A COMPREHENSIVE PROJECT REPORT ON A STUDY ON CEMENT INDUSTRY WITH SPECIAL REFERENCE TO ULTRATECH CEMENT LIMITED & STATUS OF CEMENT

IN INDIA

Submitted to
C K SHAH VIJAPURWALA INSTITUTE OF MANAGEMENT

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION Under

Gujarat Technological University

UNDER THE GUIDANCE OF Faculty Guide Mr.Prakash Patel Submitted by GUNJAN SHAH-097050592027 KRUNAL SHAH-097050592051 M.B.A SEMESTER IV C K Shah Vijapurwala Institute of Management M.B.A PROGRAMME Affiliated to Gujarat Technological University Ahmedabad April 2011
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PREFACE The cement industry today is one of the most lucrative industries. Further, due to increase in income of people and era of urbanization, demand for infrastructure is increasing. Many people have desire of their dream house. As a result, demand for cement is also increasing. There are various branded companies like J.K.cement, Ambuja cement, Ultra Tech cement, ACC cement, which provides cement of good quality. Various others small players and foreign players are coming to India to compete at International level. This is indicates positive sign for a country.

This report is categorized into parts, deals with introduction of cement industry in India, players of cement industry (domestic as well as foreign players), attractiveness of cement market, and types of cement, factors affecting demand of cement in India, key issues and trends in cement sector.

It also includes company study of Ultra Tech cement. This part includes introduction to company, product profile of company, and information of various functional departments of company.

In todays globalize world, where cutthroat competition is prevailing in the market, theoretical knowledge is not sufficient. Beside this one need to have practical knowledge, which would help an individual in his/her carrier activities and it is true that Experience is the best teacher.

ACKNOWLEDGEMENT
We, student of management college studying in M.B.A (fourth semester), in C.K.SHAH VIJAPURWALA INSTITUTE OF MANAGEMENT, felt a great pleasure to prepare this comprehensive project report at this stage, which is come out of all efforts of us and many others who help us throughout the preparation of report. We are glad to represent this report in front of you. We hope that you will acknowledge this report.

We express our profound sense of gratitude in all its humbleness to our guide for their flawless guidance and constructive criticism throughout our project report. We owe a debt of gratitude especially to those people, who provided us an opportunity directly or indirectly to gain such knowledge. We are also very thankful to Mr. Prakash Patel, who has provided us such a flawless beautiful guidance.

We

are

very

thankful

to

C.K.SHAH

VIJAPURWALA

INSTITUTE

OF

MANAGEMENT for giving us such an opportunity and industrial exposure .

DECLARATION
We, Gunjan Shah and Krunal Shah, hereby declare that the report for Comprehensive Project entitled A STUDY ON CEMENT INDUSTRY WITH SPECIAL REFERENCE TO ULTRATECH CEMENT LIMITED & STATUS OF CEMENT IN INDIA is a result of our own work and our indebtedness to other work publications, references, if any, have been duly acknowledged.

Place: Vadodara Date: 28/04/2011

Gunjan Shah Krunal Shah

EXECUTIVE SUMMARY
This project contains bird view about global cement industry, details of Indian cement industry, details about Ultra Tech cement and status of cement in India.

In section of Indian cement industry, we have put details about introduction, history, major domestic and global cement players, various types of cement, various demand determination of cement industry, key issues and analysis of cement sector. Moreover, we have taken Ultra Tech cement Limited for our company study. It contains details like introduction, company profile of Ultra Tech cement, product profile of company, and also details about various functional department of Ultra Tech cement.

In addition to study of cement industry and company study of Ultra Tech cement, we have done some brief secondary research. The purpose of secondary research is to know the status of cement in India. We have used secondary source to support and use as data from various websites and Wikipedia.

This project gave us idea about how demand and supply of cement in future. This project taught us how we can use secondary data and relate it to find out any details.

TABLE OF CONTENTS
CHAPTER NO 1 1.1 1.1.1 1.1.2 1.1.3 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 INDUSTRY INTRODUCTION INTRODUCTION Global cement industry Indian cement industry Structure Of Cement Industry INDUSTRY BACKGROUND COMPOSITION OF CEMENT WHY TO USE CEMENT? CEMENT MANUFACTURING PROCESS PRODUCT PROFILE MAJOR DOMESTIC PLAYERS IN INDUSTRY FOREIGN PLAYERS IN INDUSTRY MARKET SEGMENTATION 2008-09 DEMAND DETERMINATIONS OF INDUSTRY DISTRIBUTION CHANNEL OF INDUSTRY KEY ISSUES AND CURRENT TRENDS PEST ANALYSIS MICHEAL PORTER 5 FORCE MODEL SWOT ANALYSIS FUTURE OUTLOOK PARICULARS PAGE NO. 10 11 11 13 15 16 19 19 20 24 27 35 42 45 50 52 54 55 57 58

COMPANY STUDY OF ULTRA TECH CEMENT

61

2.1 2.2 2.3 2.3.1

COMPANY PROFILE PRODUCT PROFILE FUNCTIONAL DEPARTMENTS Production Department

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62 66 68 68

2.3.2 2.3.3 2.3.4 2.4 2.5

Marketing Department Human Resource Department Finance Department SWOT ANALYSIS OF ULTRA TECH CEMENT FUTURE OUTLOOK OF ULTRA TECH CEMENT

74 77 82 86 87

3 3.1 3.2 3.3

RESEARCH METHODOLOGY RESEARCH OBJECTIVES RESEARCH APPROACH DATA COLLECTION

88 89 89 89

4 4.1

DATA ANALYSIS TOTAL CONSUMPTION OF CEMENT IN INDIA

90 91

4.2 4.3. 4.4 4.5

DEMAND FORECAST FOR NEXT 5 YEARS TOTAL SUPPLY OF CEMENT IN INDIA SUPPLY- DEMEAND GAP IN INDUSTRY DEMAND-SUPPLY MATRIX WITH CAPACITY UTILIZATION

92 93 93 95

5 5.1 5.2

FINDINGS RESEARCH FINDINGS INDUSTRY FINDINGS

96 97 97

LIMITATIONS CONCLUSIONS REFERENCES

99 100 101

LIST OF TABLES
TABLE NO. 1 2 PARTICULARS PRESENT STATUS OF TECHNOLOGY MARKET SHARE OF MAJOR PLAYERS IN INDIA 2008-09 3 VARIOUS CEMENT PLANTS WITH IN INDIA ITS INSTALLED CAPACITY 4 REGIONAL SHARE OF INSTALLED CAPACITY 5 CUSTOM DUTY ON CEMENT AS PER BUDGET 2011-12 6 EXCISE DUTY ON CEMENT AS PER BUDGET 2011-12 7 8 TRENDS OF COMPANY OVER THE YEARS STRATEGIC BRANCH UNITS OF THE COMPANY IN INDIA 9 10 11 12 13 PROFIT & LOSS ACCOUNT OF ULTRA TECH CAH FLOW STATEMENT OF ULTRA TECH BALANCE-SHEET OF ULTRA TECH RATIO ANALYSIS OF ULTRA TECH CEMENT TOTAL CONSUMPTION OF CEMENT IN INDIA 14 DEMAND FORECAST WITH AVERAGE GROWTH RATE FOR NEXT 5 YEARS 15 16 SUPPLY- DEMEAND GAP IN INDUSTRY DEMAND-SUPPLY MATRIX WITH CAPACITY UTILIZATION 93 95 92 82 83 84 85 91 68 69 49 49 44 39 PAGE NO. 22 38

LIST OF GRAPHS GRAPH NO. 1 2 3 4 5 PARTICULARS Market Share Of Major Players In India 2008-09 Regional Share Of Installed Capacity Total Consumption Of Cement In India Demand Forecast For Next 5 Years Supply- Demand Gap In Industry PAGE NO. 38 44 91 92 94

LIST OF FIGURES FIGURE NO. 1 2 3 4 5 6 PARTICULARS Market Segmentation 2008-09 Michael Porter 5 Force Model SWOT Analysis Manufacturing Process Of Cement Product Mix Of Ultra Tech Cement SWOT Analysis Of Ultra Tech Cement PAGE NO. 42 56 57 71 74 86

CHAPTER 1: INDUSTRY INTRODUCTION

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1.1. INTRODUCTION 1.1.1. GLOBAL CEMENT INDSTRY Recent years have seen the cement industry grow dynamically with most of the actions taking place in emerging economies. Despite the ongoing financial crisis the global economy is facing, the need for housing and continued government investments in infrastructure development by emerging economies is offsetting downturn in mature markets. Though, at present, demand is growing, but at a decelerated pace, the phase is momentary. Long-term projections indicate healthy demand growths, as world economy stabilizes and construction activity picks up across global markets into the next decade. China, followed by India, United States, Japan and Russia, represent the largest producers and consumers of cement worldwide. Other countries featuring prominently on the global cement space include Spain, South Korea, Italy, Iran, Turkey, and Brazil. Significant capacity expansions in China, India, Saudi Arabia, UAE, Turkey, Egypt, and Brazil are underway and planned for the next few years.

Portland cement is the most widely consumed cement variety worldwide. Sales of straight Portland cement, which currently accounts for more than 3-quarters of all cement demand worldwide, will be less robust but still healthy, benefiting from continued growth in construction spending worldwide and further advances in manufacturing technology. The largest geographic market is Asia-Pacific, and the fastest growth is forecast to take place in the Middle East & Africa and AsiaPacific markets. In fact, China alone consumes more than half the global Portland cement. Blended cement, the less environment polluting varieties, would see demand grow in the next few years, as their favorable environmental profile and excellent performance wins end-user interest. Again Asia-Pacific represents the largest geographic market, though share of Europe also stands out.

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In terms of market, China remains the largest regional market, where Construction Contractors, followed by Concrete Products Producers represent the largest markets for cement. The fastest growing market, however, would be Ready-mix Concrete Producers, as they benefit from ban imposed by the Chinese government on mortar and concrete mixing at construction sites. Meanwhile, the second largest regional market, India, would see cement demand advance the fastest for the Ready-mix Concrete Producers market. Though demand from Consumers, the largest cement market, would continue to grow, it would lose share to Ready-mix Concrete Producers and Concrete Products Producers markets.

Cement Is a Cyclical Industry, in Which Growth Interspersed by Shorter periods of Decline. Over recent decades, different geographical markets have experienced different cycles, meaning that is comparatively rare for their periods of decline to coincide. This also means that as a rule the number of markets in growth at any one time will exceed those in decline.

The global marketplace is characterized by participants such as Lafarge (France), Holcim (Switzerland), Cemex (Mexico), Heidelberg Cement (Germany) and Italcementi (Italy), which represent the five leading manufacturers of cement. Other international cement makers include Buzzi Unicem (Italy), Cimpor (Portugal), CRH (Ireland), Votorantim Cimentos (Brazil), Sumitomo Osaka Cement (Japan), Taiheiyo Cement (Japan), and Anhui Conch (China). Other leading regional market leaders include: Anhui Conch, China Shanshui, China National Building Material, and Tangshan Jidong in China; and ACC, Ambuja Cement, Grasim, UltraTech, and India Cements in India.

The key growth drivers for cement consumption are population growth (increasing demand for housing, commercial building and infrastructure) and economic growth (driving up the consumption of cement per capita). Rapid
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urbanization and the booming infrastructure have lead to an increase in construction and development across India, attracting even the global players. Cement is a global industry made up of local markets. When a product is both heavy and cheap, transaction costs become a key factor in determining its profitability, so cement plants need to be close to customers. This is a why global cement industry leaders are seeking to be present in as many local markets as they can, resulting in the growing dominance of the industry by its largest business according to the leading manufacturer of cement production equipment in the world, FLSmidth, world cement consumption is set to price on average between 3.6% and 4.8% per year in the coming years.

1.1.2 INDIAN CEMENT INDUSTRY India is fast emerging on the world map as a strong economy and a global power. The country is going through a phase of rapid development and growth. All the vital industries and sectors of the country are registering growth and thus, luring investors. And cement industry is one of them.

India is the worlds second largest cement producer after china, accounting for about 6% of the worlds production. Annual per -capita consumption of India is around 156 Kg, which is much lower than the global average of 396 Kg. Cement is one of the core Industries, which plays a vital role in the growth of the nation. Limestone and coal being the basic material s of cement manufacturing, India has the requisite quantity of cement grade limestone deposits, backed by adverse reserves of coal. India also has the requisite technical expertise to produce best quality of cement with the most energy efficient processes. Many Indian companies have attained high levels of energy efficiency in their plants, which are comparable to international benchmarks.

The cement industry is one of the main beneficiaries of the infrastructure boom. With robust demand and adequate supply, the industry has bright future. The Indian Cement Industry with total capacity of 166.75 million tones is the second
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largest after China. Private housing sector is the major consumer of cement (53%) followed by the government infrastructure sector.

For a variety of applications, various types and grades of cement are used. The most common types of cement are Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC) and Portland Slag Cement (PSC). Indian cement industry produces various types of cements such as OPC, PPC, Portland Blast Furnace Slag Cement (PBFSC) or PSC, oil-well cement, rapid hardening - Portland cement, sulphate - resisting Portland cement & white cement.

The Indian cement industry has continued its growth trajectory over the past ten years. Domestic cement demand growth has surpassed the economic growth rate for the past three years.

The key drivers for cement demand are real estate sector, infrastructure and industry expansion projects. Among these real estate sector is the key driver of cement demand. The demand for cement is closely related to the growth in the construction sector. Consequently, cement demand has been posting a healthy growth rate of around 8 per cent since 1997-98, propelled by the increased thrust on infrastructure development, and the higher demand from the housing sector and industrial projects.

Cement is bulky commodity and cannot be easily transported over long distances making it a regional market place, with the nation being divided into five regions. Each region is characterized by its own demand-supply dynamics. Over the past few years the cost of cement production has grown at a CAGR of 8.4%.

With increase in infrastructure development activity with projects such as state and national highways, and global demand has led Indian cement industry to

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increase their production capacity. This in turn has attracted the top cement companies in the world to enter the Indian market and take the advantage of growth in demand.

The cement sector continues to emphasize on cost cutting through enhanced productivity, reduction in energy costs and logistic expenses.

The government has considered spending more than US $500 billion on infrastructure in the 11th five year plan. Apart from this railways, urban infrastructure, ports, airports, IT sector, organized retailing, malls and multiplexes will be the main sectors driving the demand of cement in the country. So we can see that cement industry is moving towards both challenges and opportunities poised by the presence of domestic and global players in the Indian market. This trend is likely to continue in the coming years.

1.1.3. STRUCTURE OF CEMENT INDUSTRY It is a fragmented industry. There are 56 cement companies in India, operating 142 large and 365 mini plants, where majority of production of cement 94% in the country is by large plants.

One of the other defining features of the Indian cement industry is that the location of limestone reserves in select states has resulted in its evolving in the form of clusters.

Since cement is a high bulk and low value commodity, competition is also localized because the cost of transportation of cement to distant markets often results in the product being uncompetitive in those markets.

Another distinguishing characteristic comes from it being cyclical in nature as the market and consumption is closely linked to economic and cyclical
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cycles. In India, cement Production is normally at its peak in the month of March. While it is at its lowest in the month of August and September. The cyclical nature of this industry has mean that only large players are able to withstand the downturn in demand due to their economies of scale, operational efficiencies, centrally controlled distribution systems and geographical diversification.

1.2. INDUSTRY BACKGROUND Finally it was in 1914 that the first licensed cement manufacturing unit was set up by Pre Independence.

Pre Independence The first endeavor to manufacture cement dates back to 1889 when a Calcutta based company endeavored to manufacture cement from Argillaceous (kankar).

But the first endeavor to manufacture cement in an organized way commenced in Madras. South India Industries Limited began manufacture of Portland cement in 1904.But the effort did not succeed and the company had to halt production. India Cement Company Ltd at Porbandar, Gujarat with an available capacity of 10,000 tons and production of 1000 installed. The First World War gave the impetus to the cement industry still in its initial stages. The following decade saw tremendous progress in terms of manufacturing units, installed capacity and production. This phase is also referred to as the Nascent Stage of Indian Cement Industry.

In 1927, the Concrete Association of India was formed with the twin goals of creating a positive awareness among the public of the utility of cement and to propagate cement consumption.

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Post Independence The growth rate of cement was slow around the period after independence due to various factors like low prices, slow growth in additional capacity and rising cost. The government intervened several times to boost the industry, by increasing prices and providing financial incentives. But it had little impact on the industry.

In 1956, the price and distribution control system was set up to ensure fair prices for both the manufacturers and consumers across the country and to reduce regional imbalances and reach self sufficiency.

Period of Restriction (1969-1982) The cement industry in India was severely restrained by the government during this period. Government hold over the industry was through both direct and indirect means. Government intervened directly by exercising authority over production, capacity and distribution of cement and it intervened indirectly through price control.

In 1977 the government authorized higher prices for cement manufactured by new units or through capacity increase in existing units. But still the growth rate was below par.

In 1979 the government introduced a three tier price system. Prices were different for cement produced in low, medium and high cost plants.

However the price control did not have the desired effect. Rise in input cost, reduced profit margins meant the manufacturers could not allocate funds for increase in capacity.

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Partial Control (1982-1989) To give impetus to the cement industry, the Government of India introduced a quota system in 1982.A quota of 66.60% was imposed for sales to Government and small real estate developers. For new units and sick units a lower quota at 50% was affected. The remaining 33.40% was allowed to be sold in the open market.

These changes had a desired effect on the industry. Profitability of the manufacturers increased substantially, but the rising input cost was a cause for concern.

Post Liberalization In 1989 the cement industry was given complete freedom, to gear it up to meet the challenges of free market competition due to the impending policy of liberalization. In 1991 the industry was de licensed.

This resulted in an accelerated growth for the industry and availability of state of the art technology for modernization. Most of the major players invested heavily for capacity expansion.

To maximize the opportunity available in the form of global markets, the industry laid greater focus on exports. The role of the government has been extremely crucial in the growth of the industry.

Indian cement industry is globally competitive because the industry has witnessed healthy trends such as cost control and continuous technology up gradation.

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1.3. COMPOSITION OF CEMENT Cement is a mixture of compounds, consisting mainly of silicates and aluminates of calcium, formed out of calcium oxide, silica, aluminum oxide and iron oxide. Cement is manufactured by burning a mixture of limestone and clay at high temperatures in a kiln, and then finely grinding the resulting clinker along with gypsum. It is a fine powder which when mixed with water sets to a hard mass as a result of hydration of the constituent compounds. It is the most commonly used construction material. The end product thus obtained is called Ordinary Portland Cement (OPC).

1.4. WHY TO USE CEMENT? After food and clothing, shelter is the next priority item for humans. Since its evolution, mankind had been pursuing a relentless search for viable building materials for securing a stable shelter. The history of mankind traced through its ancient civilizations and the track record of the past two millennia will show that Man had been using different types of materials for putting up dwelling to provide him shelter from sun, rain and wind and a home for his family. The building materials used from Stone Age to the Bronze Age in the progressive march of human civilization ranged from stone or wood, cemented with mud or any other naturally occurring cementing materials (volcanic ash - Pozzolana of Italy, natural tuff- Trass of Germany, diatomaceous earth and many others in different countries), to semi-processed materials like lime, burnt clay. With the march of civilization, better binding materials like plastic clay, lime in combination with natural gypsum or in combination with sand (lime mortar), burnt clay (surkhi), burnt gypsum (plaster of Paris) and powdered naturally occurring rocks like volcanic ash came to be used in different places. But all these binding materials were not adequate to provide high strength and long-term durability in constructions.

The invention of Portland cement brought about a landmark change and provided a satisfactory answer to mankind's quest for a strong and durable binder for
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constructions. The patent on Portland cement by Joseph Aspadin in 1824 and subsequent developments have resulted in the cements as we know today. Indeed from the latter half of the 19th century, Portland cement has emerged as a leading binding material and continues to enjoy its pre-eminent position amongst the various cementing materials to this day. Cement ranks second in volume among the industrial products manufactured in the world. The presence of Portland cement as binding material led to the development of plain cement concrete (PCC) and subsequently reinforced cement concrete (RCC). It now became possible to construct high-rise buildings, sky scrapers, large dams, reservoirs with less consumption of building materials and much higher strength. The use of RCC became very popular from the beginning of 20th century. The advent of concrete, especially reinforced concrete, significantly replaced traditional construction materials, such as steel, stone, wood and bricks. This had made concrete the most widely used man-made product and second only to water as the world's most heavily consumed substance. The widespread use of concrete boosted cement demand spectacularly throughout the world during the last one hundred years. This in turn led to innovations in the manufacturing technology, storage, handling and distribution techniques, not to speak of the utilization of cement, thus giving birth to the modern cement and construction industries

1.5. CEMENT MANUFACTURING PROCESS Cement production involves the chemical combination of calcium carbonate (limestone), silica, alumina, iron ore and small amounts of other materials. Cement is produced by burning limestone to make clinker and the clinker is blended with additives and then finely ground to produce different cement types. Desired physical and chemical properties of cement can be obtained by changing the percentages of the basic chemical components.

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Cement is manufactured from Limestone and involves the following unit operations: Mining Crushing Raw meal grinding Pyro-processing Cement grinding Packing & dispatch Raw Materials Preparation Raw material preparation involves crushing of the quarried material, further raw grinding and blending the materials. The specific electrical energy consumption in raw materials preparation accounts for a significant part of overall electrical energy consumption.

Mining The major raw material for cement manufacture is limestone, which is mined in open cast mines in the quarry and then transported to the crusher.

Crushing The mined limestone is conveyed to the crusher through dumpers/ropeways/belt conveyors. The material is then crushed in the crusher to a size of about 25-75 mm. The crushing is done in two stages in the older plants while in the modern plants normally single stage crushing is done. The typical crushers used are jaw Crusher and hammer crusher.

Raw meal grinding The crushed limestone is grounded into fine powder in the dry condition. The Vertical Roller Mill (VRM) is comparatively more energy efficient than ball mill

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consuming only 65% of the energy consumption of the ball mill. The ball mill along with a pre-grinding system such as roll press is also used in some of the plants with very hard and abrasive limestone.

Pyro-processing This takes place in the kiln system. The kiln is a major consumer of both the electrical and thermal energy in a cement plant. The calcinations of limestone and the conversion into clinker takes place in the precalciner and kiln respectively.

Cement grinding The clinker which is produced in the kiln is then grounded along with about 5% Gypsum to produce OPC. Ball mills have been generally used for grinding in cement plants in India either alone or in combination with roller press systems. In some of the recently installed plants, the VRM has been installed. The other types of cement such as PPC and PSC are also produced by grinding clinker with fly-ash and blast furnace slag respectively.

Table 1: PRESENT STATUS OF TECHNOLOGY

Stage Low Technology Plants Mining & Material Handling Crushing Two stage Single stage In-pit crushing & conveying Grinding Ball Mills with / without conventional classifier VRMs Roll Presses with dynamic classifier VRMs, Roll Presses, Horo Mills with dynamic classifier Conventional Computer aided Computer aided Modern Plants Global Technology

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Pyro Processing -

Wet Semi Dry - 4 stage preheater -Conventional cooler -Single channel burner

Dry - 5/6 stage preheater - High Efficiency Cooler - Multi Channel Burner

Dry - 6 stage preheater - High Efficiency Cooler - Multi Channel Burner - Co-processing of WDF - Co-generation of power - Low NO /SO
x 2

emission technologies Blending & Storage Batch-Blending Silos Continuous Blending silos - Continuous Blending - Multi-Chamber Silos - Dome silos Packing & Dispatch Bag - Bag - Bulk - Bulk - Palletizing & Shrink Wrapping Process Control Relay Logic / Hard Wired / PLC - DDC - DDC - Neurofuzzy expert system 6000-12000

- Fuzzy Logic expert system

Plant Size, TPD

300-1800

3000-6000

SOURCE: CENTRE FOR MINING, ENVIRONMENT, PLANT ENGINEERING & OPERATION

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1.6. PRODUCT PROFILE There are different varieties of cement based on different compositions according to specific end uses namely Ordinary Portland Cement, Portland Pozzolana Cement, Portland Blast Furnace Slag Cement, White Cement and Specialized Cement. The basic difference lies in the percentage of clinker used.

Ordinary Portland cement (OPC) OPC, popularly known as grey cement, has 95% clinker and 5% of gypsum and other materials. It accounts for 70% of the total consumption. White cement is a variation of OPC and is used for decorative purposes like rendering of walls, flooring etc. It contains a very low proportion of iron oxide.

(i)OPC 43 Grade Cement It is known for Long-Lasting Strength for Years. It is high grade cement with a consistent 28 days compressive strength of the order of 60 to Mpa. Greater cement leads to better workability for given water content, resulting in cohesive concrete. It ensures dense, homogeneous, impervious & watertight concrete. It increases life of structure not only by high strength, but also by provides adequate durability.

(ii)OPC 53 Grade Cement This is an Ordinary Portland Cement which surpasses the requirements of IS: 12269-53 Grade. It is produced from high quality clinker ground with high purity gypsum. 53 Grade OPC provides high strength and durability to structures because of its optimum particle size distribution, superior crystalline structure and balanced phase composition. Portland Pozzolana Cement (PPC) PPC has 80% clinker, 15% Pozzolana and 5% gypsum and accounts for 18% of the total cement consumption. Pozzolana has siliceous and aluminous materials that do not possess cementing properties but develop these properties in the presence of water. It is cheaply manufactured because it uses fly ash/burnt
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clay/coal waste as the main ingredient. It has a lower heat of hydration, which helps in preventing cracks where large volumes are being cast.

Portland Blast Furnace Slag Cement (PBFSC) PBFSC consists of 45% clinker, 50% blast furnace slag and 5% gypsum and accounts for 10% of the total cement consumed. It has a heat of hydration even lower than PPC and is generally used in construction of dams and similar massive constructions.

White Cement Basically, it is OPC: clinker using fuel oil (instead of coal) and with iron oxide content below 0.4% to ensure whiteness. Special cooling technique is used. It is used to enhance aesthetic value, in tiles and for flooring. White cement is much more expensive than grey cement.

Specialized Cement There are two types of specialized cement.

(i)Oil Well Cement It is made from clinker with special additives to prevent any porosity.

(ii)Rapid Hardening Portland cement It is similar to OPC, except that it is ground much finer, so that on casting, the compressible strength increases rapidly.

Water Proof Cement It is one type of OPC, with small portion of calcium stearate or non-saponifibale oil to impart waterproofing properties.

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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.

Sulphate Resisting Portland cement (SRC) It is a type of Portland cement in which the quantity of tricalcium aluminates is less than 5%. It can be used for purposes wherever Portland Pozzolana Cement, Slag Cement, and Ordinary Portland Cement are used. The use of Portland Sulphate Resisting Cement has proved beneficial, particularly in conditions where there is a risk of damage to the concrete from sulphate attack. The use of Sulphate Resisting Portland Cement is recommended in places where the concrete is in contact with the soil, ground water, exposed to seacoast, and sea water. In all these conditions, the concrete is exposed to attack from sulphates that are present in excessive amounts, which damage the structure. This is the reason that the use of the Sulphate Resisting Portland Cement have increased in India.

The various uses of Sulphate Resisting Portland Cement are:

Underground and basements structures Works in coastal areas Piles and foundations Water and sewage treatment plants Sugar, chemical, and fertilizers factories Petrochemical and food processing industries

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1.7. MAJOR PLAYERS OF INDUSTRY Following are the major players of cement industry in India. Let us take view of them. ACC Limited

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, 20 sales offices, and several zonal offices. It has a workforce of about 10,000 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 made significant contributions to the nation building process by way of quality products, services and sharing expertise. Its commitment to sustainable development, its high ethical standards in business dealings and its on-going efforts in community welfare programmers have won it acclaim as a responsible corporate citizen. ACCs brand name is synonymous with cement and enjoys a high level of equity in the Indian market. It is the only cement company that figures in the list of Consumer Super Brands of India.

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Gujarat Ambuja Cements Ltd.

Ambuja Cements Limited, formerly known as Gujarat Ambuja Limited is a major Cement producing company in India. The Group's principal activity is to manufacture and market cement and clinker for both domestic and export markets.

The company has entered into a strategic partnership with Holcim, the second largest cement manufacturer in the world. Holcim had, in January, bought a 14.8 per cent promoters` stake in the GACL for INR 21.4 billion.

The Joint Venture between the public sector Gujarat Industrial Investment Corporation (GIIC) and Narottam Sekhsaria & Associates was the reason for confinement of the company. The company was incorporated in the year 1981 as Ambuja Cements Private Ltd and it was rehabilitated into a public limited company on 19th March 1983 as Gujarat Ambuja Cements Ltd, cement production is the role of the company in nature and a cost efficient cement manufacturer in the country. It is a National Quality ISO 9002 certified company, the only cement company have this so. It's also the first to receive the same and also have ISO 14000 Certification for environmental systems.

The company's most distinctive attribute, however, is its approach to the business. Ambuja follows a unique homegrown philosophy of giving people the authority to set their own targets, and the freedom to achieve their goals. This simple vision has created an environment where there are no limits to

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excellence, no limits to efficiency, and has proved to be a powerful engine of growth for the company.

As a result, Ambuja is the most profitable cement company in India, and one of the lowest cost producers of cement in the world.

JK Cements

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

Ultra Tech Cement Limited

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UltraTech Cement Limited, a Grasim subsidiary was incorporated in 24th August 2000 as L&T Cement Limited, has an annual capacity of 17 million tones. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzolana Cement. As part of the eighth biggest cement manufacturer in the world, UltraTech Cement has five integrated plants, five grinding units as well as three terminals of its own (one overseas, in Colombo, Sri Lanka). All the plants have ISO 9001 certification, and all but one have ISO 14001 certification, while two of the plants have already received OSHAS 18001 certification. The export market comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. Export is a thrust area in the company's strategy for growth.

Grasim acquired management control in July 2004 and the name of the company was changed to UltraTech Cement Limited with in 14th October 2004. The Company enhanced its capacity utilization across its plants. Cement is an energy intensive industry with coal and power being the major cost contributors. Use of alternative fuels auctioned, while over Rs.600 Crore has been committed for the installation of captive power plants throughout the year 2004-05. Narmada Cement Company Limited (NCCL) was amalgamated with the company in May of the year 2006. UltraTech subsidiaries are Dakshin Cement Limited and UltraTechCeylinco (P) Limited.

The India Cements Ltd

India Cements is the largest cement producer in southern India with a total capacity of 8.81 million tones and plants in Andhra Pradesh and Tamil Nadu. Its product portfolio includes ordinary Portland cement and blended cement. The
30

company has limited its business activity to cement, though it has a marginal exposure to the shipping business. The company plans to reduce its manpower significantly and exit non-core businesses to turnaround its fortune. It also expects the export market to open up, with the Gulf emerging as a major importer.

Jaiprakash Associates Limited

Jaiprakash Industries, now known as Jaiprakash Associates Limited (JAL) is part of the Jaypee group with businesses in civil engineering, hospitality, cement, hydropower, design consultancy and IT. It has an annual capacity of 4.6 million tones with plants located in Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar Pradesh). The company is upgrading its capacity 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.

Binani Cement Ltd

31

Binani Cement Limited is the flagship subsidiary of Binani Industries Limited (BIL), representing the Braj Binani Group. The cement business started operations in 1997, in Sirohi District, Rajasthan with a 1.65 MTPA integrated cement facility and a 25 MW captive power plant with technological support from F. L. Smidth, Denmark and Larsen & Toubro Ltd. The capacity was raised to 2.25 MTPA in 2005 through advanced in-house R&D and de-bottlenecking and the Company was also certified to ISO 9001, ISO 14001 and OHSAS 18001 within a short span from commencement of operation. This is an achievement that clearly illustrates the management's commitment to quality, efficiency, environment, health and safety. In 2008, a split-grinding unit at Neem Ka Thana was commissioned, boosting the capacity in India to 6.25 MTPA. Today, Binani Cement has established itself as one of the top companies in the industry in terms of efficiency and performance. What truly sets Binani Cement apart is its clear focus on the core attributes of quality, strength and reliability of the end product. These have paid rich dividends and seen brand 'Binani' growing in prominence and stature, poised to capture increasing market share globally. Binani Cement Ltd. has a consolidated global asset base of $ 616 million and gross income of $ 550 million for the year ended 31st March '10. The Company has operations in India, China and Dubai where it has already scripted a success story. It has now set its sights on emerging markets in Africa. For the Binani Group, cement business is a means to transform imagination and vision into reality. Binani Cement has already set global benchmarks, in its existing operations and is poised to achieve the same stature worldwide.

32

Madras Cements

Madras Cements Ltd is one of the oldest cement companies in the southern region and is a part of the Ramco 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 tons annually and holds a market share of 3.1 percent. 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 tons to 3.4 million tones through an investment of US$ 9 million.

Birla Corporation Limited

Birla Corporation Limited is the flagship Company of the M.P. Birla Group. It was incorporated as Birla Jute Manufacturing Company Limited in 1919. Birla Corp's product portfolio includes acetylene gas, auto trim parts, casting, cement, jute goods, yarn, calcium carbide etc. The company has two plants in Madhya Pradesh and Rajasthan and one each in West Bengal and Uttar Pradesh. It manufactures Ordinary Portland cement (OPC), Portland Pozzolana cement, fly
33

ash-based PPC, Low-alkali Portland cement, Portland slag cement, low heat cement and sulphate resistant cement. Large quantities of its cement are exported to Nepal and Bangladesh. Going forward, the company is setting up its captive power plant to remain cost competitive.

Shree Cement

Shree Cement is the largest cement manufacturer in North India and among the top five cement manufacturing groups in the country. The company is being professionally managed by its promoters Shri B. G. Bangur, Chairman and Shri H. M. Bangur, Managing Director. Turnover of the company for 2009-10 was Rs. 3632 Crore and Net profit was Rs. 676 Crore, while in 2008-09 the company posted a turnover of Rs. 2715 Crore and generated operating profit of nearly Rs. 1034 Crore. It has more than quadrupled its capacity in the last 5 years to reach present cement capacity of 13.512 million tons p.a. with manufacturing plants at Beawar, Ras, Khushkhera, and Suratgarh and Jaipur in Rajasthan and Laksar (Roorkee) in Uttarakhand. The Company follows a multi-brand strategy and sells cement under the highly recognized brands of Shree Ultra, Bangur and Rockstron, Which together enjoy largest market share in high value markets of Rajasthan, Delhi & Haryana. Operational excellence and efficiency of the Company gets reflected in one of the highest operating profit margins in the Industry. High-caliber project management and execution capabilities have seen the Company compress project timelines and push rapid capacity expansions. A striking case in point is the commissioning of Unit VII in a world record of 367 days which was further
34

surpassed by commissioning another clinkeriation unit VIII in mere 330 days. Shree is also into the power sector with a Power generation capacity of 210 260 MW which is set to go up to 560 MW by December 2011. It is known to be an energy efficient and environment friendly company and has received various awards and accolades at national and international level for excellence in energy efficiency and environment management. Shree has set up waste heat recovery projects of 46 MW capacities which is the largest waste heat power generation capacity in world cement industry excluding China. Shree follows the triple bottom-line approach of measuring performance against the three benchmarks of Economical, Social and Environmental. Shree is an active participant at Climate change forums and is the first Indian cements company to join the Cement Sustainability Initiative of the World Business Council for Sustainable Development, Switzerland.

1.8. FOREIGN PLAYERS IN CEMENT INDUSTRY Following are the major foreign players entered into the cement industry of India.

Holcim

Holcim, earlier known as Holder bank, has a cement production capacity of 141.9 million tones. It is a key player in aggregates, concrete and construction related services. It has a strong market presence in over 70 countries and is a market leader in South America and in a number of European and overseas markets. Holcim entered India by means of a long-term strategic alliance with Gujarat Ambuja Cements Ltd (GACL). The alliance aims to strengthen their clinker and
35

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 procurement sourcing hub to generate additional synergies and value for the group.

Italcementi Group

The Italcementi group is one of the largest producers and distributors of cement with 60 cement plants, 547 concrete batching units and 155 quarries spread across 19 countries in Europe, Asia, Africa and North America. Italcementi is present in the Indian markets through a 50:50 joint venture company with Zuari Cements. All initiatives in southern India are routed through the joint venture company, while Italcementi is free to buy deals in its individual capacity in northern India. The joint venture company has a capacity of 3.4 million tones and a market share of 2.1 per cent.

Lafarge India

Lafarge India Pvt Ltd, a subsidiary of the Lafarge Group, has a total cement capacity of 5 million tones and a clinker capacity of 3 million tons in the country. Lafarge commenced operations in 1999 and currently has a market share of 3.4 per cent. It exports clinker and cement to Bangladesh and Nepal. It produces Portland slag cement, ordinary Portland cement and Portland Pozzolana cement. The Indian cement plants are located in Chhattisgarh and Rajasthan. Lafarge
36

Cement has become the largest cement selling firm in the Indian markets of West Bengal, Bihar, Jharkhand and Chhattisgarh.

Heidelberg Cement - Indorama Cement Ltd

Heidelberg Cement concluded a 50:50 joint venture agreement in India, consisting of the grinding plant of Indorama Cement Ltd, owned by the Indorama S P Lohia Group, and located in Mumbai (Bombay) on the West coast of India.

The plant, which was built in 2000, has a cement capacity of 750,000 tones and is in very good technical condition. It has an excellent market position in the vicinity of the big markets of Mumbai (17 million residents) and Pune (5 million residents). Due to its location next to a steel plant of the Ispat Group, led by Mr. P.K. Mittal and Mr. V.K. Mittal, Indorama has also direct access to blast furnace slag, which is an important factor for sustainable and cost efficient cement production. Indorama is the only producer of high quality slag cement on the Mumbai market; the company operates also a terminal near the Mumbai harbor. The approval procedure for the construction of a clinker plant in the neighboring federal state of Gujarat has been started. Representatives of Heidelberg Cement in the Indorama management are included in all important decisions. For Heidelberg Cement, this is the first important step on its way to a long-term market position on the Indian growth market. In the past ten years, cement consumption in India grew by approximately 7.5% per year. The building industry developed very dynamically, driven by the strong growth of population and the quick expansion of infrastructure. In 2005, India was after China the second largest cement consumer with around 135 million tones. Since per capita
37

consumption of around 125 kg is one of the lowest in Asia, an average growth of 8 % to 9 % is expected for the years to come.The cement grinding plant in Mumbai is our entrance gate to India, says Dr. Bernd Scheifele, Chairman of th e Managing Board of Heidelberg Cement. Step by step, we intend to expand our activities on this very promising market. The acquisition in India is in line with our strategy to invest specifically in growth markets.

Table 2: MARKET SHARE OF MAJOR PLAYERS IN INDIA 2008-09

Company Ultra Tech Cement Limited Ambuja Cements Limited Shree Cement Limited Dalmiya cement (Bharat) Limited ACC Limited Birla Corporation Limited India Cement Limited Madras Cement Limited Others
SOURCE: Prowess, CMIE

Market Share (In %) 16.7 9.8 4.3 2.7 5.2 2.8 5.2 4.0 49.3

Graph 1: MARKET SHARE OF MAJOR PLAYERS IN INDIA 2008-09

Market Share (In %)

16.7 49.3 9.8 4.3 2.7 Ultra Tech Cement Limited Ambuja Cements Limited Shree Cement Limited Dalmiya cement (Bharat) Limited

4
5.2 SOURCE: Prowess, CMIE

5.2 2.8

38

Table 3: VARIOUS CEMENT PLANTS WITH ITS INSTALLED CAPACITY

Company Plant No. of Plants Installed Capacity (In lakh tonnes) ACC Ltd Chaibasa, Chanda, Jamul, Kymore, Lakheri, Madukkarai, Sindri, Wadi, Gagal I & II, Damodar Cement Works, Tikaria (G), Wadi New, Baragarh Cement Works. Birla Corp. Ltd Birla Vikas, Satna, Birla Cement, Chanderia, Durgapur (G), Rae Bareli (G), Durga Hitech (G) CCI Ltd Adilabad, Akaltara, Bokajan, Charkhi-Dadri, Kurkunta, Mandhar, Neemuch, Rajban,Tandur, Delhi (G) Andhra Cements J.K. Group Vizag (G), NadikudeDurga Cement Nimbahera, Mangrol, Gotan, Lakshmi Cement, J.K. Udaipur Udyog Century Textiles Century Cement, Maihar Cement, Manikgarh Cement India Cements Sankarnagar, Sankaridurg, Chilamkur Works, Dalavoi, Visaka Cement, Yerraguntla, Raasi Cement Grasim Industries Rajashree-Malkhed, Rajashree-Hotgi (G), Vikram Cement, Aditya Cement, Grasim Cement-Raipur, Grasim South, Grasim-Bhatinda (G), Grasim Dadri (G), 9 196.5 7 140.5 3 78 5 40.5 2 14.2 10 NA 7 57.8 13 241.6

39

Grasim Panipat (G)

Tamil Cement Madras Cements

Nadu

Alangulam, Ariyalur

NA

Ramasamyraja Nagar, Jayantipuram, Alathiyur Works I & II

98.9

Mehta Group

Saurashtra Cement, Gujarat Sidhee Cement

27

HMP Cements

Porbandar, Shahabad

NA

Ultra Cement

Tech

Ultra Tech-ACW, Ultra Tech-JCW (G), Ultra Tech-HCW, Ultra Tech Gujarat, Ultra TechAPCW, Jafrabad, Magdalla (G), Ratnagiri (G), Ultra Tech-ARCW (G), Ultra Tech-WBCW (G)

10

219

Gujarat Ambuja Group

Ambuja Cement, Gajambuja Cement, Ambuja CementHimachal Pradesh, Ambuja Cement Ropar (G); Ambuja Cement Rabriyawas, Ambuja CementBhatinda (G), Maratha Cement; Ambuja Cement Roorkee (G); Ambuja Cement Bhatapara, Ambuja Cement Sankrail (G); Ambuja Cement Magdella (G); Ambuja Cement Farakka (G)

12

184.3

Jaypee Cement Ltd

Jaypee Rewa, Jaypee Bela, Jaypee Sadva Khurd (G), Jaypee

122.3

40

Ayodhya (G), Dalla, Chunar (G), Jaypee Panipat (G) Dalla, Chunar (G), Jaypee Panipat (G) Kesoram Industries Mangalam Cement Mysore Cement Kesoram Cement, Vasvadatta Cement Mangalam Cement, Neershree Cement Mysore Cement, Diamond Cement I & II, Diamond Cement-Jhansi (G) Orient Paper Orient Cement, Orient Cement-Jalgaon (G) Penna Tadippatri I & II, Penna Ganeshpahad, Penna-Boyareddypalli Lafarge Ltd Malabar Cements Binani Cement India Arasmeta, Sonadih, Jojobera (G) Malabar Cements, Malabar Cements (G) Binani Cement Sirohi, Binani Cement Sikar (G) Binani Cement Sirohi, Binani Cement Sikar (G) Rain Ltd Cement Manu. Co. Ltd Chettinad Cement Zuari Ltd Others* Cement Comdt. Rain Comdt. Unit I, Rain Comdt. Unit II LN-1 Cement Manu. Co. Ltd, Megha T&E (P) Ltd (G) Chettinad-Karur & Chettinad Karikkali Zuari Cement, Sri Vishnu Cement Shree Cement, Prism Cement, Shree DigvijaySikka, Indo-Rama Cement (G), Lemos Cement, Kistna, 19 276.3 2 22 2 56.5 2 NA 2 40 2 60.8 2 NA 3 NA 3 NA 2 34 3 NA 2 20 2 60.1

Industries Penna Cement Industries Ltd.

41

Bagalkot Cement & Ind. Ltd, Dalmia Cement, OCL India Ltd, J&K Ltd, Kalyanpur Cement, KCP Ltd, Mawmluh Cherra, Panyam Cements, Sone Valley, Meghalaya Cements Ltd, Shriram Cements, Sanghi Industries Ltd, My Home Industries.

SOURCE: CEMENT MANUFACTURERS ASSOCIATION

1.9. MARKET SEGMENTS OF CEMENT INDUSTRY IN INDIA 2008-09

FIGURE 1: MARKET SEGMENTATION 2008-09

Cement Industry East West Central

North South

The cement industry in India can be divided into the five geographical zones of India North, South, East, West and central based on localized variations in the consumer profile and supply-demand scenario. Market segment North Key markets in northern India include the states of Rajasthan, Punjab, Haryana and the National Capital Region (NCR).

42

 Demand in this region is being driven by infrastructure, residential and commercial projects, including the projects under the Commonwealth Games 2010 to be held in Delhi in October 2010.

Market segment West The states of Maharashtra and Gujarat are the key markets in this region. Over the past few years, growth in housing and commercial real estate has augmented the demand for cement in this region. The western region also exports cement to countries in the Middle East. Market segment Central The state of Uttar Pradesh is the key market in this region.

The demand for cement has grown in this region primarily due to an increase in the number of housing and infrastructure projects. Market segment East The key markets in the East are the states of West Bengal, Orissa and Bihar. Growth in housing and industrial activity is primarily driving demand for cement in this region. Market segment South Key markets in the southern region are the states of Tamil Nadu, Andhra Pradesh and Karnataka. The South zone has vast reserves of limestone. Growth in the real estate market in the region, coupled with the development of key infrastructure projects such as airport and metro rail, has resulted in increased demand for cement in this region.

43

Table 4: REGIONAL SAHRE OF INSTALLED CAPACITY Zone

Regional share of installed capacity (For Financial Year 2010)

North West Central East South

SOURCE: http://eaindustry.nic.in

17% 18% 16% 16% 33%

Graph 2: REGIONAL SHARE OF INSTALLED CAPACITY

Regional share of installed capacity (For Financial Year 2010)

17% 33% 18% 16% 16% North West Central East South

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1.10. DEMAND DETERMINATIONS OF CEMENT INDUSTRY Now a days demand of cement is increasing because of following reasons.

Infrastructure & Commercial construction The GOI has indicated its strong commitment towards developing infrastructure in the country and has undertaken several large projects involving construction of ports, airports, power plants, and highways linking different parts of the country. The GoI plans to spend about US$ 350 billion on infrastructure development under the Eleventh Plan. The Ministry of Road Transport and Highways has planned to invest US$ 354 billion in road infrastructure by 2012.

Commercial construction includes malls, multiplexes, office space, hotels, hospitals etc. Demand for office space is largely driven by the IT/ITES industry, which Comprises 75-80% of commercial demand at present. The sector is expected to grow 25-30% annually over the next few years and would be the key driver of commercial demand.

Increasing demand from housing Over the last decade, growth in cement consumption has been driven almost entirely by private housing. The housing segment accounts for a major portion of the total domestic demand for cement in India. With retail interest rates falling to historic lows, credit off take in the form of housing loans showing a significant increase, and tax incentives given to housing loans expected to continue, it is expected that the robust demand generated by this sector will continue. According to the Eleventh Five Year Plan (20072012), housing demand is estimated to increase from more than 24 million units in 2007 to over 26 million units at the end of the Plan period. SEZ development SEZs are areas notified under the SEZ Act 05, with benefit of fiscal incentives from both Central and State Governments along with minimal regulatory
45

requirements

and

quality

infrastructure

for

boosting

economic

growth.

Development of the Special Economic Zones (SEZs) is creating huge demand for cement.

Increasing Population With an increasing population and growing per capita cement Consumption, which is supported by large construction activities going on the in the country, the cement market will continue to grow.

Cement demand High correlation with GDP Cement demand is directly linked to economic activity. Since infrastructure investments and construction activity, which are the main drivers of cement demand, are key components of GDP, cement demand growth has high correlation to GDP growth. Further, housing (both rural and urban), also a determinant of cement demand, depends on agricultural productivity and income levels, which are again a key components of GDP.

Nuclear families and urbanization The joint family system in India has been gradually moving towards nuclear families. Migration of population towards urban areas due to better job opportunities coupled with rapid urban infrastructure development would affect the decline in average size of an Indian household. Hence, with the ever-growing population, expected reduction in the size of an average Indian Household, outlook for housing demand remains extremely positive.

Fiscal incentives to continue boosting cement demand Fiscal incentives granted by the Central Government have provided boost to housing demand. Fiscal benefits, existent since the FY00 Budget, give tax incentives on both interest payments and principal repayments on mortgage

46

loans, thereby reducing effective cost of financing and stimulating housing demand.

Power Projects The XI FYP envisages total capacity addition of 78,577MW, of which 16,500MW would be hydro projects where cement consumption is significantly higher than other projects. We expect 46mnte of cement consumption for power generation projects over the next five years.

The East -West and North-South Road Corridors This project envisages constructing roads that will transverse India approximately 7,000 kilometers). In addition the government has also announced plans to build roads (approximately 200,000 kilometers) linking every village in the country which has a population of over 1,000.The increased focus on infrastructure development, together with the increasing demand for housing and commercial construction are expected to drive growth of the cement industry going forward.

Upswing in exports Cement exports have been growing at a CAGR (cumulated average growth rate) of 11.45% since 1997-98. In order to take advantage of the high export prices, coastal plants have been exporting their additional production, thereby reducing supply pressure in the domestic market. India mainly exports cement and clinker to its neighboring countries and the countries in Africa and West Asia. Going forward, with significant redevelopment activity expected in Dubai, Afghanistan and Iraq, India is proximity to these markets is likely to further boost exports.

47

Types of Cement Substitutes Fly ash It is one of the byproducts of burning coal to create electric power. The carbon content of fly ash is a major concern. Class C fly ash, most of which is produced in the west from lignite coal, contains little carbon. However, Class F fly ash, produced primarily from anthracite and bituminous coal, contains significant amounts of carbon. Class C and Class F material also differ from each other and from source to source with regard to strength, rate of strength gain, color and weatherability. Insuring a consistent supply is a concern among concrete suppliers. Slag It is a by-product from production of both iron and steel, and ground iron slag from blast furnaces can be used for making concrete. Because the demand for the product is rising while the supply is falling, new grinding plants are coming on line to process imported slag. Silica fume It was once a cheap waste product; but high demand has made it a high-cost admixture, used primarily for bridges and other structures where top weathering performance and high strength are needed. Concrete made from silica fume is expensive, however, not only because of the material cost, but because the powdery fineness of the fume makes it hard to handle. It is often turned into slurry before use. Rice hull ash It is as long as quality is controlled, is another material that can be used to replace cement.

48

Current duty structure

Table 5: CUSTOM DUTY ON CEMENT AS PER BUDGET 2011-12 CUSTOMS DUTY OPC / PPC Coal Gypsum Pet Coke PRE BUDGET Nil 5% 5% 5% POST BUDGET Nil 5% 2.5% 2.5%

SOURCE: http://www.equitymaster.com/budget2011/sectors/Cement.asp

Table 6: EXCISE DUTY ON CEMENT AS PER BUDGET 2011-12 EXCISE DUTY (Rs. per tonne) Retail Price below Rs.190 per 50 kg bag Price above Rs.190 per 50 kg bag Bulk PRE BUDGET POST BUDGET

290

10% ad-valorem +Rs. 80

10% ad-valorem

10% ad-valorem +Rs. 160 10% ad-valorem

290 or 10% advalorem whichever is higher

Clinker

375

10% ad-valorem +Rs. 200

SOURCE: http://www.equitymaster.com/budget2011/sectors/Cement.asp

49

1.11. DISTRIBUTION CHANNEL OF CEMENT INDUSTRY Transportation Cement industry is highly transport intensive. Transport cost is about 20%. Rail transport being economical, is the ideal mode for transportation of cement, clinker and coal. Any bottleneck or inadequacy in Railway transport has, therefore, an adverse impact on cement production and distribution. This issue has assumed great importance recently due to a number of skewed policy measures taken by the railways. Most of these policy measures are one sided and difficult for the users to implement. Thus, these measures have steeply affected the growth of the cement industry. Rail Transportation of Cement - A Few Facts (i)Cement Industry Location Specific Due to location specific nature of the cement industry, cement plants are concentrated at limestone deposits which are available in few States. The main raw material coal is available only in 4/5 States, mostly in the eastern region. Further, cement is a high volume, low priced commodity. In view of this, long leads of movements are necessary both for inward movement of raw materials coal, gypsum, etc. and outward movement of cement/clinker to grinding units/markets and Railways is the only economic mode of such transportation for the cement industry. (ii)Railways Ideal Mode of Transport

Average lead for coal movement - 1000 kms Average lead for cement movement - 600 kms Average lead for Gypsum movement - 750 kms Average lead for Clinker movement - 700 kms

Further, cement is a high volume, low priced commodity. A railway thus is the only economic mode of such transportation for the cement industry.
50

(iii) Cement Distribution Transport Intensive

Transport Cost - roughly 20% of sale price High for a low cost commodity like cement Cement Cost < even half that of SALT

Cement - 3rd Largest Revenue Payer to Railways even with 40% rail co-efficient (Contributes about 9% to their total earnings). Major Concerns of Cement Industry (1) Wagons Availability Regular and consistent availability of wagons, including two-point and mini rakes to the cement plants, is a big causality. Non-availability of wagons not only throw into disarray the dispatch plans and affect production of cement, it also obliges Rake availability a consistent problem. Need to arrive at a long term solution in line with expected industry requirements.

Frequent shifting of priorities of Rakes by Railways to various sectors i.e. Fertilizer, Food grain and Power resulting in substantial dispatch losses to the cement companies as it is not possible for them to shift their mode of transport frequently.

Inadequate Infrastructure facilities at Terminals like platform, double line, access road etc., on the Railways fronts, are hampering the evacuation of material from wagons, leading to frequent demurrage and wharfage charges being paid by cement plants.

(2) Operational Problems Railways policy circulars, issued from time to time in a bid to increase the turnaround of wagons, have not only created for the cement plants operational problems both at loading and unloading points but have also made them liable to
51

pay penalties, wharfage and demurrage charges. A few policy decisions which had affected the industry are significant increase in carrying capacity of wagons and reduction in the permissible free time for loading/unloading of wagons; round-the clock working at Terminals, which is not feasible due to constraints related to infrastructure and labor availability, etc.

1.12. KEY ISSUES AND CURRENT TRENDS Following are some of the key issues and current trends related to cement industry in India.

Freight costs Freight costs constitute 12-18% of cement companies revenues and depend on lead distances to markets, freight mix between road, rail & sea as well as proximity to source of raw material such as fly ash. Freight costs have also seen rising trend on account of rising diesel prices. However, companies are planning to split grinding units located closer to key markets or to fly ash sources to reduce impact of higher freight costs.

Input costs Power and fuel costs constitute 18-22% of cement companies revenues. Indian cement companies largely depend on domestic coal, imported coal and pet coke as a source of fuel. Fuel is primarily used in kilns and CPPs.

The cost advantage The Indian cement industry has undergone vital changes though technological up gradation in the pursuit of cost efficiency and the drive for consolidation. Modernization at the plants and the Improvements of plant processes have helped reduce manpower requirements.

52

Opening up the FDI channel The impact of government policies on cement demand has been steadily decreasing with the sector being gradually deregulated. At present, 100 per cent foreign direct investment (FDI) is permitted in the cement industry. Lafarge was the first foreign company to enter the Indian market in 1999.

Transportation Cement is mostly packed in paper bags now. It is then transported either by rail or road. Road transportation beyond 200 kms is not economical therefore about 55% of cement is carried by the railways. There is also the problem of inadequate availability of wagons especially on western railways and

southeastern railways. Under this scenario, there is a need to encourage transportation through sea, which is not only economical but also reduces losses in transit. Today, 70% of the cement movement worldwide is by sea compared to 1% in India.

Easing environment norms To set up a cement plant in India, with an investment of over US$22 million entrepreneurs are required to obtain environmental clearance from the Ministry of Environment. 100 per cent FDI is also allowed for private cement companies to set up power projects as well as coal or lignite mines for captive consumption.

Regulatory issues Land acquisition Obtaining mining rights Obtaining environmental clearances

Demand for high-tech products Ready Mix Concrete Concrete product manufacturers
53

CP (Calcium phosphate) cement Green products-blended cement

1.13. PEST ANALYSIS Political The price of cement is primarily controlled by the coal rates, power tariffs, railway tariffs, freight, royalty and cess on limestone. Interestingly, government controls all of these prices. Government is also one of the biggest consumers of the cement in the country. Most state governments, in order to attract investments in their respective states, offer fiscal incentives in the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff for 5 years, while Gujarat offers exemption from electric duty.

Economic Currently, the industry is on the boom, with a lot of government infrastructure and housing projects under construction. In spite of seeing a fall during 2008-09, the export segment of the industry is expected to grow again on account of various infrastructure projects that are being taken up all over the world and numerous outstanding cement plants coming up in near future in the country.

Social Usually, the cement industry in India consists of both the organized sector and the unorganized sector. Organized sector comprises of the well-known cement manufacturing companies while the main players of the unorganized sector are the regional and local cement-producing units in various states across the state. Indian consumers prefer buying branded cement like Ultratech, Jaypee Cement, Lafarge Cement etc. It has been seen in the past, as well, that mini cement plants with low brand value and image are not able to survive against the cement giants. With a population of more than 100 billion people, it is expected that cement industry will create another 25 lakhs jobs in the next 4-5 years.

54

Technology From mining to production the entire process depends on technology. The Government of India plans to study and possibly acquire new technologies from the cement industry of Japan. The government is discussing technology transfer in the field of energy conservation and environment protection to help improve efficiency of the Indian cement industry. Cement industry has made tremendous strides in technological up-gradation and assimilation of latest technology. At present 93% of the total capacity in the industry is based on modern and environment-friendly dry process technology.

1.14. MICHAEL PORTER FIVE FORCE MODEL The structure and competitive scenario of the Indian cement industry can be described concisely with the help of Porters notable Five -Forces Model (1980) that determine the attractiveness of the industry and the way in which individual firms might choose to compete.

55

FIGURE 2: MICHEAL PORTER FIVE FORCE MODEL

Threat of Substitutes - Limited Only bitumen in road, and engineering plastics in building offer. some element of competition, otherwise no close substitutes are popular in India.

Bargaining Power of Suppliers-Very High Monopolistic control of external cost element (coal, power, transportation and taxes) results in high bargaining power with the government.

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

Bargaining Power of Buyers-Limited Rising share of retail purchase, declining share of bulk purchase by Government has taken away the bargaining power of customers.

Threat of New Entrants- Limited High capital investment, broad distribution network and oversupplied market deter new entrants. However, technology and manpower are easily available.

56

1.15. SWOT ANALYSIS OF CEMENT INDUSTRY FIGURE 3: SWOT Analysis

STRENGTHS Double digit growth rate. Growth in housing sector (over 30%). Infrastructure projects like ports, airports, power projects, dam & irrigation projects. National Highway Development Programme. Bharat Nirman Yojana for rural infrastructure. Rise in industrial projects. Export potential. Capacity utilization over 90%. WEAKNESSES Low value commodity. Cement Industry is highly fragmented. Industry is also highly regionalized. Low value commodity makes transportation over long distances un- economical.

OPPORTUNITIES Limited green field capacity addition in pipeline for next two years, leading to favourable demand. Additional production capacity is required to meet the demandsupply gap.

THREATS Rising input costs. Government intervention to adjust cement prices. Possibility of over bunching of capacities in the long term as some of the players has already announced new capacities. Transportation cost is scaling high; bottleneck due to loading restrictions. Coal prices climbing up.

57

1.16. FUTURE OUTLOOK The cement industry is vital for the development of infrastructure all over the world as no other material is likely to be its substitute in the near future.

Infrastructure and industrial activity, real estate business and investment in core sectors mainly drive the demand for cement. Some emerging markets for cement demand are concrete roads, concrete canal lining and rural construction (housing).

The country is self-sufficient in cement. Most of the cement plants in India have the state-of-the- art technology and production facilities. Cement industry is going ahead with a modification and up gradation of technology particularly in energy conservation.

The liberalization policies for cement industry have helped in achieving the strong growth of the cement sector.

The Working Group on Cement Industry constituted by the Planning Commission for the 11th Five-Year Plan period has projected a demand growth at the rate of 11.5% per annum during the plan period at an expected 9% GDP growth rate.

The cement capacity during 11th plan period is projected as additional 112 million tpa 80 million from Greenfield plants and 32 million through Brownfield expansion and technology up gradation.

The cement capacity and production by the end of 11th Plan are estimated at 320 million tones and 269 million tons per annum, respectively, with a capacity utilization of 90 percent. An investment of
58

Rs.52, 400 crores would be required to attain the targeted capacity addition.

The Working Group report also seeks regulatory support for creating framework for co-processing of wastes, co-generation of power and enhanced support to R & D activities to align the technology regime with the best of the world.

The report also emphasizes the importance of bulk transportation of cement, use of ready - mix concrete and reduction of taxes and levies on cement. Transportation of cement in bulk is devoid of seepage, pilferage and is environment- friendly.

Only two rail bulk cement terminals (Kalamboli and Bangalore) and three port-based bulks cement terminals (Mumbai, Surat and New Mangalore) have been set up. In India, only 5% production accounts for bulk transport against 70% world over.

The Government has identified following thrust areas for improving demand for cement: I) further push to housing development programmes; ii) Promotion of concrete highways and roads; iii) Use of ready-mix concrete in large infrastructure projects; and IV) Construction of concrete roads in rural areas under Prime Minister's Gram Sadak Yojana.

Favourable and low interest housing finance schemes and various income tax concessions announced in this context have given fillip to the house building activities. If such stimulation is continued, it will boost up the future demand for cement in the country.
59

The rural infrastructure that includes irrigation facilities, storage, market yards & mandies, telecommunications and rural electrification would also demand substantial quantity of cement. As compared to many other sectors of the national economy, the cement industry is thus favourably placed for a bright future.

60

CHAPTER 2: COMPANY STUDY OF ULTRA TECH CEMENT LIMITED

61

2.1. COMPANY INFORMATION 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. UltraTech Cement Limited is an India's biggest cement company and Indias largest exporter of cement clinker based in Mumbai, India. The company is part of Aditya Birla Group. It has an annual capacity of 52 million tonnes. 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. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzalana Cement. It also manufactures ready mix concrete (RMC). The export markets span countries around the Indian Ocean, Africa, Europe and the Middle East. It is part of Grasim Group. 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. UltraTech Cement Limited has 12 integrated plants, 11 grinding units in India and 1 clinkerization plant and 4 grinding units outside India.

62

Aditya Birla groups cement capacity Currently, the Aditya Birla Group is the 11th largest cement producer in the world and the seventh largest in Asia and Ultra Tech and Grasim together, make it the largest cement producer in India. The group mainly has two cement units Grasim and Ultra tech.

Vision "To actively contribute to the social and economic development of the communities in which we operate. In so doing, build a better, sustainable way of life for the weaker sections of society and raise the country's human development index." UltraTech Cement Limited has an annual capacity of 52 million tonnes. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzalana Cement. It also manufactures ready mix concrete.

The company has 11 integrated plants, one white cement plant, one clinkerisation plant in UAE, 15 grinding units 11 in India, 2 in UAE, one in Bahrain and Bangladesh each and and five terminals four in India and one in Sri Lanka.

63

UltraTech Cement is the countrys largest exporter of cement clinker. The export markets span countries around the Indian Ocean, Africa, Europe and the Middle East.

UltraTech's subsidiaries are Dakshin Cements Limited, Harish Cements Limited, UltraTech Ceylinco (P) Limited and UltraTech Cement Middle East Investments Limited

Mission To deliver superior value to our customers, shareholders, employees and society at large. Values Integrity Commitment Passion Seamlessness Speed Fact files of Ultra-Tech Cement It includes some facts about Ultra-Tech cement. The Aditya Birla Group is the eighth-largest cement producer in the world. It is incorporated on 24 August 2000 as L&T Cement Limited. Cement business of Larsen & Toubro Limited demerged and vested in company in 2004. Grasim acquired management control in July 2004. Together with Grasim, one of the largest cements producers in India. Name changed to UltraTech Cement Limited with effect from 14 October 2004. Narmada Cement Company Limited amalgamated with UltraTech in May 2006.

64

Cement business of Grasim demerged and vested in Samruddhi Cement Limited in May 2010. Samruddhi Cement Limited amalgamated with UltraTech Cement Limited in July 2010. UltraTech Cement Middle East Investments Limited, a wholly owned subsidiary of the Company has acquired management control of ETA Star Cement together with its operations in the UAE, Bahrain and Bangladesh in September, 2010.

Sources of Competitive Advantage for Ultra Tech Cement UltraTech's capabilities in identifying, and leasing, higher quality raw material quarries results in significant cost savings for them. (i)Sourcing of Raw Materials UltraTech's greatest strength is its raw material sourcing. Limestone quarries are usually leased from the government on a long-term basis (usually at least 25-30 years). UltraTech's capabilities in identifying, and leasing, higher quality raw material quarries results in significant cost savings for them. This source of longterm competitive advantage is due to their people skills which aid in identifying the sources and their terms of leasing which lock in these resources for the long term. Clearly, this resource is valuable and rare. (ii)Fuel used in Manufacturing Process The manufacturing process offers no distinct competitive advantage to UltraTech or its largest competitor ACC, though ACC enjoys lower fuel cost. However, this is not sustainable, and since UltraTech has already started switching to coal, ACC's advantage is likely to be neutralized in the near future. (iii)Financial and Human resource advantage UltraTech, being a part of the Aditya Birla Group, has access to the deep pockets of its promoters, as well as human capital of the highest quality. While financial resources may be rare and inimitable, non-substitutability is debatable. Evidence
65

suggests that in the long term others like the Holcim group can match the financial resources of ABG. Higher quality of human capital might be more valuable in the long run, and given their astute knowledge of the Indian market, ABG might be able to leverage this resource better than their foreign counterparts.

2.2. PRODUCT PROFILE UltraTech is India's largest exporter of cement clinker. The company's production facilities are spread across eleven integrated plants, one white cement plant, one clinkerisation plant in UAE, fifteen grinding units, and five terminals four in India and one in Sri Lanka. Most of the plants have ISO 9001, ISO 14001 and OHSAS 18001 certification. In addition, two plants have received ISO 27001 certification and four have received SA 8000 certification. The process is currently underway for the remaining plants. The company exports over 2.5 million tonnes per annum, which is about 30 per cent of the country's total exports. The export market comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. Export is a thrust area in the company's strategy for growth. UltraTech's products include Ordinary Portland cement, Portland Pozzolana cement and Portland blast furnace slag cement.

Ordinary Portland cement Portland blast furnace slag cement Portland Pozzolana cement

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

66

(ii)Portland blast furnace slag cement Portland blast-furnace slag cement contains up to 70 per cent of finely ground, granulated blast-furnace slag, a nonmetallic product consisting essentially of silicates and alumino-silicates of calcium. Slag brings with it the advantage of the energy invested in the slag making. Grinding slag for cement replacement takes only 25 per cent of the energy needed to manufacture Portland cement. Using slag cement to replace a portion of Portland cement in a concrete mixture is a useful method to make concrete better and more consistent. Portland blastfurnace slag cement has a lighter color, better concrete workability, easier finishability, higher compressive and flexural strength, lower permeability, improved resistance to aggressive chemicals and more consistent plastic and hardened consistency.

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

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2.3. FUNCTIONAL DEPARTMENTS Following are the details of various functional departments of company.

2.3.1. PRODUCTION DEPARTMENT UltraTech Cement Limited has an annual capacity of 48.8 million tones. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzalana Cement. It also

manufactures ready mix concrete (RMC).

As part of the ninth biggest cement manufacturer in the world, Ultra Tech Cement has eleven integrated plants, one white cement plant, twelve grinding units as well as five terminals of its own (one overseas, in Colombo, Sri Lanka).

Table7: Trends of the company over the years

Year 2010 Particulars The cement business of Grasim demerged and vested in Samruddhi Cement Limited in May, 2010 2010 Samruddhi Cement Limited amalgamated with UltraTech Cement Limited in July 2010. 2006 2004 Narmada Cement Company Limited amalgamated with UltraTech. Completion of the implementation process to demerge the cement business of L&T and completion of open offer by Grasim, with the latter acquiring controlling stake in the newly formed company UltraTech. 2003 Grasim decides to acquire an 8.5 per cent equity stake from L&T and then make an open offer for 30 per cent of the equity of Cement Company, to acquire management control of the company. 2002 The Grasim Board approves an open offer for purchase of up to 20 per cent of the equity shares of Larsen & Toubro Ltd (L&T), 2001 Grasim acquires 10 per cent stake in L&T. Subsequently increases stake to 15.3 per cent by October 2002. 1998-2000 Bulk cements terminals at Mangalore, Navi Mumbai and Colombo.

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Table 8: Strategic Branch Units of the company in India

Location of units Name of Plants A Composite plants Tadipatri (Andhra Pradesh) Hirmi (Chhattisgarh) Jafrabad (Gujarat) Kovaya (Gujarat) Awarpur (Maharashtra) Reddipalyam (Tamil Nadu) Adityapuram (Rajasthan) Neemuch (Madhya Pradesh) Rawan (Chhattisgarh) Malkhed (Karnataka) Kotputli (Rajasthan) B Grinding units Magdalla (Gujarat) Ginigera (Karnataka) Ratnagiri (Maharashtra) Jharsuguda MGD GICW APCW

Kiln Capacity (Tpd)

Capacities (Million Tpa)

8000

2.3

HCW JFD GCW ACW

8050

1.6

15000 NA 9500

5.3 NA 3.3

RDCW

NA NA NA NA

AC

VC

NA

NA

RWCW

NA

NA

RC

NA

NA

KCW

NA

NA

NA NA

NA NA

RTN JCW

0.4

NA

0.8

NA

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(Orissa) Arakkonam (Tamil Nadu) Durgapur Bengal) Hotgi (Maharashtra) Bathinda (Punjab) Panipat (Haryana) Aligarh Pradesh) Dadri Pradesh) Ajman (UAE) Abu Dhabi, UAE Bahrain Bangladesh (Uttar (Uttar (West ARCW 1.2 NA

WBCW

1.0

NA

HOCW BCW PCW ALCW

NA

NA

NA NA NA

NA NA NA

DCW NA NA NA NA

NA

NA

NA NA NA NA

NA NA NA NA

C White Cement Kharia Khangar BW NA 0.6

(Rajasthan) D Clinker Plant Ras Al Khaimah, UAE E Bulk terminals Navi Mumbai

RAK

NA

NA

(Maharashtra) Mangalore (Karnataka) Shankarpally (Andhra Pradesh)

NA

NA

NA

NA

NA

NA

NA

NA

NA

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Dodaballpur (Karnataka) Colombo Lanka) Ready-mix F concrete (73) plants (Sri

NA

NA

NA

NA

NA

NA

9.5 million cubic metres

NA

NA

PRODUCTION PROCESS
FIGURE 4: Manufacturing Process of cement

The Advantage of the Company UltraTech Cement Ltd is one of the largest premium quality cement producer in India. UltraTech Cement is manufactured in the state of the art dry process plant at Tadipatri (Andhra Pradesh) and grinding unit at

71

Arakkonam (Tamil Nadu). Advanced instrumentation systems, computerized process control and online quality control through X-ray ensure consistently high quality product at UltraTech Cement plant. The quality of UltraTech Cement has been globally accepted and is India's largest exporter of clinker &cement.

UltraTech Cement due to its consistently superior quality has become the first choice amongst discerning users and construction professionals.

Raw Material Careful selection and scientific proportioning of raw material with the use of latest technology enables manufacturing of high quality cement. Rigorous hourly tests are conducted on raw material. Laboratories at all plants are equipped with sophisticated facilities.

World Class process Technology ensures Quality and Consistency Quality Assurance is an integral part of Ultra Techs manufacturing

philosophy. The quality attributes are consistently ensured through rigorous application of advanced technology. Key features include: Use of good quality limestone and careful selection of other raw material. Computerized mining operation and homogenization of crushed Limestone. Perfect proportioning of raw materials byQCX (QualityControl Through X-ray). Online process control throughCCR (Computerized ControlRoom High-quality clinkerisation and close-circuit grinding for optimum particle size distribution UltraTech Cement plants have been accredited with ISO 9001, 14001, 18001 Certifications by DNV of Netherlands

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Distinct Features of Ultra Tech Products Higher Compressive strength Optimal fineness Balanced physical and chemical properties Optimal setting time Consistency in quality Low-level of Chloride High-soundness

Advantages Higher workability Lower consumption Enhanced durability Quicker construction Overall economy

Customer Care and Guidance UltraTech Cement offers customers a range of "product plus" services. A fullfledged Technical Services Network has been set up exclusively for technical advice and guidance in usage of cement UltraTech Cement is marketed nationwide through large network of stockist's, sales officers and representatives. Cement dumps have also been established at strategic locations to facilitate faster delivery of cement.

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2.3.2. MARKETING DEPARTMENT

Figure 5: Product Mix

Products

Ordinary Portland cement

Portland blast furnace slag cement

Portland Pozzolana cement

Distribution Network Cement in India is primarily sold through a distributor - dealer network Total margins for the distribution channels - 17 to 18 % Direct sales less than 2 % of total sales Managing the distribution network & strong working relationships with distributors, contractors etc.

Branding of Ultra tech In step with its global agenda, the cement business of the Aditya Birla Group, is orchestrating a contemporary brand makeover. 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. Keeping pace with the expanding demand for cement, the cement business of the Aditya Birla Group has integrated its national cement brands into one entity UtlraTech Cement. Jaan Wahi, pehchaan nayi this new brand identity sums up the ultimate promise a forceful statement that communicates the business benefit of the level of service and quality that the company provides to

74

its customers and partners.

Branded Channels of Ultra tech Surging ahead of competition, the cement business brought in a new concept in cement marketing UltraTech Building Solutions, a one-stop shop for all construction needs. "Advocating our Plan, Build and Support" philosophy, it seeks to enhance the shopping experience of customers and strengthen existing trade partnerships, by upgrading the service proposition. It offers a wide spectrum of end-to-end home building solutions, high quality construction materials and allied value-added services. As a business model, UltraTech Building Solutions offers home building solutions from planning to completion.

Basically, every customer who walks in to UltraTech Building Solutions outlet receives guidance on construction-related issues as well as value-added services like Vastu, usage of budget software to estimate costs involved for construction, paper clearance procedures, etc. The customer gets a ready reckoner of information on how to choose and buy quality construction materials. With the Rajkot success and with key learning points, the company intends to open many more outlets across the country.

Advertising & Promotion

75

India, the world's largest producer of movies in as many as 10-12 different languages, provides a great opportunity for advertisers to reach the masses. Films are a great entertainment platform for most Indians. Many FMCGs have encashed this opportunity. The in-film branding opportunity was used by UltraTech for the first time ever in the cement industry. The film Chak De India, promoting women's hockey in India, became an all-time hit. In the movie UltraTech was the sponsor of the Indian women's hockey team. UltraTech branding was all over, throughout the movie. 'It was a big gamble we took," says Mr. Puranmalka. "Initially we were sceptical, with many big banners with big stars failing in the recent past. After a lot of deliberation, we decided to go ahead with this gamble and finally Chak De India almost became like a national anthem, with India winning the women's hockey title in reality and our cricket team winning the inaugural 20-20 World Cup." The various initiatives taken by the government recently have given a boost to the rural economy. The rate of growth of the housing sector in the rural segment is increasing every year. UltraTech is already well represented in the rural markets and we are planning various initiatives, which will help us grow in this sector. For obvious reasons I am unable to share these plans at this stage. These will include providing technical assistance to masons and contractors, teaching them more cost-efficient construction methods and usage of ecofriendly cement and cement products. UltraTech Cement the Official Team Sponsor of Rajasthan Royals Shilpa Shetty , coowner along with Raj Kundra give a heart-warming farewell to the team - Yusuf Pathan, Mohammed Kaif, Ravindra Jadeja, Dinesh Salunkhe, Niraj Patel, Mahesh Rawat, Swapnil Asnodkar and Siddharth Trivedi as they leave for the African Safari. UltraTech Cement Limited, the single largest cement brand in the country, today proudly announced its association with the defending champions of Indian

76

Premier League 2008, Rajasthan Royals. Through this association UltraTech will be the Official Team Sponsor of the Jaipur based IPL team. 2.3.3. HUMAN RESOURCE DEPARTMENT Following are some of the human related issues of ultra tech cement. MANAGEMENT TEAM Board of Directors :: Mr. Kumar Mangalam Birla, Chairman :: Mrs. Rajashree Birla :: Mr. R. C. Bhargava :: Mr. G. M. Dave :: Mr. A. Gupta :: Mr. N. J. Jhaveri :: Prof. N. Kumar :: Mr. S. B. Mathur :: Mr. V. T. Moorthy :: Mr. S. Rajgopal :: Mr. D. D. Rathi :: Mr. O. P. Puranmalka, Wholetime Director

Executive President & Chief Financial Officer :: Mr. K. C. Birla

Chief Manufacturing Officer :: Mr. R.K. Shah

77

Chief Marketing Officer :: Mr. S.N.Jajoo

Chief People Officer :: Mr. C. B. Tiwari

Company Secretary :: Mr. S. K. Chatterjee

Corporate Social Responsibility by UltraTech Cement Before Corporate Social Responsibility found a place in corporate lexicon, it was already textured into our Group's value systems. As early as the 1940s, our founding father Shri G.D Birla espoused the trusteeship concept of management. Simply stated, this entails that the wealth that one generates and holds is to be held as in a trust for our multiple stakeholders. With regard to CSR, this means investing part of our profits beyond business, for the larger good of society.

While

carrying

forward

this

philosophy,

our

legendary leader, Mr. Aditya Birla, weaved in the concept of 'sustainable livelihood', which

transcended cheque book philanthropy. In his view, it was unwise to keep on giving endlessly. Instead, he felt that channelising resources to ensure that people have the wherewithal to make both ends meet would be more productive. He would say, "Give a hungry man fish for a day, he will eat it and the next day, he would be hungry again. Instead if you taught him how to fish, he would be able to feed himself and his family for a lifetime."

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Strategy Projects of company are carried out under the aegis of the "Aditya Birla Centre for Community Initiatives and Rural Development", led by Mrs. Rajashree Birla. The Centre provides the strategic direction, and the thrust areas for work ensuring performance management as well. Focus of Ultra Tech cement is on the all-round development of the communities around our plants located mostly in distant rural areas and tribal belts. All Group companies - Grasim, Hindalco, Aditya Birla Nuvo and UltraTech have Rural Development Cells which are the implementation bodies. Projects are planned after a participatory need assessment of the communities around the plants. Each project has a one-year and a three-year rolling plan, with milestones and measurable targets. The objective is to phase out our presence over a period of time and hand over the reins of further development to the people. This also enables us to widen our reach. Along with internal performance assessment mechanisms, our projects are audited by reputed external agencies, who measure it on qualitative and quantitative parameters, helping us gauge the effectiveness and providing excellent inputs. Companys partners in development are government bodies, district authorities, village panchayats and the end beneficiaries the villagers. The Government has, in their 5-year plans, special funds earmarked for human development and we recourse to many of these. At the same time, we network and collaborate with likeminded bilateral and unilateral agencies to share ideas, draw from each other's experiences, and ensure that efforts are not duplicated. At another level, this provides a platform for advocacy. Some of the agencies we have collaborated with are UNFPA, SIFSA, CARE India, Habitat for Humanity International, Unicef and the World Bank.
79

Focus areas of the company Rural development activities span five key areas and our single-minded goal here is to help build model villages that can stand on their own feet. Focus areas are healthcare, education, sustainable livelihood, infrastructure and espousing social causes.
Education Balwadis (pre-school) Adult education Non-formal education Continuing education Scholarships for girls, merit and technical education Health and family welfare Mobile clinics - doctors visit once a week Medical camps - general and issuebased Health training and awareness Sanitation - toilets, training, smokeless chullahs, biogas Safe drinking water Mother and child health Reproductive health Awareness building

Sustainable livelihood

development and agriculture

and and

watershed development Self-help groups

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SGSY - dairy, readymade garments, jute project, basket making, aggarbati making, bee keeping, durrie making. Check dam Irrigation Land development Soil and water conservation Pasture development Social forestry/ plantation activities/ nursery Horticulture Farmer training

Infrastructure development Roads Dams Community centres Houses Culverts Electricity Health centres Water channels Schools

Social causes Widow / dowry-less mass marriages Women empowerment Awareness drives on knowledge,

attitude and practices

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2.3.4. FINANCE DEPARTMENT Table 9: PROFIT & LOSS ACCOUNT PARTICULARS Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Mar '06 Mar '07 Mar '08 (Rs.Crs) Mar '09 Mar '10

3,785.29 5,484.35 6,286.24 7,160.42 7,729.13 485.84 575.3 773.81 774.92 686.31 3,299.45 4,909.05 5,512.43 6,385.50 7,042.82 24.59 61.41 98.67 75.35 122.71 39.12 -30.76 23.42 86.34 4.59 3,363.16 4,939.70 5,634.52 6,547.19 7,170.12

772.84 871.3 1,032.34 1,280.31 1,593.03 910.11 1,138.32 1,253.26 1,712.98 1,430.91 92.26 117.22 171.55 216.76 250.28 48.19 56.22 61.52 92.58 97.42 935.24 1,241.44 1,267.57 1,405.51 1,653.57 18.32 0 30.15 0 35.48 -13.37 28.88 -8.38 48.58 -4.02

2,776.96 3,454.65 3,808.35 4,728.64 5,069.77 561.61 586.2 96.99 489.21 216.03 0 273.18 12.41 285.59 1,423.64 1,485.05 92.61 1,392.44 226.25 0 1,166.19 0 1,166.19 1,727.50 1,826.17 81.93 1,744.24 237.23 0 1,507.01 0 1,507.01 1,743.20 1,818.55 134.09 1,684.46 323 0 1,361.46 0 1,361.46 1,977.64 2,100.35 124.11 1,976.24 388.08 0 1,588.16 0 1,588.16

55.83 383.91 499.4 384.44 494.92 229.76 782.28 1,007.61 977.02 1,093.24 2,004.12 2,583.35 2,776.01 3,448.33 3,476.74 0 0 0 0 0
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Equity Dividend 21.79 Corporate Dividend 3.06 Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

49.79 6.98

62.24 10.58

62.24 10.58

74.69 12.41

1,243.99 1,244.86 1,244.86 1,244.86 1,244.87 18.47 17.5 83.46 62.84 40 141.69 80.94 50 216.59 78.48 50 289.22 87.82 60 370.05

Table 10: CASH FLOW STATEMENT PARTICULAR Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents Mar '06 285.59 551.63 Mar '07 1166.19 1113.09 Mar '08 1507.01 1375.26 Mar '09 1361.46 1457.57

(Rs.Crs) Mar '10 1588.16 1571.93 -851.66

-357.24 -1046.25 -1441.79 -1645.43

-191.02

-38.84

77.63

191.66

-741.03

3.37

27.99

11.1

3.8

-20.76

58.23 61.6

61.6 89.59

89.59 100.69

100.69 104.49

104.49 83.73

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Table 11: BALANCE SHEET PARTICULARS Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses TOTAL ASSETS Contingent Liabilities Book Value (Rs) Mar '06 124.4 124.4 0.09 0 913.78 0 1,038.27 1,221.93 229.9 1,451.83 2,490.10 Mar '07 124.49 124.49 0 0 1,639.29 0 1,763.78 1,151.25 427.38 1,578.63 3,342.41 Mar '08 124.49 124.49 0.77 0 2,571.73 0 2,696.99 982.66 757.84 1,740.50 4,437.49

(Rs.Crs) Mar '09 124.49 124.49 1.68 0 3,475.93 0 3,602.10 1,175.80 965.83 2,141.63 5,743.73 Mar '10 124.49 124.49 1.99 0 4,482.17 0 4,608.65 854.19 750.33 1,604.52 6,213.17

4,605.38 4,784.70 4,972.60 7,401.02 8,078.14 2,068.21 2,267.42 2,472.14 2,765.33 3,136.46 2,537.17 2,517.28 2,500.46 4,635.69 4,941.68 141.03 696.95 2,283.15 677.28 259.37 172.39 483.45 170.9 1,034.80 1,669.55 379.57 433.58 609.76 691.97 821.7 172.55 183.5 216.61 186.18 215.83 61.5 89.59 100.69 104.49 83.73 613.62 706.67 927.06 982.64 1,121.26 168.23 265.46 390.43 395.71 374.92 0.1 0 0 0 0 781.95 972.13 1,317.49 1,378.35 1,496.18 0 0 0 0 0 1,103.26 1,308.93 1,708.96 1,860.59 1,992.60 39.18 18.47 125.55 121.8 161.01 1,142.44 1,327.40 1,834.51 1,982.39 2,153.61 -360.49 -355.27 -517.02 -604.04 -657.43 0 0 0 0 0 2,490.10 3,342.41 4,437.49 5,743.73 6,213.17 685.42 1,942.56 83.46 141.69 645.17 216.59 355.07 289.22 420.26 370.05

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Table 12: RATIO ANALYSIS PARTICULARS Investment Valuation Ratios Face Value (Rs.) Dividend Per Share (Rs.) 10 1.75 10 4 10 5 10 5 10 6 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Profitability Ratios Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Net Profit Margin(%) Return On Capital Employed(%) Earnings Per Share (RS.) Return On Net Worth(%) 18.47 22.13 62.84 44.35 80.94 37.37 78.48 27.13 87.82 23.73 14.9 6.91 14.8 28.07 15.75 37.54 27.03 17.99 35.55 22.24 15.06 26.45 22.56 15.3 27.22 10.4 24.1 26.61 21.9 22.24

Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Interest Cover (In Times) 0.67 0.34 1.4 4.11 0.71 0.4 0.9 14.45 0.58 0.38 0.65 20.85 0.59 0.34 0.59 12.75 0.67 0.3 0.35 14.97

ACTIVITY/TURN OVER RATIO Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio
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8.75 19.16 21.2

11.46 27.58 34.61

31.16 27.55 31.16

22.89 31.71 22.89

22.65 35.04 22.65

Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio

1.25

1.67

1.11

0.86

0.87

1.33

1.47

1.24

1.11

1.14

0.72

1.03

1.11

0.86

0.87

2.4. SWOT ANALYSIS OF ULTRATECH CEMENT Figure 6: SWOT analysis of Ultra Tech Cement
STRENGTHS *Strong brand image. *Better quality. *Long relationship with customer. *Maintains a world class infrastructure. *Market share. *Large distribution network. *Proper research and development. *Strong financial backing. WEAKNESSES *Delay in supply. *Inconsistency of Supply. *Insufficient manpower.

OPPORTUNITIES * It can develop new marketing areas. * It can sign more MOUs with government regarding supply of cement for Government work. * Maintain the position of competition in the market

THREATS *It has strong competitors like ACC, LAFARG E , AM BUJ A Et c . , Although the Brand Equity Of ULTRATECH CEMENT is AT PAR with ACC and LAFAGE, to maintain the same continuous follow-up in all respect is necessary.

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2.5. FUTURE OUTLOOK Ultra Tech looks at the trends emerging in this sector and analyze how UltraTech can leverage these to its advantage in the light of its competitive advantages. Cost Leadership Striving to become a cost leader by means of setting up captive power plants, and/or upgradation of technology to enhance productivity, is increasingly becoming critical for large cement players in this sector. Rising Exports Due to the increasing construction activity in the Middle-East, exports will constitute a major sales driver. Hence, the coming years would see companies scrambling for bases on the Western coast to minimize their export transportation costs. Retail Stores A unique concept, which Ultra Tech is experimenting with in recent times, and one that is important for the future, is to continue setting up retail stores. Other companies like Asian paints, and most recently Tata Steel have tried a similar concept. Relationship Management UltraTech should focus on managing its relationships with importers, exporters, distributors, warehouse providers, wholesalers, retailers and dealers for their long-term profitability. Synergies with Grasim The two companies under the ABG banner can exploit operational synergies in raw materials procurement, manufacturing, common branding, dealer networking, logistics, and exchange of key personnel. Ready Mix Concrete Finally, one of the recent trends in this sector is the focus on ready-mix concrete. Therefore, an early technology and capacity building in this area would determine the strategic moves of cement companies in the future.

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CHAPTER 3: RESEARCH METHODOLOGY

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This Section presents the procedure of the research; describing its approach, the sample selection, the data and its collection procedure.

3.1. Research Objectives To know the current issues of cement industry To study about the Ultra Tech cement (Company Research) To know the current status of demand & supply in India.

3.2. Research Approach Qualitative data is presented in the form of words, text, symbols and actions. A quantitative study aims to gain an understanding of a certain phenomenons holistic view. Quantitative data is used to construct theories, theoretical hypotheses or practical working hypotheses. Research approach can be Deductive or Inductive. In Inductive approach one collects data and develops theory as result of data analysis. In deductive approach we develop a theory and design a research strategy to test the theory.

We would like to use quantitative approach and somehow a deductive approach because the aim of this work is to test the theory, which means see if econtracting applies or not, and test the theory in specific situation.

3.3. Data collection As our research is somehow an explorative and a descriptive in nature so we have collected data from the secondary sources.

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CHAPTER 4: DATA ANALYSIS

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4.1. TOTAL CONSUMTION OF CEMENT IN INDIA Table 13: Total consumption of cement in India Year Total Growth Rate Consumption (Based On 2004(In MT) 2005) 131.2 Nil 144.8 10.36% 158 20.43% 169.6 29.27% 182.4 39.02% 195.6 49.08% Average Growth Rate

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

24.69%

Source: Cement Manufacturers Association

Graph 3: Total consumption of cement in India

250 200 150 100 50 0 0 49.08% 39.02% 29.27% 20.43% 10.36% 131.2 144.8 158 169.6 182.4 195.6

Total Consumption (In MT)

Growth Rate (Based On 2004-2005)

Source: Cement Manufacturers Association

Interpretation We have taken 2005 as a base year to find average growth rate. As infrastructure sector is continuously growing in India, demand of cement is also increasing. As total consumption of cement is increasing in India year by year, growth rate of cement has also increased. Recently, average growth rate of cement sector is 24.69%. So, it indicates positive sign for cement sector.
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With increase in total consumption of cement, growth rate has also increased since last 5 years. From above calculation, we have come to know average growth rate of cement sector i.e 24.69%. 4.2. DEMAND FORECAST FOR NEXT 5 YEARS Table 14: Demand forecast (In MT) with average growth rate
Year Demand Forecast (In MT) with average growth rate

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

243.89 304.11 379.2 472.82 589.56

Source: Cement Manufacturers Association

Graph 4: Demand forecast (In MT) with average growth rate

Demand Forecast (In MT)

700 600 500 400 300 200 100 0

589.56
472.82 379.2 243.89 304.11 Demand Forecast (In MT)

Source: Cement Manufacturers Association

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Interpretation With the help of average growth rate of 24.69%, we have forecasted demand of cement in India for next 5 years, which come to 243.89, 304.11, 379.2, 472.82, 589.56 respectively.

4.3. TOTAL SUPPLY OF CEMENT As on today the capacity of cement supply is 166.75 MT in India. So we have considered the same supply for further calculation because there is no other plant in developing mode.

4.4 SUPPLY-DEMAND GAP IN CEMENT INDUSTRY

Table 15: Supply-demand gap in Industry Year Supply (In MT) 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 166.75 166.75 166.75 166.75 166.75 Demand (In MT) 243.89 304.11 379.2 472.82 589.56 Supply-Demand Gap (In MT) 77.14 137.36 212.45 306.07 422.81 Rate of Difference NA 78.06% 175.41% 296.77% 448.11%

Source: Cement Manufacturers Association

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Graph 5: Supply-Demand Gap in Industry

700 600 500 400 300 200 100 0 Supply-Demand Gap (In MT) Supply (in MT)

Demand (in MT)

Source: Cement Manufacturers in India Interpretation To find the total supply-demand gap in India, we have assumed 2011 as base year. Supply in 2011 is assumed to be 166.75 MT. From the above calculation, we can say that supply-demand gap of cement in India is continuously increasing year by year. So, there is a shortage of cement in India. This is one of the important factors for rise in price of cement.

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4.5. DEMAND-SUPPLY MATRIX WITH CAPACITY UTILIZATION Table 16: Demand-Supply Matrix with Capacity Utilization
PARTICULARS Supply (a) Demand (b) Difference (c)=(b)-(a) Growth Rate (Y-O-Y) (In %) (d) Capacity Utilization (e)=(b)/(a) All India average prices (INR/50 kg bag) % change Y-o-Y NA 3.4 (2.4) 1.7 1.4 238.1 246.2 240.4 244.6 248.1 146.26 182.37 227.41 283.55 353.56 NA 78.06 54.7 44.07 38.1 2011-2012 166.75 243.89 77.14 2012-2013 166.75 304.11 137.36 2013-2014 166.75 379.2 212.45 2014-2015 166.75 472.82 306.07 2015-2016 166.75 589.56 422.81

Interpretation Capacity utilization of cement industry is increasing year by year. So, it indicates good sign for a country.

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CHAPTER 5: FINDINGS

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5.1 RESEARCH FINDINGS Due To Increase In Total Consumption Of Cement, Growth Rate Of Cement Is Also Increasing. Current Average Growth Rate Is 24.69%. With the help of average growth rate and past data, we have forecasted demand of cement for next 5 years. Graph shows the increasing trend in demand. With the help of constant supply and forecasted demand for next 5 years, we have calculated supply-demand gap. The graph shows that gap is increasing year by year. Capacity utilization of cement industry is increasing year by year. So, it indicates good sign for an industry.

5.2. INDUSTRY FINDINGS

The Industry has been facing a chronic problem of insufficient availability of the main fuel coal, driving the manufacturers to resort to use of alternatives at steep cost.

Taxes and Government levies on cement are high compared to countries in Asia pacific region.

Cement Industry, which was branded as the highest polluter of environment, now meets the pollution standards, and no longer a polluter today.

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

High Govt. levies and inadequate infrastructure facilities at ports and border points make Indian cement uncompetitive in the global market.

Housing sector is expected to remain the largest cement consumer in coming years. With a large percentage of Indian population being below the age of 25, the construction activity is expected to make a significant contribution in the context of growing housing needs, development of

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roads and other infrastructure, urbanization, etc. Reduction in custom duty of Gypsum and Pet coke will have a very negligible impact on the Cost structure of cement companies.

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LIMITATIONS
Most of the projects are hindered in their smooth flow by some unforeseen problems. The problems arise in the form of constraints by budget, time and scope of the study. The current project was also faced by certain problem. Some of the problems faced in the course of this project are as follows:

We have collected and used data from secondary sources. So, there are chances of error. There may be variation in data collected from various secondary resources.

All collected data are checked and validated latest on 27/04/2011.

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CONCLUSION
The cement industry as a whole is not yet on a sustainable path in any of the dimensions of the triple bottom line - society, economy and ecology. From above project, we have found that there is huge demand of cement in India. But, supply is not increasing simultaneously.

To meet this demand-supply gap of cement in India, there is a need of additional production capacity in India.

As there is a shortage of cement in India, there are some chances of malpractices in prices of cement in India.

Government should take certain steps to control the prices of cement in India.

Government can also make agreement with some cement producing country to meet the demand of cement in India.

Process innovations will lead to resource and energy efficiency improvements with resulting cost savings. Product and service innovations will allow companies to meet new demands for construction products with lower environmental impact.

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dated

on

18.

CMIE,Cement Manufacturers Association; Ernst & Young analysis dated on 12/04/2011

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