUJA 10%

LAFARGE 31%

AMBUJA 10% KONARK 34%

KONARK 33%

CHART-6.6

CHART-6.7

Margin perception
JYPEE MAHA 2% RAMCO 4% 2% ULTRATECH 14%

Customer Demand perception

JYPEE RAMCO 4% MAHA 2% 2% ULTRATECH 10% ACC 8% LAFARGE 31%

LAFARGE 32%

ACC 8% AMBUJA 10% KONARK 28%

AMBUJA 9% KONARK 34%

CHART-6.8

CHART-6.9

Interpretation: This analysis shows that Konark cement is highest selling brand in terms of Quality, price which increased its brand image and customer demand but profit margin is less as compare to Lafarge.

6.6. Recommendations made by the dealers.

Brands
LAFARGE KONARK AMBUJA

Preference
30 36

RAMCO RASI JYPEE 3% 0% 3%

MAHA 5%

3 0 BIRLA 9 ACC ULTRATECH 24 3 RAMCO 3 JAYPEE 0 RASI 6 MAHA

TABLE-6.6

LAFARGE 25% ULTRATECH 22%

ACC 8% BIRLA AMBUJA 0% 4%

KONARK 30%

CHART-6.10

Interpretation: In this analysis konark cement is most preferable brand among dealers .About 30% of dealers prefer konark cement due to its Quality, packaging and customer demand.

6.7. The frequency of personal visits by sales officer for inspiration and support?

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA

Support
24 36
RASI JYPEE 1% MAHA 8% 6% RAMCO 4% LAFARGE 20%

3 0
12 6

ULTRATECH 24

6 3 9
TABLE-6.7

ULTRATEC H 20% ACC 10% AMBUJA 3%

KONARK 28%

CHART-6.11

Interpretation: This analysis shows that personal visits by marketing people is most on konark cement for support and the new brands like Maha, Rasi, Ramco are now capturing market by increasing support to the dealers and also providing different types of schemes.

6.8. The credit (in days) enjoyed by the bands. Interpretation: In this analysis no company is providing credit days rather than they provide credit limit. And the dealers use pay and take relationship with cement companies. 6.9. The Profit margin got by selling the brands (Cash)?

Brands
LAFARGE KONARK AMBUJA BIRLA ACC ULTRATECH RAMCO JAYPEE RASI MAHA Interpretation:

Profit margin(Rs.)
10 11 12 10 12 10 15 12 14 16 TABLE-6.8
RAMCO 12% JYPEE 10% RASI 11% MAHA 13%

LAFARGE 9% KONARK 9% AMBUJA 10% BIRLA 8%

ULTRATEC H 8%

ACC 10%

CHART-6.12

The analysis shows that all low price brands like, Maha,Rasi,Ramco give more profit margin as compare to big brands like, Konark,Lafarge,Ultratech,Acc. The profit margin given by big brands vary between Rs 8-13.Maha is giving margin about Rs 16 and some hidden gifts are also there. 6.10. On the basis of their availability throughout the year mainly on seasons.

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA

Availability
27 39 3 0 6 3 3 0 12 TABLE-6.9

JYPEE MAHA 3% 10% RAMCO 2% LAFARGE 25%

ULTRATECH 21

ULTRATEC H 18% ACC 6%

KONARK 33% BIRLA 0% AMBUJA 3%

CHART-6.13

Interpretation: This analysis shows that konark and Lafarge is mostly available on sessions. Its because as per necessary the trucks are easily diverted from depot and also the factories are nearer to bhubneshwar. 6.11. Most effective advertisement activities done by which brand (rank them).

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA

Preference
24 39 6 0 12 0 3 0 3 TABLE-6.10
ACC 10%
ULTRATECH 21%

JYPEE RAMCO 4% MAHA 4% 1% LAFARGE 22%

ULTRATECH 24
KONARK 34% AMBUJA 4%

CHART-6.14

Interpretation: The analysis show that 34% of dealers say that konark cement is having effective promotional activities and then Lafarge, ultratech, Acc but Maha is also now coming up with better promotional activities. 6.12. Brand wise ranking for all activity (Appreciation by Dealer)?
sales promotion Dealer meet Tour Get together Special schemes Award programs Advertisement Incentive Schemes CRM Activities LAFARGE 12 15 16 15 11 10 13 16 KONARK 13 13 15 16 12 14 14 13 AMBUJA 6 4 3 4 3 4 5 4 BIRLA 1 ACC 8 8 7 7 10 7 7 8 ULTRATECH 10 12 9 10 9 9 7 13 1 1 RAMCO 1 1 JYPEE 7 5 4 3 4 2 3 3 4 1 3 5 1 RASI MAHA 2 2

TABLE-6.11

Appreciation by dealers

MAHA 3% RAMCO JYPEE 9% 2% ULTRATE CH 17% ACC 14%

Dealer meet
LAFARGE 21%

Tour
JYPEE MAHA 3% RAMCO 8% 2% ULTRATEC H 20% LAFARGE 25% KONARK 22% AMBUJA 7%

KONARK 22% BIRLA AMBUJA 2% 10%

ACC 13%

CHART-6.15

CHART-6.16

Get together
JYPEE 7%
ULTRATEC H 17%

Special schemes
JYPEE RAMCO 5% 1% MAHA 7% LAFARGE 25%

LAFARGE 30%

ACC 13% AMBUJA 5%

ULTRATE CH 17% ACC 11% AMBUJA 7%

KONARK 28%

KONARK 27%

CHART-6.17

CHART-6.18

Award programs
JYPEE 8% MAHA 2% LAFARG E 22%

Advertisement
MAHA JYPEE RAMCO 6% 4% 2% ULTRATE CH 18% KONARK 28% ACC 14% AMBUJA 8% LAFARGE 20%

ULTRATE CH 18%

ACC 20%

KONAR K 24%
AMBUJA 6%

CHART-6.19

CHART-6.20

Incentive Schemes
JYPEE 6% ULTRATE CH 13% ACC 13% AMBUJA 9% MAHA 9% LAFARGE 24%

CRM Activities
JYPEE 5%
ULTRATECH 22%

MAHA 2%

LAFARGE 28%

KONARK 26%

ACC 14% AMBUJA 7%

KONARK 22%

CHART-6.21

CHART-6.22

Interpretation: The analysis shows that konark cement is good in all but some of the activities like, tour, get together and CRM activities are good on Lafarge cement.

6.13. Packaging Quality of brands compared based on HDPE bags (customer preference)?

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA Interpretation:

Quality
24 39 6 0 12 3 3 0 6 TABLE-6.12
ACC 10% AMBUJA 5% KONARK 35% ULTRATEC H 18% JYPEE RAMCO 3% 2% MAHA RASI 5% 0%

LAFARGE 22%

ULTRATECH 21

CHART-6.23

This analysis shows that konark is having the highest percentage in terms of packaging quality about 35% and next good packaging brands are Lafarge and Ultratech which is having 22% and 18%. But in case of LP packings ACC F2R is on top most followed by Lafarge concerto.

6.14. Quick delivery system?

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA

Preference
33 36 3 0 9 3 3 3 9 TABLE-6.13

JYPEE RASI MAHA RAMCO 2% 1% 7% 2%

LAFARGE 26% ULTRATECH 21%

ULTRATECH 24
ACC 7% KONARK 30% AMBUJA 3%

CHART-6.24

Interpretation: This analysis shows that konark is delivering faster and then Lafarge because there stockyard is nearer than any other brand on market.

6.15. Rank the brands which satisfy most on damage claim settlement?

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA

Preference
36 27 6 0 12 3 3 3 9 TABLE-6.14

RASI JYPEE 1% 3% RAMCO 2%

MAHA 8% LAFARGE 29%

ULTRATECH 21

ULTRATEC H 19% ACC 9% KONARK 24%

AMBUJA 5%

CHART-6.25

Interpretation: This analysis shows that Lafarge and Ultratech give damage claim settlement faster than other brands which is about 14%.

6.16. Small quantity supply directly to customers faster (100 bags)?

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA

Preference
30 30 6 3 12 3 3 0 6 TABLE-6.15

RAMCO JYPEE MAHA 2% 2% 6%

LAFARGE 26% ULTRATECH 22%

ULTRATECH 24
ACC 9% BIRLA 1% KONARK 27% AMBUJA 5%

CHART-6.26

Interpretation: This analysis shows nearly about all big brands give faster delivery service to customers. After placing order with in 36hrs the order is delivered to customer. Konark is faster because factory is nearby bhubneshwar if less amount of cement is available on depot then they arrange it from factory. Ultratech sometimes gives slower service because on seasons the stock is less on depot. 6.17. The incentive schemes which satisfy dealer most eg: gold, tour etc.?

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA

Incentive
24 27 6 0 9 6 1 0 18 TABLE-6.16
RASI JYPEE 1% 2% RAMCO 6% ULTRATEC H 17% ACC 8% AMBUJA 6% MAHA 15% LAFARGE 21%

ULTRATECH 18

KONARK 24%

CHART-6.27

Interpretation: This analysis shows that konark give good incentive schemes to dealers. Where new entrants maha, rasi and ramco are giving very lucrative incentive schemes to capture the market and increase their sales volume. 6.18. Timely distribution of informative test certificates and brochures for customers given by which brand (rank them).

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA

Preference
30 30 6 0 9 0 3 0 6 TABLE-6.17
ACC 8% ULTRATEC H 24% KONARK 26% AMBUJA 5% LAFARGE 26% JYPEE MAHA RAMCO 4% 6% 1%

ULTRATECH 27

Interpretation: This analysis shows that konark, Lafarge & Ultratech give periodic information to the customers and dealers. 6.19. The effective technical services team relating IHB visit, brand conversation ability and under win-win situation (rank them)?

CHART-6.28

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA

Preference
27 18 6 0 12 0 3 0 3 TABLE-6.18

JYPEE 2% MAHA 3%

LAFARGE 27%
ULTRATECH 32%

ULTRATECH 33
ACC 11% AMBUJA 6% KONARK 19%

CHART-6.29

Interpretation: Lafarge and Ultratech is having effective technical services team about 32% & 27% of customer and dealers use the benefit of technical services provided by the brands. Ultratech and Lafarge also provide mobile van for assistance of technical services.

6.20. Quarry handling service provided by the company to the customer that satisfies most (Rank them).

Brands
LAFARGE KONARK AMBUJA BIRLA ACC RAMCO JAYPEE RASI MAHA

After sales
33 27 6 0 12 3 3 0 6 TABLE-6.19
ACC 11% AMBUJA 5% KONARK 23% ULTRATECH 23% LAFARGE 28% JYPEE MAHA RAMCO 3% 5% 2%

ULTRATECH 27

CHART-6.30

Interpretation: After Quarry handling services provided by Lafarge is very good. Ultratech and konark also handle quarry better and help the dealers and customers to clarify their problem.

CHAPTER-7 PROJECT FINDINGS

7.1 SWOT Analysis

STRENGTH Bargaining power of the supplier is high because of few best sellers like: Lafarge, Acc ,Ultratech. Good brand image. Best quality product. On time delivery. Value for money. Regular visit by sales officer.

WEAKNESS High dependence on imported coal. Need to better sales promotion. Lack on technical services. Lack on handling customer complaint. Lack on handling damage claim settlement. The major concern for the industry are : Continuous increase in labour cost. Shortage of skilled labourers. Royalty for limestone mines is limited.

OPPORTUNITIES Cement demand increases as the economy grows. Increase on infrastructure development by the Indian government ex. BDA. Increase in demand for housing development like housing development. Despite slightly lower economic growth, the construction and infrastructure sector is expected to record healthy growth, which augurs well for cement industry. The modernization and productivity improvement leads to growth on cement industry.

THREATS Regulatory tightening for quarrying of limestone over environment issues. From the new entrant cement companies Like: Maha, Ramco, Rasi who offers low price and high margin. Production may be lower due to increase in price, freight, coal, and diesel.

7.2 FINDINGS
It can be concluded from the study that konark Cement has a good brand image in the dealers mind in Bhubneshwar. The company lack on technical services which can be improved by increasing efficiency level of technical team. 82% of dealers use to retailer. 50% of respondents monthly sales turnover is more than 200 tonnes. 60% of respondents having experience between 6-15 years. Konark Cement is the highest selling brand from counter and dealers also recommend konark cement to the customer. Personal visits by the sales officer of the company to support the dealers is very good but in some sub-dealers counters less frequency of visits made by sales officer. Earlier company was not doing any promotion activity but after doing the promotions the brands image is increasing in front of dealer and customer which is strengthening the companies brand image. Quality and packaging is very good but some of the dealers want the packaging should by LP packaging which will be ecofriendly and good packaging looks attractive to the customers. The company is providing on time damage claim settlement though in some cases company is slow on damage claim settlement. Incentive schemes of the company is good but schemes should me more due to cut trough competition in the market by the new entrants like, maha, rasi, & ramco. The technical service team is good but the team should be more efficient for better market hold on future. At par with Lafarge on quarry handling services should be more efficient.

7.3 SUGGESTION AND RECOMMENDATIONS I would humbly suggest the company that to improve the quality of cement on Kapilash Cement Works division as suggested by dealers. By increasing more advertisement, regular contact, marketing experts dealing with dealers in all rural and urban areas. The company can improve their market shares, brand loyalty and promote their sales easily. For customer care Services and technical services Company should start its concrete mobile van facilities. Non-Trade entry is growing rapidly so company should improve supply to capture maximum market share. Company should start its internal call centre for its valuable customers by which they can directly interact with company experts. Company can increase society welfare programs in rural area. By this company can enhance goodwill among people for future. By giving some gifts and best wishes cards to the customer that your buying decision is very good. Company can show that they are important to company. Company should organize seminars, conferences, contractors meetings time to time.

7.4

SUGGESTION FROM DEALERS A Price fluctuation creates problems for dealers and sub-dealers as they cannot keep the commitments of price to customers. On interviewing Dealers/sub-dealers the most important thing they said was about the price flexibility, they want that the company should give them the price flexibility to play in the market. The packaging should be LP bags which give the product more safety and The profit margin should be increased so that they can get more profit on selling the items.

7.5

FURTHER SCOPE AND LIMITATIONS

7.5.1 SCOPE OF THE STUDY Other than the objectives of the study some of the related factors were also covered in which some of them are. Fast moving brand of cement Dealers opinion on price fluctuation Opinion about promotional support Technical Support Customer survey. Branding of cement. These factors are given more importance while analyzing the market. Since the future phase was to be adopted after finding out the important factors relating to this market, sincere attempt is made to elicit the above informations.

7.5.2 LIMITATIONS OF THE STUDY The study was carried out in Bhubneshwar only, owing to time and cost limitations. Simple size which limited to 50 due to time and cost constrains it can be increased. This research was conducted among dealers and sub-dealers only for obtaining consumer response and dealer response; further survey among users of cement is suggested.

CHAPTER-8

CONCLUSION

CONCLUSION
To attain the objective of the project detailed information was collected from the market of Bhubaneshwar. The market research has revealed many facts and figures about the current scenario in the market prevailing. In the market, Konark cement is well known brand of cement. This is the result of the good quality of the Konark cement along with their effective marketing efforts, which covers the whole market. Customers of Lafarge cement are highly satisfied with the Quality, packaging, services, promotion etc. as they do not face any problem after using it. There are ten major players in the market but the major completion is between the three brands of cement konark, Lafarge, Ultratech. Were Ultratech is also providing good quality of cement and services to the dealers and customers. Because of good marketing efforts, Konark cement is able to grasp some share of various other brands also. The market survey undertaken shows that effective marketing efforts play a vital role in creating the goodwill for the brand. The distribution channel of cement industry must be well designed and made effective this ensures timely availability of cement to customers. Good marketing creates good image i.e. brand building. From the study it can be concluded that the overall satisfaction for Konark cement in good .Konark cement stands best a quality. Dealers are satisfied as per quality, channel of distribution, dealer sales support etc. But dealers are not satisfied on profit margin given by the company and also by the incentive schemes and technical support provided by the company.

BIBLOGRAPHY

 Kotler, Philip Marketing Management published by Vikas publishing house Pvt. ltd. New Delhi. Kothari, C. R. Research Methodology (third edition 2007) published by new age international (P) ltd. CMA Magazine (Cement Manufacturers Association). Aaker, D.A. and Shansby, J. (1982) Positioning your Product, Business Horizons, 25, (May/June), 56-62. Alden, D. L., Steenkamp, J. B. E. M. and Batra, R. (1999) Brand Positioning through Advertising in Asia, North America, and Europe: The Role of Global Consumer Culture, Journal of Marketing, 63 (January), 75-87. Best, R.J. (2004) Market-Based Management: Strategies for Growing Customer Value and Profitability, 3rd Edition, Upper Saddle River, NJ, Prentice-Hall, 246267. Bhat, S. and Reddy, S. K. (1998) Symbolic and Functional Positioning of Brands,Journal of Consumer Marketing 15, (1), 32-43. Blankson, C. and Kalafatis, S. P. (2001) The Development of a Consumer/Customer- Derived Generic Typology of Positioning Strategies, Journal of Marketing Theory and Practice, 9 (2), (Spring), 35-53. Crawford, C. M. (1985) A New Positioning Typology, Journal of Product Innovation Management, 4 243-253. News Papers Times of India Hindustan Times Economic Times Web Based References http://www.oclindia.com http://www.cma.com http://www.scribd.com http://www.amzon.com http://www.wikipedia.com

ANNEXURES-4

QUESTIONNAIRE
DEALER SATISFACTION ON CEMENT INDUSTRY UNDER BHUBANESWAR REGION

Personal data: Dealer Name: Place of Business: Address: Mobile No.: Age Educational Level <35yrs Below Pre degree 35-45yrs UG > 45yrs PG

Part A -----------------------------------------------------------------------------------------------1. What is the nature of your shop? a. Retail(>60%) b. Whole Sale(>40%) Less than 50 tons 50-100 tons 100-200 tons 200-400 tons 2. How much quantity of cement you sell per month? 3. Since how many years you are in this business? a. Less than 5 years b. 6 15 years c. More than 15 years Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

4. Which brand is highest sold form your counter (customer pull)? 5. Rank the factor affecting the highest selling brand? Factors Quality Price Brand Image Margin Customer Demand 5 4 3 2 1

Part B (Rank 1-10) ---------------------------------------------------------------------------------------------Rank the following brand:1. Which brand do you (dealer) prefer the most? Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

Brands Ranks

2. Ranking of the frequency of making personal visits SO for inspiration and support? Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi

Maha

3. How much credit (in days) do you enjoy from the stockiest of following brands? Ambuja Birla Acc Ultratech Ramco Jypee Brands Lafarge Konark days

Rasi

Maha

4 .What is the Profit margin you get by selling the brands (Inclusive annually cash benefit)? Brands Rs. Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

5. Rank the brands on the basis of their availability throughout the year mainly on seasons? Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

6. Rank the various brands on the basis of their effective promotional activities? Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

7. According to you which brand have most effective method of sales promotion? Lafarge Dealer meet and Training Tour Get together Special Schemes Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

Award Programs Advertisement Incentive Schemes CRM Activities 8. Please rate in terms of Quality and packaging of brands customer prefer? Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

9. Rank on the basis of quick delivery system (100 bags)? Ambuja Birla Acc Ultratech Brands Lafarge Konark Ranks

Ramco

Jypee

Rasi

Maha

10. Rank the brands which satisfy most on damage claim settlement? Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

11. Rank the brands which supports on small quantity supply directly to customers faster? Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

12. Rank on the basis of the brands incentive schemes which satisfy you most? Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

13. Rank the brands which give Test certificates and vouchers for customers about different grades and quality standards periodically? Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

14. On the basis of the effective technical services team of IHB visit, brand conversation ability or redressal of customer complaints? Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

15. Rank the brands after sale service satisfy you most? Brands Ranks Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

16. Any suggestion you would like to make for the brands?

Brands Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jaypee Rasi Maha

Suggestion