cement industry - internship

8/14/2019 Cement industry - internship

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TABLE OF CONTENTS

1.EXECUTIVE SUMMARY ................................................................................................. 3

2. INTRODUCTION ............................................................................................................. 6

2.1. INDUSTRY OVERVIEW ................................................................................................... 7

2.2. COMPANY OVERVIEW .................................................................................................. 31

3. PROJECT PROFILE ..................................................................................................... 50

4. OBJECTIVE OF STUDY............................................................................................... 56

5. OBSERVATION AND ANALYSIS ............................................................................. 58

6. FINDINGS ....................................................................................................................... 72

7. RECOMMENDATIONS AND CONCLUSIONS ....................................................... 78

8. LEARNING OUTCOME.........81

9. REFERENCES ................................................................................................................ 84

10. ANNEXURE ................................................................................................................. 86


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LIST OF TABLES,FIGURES &GRAPHS

Table 1 : Region-wise production of cement .............................................................................10

Table 2 : Region-wise Cement Consumption .............................................................................11

Table 3: Cluster-wise capacity of various regions (7 major clusters) ..........................................13

Table 4: Weighted Average Energy Consumption ......................................................................16

Table 5: Particulate Emission Standards from Stacks .................................................................16

Table 6: Permissible Emission ....................................................................................................17

Table 7: Home Loan Rates and disbursement of loans...............................................................23

Table 8: Projects under the NHDP .............................................................................................25

Table 9: Demand & Supply Scenario ..........................................................................................27

Table 10: Historical cement demand supply model ...................................................................28

Table 11: FORECAST MODEL :FY(09) TO FY(12) ..........................................................................29

Table 12: Market share (State-wise) ..........................................................................................41

Table 13: Selling Channels of Birla Gold .....................................................................................43

Figure 1: A Panoramic view of Mines .......................................................................................33

Figure 2: Power Plant View........................................................................................................34

Figure 3: Rail Lines.....................................................................................................................34

Figure 4: View of Greenaries in Plant Area ................................................................................40

Graph 1: Region-wise production increase for Dec 2008 ...........................................................11

Graph 2: Region-wise consumption & YoY growth % .................................................................12

Graph 3: Cement Prices .............................................................................................................17

Graph 4: Cement demand drivers .............................................................................................21

Graph 5: Home Loan Rates and disbursement of loans .............................................................24
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EXECUTIVE

SUMMARY


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EXECUTIVESUMMARY

It is a general phenomenon that buyers in same market seek products for broadly the same

function, but different buyers have different evaluative criteria about what constitute the right

choice of performing the function. As a consequence different offering will attract different

buyers.

A market segment is explained to mean homogeneous group consisting of buyers who seek the

same offering. In other words Market Segmentation may be defined, as the division of the

market in to groups of segments having similar wants. But wants must be interpreted very

broadly, broader than products characteristics only. Segment may differ also in their needs for

information, reassurance, technical support, service, promotion, distribution and host of other

non-products benefits that are part of their purchases; they may also differ in their capacity for

these differences.

Maihar Cement (Birla Gold) is well-established brand in Bihar region, besides it has market in

Madhya Pradesh, Uttar Pradesh, Orissa and other parts of the Country. One of the major

section, which requires or purchases cement in bulk quantity are engineers, architect, builders

and contractors. This section or segment is known as the non-trader segment. And the retailers,

stockists, whole-sellers and dealers are known as trader segment.

I carried out my project concerning Perception of Trade and Non-trade Segments of BIRLA

GOLD Cement in Satna market.

The project was carried out in the market of Satna region in Madhya Pradesh. There are five

major market players in cement industry of these areas. They are Jaypee, Birla Gold, Ultratech,

ACC, and Prism. Apart from these there are few local brands such as Birla Samrat (M.P. Birla

group) in Madhya Pradesh which is selling in the market.

The information about the market was gathered by visiting retailers in the market. Interview of

retailers was taken depending upon there accessibility. Also opinion of engineers, contractors,

architects and builders (who posses knowledge regarding different brands available in the


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market) has been taken. Survey was done for both trade and non-trade segment to get the

right picture about the market scenario.

While doing the project attempt was made to collect maximum information about the market.

To get actual and correct information, it was not told retailers that the survey is conducted by

Maihar Cement for confidentiality reasons. Large numbers of retailers were visited to get the

actual picture of the market. Again, the retailers of each grade (according to the performance)

were visited, to get each and every detail about the market.


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INTRODUCTION


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INTRODUCTION

Cement is a binder which sets and hardens independently, and can bind other materials

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

to describe masonry which resembled concrete and was made from crushed rock with burnt

lime as binder. Cement is an essential component of infrastructure development and most

important input of construction industry, particularly in the governments infrastructure and

housing programs, which are necessary for the countrys socioeconomic growth and

development.

Cement ranks second in volume among the industrial products manufactured in the world. And

it is the most widely used man-made product and second only to water as worlds most heavily

consumed substance. Cement is poly-phased inorganic compound of complex nature formed by

burning of calcareous and argillaceous raw materials as a binding material. Cement is used as a

binding material in various types of civil constructions. Earlier, clay or lime was used for binding

materials together. Its properties include-

Low cost, high performance

Binder with almost any hard material

Building block

Gain strength progressively with ageing

Substitutes with steel, polyester, epoxy-resin, plasticizers

With advancement in manufacturing technology, today cement is a completely technical

product. Various types of grades of cement are being manufactured to satisfy different needs of

the construction industry. However, cement is still considered as a non-technical product and

used in a traditional and often unscientific manner. Compressive strength is the important

known parameter for approving the quality of cement. Strength of cement is also affected by

water-cement ratio, grading of aggregates, methods of preparation, methods of compaction,

curing conditions and atmospheric conditions.


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INDUSTRY OVERVIEW: INDIAN CEMENT INDUSTRY

Cement is the preferred building material in India. It is used extensively in household and

industrial construction. Earlier, government sector used to consume over 50% of the total

cement sold in India, but in the last decade, its share has come down to 35%. Rural areas

consume less than 23% of the total cement. Availability of cheaper building materials for non-

permanent structures affects the rural demand.

The Indian Cement industry is the second largest cement producer in the world. The industry

has undergone rapid technological upgradation and vibrant growth during the last two decades,

and some of the plants can be compared in every respect with the best operating plants in the

world. The industry is highly energy intensive and the energy bill in some of the plants is as high

as 60% of cement manufacturing cost. Although the newer plants are equipped with the latest

state-of-the-art equipment, there exists substantial scope for reduction in energy consumption

in many of the older plants adopting various energy conservation measures.

There are around 11 different types of cement that are being produced in India. The production

of all these cement varieties is according to the specifications of the BIS (Bureau of Indian

Standards). Some of the various types of cement produced in India are:

Clinker Cement

Ordinary Portland Cement (OPC)

Portland Blast Furnace Slag Cement (PSC)

Portland Pozzolana Cement (PPC)

Rapid Hardening Portland Cement

Oil Well Cement

White Cement

Sulphate Resisting Portland Cement

The production of PPC and PSC are based on Fly Ash and Blast furnace slag, the waste product

of Thermal Power Plant and Steel Plant respectively.


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CHARACTERISTICS-

State wise Capacity

As cement is a low value commodity, freight costs assume a significant proportion of the final

cost. Transporting costs render the prices of cement in distant destinations uncompetitive. For

instance, it is financially infeasible to transport cement by road over 250 kms. Railways are

mostly used to transport cement over longer distances. However, its bulky nature and

infrastructure bottlenecks render even rail transport unviable over very long distances (that is

why Madras Cements or India Cements, located in the south, can hardly make a difference to

the fortunes of west-based companies like Gujarat Ambuja). Therefore, manufacturers tend to

sell cement at the nearest market first and sell in distant markets only if additional realization is

greater than freight costs incurred. This highlights the regional nature of the cement industry.

The Indian cement industry has to be viewed in terms of five regions:-

North (Punjab, Delhi, Haryana, Himachal Pradesh, Rajasthan, Chandigarh, J&K and

Uttaranchal)

West (Maharashtra and Gujarat)

South (Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, Pondicherry, Andaman &

Nicobar and Goa)

East (Bihar, Orissa, West Bengal, Assam, Meghalaya, Jharkhand and Chhattisgarh)

Central (Uttar Pradesh and Madhya Pradesh)

South accounts for 33.03% of cement production capacity of the country, with Andhra Pradesh

accounting for 15.27% of the total production capacity of India. It has an installed capacity of

around 20mn tons of cement and ranks first in the country, followed by Tamil Nadu with 9.94%

of the total production capacity.

North accounts for 18.02% of the total production capacity, with Rajasthan at 12.55% of the

total production capacity of the country.

West accounts for 16.85% of the total production capacity. Maharashtra and Gujarat have

production capacity of 6.89% and 9.96% respectively.


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East and Central Regions account for 16.33% and 15.77% of the total production capacity of the

country respectively.

Production & Dispatches (Region-wise):During the month of December 2008 the cement industry posted excellent growth in

production mainly from the northern and the eastern region of the country. The demand

continued to be strong as can be evident from the capacity utilization levels in all the major

regions. Increase in installed capacities by some players also contributed to improved

production growth.

The central region of the country achieved the highest capacity utilization rate of 98%.

The northern region and the eastern region had a capacity utilization rate of 93%

respectively.

The western region and the southern region had a capacity utilization level of 95% and

86% respectively.

The overall cement production and dispatches increased by 11% to 15.82 million metric tonnes

and 15.81 million metric tonnes respectively during the month of December 2008 as compared

to the same period last year. Excess dispatch implies that there is strong demand as inventories

are being disposed off quickly. The production and dispatches were higher by 10% and 11%

respectively as compared to the previous month.

The following graph gives a clear indication of the increase in production (Region wise) in

December in comparison to the previous month.

Table 1 : Region-wise production of cement

Region Increase % Production in million tonnes

Central 13 2.31

Northern 22 3.74

Southern 9 4.94

Western 2 2.51

Eastern 9 2.32


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(Source: Capitaline)

Graph 1: Region-wise production increase for Dec 2008

CONSUMPTION:

Southern region continued its trend of higher consumption with the total consumption

reaching a level of 4.58 million tonnes thus registering a YoY growth rate of 9.3%. Andhra

Pradesh and Tamil Nadu were the dominant consumers in the southern region accounting for

1.59 and 1.3 million tonnes respectively. Following South is the Western region with a

consumption of 3.02 million tonnes. The following graph gives a clear indication of the region

wise consumption and their YoY growth percentage.

Table 2 : Region-wise Cement Consumption

Region Consumption YoY growth %

Central 2.38 25

Northern 3.21 11.7

Southern 4.58 9.3

Western 2.46 14.1

Eastern 3.02 8.3

0

5

10

15

20

25

Northern Central Southern Western Eastern

Percentage

Region-wise Production increase for Dec 2008


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(Source: PL Research)

Graph 2: Region-wise consumption & YoY growth %

Trade between these regions is on a very low scale mainly because of the transportation

bottlenecks and uncompetitive cost of transportation. This apart, there are other factors that

determine the location of a cement plant. Proximity to limestone deposits, availability of coal

and power and the markets the plants cater to, are some of the critical factors that determine

the viability of a cement plant.

Seven Clusters:

Cement and its raw materials namely coal and limestone, are all bulky items that make

transportation difficult and uneconomical. Given this, cement plants are located close to both,

sources of raw materials and markets. Most of limestone deposits in India are located in

Madhya Pradesh, Rajasthan, Andhra Pradesh, Maharashtra and Gujarat, leading to

concentration of cement units in these states. This has resulted in clusters. There are seven

such clusters in the country and account for 51% of the cement capacity. There is a trade-off

between proximity to markets and proximity to raw materials due to which some cement

plants have been set up near big markets despite lack of raw materials.


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CLUSTER CAPACITY

Satna, MP 11.77 mntpa

Chandrapur, Maharashtra/ AP 9.59 mntpa

Gulbarga, Karnataka/ AP 6.83 mntpa

Yerranguntla, AP 1.9 mntpaNalgonda, AP 5.85 mntpa

Bilaspur, MP 9.7 mntpa

Chandoria, Rajasthan/ MP 7.03 mntpa

(Source: www.researchand markets.com)

Table 3: Cluster-wise capacity of various regions (7 major clusters)

Factors Affecting Cement Industry:

LIMESTONE RESERVES

Limestone is the main raw material for manufacture of cement. For manufacture of one tonne

of cement, a quantity of 1.5 tonne of limestone is required. India is endowed with large

deposits of limestone. The estimated total reserves of cement-grade limestone are 95.623

billion tonnes. However, the limestone deposits are not uniformly distributed in all the States.

There is a concentration of about 73 per cent of the total reserves in five States, namely,

Andhra Pradesh, Karnataka, Gujarat, Rajasthan and Madhya Pradesh. This concentration is

about 48 per cent in South Zone, 23 per cent in North Zone, 21 per cent in West Zone and the

remaining 8 per cent in East Zone.

COAL

The consumption of coal in a typically dry process system ranges from 20-25% of clinker

production. This means for per ton clinker produced 0.20-0.25 ton of coal is consumed. This

contributes 35-40% of the production cost. The cement industry consumes about 10mn tons of

coal annually. Since coalfields like BCCL supply a poor quality of coal, NCL and CCL the industry

has to blend high-grade coal with it. The Indian coal has a low calorific value (3,500-4,000

kcal/kg) with ash content as high as 25-30% compared to imported coal of high calorific value
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91% of the total kiln capacity comprise dry process, 7% wet process and the remaining 2% on

semi-dry process based technologies.

Indian cement industry has been actively pursuing various avenues to improve its productivity

and energy efficiency. There has been all-around upgradation of technology in all sections of

the plant like mining, process, equipment and machinery, packaging and transportation.

Adoption of modern techniques like photo-grammetry and remote sensing has enabled the

industry to discover virgin limestone. Advanced equipment like hydraulic excavators, surface

miners, large wheel loaders and mobile crushers have helped the industry in increasing its

productivity considerably. The modern raw material evaluation and management system starts

from computerized mine planning through on-line bulk material analysis to automated X-ray

analysis and process computers to control the weigh feeders. Expert systems based on fuzzy

logic are used to control the operation of kilns and mills to ensure that the process systems

operate at optimum levels of energy efficiency all the time. Energy efficient technologies are

being adopted for a new as well as for retrofits, modernization and expansion of existing plants.

A number of cement plants in the country are now equipped with double string pre-heater

towers with pre-calciners, vertical roller mills, roller presses, high efficiency fans and motors

with slip power recovery systems. Besides this, the software approach involving detailed

process diagnostic studies and energy audits are used successfully by almost every large andmedium sized cement plant in the country.

ENERGY CONSERVATION

The cement industry is an energy intensive industry by virtue of high temperature reactions and

various physical operations involved in its manufacture. The industry uses both coal and power

as energy inputs. The cost of energy accounts for about 45% of the total production cost.

Energy management in modern cement plants in India meets the standards comparable with

the best in the world. Energy studies of cement plants are being carried out in a large number

of plants on a continuing basis by the National Council for Cement & Building Materials (NCB).

NCB has a mobile energy diagnostic unit (Energy Bus) equipped with necessary instrumentation

and on-board computer with relevant software for conducting the energy studies on systematic


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and accurate manner. NCB has been giving National Awards for Energy Efficiency in Indian

Cement Industry to the best performing cement plants on annual basis since 1986. Based on

the recent data of 51 participating plants, the weighted average energy consumption is: -

Thermal EnergyConsumption

(Kcal/kg Clinker)

Electrical EnergyConsumption (kWh/t

Cement)

Dry Process Plants 763 96.88

Overall (Combined for all

Processes)

769 96.86

(Source: NCB)

Table 4: Weighted Average Energy Consumption

POLLUTION CONTROL

The main source of pollution in cement industry is dust emission. The industrys achievement in

controlling particulate emission has been quite satisfactory. Considerable progress has been

made in installing Electrostatic Precipitators (ESPs) and bag houses/fabric filters in various

sections of cement plants, especially after the promulgation of the environment legislation in

1981 and 1986. The Central Pollution Control Board has fixed standards for particulate

emissions from stacks as under: -

Capacity Protected Area Other Area

200 tpd & less 250 mg/Nm3 400 mg/Nm3

Above 200 tpd 150 mg/Nm3 250 mg/Nm3

(Source: government data)

Table 5: Particulate Emission Standards from Stacks

However, the State Pollution Control Board have authority to make the limits more stringent, if

required and accordingly the following States have formulated particulate emission for general

area as under :-


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(Source: government data)

States

Permissible particulate emission levels for

general area

Madhya Pradesh 150 mg/Nm3

Gujarat 150 mg/Nm3

Andhra Pradesh 115 mg/Nm3

Himachal Pradesh 150 mg/Nm3

Rajasthan (some parts) 150 mg/Nm3

Table 6: Permissible Emission

PRODUCTION COSTSCement companies reported 10 per cent growth in their revenues, while their net profit

declined by 21 per cent on compression of margins, last year. Almost all cement companies

faced margin pressures on account of an increase in their overall production costs. Coal which

accounts for almost 35-40 per cent of the cost of production of cement is in short supply. Coal

prices increased by over 100 per cent in the last one year. This has lead to an overall increase in

the cement prices, thus affecting the demand for it.

Graph 3: Cement Prices


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

consolidation in the Indian cement industry are: Gujarat Ambuja taking a stake of 14 per cent in

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

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

business of L&T, Indian Rayon's cement division, and Cimpor, the Portuguese cement maker,

paid US$ 68.10 million for Grasim Industries' 53.63 per cent stake in Shree Digvijay Cement.

Foreign cement companies are also picking up stakes in large Indian cement companies. Swiss

cement major Holcim has picked up 14.8 per cent of the promoters' stake in Gujarat Ambuja

Cements (GACL). Holcim's acquisition has led to the emergence of two major groups in the

Indian cement industry, the Holcim-ACC-Gujarat Ambuja Cements combine and the Aditya Birla

group through Grasim Industries and Ultratech Cement. Lafarge, the French cement major

Lafarge has acquired the cement plants of Raymond and Tisco. Italy based Italcementi has

acquired a stake in the K.K. Birla promoted Zuari Industries' cement plant in Andhra Pradesh,

and German cement company Heidelberg Cement has entered into an equal joint-venture

agreement with S P Lohia Group controlled Indo-Rama Cement.

Issues concerning Cement Industry -

High Transportation Cost is affecting the competitiveness of the cement industry.

Freight accounts for 17% of the production cost. Road is the preferred mode fortransportation for distances less than 250km. However, industry is heavily dependant on

roads for longer distances too as the railway infrastructure is not adequate.

Cement industry is highly capital intensive industry and nearly 55-60% of the inputs are

controlled by the government.

There is regional imbalance in the distribution of cement industry. Limestone availability

in pockets has led to uneven capacity additions.

Coal availability and quality is also affecting the production.

Technological change is the way to the future. Continuous technological upgrading and

assimilation of latest technology has been going on in the cement industry. There is

tremendous scope for waste heat recovery in cement plants and thereby reduction in

emission level.


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Government Policies

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

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

contributed to the gradual opening up of the market for cement producers. The stages ofgrowth of the cement industry can be best described in the following stages:

Price and Distribution Controls (1940-1981):

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

the Defence of India Rules and was brought under price and distribution controls which

resulted in sluggish growth. The installed capacity reached only 27.9 MT by the year

1980-81.

Partial Decontrol (1982-1988):In February 1982, partial decontrol was announced. Under this scheme, levy cement

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

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

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

mere 27.9MT in 1980-81, an increase of almost 111%.

Total Decontrol (1989):

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

decontrolling the cement industry, the government relaxed the forces of demand and

supply. In the next two years, the industry enjoyed a boom in sales and profits. By 1992,

the pace of overall economic liberalization had peaked; ironically, however, the

economy slipped into recession taking the cement industry down with it. For 1992-93,

the industry remained stagnant with no addition to existing capacity.

Government Controls

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

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

is now encouraging the use of wastes such as slag and fly ash as a substitute to limestone

concerning environmental issues which helps in reducing pollution.


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EXPORTS

The cement sector is relatively insulated from international markets. This is largely due to

inadequate infrastructure to carry on international trade. Being a very bulky item, international

trade is very limited and only between neighboring states. This is amply borne out by the factthat cement accounts for not more than 0.20% of total world exports.

Having a long coastline, India is well positioned to export cement to the Middle East and Sri

Lanka. However, congestion at the Indian ports and lack of cement handling facilities restrict

the free movement of cement out of India. Hence, only those companies who have their own

jetties are able to export. Moreover, currently, prices in the international market too are at un-

remunerative levels. Nevertheless, companies like Gujarat Ambuja and L&T are major

exporters, who export mainly to get incentives like duty-free import of high grade coal and oil.This apart, large scale cement exports are possible only when cement prices in the international

market look up.

REASONS FOR THE GROWTH OF CEMENT INDUSTRY

The domestic cement industry is highly insulated from global cement markets. Exports have

been constant at about 6% of total cement demand for past few years. With the Government ofIndia intervention, making cement duty free, cement is being imported from neighboring

countries. However, due to logistics issues and lack of port handling capabilities imports of

cement will remain negligible and do not pose a threat to domestic industry. Earlier

government sector used to consume over 50% of the total cement sold in India but in the last

decade, its share has come down to 35%.

Demand for cement is linked to the economic activity in any country. Broadly, it can be

categorized into demand for housing construction (homes, offices etc.) and infrastructure

creation (ports, roads, power plants etc). The real driver of cement demand is creation of

infrastructure; hence cement demand in emerging economies is much higher than developed


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countries where the demand has reached a plateau. In India too, the demand for cement will

be affected by spending on infrastructure (including housing).

Indian Cement Industry Demand Drivers - 2009

(Source CMA) Graph 4: Cement demand driversHousing and infrastructure sectors constitute a major part of the total demand for cement in

India. These two sectors have been further analyzed.

HOUSING

Housing, besides being a very basic requirement for the urban settlers, also holds the key to

accelerate the pace of development. Investments in housing, like any other industry, have a

multiplier effect on income and employment. Construction sector employment is growing at

the rate of 7% per annum. Housing provides opportunities for home-based economic activities.

The Indian Housing sector has grown by leaps and bounds in the last few years. The total home

loan disbursements to this sector has risen from Rs 19,723 crore in the year ended 2000 to a

massive Rs 2,52,932 crore in the year 2008.This robust growth has been triggered by a number

of factors. Some of which are:

Tax rebates on housing loans


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Continued growth in population

Decrease in number of people per household (average size of household)

Rise in disposable income levels

Lower interest rates and easy availability of housing finance

Also the Housing Finance Companies and banks have introduced various schemes to attract the

young generation borrower. Free home insurance, lower rates for purchase of consumer

durables, household goods, and refinance options are some of the noteworthy schemes that

the institutes have come up with to attract the borrowers.

The Indian housing industry is highly fragmented, with the unorganized sector, comprising small

builders and contractors, accounting for over 70% of the housing units constructed and the

organized sector accounting for the rest. The organized sector comprises large builders and

government or government affiliated entities. The housing market witnessed a frenzied boom

in the early nineties on the back of a booming stock market and a liberalization process that

was kicked off in 1991. The stock market and real estate markets crashed in quick succession

1994 and 1995 respectively, followed by a prolonged period of about 8 years of little or no

appreciation in real estate. The crash, accentuated by high inflation and high interest rates, notonly kept speculative inflows out but also kept genuine home seekers at bay. However, reversal

in that trend is being witnessed in the past 3-4 years because of several reasons.

One of the most important reasons is that the rural people are moving from thatched mud

units to pucca (brick and mortar) structures. With increasing rural affluence, demand for

cement for construction of houses in villages has gone up significantly overt the last few years.

The cement industry is expecting around 50 per cent of the overall demand to come from therural housing sector during the current year and beyond. Rural people, especially in the most

underdeveloped states, are increasingly replacing thatched mud hutments and switching over

to pucca structures. While a marked increase in demand is being seen in the rural parts of


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predominantly underdeveloped states such as Bihar, Chhattisgarh and Uttar Pradesh, the hill

states of Uttarakhand, Himachal Pradesh and the north-east are also seeing a spurt in demand.

The Centre's latest estimates peg the estimated shortage of houses in rural areas at around 15

million as against an overall shortage of 22 million dwelling units in the rural and urban areas

put together. The Centre, under its Bharat Nirman programme, expects over six million houses

to be built in rural areas over the next four years. Rural housing projects undertaken by about

15 states through their own capital subsidy or credit-cum-subsidy schemes have also resulted in

rural housing coverage going up during the last few years. These states, including Tamil Nadu,

Andhra Pradesh, Karnataka, Gujarat, Uttarakhand, Jharkhand, Sikkim, Meghalaya and Punjab,

have together constructed about 27 lakh houses from 2001 to 2005, according to Planning

Commission estimates. The cement industry recorded another year of double digit demand

growth (10 per cent for 2006-07). The demand buoyancy is witnessed across sectors with

increased focus on infrastructure development, rising industrial activity, and strong real estate

demand from commercial and residential sectors.

Table 7: Home Loan Rates and disbursement of loans

Year Interest Rate (in %) Quantum of Loan

lent in Rs Crore2000 13.00 19,723.38

2001 12.15 22,425.09

2002 11.35 29,359.29

2003 09.85 51,672.70

2004 07.65 89,449.00

2005 07.50 1,34,276.00

2006 08.50 1,79,060.00

2007 11.00 2,24,481.00

2008 9.00 2,52,932.00

(Source: RBI Trend and Progress Reports)


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Another reason is the fall in interest rates, which have also greatly contributed to the growth of

the housing sector thus fuelling the demand for cement and in turn its production. The

following graph gives a clear indication of the rise in the quantum of loans lent as against the

rate of interest prevailing over a period of time.

Graph 5: Home Loan Rates and disbursement of loans

INFRASTRUCTURE

Infrastructure projects along with commercial constructions accounts for about 35% of the total

cement consumption in India. With the government increasing its focus on infrastructure

spending, particularly on roads, ports and airports, the cement demand is likely to go up in the

near future.

Since India began opening up in 1991, until recently, the progress of infrastructure has been

very poor and has been a zigzag process. But if one considers the following developments, it

would be visible that India is turning the corner on the infrastructure question and in turn

spurring the demand for cement.


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Firstly, there are over a hundred Special Economic Zones (SEZs) in India either in operation or

under construction. Many international companies, like Nokia and automotive makers like

Volvo, are actually producing in the SEZs. Construction has been taking place land clearance

has been done to relocate squatters or farmers away from their land and this has already

happened in the last five years or so.

The other thing to look at is the organized retail sector in India. There are well over 500 retail

malls either already operating in India or in various stages of construction and this is also new in

the last three to five years.

The various road projects under the National Highway Development Program (NHDP Phase I

and II) initiated by the previous government are being successfully implemented by the present

government. Further, government has also announced new projects namely NHDP Phase, III, IV,

V and VI, which include having four lanes on high density highways, upgradation of existing

highways, six-laning of roads under NHDP Phase I and also 1,000kms of new expressways. The

total cost of these new projects is about Rs. 1,075 billion and is expected to be completed by

FY2012. A total demand of close to 50 million tonnes of cement is expected from the above

projects.

Table 8: Projects under the NHDP

Project Details Date of

completion

Cement Consumption

(Mn tonnes)

NHDP Phase I GQ & Portconnectivity 90% complete -

NHDP Phase II NSEW Corridor Dec, 2009 8.8

NHDP Phase III Four laning of 10,000 kms of

high density National

Highways

Mar, 2010 12.8

NHDP Phase IV Upgradation of existing20000 highways to 2 lane Mar, 2012 18.0

NHDP Phase V Six laning of GQ & other high

density highways

Mar, 2012 3.5

NHDP Phase VI 1000 kms of expressways Mar, 2012 4.5

Total 47.5

(Source: NHAI, committee on infrastructure)


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Moreover, the government has set aside over USD 100 billion for infrastructure spending in

between 2007 and 2012. New airports have come up and the efforts are on to modernize the

existing ones. Thus, infrastructure is getting its share of attention and in turn spurring demand

for cement.

Global Players entering the Indian Market:

Rapid urbanization and the booming infrastructure have lead to an increase in construction and

development across India, attracting even the global players. The recent years have witnessed a

surge of foreign direct investment in the cement sector. International players like France's

Lafarge, Holcim from Switzerland, Italy's Italcementi and Germany's Heidelberg Cements

together hold more than a quarter of the total capacity. Holcim, one of the world's leading suppliers of cement, has 24 plants in the country and

enjoys a market share of about 2325 per cent. It will further invest about US$ 2.49

billion in the next five years to set up plants and raise capacity by 25 MT in the country.

Holcim has a global sale worth about US$ 20 billion, where India contributes US$ 2

billionUS$ 2.5 billion.

Italcementi Group, which acquired full stake in the K K Birla promoted Zuari Industries'

cement, for US$ 126.62 million in 2006 plans to invest US$ 174 million over the next two

years in various Greenfield and acquisition projects.

The French cement major, Lafarge which acquired the cement plants of Raymond and

Tisco with an installed capacity of 6.5 MTPA a few years back plans to grow it to 15-30

MTPA in the next 10 years. Till now its manufacturing capacity was concentrated in East

India, but now the company is spreading its wings to the north and south. It is setting up

four Greenfield projects in Rajasthan, Himachal Pradesh, north-east and south India,

with a combined capacity of around 5 MT.

German major, Heidelberg Cement has merged Mysore Cement, in which it owns

around 54 per cent stake, Indorama, (where it acquired 100 per cent stake in 2008) and

its 100 per cent Indian subsidiary, Heidelberg Cement India.


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Current Scenario: Indian Cement Industry

The cement industry has continued its growth trajectory over the past seven years. Domestic

cement demand growth has surpassed the economic growth rate of the country for the past

couple of years. The growth rate of cement demand over the past five years at 8.37 % was

higher than the rate of growth of supply at 4.84% as also the rate of growth of capacity addition

during the same period. Demand for cement in the country is expected to continue its buoyant

ride on the back of robust economic growth and infrastructure development in the country.

DEMAND & SUPPLY SCENARIO

Date Production (% change) Consumption (% change) Capacity utilization (%) Excess supply(%)

Jan-08 5.2 10.8 102.4 1.0

Feb-08 (0.9) 5.4 101.2 0.1

Mar-08 11.2 (0.3) 104.1 1.8

Apr-08 (8.3) 10.7 91.9 (1.1)

May-08 (0.9) (9.8) 89.1 0.4

Jun-08 (1.5) 2.0 86.5 (0.2)

Jul-08 (0.1) (1.3) 86.4 0.0

Aug-08 (10.2) (2.5) 77.3 (1.1)

Sep-08 5.6 (9.5) 81.6 1.0

Oct-08 6.2 4.9 86.3 1.2

Nov-08 (2.9) 3.1 83.3 0.4

Dec-08 10.3 0.9 91.7 1.7

Jan-09 2.0 11.0 93.4 0.5

(Source: www.ibef.org) Table 9: Demand & Supply Scenario

The table above highlights the fact that consumption of cement has not taken back seat and

industry is growing and has been operating at the near equilibrium levels. Supply has fallen

short only for last monsoon which is usually a slack period for this industry. It is clearly can be


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noted from the above data the production in Jan(08) 5.2% and in Dec(08) production increased

to 10.3% and consumption in Jan(08) 10.8% and in Dec(08) 0.9% and in Jan(09) increased to

11.0% and the supplies in Jan(09) become 0.5% in excess which is a indicator that cement

industry has a significant growth over the year.

SUPPLIES ESTIMATES

*in (m tonnes) FY04 FY05 FY06 FY07 FY08 FY09

Year-end installed capacity 144 152 158 166 199 222

Actual effective capacity 144 152 158 166 180 207

(-) Mothballed capacity 8.5 8.2 8.5 8.3 5.7 4.9

Effective installed capacity 136 143 150 158 174 202

Domestic consumption 114 121 136 149 164 178

Export (cement + clinker) 9 10.1 9.2 8.9 6 6.1

Domestic consumption + export 123 131 145 158 170 184

Surplus / (deficit) 13 12 5 0 4 18

% surplus (w.r.t effective capacity) 10% 9% 3% 0% 2% 9%

Actual utilization 86% 88% 95% 99% 97% 91%

Average prices 141 153 163 206 231 239

Change in average price 3% 8% 6% 27% 12% 4%

Capacity growth 5% 6% 4% 6% 10% 16%

Domestic demand growth 5.80% 6.40% 12.00% 9.90% 10.10% 8%

(Source: www.ibef.org) Table 10: Historical cement demand supply model

Historically, the sustainable capacity utilization in the cement industry has been 80-85%. This

implies FY09 and FY10 are unlikely to be years of overcapacity in the traditional sense. This

indicates the self efficiency of the Indian Cement Industry and also emphasizes that India

doesnt require import of cement in future. Domestic Cement industry is highly insulated from


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global cement markets. Exports have been constant at about 6% of total cement demand for

past few years.

FORECAST MODEL*in (m tonnes) FY09 FY10E FY11E FY12E

Year-end installed capacity 222 250 287 300

Actual effective capacity 207 231 257 283

(-) Mothballed capacity 4.9 4.9 4.9 4.9

Effective installed capacity 202 226 252 278

Domestic consumption 178 187 205 226

Export (cement + clinker) 6.1 5 8 9

Domestic consumption + export 184 192 213 235

Surplus / (deficit) 18 35 38 43

% surplus (w.r.t effective capacity) 9% 15% 15% 15%

Actual utilization 91% 85% 85% 85%

Average prices 239 240 240 240

Change in average price 4% 0% 0% 0%

Capacity growth 16% 12% 11% 10%

Domestic demand growth 8% 5% 10% 10%

(Source: www.ibef.org) Table 11: FORECAST MODEL :FY(09) TO FY(12)

The above model is a forecast model for the growing cement sector from FY09 to FY12 the

contributing factors taken to consideration are -

o Export

o Domestic Consumption

o Average Prices

o Capacity Growth and


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o Domestic Demand Growth

The above factors are increasing in a considerable rate indicating a positive sign towards the

growth of this sector.


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COMPANY OVERVIEW

Introduction:

Maihar Cement is a division of Century Textiles and Industries Ltd, a flagship company of BK

Birla Group. The company is well diversified having interest in cement, textiles, rayon,

chemicals, pulp and paper.

Maihar Cement is situated at Sarlanagar (Maihar) Dist. Satna in the State of Madhya Pradesh

with an installed capacity of 4.20 Million TPA. Maihar is 45 Kms South - East of Satna on

Howrah - Mumbai Central Railway Main Line. Maihar is well known for Sharda Devi Temple and

Maihar Gharana Music whose proponent was renowned Musician Padma Vibhushan Baba

Allaudin Khan.

Devi Sharda (Maihar)

Apart from Maihar Cement, company has two more cement plants namely Century Cement at

Baikunth, Dist. Raipur in the State of Chhattisgarh with an installed capacity of 2.10 Million TPA

and Manikgarh Cement at Gadchandur, Dist. Chandrapur, Maharashtra with an installed

capacity of 1.90 Million TPA. The combined Capacity of all cement plants taken altogether is


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8.2 Million TPA. More emphasis is given for production of blended cement which constitutes

about 95% of the total cement produced by the company.

Plants of Century Textiles & Industries Limited:

Century Cement - Chhattisgarh

Maihar CementMadhya Pradesh

Manikgarh Cement Maharashtra

The capacity enhancement to 8.20 Million TPA is under implementation by carrying out

modification, up gradation and debottlenecking of existing plant & machinery and equipments,

Units

Figures in Million TPA

2008-09

Century Cement 2.1

Maihar Cement 4.2

Manikgarh Cement 1.9

Total 8.2


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which is likely to be completed by Oct-Dec 2009 Quarter. All cement plants are equipped with

captive power plants, which not only ensure an uninterrupted power supply, but also help

company substantially on power cost, as the own generated power is quite economical as

compared to grid power.

The company sells its cement under its premium brand name - BIRLA GOLD.

Shri B.K. Birla group has three more plants :

1) M/S Kesoram cement for southern region

2) M/S Vasavdutta ceent for southern region

3) M/S Manglam cement for western region

Captive Mines:

Maihar Cement has its own Captive Mines with rich limestone reserves at Bhadanpur just 7 Kms

from the plant. Mines' working is fully mechanized and an overland belt conveyor of 7 kms

passing through hilly terrain transports limestone from mines to plant. The aesthetic view of

the surrounding area has been maintained by afforestation of the mining area and also by

creating water reservoir in the excavated area.

Figure 1: A Panoramic view of Mines


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Captive Power Plant:

To meet the need of the hour and in order to reduce the cost of production, so as to be

competitive, Maihar Cement has installed its own Captive Thermal Power Plant and the

total installed capacity is 35 MW which is helpful in uninterrupted running of the plants onsustainable basis.

Figure 2: Power Plant View

Logistics:

Strategic location of the plant, connected with NH-7 puts Maihar Cement in a very

advantageous position so far as logistics is concerned. The Plant is well connected by Road with

all the major marketing centers. Being situated on Mumbai - Howrah (via Allahabad) main

Railway Line, it is also well connected with all the States in East & North East.

Figure 3: Rail Lines


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Maihar Cement is pioneer in producing Blended Cement i.e. Portland Pozzolana Cement. The

motivation for the production of blended cement has been primarily with the aim of preserving

limestone reserves and environment.

Advantages:

Low Heat of hydration resulting in resistance to cracking.

Resistance to corrosive water and chemical attacks and thereby longer life to steel/iron

structure underneath.

High degree of impermeability and workability for the concrete mix.

Higher ultimate strength at longer duration

Higher degree of fineness, resulting in -

- Complete chemical reaction

- Easy workability

- Increased plasticity

Reduced Alkali aggregate reaction as also free lime expansion and thereby resistance to

cracking.

Lower drying shrinkage and low leaching value.

PPC can be used for any type of construction which earlier had been the forte of OPC. However due

to it's special attributes, its use is rather imperative for the following construction works.

Uses:

Hydraulic Structures

Mass Concreting Works

Marine Structures

Masonry Mortars and Plastering

Under aggressive Conditions

The basic raw material in the production of cement is Limestone. The Limestone ore as

obtained from the Mines is fed to the Raw Mills after first crushing it to acceptable size. Certain


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additives such as Laterite, Bauxite, High Grade Limestone (Sweetener) etc. are also introduced

along with Limestone into the Raw Mills as applicable. In the Raw Mills, the above inputs are

reduced to a particular fineness. The output of the Raw Mills, called 'Raw Meal' is then burnt

in the Kiln and then cooled to produce Clinker.

The fuel used for burning of limestone is powdered coal produced from the coal Mill. The

Clinker is thereupon fed into Cement Mill & pulverized along with Gypsum to yield the basic

cement. A certain proportion of Clinker in the production of cement is replaced by Fly ash to

produce PPC.

Process in Nutshell

Scenic View of Our Uniqueness:

1. Limestone excavated from Mines is transported through Dumpers and fed to crushers

wherein it is reduced from above 850 mm to 80 mm size.

2. Environmental friendly Conveyor belts transport the limestone from the Crusher to the

Plant Site over a distance of 7 kms.


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3. Scientifically designed Stackers provide for stacking of the limestones received from the

mines in circular / longitudinal stock piles. Use of Reclaimers ensures consistency in

quality.

4. State of the Art Vertical Roller Mill grinds Limestone feed to powdered form called Raw

Meal.

5. Most advanced Coal Mill pulverizes the coal to be injected into Kiln for burning of Raw

Meal.

6. Rotary Kiln provides for Clinkerisation where in Raw Meal fed from VRM is first burnt to

melting (1400 C) & then cooled to 100 - 120 C by means of coolers immediately outside

the Kiln to produce Clinker.


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7. Close Circuit Cement Mill ensures high quality grinding of clinker, gypsum and Pozzolana

to yield best possible uniformity of the cement particles.

8. Centralized Control Room monitoring the manufacturing process through computers.

Consistency and accuracy in the packing of bags by electronic packing machines:

Packing Plant is equipped with computer controlled electronic packers, which ensure that

cement bags are packed and sealed to 50 kg of cement each accurately. Manual check is also

carried out at random to monitor computer accuracy and introduce correction as applicable.

Packing & Dispatch:


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Loading of bags in the wagon/trucks is carried out automatically by means of wagon / truck

loading machines, equipped with Electronic Loading Counters which accurately keep count of

the Number of bags being loaded.

Efficient logistic & transportation network ensures prompt delivery of materials to the

customers.

Environmental Management System:

Right from inception, great emphasis has been laid at Maihar Cement on maintaining ecological

balance and environmental preservation so as to provide green, healthy and pollution free

environment. Continuous monitoring of various Pollution Control equipments are done round

the clock to maintain emission levels much below the norms specified by State Pollution

Control Board.

Measures Taken Towards a Cleaner Environment

Installation of highly efficient Pollution Control Equipments viz., ESPs, Bag Houses and

Pulse Jet Dust Collectors at every dust generating point in the Plant.

Regular monitoring of all stacks and ambient air quality.


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Proper treatment of domestic affluent generated from residential colony in Oxidation

Ponds and use of treated water for plantation purposes.

Massive efforts for plantation of various species of trees for ecological up-gradation.

Figure 4: View of Greenaries in Plant Area

To control fugitive emission, following additional steps have been taken:

Covering of Conveyor belts transporting various process materials

All raw materials are stored in covered gantry.

Water sprinklers have been provided on the roads to check fugitive emission generated

due to movement of vehicles

Concretization of roads and floors inside the Plant

The Fly Ash generated from Thermal Power Plant is used as an additive for manufacture

of PPC.

The Plant maintains perfect harmony with environment through effective pollution control

measures in respect of air, water, land and noise level. All efforts are made to curb pollution at

grass root level.


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Customer service:

Customer delight remains focus of companys marketing mix. For that company

provides best quality cement to the customers followed by prompt and perfect After

Sales Services. Later, independent customer feedback assessment is done to evaluatethe degree of satisfaction, which is the key to Birla Golds marketing strategy.

Technical Service Cell has been setup to provide technical assistance to institutions

and people engaged in construction work. Besides on site assistance brochures and

useful guidelines for cement usages provided regularly. Masons, contractors, Architects

and Engineers are also trained on regular basis and so far 53715 such persons have been

trained.

Advertisements and Promotional campaigns are created and executed in-house by

innovative marketing professionals involving whole gamut of activities right from

conceptualization to execution stage.

Market Regions of Birla Gold:

Maihar Cement sales are mainly spread in Madhya Pradesh, Uttaranchal, West Bengal, Bihar,

Uttar Pradesh, Assam and Orissa. The increasing congestion of plants in the Satna belt has led

to intense competition in M.P. market.

Sl No. State Share

1 Bihar 25.91%

2 Uttar Pradesh 46.83%

3 Madhya Pradesh 17.86%

4 Uttaranchal 2.47%

5 West Bengal 1.15%

6 Assam 3.48%

7 Export 2.29%

(Source: company data) Table 12: Market share (State-wise)


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Cross Branding:

Introduction of cross branding concept is the major achievement as packaging of different

brands of Century, Maihar and Manikgarh cement from different manufacturing facilities

started selling as a single brand Birla Gold; which in turn has given freight benefits and

advantage of brand powers of established brands like Birla Faulad, Century Gold, Century

Classic etc. This has significantly improved brands base and realization to cement division.

SELLING CHANNELS:

(1) Stock Transfer:

In Bihar and Uttar Pradesh sales are through stock transfer to company dumps. Handling Agents

manage companys godown / dumps and cement marketing under instruction of the companyslocal office. Cement is sold through dealers.

(2) Consignment Sale:

Earlier sales in Bihar, Orissa, Assam, A.P. and N.E. States, were made through Consignment

Agents. The Consignment Agents used to develop market and sale cement through dealers.

Storage / Warehousing, sales, collection of payment, tax payment and advertising in the area

were under their responsibilities. But now due to issues in Branding and due to customer

dissatisfaction consignment sale has been stopped.

(3) Dealer Sale:

In Chhattisgarh, the company directly supplies material to dealers against their orders and

collects payment from them. These dealers either retail the cement or sale in wholesale to sub

dealers appointed by them.

(4) Direct Sale:

Government Departments or private companies float tenders/ enquires from time to time for

bulk supply of cement. The company actively participates in these tenders. Marketing agents

assist in getting orders/payments and get small commission for the same.


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Maihar Cement is selling through dealers, stock transfer and also selling directly to government

department/institutional buyers.

Sl No. Channel State Sales By Sales in %

1 Stock Transfer Bihar, Uttar Pradesh, N.E. Handling Agents 27%

2 Dealer Sale Chhattisgarh, M.P., Orissa Dealers 34%

3 Direct Sale All States Government,

Institutional Buyers

39%

(Source: company data)

Table 13: Selling Channels of Birla Gold

As on 31st March 2009, Maihar Cement has more than 4000 stockist/agents.

TOTAL 100%


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CEMENT- Major Players

ACC LIMITED

Established in 1936, ACC has been a pioneer and trend-setter in cement and concrete

technology. A prominent overseas presence and figuring on the elite list of consumer super

brands of India but most importantly ACC has been amongst the first Indian companies to make

environmental protection, it is a cornerstone of its corporate objectives.

The historic merger of ten existing cement companies led to the establishment of ACC

melding into a cohesive organization in the year 1936 at Maharashtra. Its a big company in

cement manufacturing and offers the services of Ready mixed concrete and Consultancy

service. This company is listed by Bombay Stock Exchange, National Stock Exchange and in

London Stock Exchange.

The company received an award as 'Good Corporate Citizen' for the year 2005-2006. During the

year 2007 company acquired 100 % of the equity stake of Lucky Minmat Private Limited for Rs

35 crores and also acquired 14.3 % equity stake in Shiva Cement Limited. Meanwhile the

company divested its entire equity shares in Almatis ACC Ltd to the Almatis group. The overseas

contract with YANBU Cement Company in the kingdom of Saudi Arabia is successfully ongoing

relationship from last 28 years and has been renewed up to February 28, 2011.

The company has developed comprehensive expansion plans to meet the requirements of its

agenda for growth with a view to attain leadership position in the cement industry, for that

company made a project for augmentation of clinkering and cement grinding. As a result with

this the capacity of Gogal works stands increased to 4.4 Metric Tonnes Per Annum. ACC planed

to expand the unit of Bargarh works capacity to 2.14 MTPA together with 30MW captive power

plant is underway.


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Ready mix concrete business has been identified as an area of strategic priority. ACC

commissioned a Wind Energy Farm in Tamil Nadu to promote clean and green technology. The

company foresees substantial scope for growth of this business in India and has accordingly

finalized plans to expand Ready Mix business in major cities including Tier1 and Tier 2 cities.

ACC realizes the growth potential of Ready Mix, the company has 26 plants for the same and

enhance to 46 in 2008. The company has major capital expenditure projects in hand, as a result

of these projects the total cement capacity of the company will increase to about 30.4 MTPA by

end of 2010 with total outlay of Rs 4,000 crores.

ULTRATECH CEMENT LTD.

UltraTech Cement Limited was incorporated as a public limited company on 24th August 2000,

as L&T Cement Limited a 100% Subsidiary of Larsen & Toubro Limited. The name of the

Company was changed to UltraTech Cement Co. Limited with effect from 19th November 2003

after the Aditya Birla group owned Grasim Industries acquired it. The name of the company was

again changed to UltraTech Cement Limited with effect from 11th

October 2004.

UltraTech Cement Limited has an annual capacity of 18.2 million tonnes. It manufactures and

markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzolana

Cement. It also manufactures ready mix concrete (RMC). UltraTech Cement Limited has five

integrated plants, six grinding units and three terminals two in India and one in Sri Lanka.

UltraTech Cement is the countrys largest exporter of cement clinker. The export markets span

countries around the Indian Ocean, Africa, Europe and the Middle East.

INDIA CEMENTS

India Cements was set up in 1946 and the company's first plant was established in 1949 at

Sankarnagar, Tamil Nadu. Since the India Cements Ltd. has been established, it has risen in

stature to become the biggest cement producer in south India. India Cements has 7 plants


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spread across Andhra Pradesh and Tamil Nadu. The total production capacity of the plants is

around 9 million tons per year. In south India, India Cements Company has a 28% market share

and it plans to achieve a market share of around 35% in the near future.

Around 90% of India Cements Company's produce is sold in the Tamil Nadu and Kerala markets.

India Cements Company has a distribution network which is very strong - it has over 10,000

stockists out of which around 25% is devoted to the company. The India Cements Ltd owns

famous brands such as Rassi Super Power, Sankar Super Power, and Coromondal Super Power.

In the year of 1990, ICL acquired Coromandel Cement plant at Cuddapah, consequently

installed capacity rose to 2.6 million tonnes per annum). The India Cements Company has

subsidiary companies which include ICL Financial Services, Industrial Chemicals & Monomers,

ICL International, and ICL Securities. In 1997 India cements acquired Aruna Sugars Finance Ltd

which was later renamed as India Cements Capital & Finance Ltd. It also acquired Cement Plant

of Visaka Cement Industry, at Tandur, Ranga Reddy district of Andhra Pradesh with Installed

capacity 9,00,000 Tonnes.The cement division of Raasi Cement (RCL) was vested with the

company from April.1998 under a scheme of arrangement

India Cements has established itself as a leading cement manufacturing company and as it plans

to expand its production capacity, the company's position in the market is sure to rise in the

near future.

AMBUJA CEMENT

The company's cement plant was commissioned in 1985. It was set up in technical collaboration

with Krupp Polysius, Germany, Bakau Wolf and Fuller KCP. The company got necessary

approvals for setting up another cement plant with 1 million tonne capacity per annum at

Himachal Pradesh in the year 1991. The Company undertook bulk cement transportation, by

sea, to the major markets of Mumbai, Surat and other deficit zones on the West Coast.

Transportation was to be carried out by three specially designed ships during the year 1992.

During the year 1994, the company's Muller location 1.5 million tonne cement project with


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clinkerization facility at site in H.P and grinding facility both at Suli & Ropar in Punjab was

bespoken. In 1997, Kodinar plant of the company was originated its commercial production

with an enhanced capacity.

In the last decade the company has grown tenfold. It was the first company in India to

introduce the concept of bulk cement movement by the sea transport. The company's most

distinctive attribute, however, is its approach to the business. Ambuja follows a unique

homegrown philosophy for successful survival. Ambuja is the most profitable cement company

in India, and one of the lowest cost producers of cement in the world.

The company was awarded for its credit, the National Award for commitment to quality by the

Prime Minister of India, National Award for outstanding pollution control by the Prime Minister

of India, Best Award for highest exports by CAPEXIL and Economic Times - Harvard Business

School Association Award for corporate excellence in different years. The company was

adjudged as the top Indian company in the cement sector for the Dun and Bradstreet -

American Express Corporate Awards 2007. The company developed a unique homespun

channel management model called Channel Excellence Programme (CEP) for marketing their

product. Over 7000 dealerships and 20,000 retailers across India are covered under this model.

The company name was changed from Gujarat Ambuja Cements Limited to Ambuja Cements

Limited on April, 2007, the word Gujarat was dropped to reflect the true geographical presence

of the company.

JAYPEE CEMENT

Jaypee group is the 3rd largest cement producer in the country. The groups cement facilities

are located in the Satna Cluster (U.P), which has one of the highest cement production growth

rates in India.

The group produces special blend of Portland Pozzolana Cement under the brand name Jaypee

Cement (PPC). Its Cement Division currently operates modern, computerized process control

cement plants with an aggregate capacity of 13.5 MTPA. The company is in the midst of


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capacity expansion of its cement business in Northern, Southern, Central, Eastern and Western

parts of the country and is slated to be a 24.30 MTPA cement producer by the year 2010 and

26.80 MTPA by 2011 with Captive Thermal Power Plants totaling 327MW.

Keeping pace with the advancements in the IT industry, all the 140 cement dumps are

networked using TDM/TDMA VSATs along with a dedicated hub to provide 24/7 connectivity

between the plants and all the 120 points of cement distribution in order to ensure track the

truck initiative and provide seamless integration. This initiative is the first of its kind in the

cement industry in India.

In the near future, the group plans to expand its cement capacities via acquisition and

greenfield additions to maximize economies of scale and build on vision to focus on large size

plants from inception.

LAFARGE INDIA

Lafarge India is a subsidiary of the French Building Materials major Lafarge. Lafarge is the world

leader in building materials, with top-ranking positions in all of its businesses: Cement,

Aggregates & Concrete and Gypsum. Lafarge entered the Indian market in 1999, with the

acquisition of the cement business of Tata Steel. This acquisition was followed by the purchase

of the Raymond Cement facility in 2001.

Lafarge currently has three cement plants in India: two integrated plants in the state of

Chhattisgarh and a grinding station in Jharkhand. Total cement production capacity of Lafarge

in the Indian market currently stands at around 5.5 million tons. Lafarge India produces

different types of cements like Portland Slag Cement, Portland Pozzolana Cement. Lafarge

Cement is famous all over the world for its premium quality and has been used to build many

landmark buildings globally. The company is a leading cement player in Eastern India. Its

brands Lafarge Cement and Lafarge Concreto Cement enjoy high brand equity here and are

amongst the highest priced brands. Lafarge is committed to the Indian market and has firm

plans to expand its capacity in India.


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Lafarge cement is available through a large dealer network, throughout eastern India- in the

states of West Bengal, Jharkhand, Bihar, Chhattisgarh, Orissa and North-East States. Lafarge

Cement is also available in parts of Madhya Pradesh and Maharashtra (Vidarbha region), parts

of Uttar Pradesh, Andhra Pradesh & National Capital Region.


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PROJECT PROFILE


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PROJECT PROFILE

The project entitled "Perception of Trade and Non-trade Segments of BIRLA GOLD Cement in

Satna market" revolves around the customer, who is the optimal decision maker of a firm's

future. Since the cement is a core product and used by all consumers; it is very necessary firm

to now about their brand's position and customer expectations.

Earlier Marketers aimed at satisfying the customer's need but the present day of Marketing

requires something more that is customers delight.

In this era of globalization Company can survive only when he knows the fast of consumer,

which is changing day by day. A company can get an edge other its competitors in these

cutthroat competitions through superior quality, innovations and better customer

responsiveness. Hence this project aims to analyze how a cement manufacturing company can

create value to all its stakeholders to achieve a leading position in the market.

In order to get competitive advantage in core Industries, A firm will have to not only take care

of consumers taste but also delight its channel partners, which is its external resource.

Normally it takes years to build, and it not easily changed. It ranks in importance with key

internal resources such as manufacturing, research, engineering and field sales processional

etc. It represents a significant corporal commitment to a large number of intelligent companies

whose business is distribution and to the particular market they serve. It represents to a

commitment to a set of policies and practices that constitute the basic fabric on which is woven

an extensive of long-term relationship intermediaries smooth the flow of goods and services.

This procedure is necessary in order to bridge the discrepancy between the assortments of

goods and services generated by the producer and the assortment demanded by the consumer.

The discrepancy results from the fact that manufacturers typically produce a large quality oflimited variety of goods, where as consumers usually desire only a limited quantity of a wide

variety of goods. In order to attain the market share it is necessary to satisfy the channel

members. Channel members are having better knowledge of consumers buying behavior hence

their suggestions regarding the product distributors are of high values.


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Research Methodology:

DATA COLLECTION METHODOLOGY

Universe

Since the cement is a core product and being used by all types of consumers, so our focus for

collection data was each and every man who are directly or indirectly involved with the sale or

use of cement such as stockists, dealers, civil engineers, contractors, individual customers,

masons, etc.

Sample Plan

To know the position of Maihar Cement in the trade and non-trade segment regarding sale in

comparison with the other brands on the basis of attributes of cement has been done. For this

purpose, opinion of stockists, dealers, engineers, contractors, architects and builders (who

posses knowledge regarding different brands available in the market) has been taken. This

might be helpful to draw the right picture about the market scenario.

This was convenient in nature because I would have to account only those people who actually

require or purchase cement in bulk quantity. The survey is conducted with the help of

questionnaire method and survey is conducted in the Satna region. Survey of50 traders and

50 non-traders has been done for the analysis. Among the responses, I accepted 95

responses of the survey and rejected 5 (3 traders and 2 non-traders) because of incomplete

questionnaire. The survey was conducted in Satna City (Prem Nagar, Pateri Road), Kothi Road,

Dhawari, Unchehra, Maihar, Devendra Nagar, Panna, Nagaud, Singhpur, Kotar, Birsinghpur,

MadhavGarh, Sajjanpur and Rampur regions of Satna area.

Data Collection

Every type of research requires two types of data to be collected to reach up to any conclusion.

Primary Data are those data, which are directly obtained from people by approaching them

individually, primary data are generated when the researcher employing mail questionnaire,


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telephone surveys, personal interviews, observations and investigates a particular problem at

hand.

For this project primary data was collected from stockists, dealers, engineers, contractors,

architects, masons and builders by using survey method. Data collection from respondents was

carried out with the help of a structured interview schedule. In this method data was collected

from respondents through questionnaires. I made a survey based on the questionnaire, which

consist of 13 questions. The mode of survey was directly contacting the people and recording

their response based on well-defined questions and also through telephone.

Secondary Data, on the other hand, includes those data, which are collected in the past for

other research work and are being used in current project work.

Secondary Data, such as procedures of marketing for cement, marketing conditions, brief

details of M/s Maihar Cement and other competitors, price, quality, and other strategy and

planning, specification in relation to other cement companies, all other information which can

be useful to complete this project, was collected for Sales and Marketing Department of Maihar

Cement. Published Documents of Maihar Cement and other competitors cement plants have

also been used for collection of secondary data.

NATURE OF SURVEY:

Objective of my study in this project is the discovery of ideas and thoughts from trade and non-

trade segment and is exploratory in nature. Hence instead of probability sampling, a non-

probability sampling procedure has been adopted. Survey was subjective as well as convenient

in nature because I have taken into account those people who are directly related to non-trade

segment.

Accordingly I made a survey based on the questionnaire, which consists of 13 questions. The

mode of survey was direct contacting the people and also on telephone by recording their

response about the questions asked.


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ASSUMPTIONS MADE:

During the project the data regarding the comparison in among different brands on the basis of

market share were required. For collecting those following assumptions are made-

1. Survey of non-trade segment included engineers, contractors, masons, architects and

builders have been done because it is assumed that only these parties have adequate

knowledge and information regarding cement market situation and they are able to compare

different brands on the basis of attributes of cement.

2. The comparison of different brands was based on retailers and dealers percept ion about

these brands because it has been assumed that they are directly in contact with customers and

they can influence the buying decision of end consumer or buyer.

3. The term quality was assumed to be sum total of setting time strength, treatment color etc.

and the opinion was taken in total terms.

4. Delivery promptness, delivery quality and percentage of defective bags of cement reaches to

retailer are taken into account while we were trying to know their perception about any

particular brand on the basis of delivery.

5. Not only the promotional tools uses by company out also advertisement along with other

support provided by marketing team such as payment terms, credit terms, attention on the

feed back on remarks given by retailers are considered while trying to know about marketing

support.

6. In this survey it is assumed that the response provided by respondents is true, genuine and

free from any bias. Results obtained are based only on the opinion of the respondents.

LIMITATION OF THE STUDY

1. Lack of co-operation from the retailers in regard to giving interview.

2. It was found in some cases dealers showed inclination towards certain brands which

gave them more margins when compared to others.


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3. It was experienced during the survey that it was difficult to convince or make the

retailers and dealers understand the important of the project.

4. As the retailers and dealers thought that it was unwise for them to give their details of

business as they feared competitors would take advantage.

5. Some time the emotional attachment and brand loyalty of respondents prohibited to

give correct information.

6. The time constraint faced in the project might have affected the comprehensiveness of

its findings.


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OBJECTIVE OF

STUDY


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Objectives of my survey are as under:

1. To know the position of Birla Gold Cement in the trade and non-trade segment

regarding sale in comparison with the other brands.

2. To know the reasons behind the selection of a particular brand.

3. To get suggestions form the trade and non-trade segment in order to improve the sale

as well as level of satisfaction in them.

To attain the above objectives various other sub objectives were needed to be achieved. These

are listed below:

To analyze the market share of Birla Gold Cement.

To know the customers preference for the brands of cement.

To know the preference of retailer for sorting different brands of cement.

To understand the effectiveness of various sales promotion activities of cement.

To know preference of retailers for different gift and incentives.

To analyze the sales promotion activities of various brands.

To analyze the transportation facilities for Birla Gold and other cement companies.

To analyze the frequency of visits of marketing representative of various companies.

Thus my study attempts to find ways to increase market share, to increase customer

satisfaction and thus increase the business prospects.


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OBSERVATION &

ANALYSIS


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OBSERVATION & ANALYSIS

1. Market Position in terms of Sales:

Brand %JAYPEE-BULAND 35.31

PRISM-CHAMPION 34.11

ACC 13.12

BIRLA-GOLD (MAIHAR) 10.40

BIRLA-SAMRAT (SATNA) 07.06

Total 100%

Jaypee and Prism Cements have a good market share in Satna region. Here people are price

conscious and even aggressive marketing by Jaypee has allowed it to capture a large market

here. Birla Gold should respond by launching innovative marketing campaigns so that it can

increase its market share.

In the Satna market some area like MAIHAR, Naguad, Singhpur JAYPEE has sales of around 95-

99%. But some area of SATNA Zone like SATNA City market is captured by the PRISM & ACC

Comparitively Birla Gold stands 4th in ranking. It has considerable market share in places such

as Kotar, Birsinghpur, DevendraNagar, Panna.

0

5

10

15

20

25

30

3540

Jaypee-Buland Prism-Champion ACC Birla Gold Birla Samrat

Market Position of Brands


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2. Customer Preference of the Brand:

Birla Gold has a decent image in consumers mind. It can increase its market if it increases its

availability by enhancing its dealer network and increasing the number of counters where it

could sell its product. Thus compared to market share Birla Gold has a better Brand Image,

hence by strengthening its marketing and sales efforts it can leverage in this region.

29.20%

25.30%

18%

18.40%

9.10%

JAYPEE-BULAND

PRISM-CHAMPION

ACC

BIRLA-GOLD (MAIHAR)

BIRLA-SAMRAT (SATNA)

Brand %

JAYPEE-BULAND 29.2

PRISM-CHAMPION 25.3

ACC 18.0

BIRLA-GOLD (MAIHAR) 18.4

BIRLA-SAMRAT (SATNA) 09.1

Total 100%


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3. Purchasing frequency and reasons

According to this survey:

a) In summer i.e. March, April, May about 35% of the cement purchase increases. It is due to

good climatic conditions for starting new construction work.

b) In monsoon i.e. from June to August about 30% of the construction work is decreased due to

rains.

c) 35% purchasing of cement is done according to the availability of work and the purchasing

does not depend upon seasons.

Hence attempts need to be done to maximize their sales efforts in summer and launch heavy

marketing during rainy seasons to increase sales. As we know that sales in cement industry are

seasonal, there is a need to launch different marketing campaigns according to season to target

its customers more accurately. Birla Gold can also launch special variety of cement specifically

designed for various seasons. This idea could motivate more customers to buy Birla Gold.

35%

30%

35%

Summer

Rains

Availability of work


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4. Decision for selection of brand:

Advertisements- 35%

Contractors, Masons, Engineers advice- 50%

Personal Decision- 5%

Family Referrals, Word of Mouth- 10%

It can be seen that customers give the maximum weightage to the advice of masons, engineers

and contractors. Even Advertisements play a major role in their buying decisions. Very few

people take personal decision while buying cement and family referrals also effects their

selection of a brand.

Thus company should make maximum efforts to attract masons, contractors and also launch

innovative advertising campaigns to attract more customers.

35%

50%

5%10%

Decision for selection of brand

Advertisements

Contractors, Masons, Engineers

advice

Personal Decision

Family Referrals, Word of

Mouth


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5. Availability of Promotional Schemes

From the above data I can say that there are abut 32% of respondent who are not availing any

promotional schemes and they are most important for any company to make them their

customer by offering them schemes. Increasing the reach of promotional schemes should be

done by Birla Gold.

Some companies such as ULTRATECH, ACC send their sales representatives to the construction

of the site. This place a very good impression on customers but this is only a marketing gimmick

of cement companies.

0

10

20

30

40

50

60

Ava