Cement Industry - Internship

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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EXECUTIVE SUMMARY 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 4

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 government’s infrastructure and housing programs, which are necessary for the country’s 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 world’s 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 includeLow 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 nonpermanent 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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CHARACTERISTICSState 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

10

Region-wise Production increase for Dec 2008 25

Percentage

20

15

10

5

0 Northern

Central

Southern

Western

Eastern

(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

11

(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 mntpa

Nalgonda, 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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(7,000-8,000 kcal/kg) with low ash content 6-7%. Lignite is also used as a fuel by blending it with coal. However this process is not very common.

ELECTRICITY Cement industry consumes about 5.5bn units of electricity annually while one ton of cement approximately requires 75-85 units of electricity. Power tariffs vary according to the location of the plant and on the production process. The state governments supply this input and hence plants in different states shall have different power tariffs. Another major hindrance to the industry is severe power cuts. Most of the cement producing states like AP, MP experience power cuts to the tune of 25-30% every year causing substantial production loss.

TRANSPORTATION Cement is mostly packed in HDPE (High Density Poly Ethylene) bags. It is then transported either by rail or road. Road transportation beyond 200 kms is not economical therefore about 55% of cement is being moved by the railways. There is also the problem of inadequate availability of wagons especially on western railways and southeastern railways. Under this scenario, manufacturers are looking for sea routes, this being not only cheap but also reducing the losses in transit. Today, 70% of the cement movement worldwide is by sea compared to 10% in India. However, the scenario is changing with most of the big players like ACC and Ultratech having set up their bulk terminals.

TECHNOLOGY Cement Industry has been in existence in India for over eight decades. From the initially available wet process technology the industry has travelled through semi-dry and the latest energy efficient dry process technology. Recent plants have been erected with state-of-art technology comparable to those available in the world. The earlier cement plants that came into existence were mostly of small kiln capacities of 300 to 600 tpd based either on wet or dry process; however, the new plants set up later were of the order of 3000 tpd or more exclusively of dry process. Kilns of the capacities 5000 to 7000 tpd are also in operation now. At present

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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 and medium 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 Energy Consumption (Kcal/kg Clinker)

Electrical Energy Consumption (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 industry’s 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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Permissible particulate emission levels for States

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

(Source: government data)

Table 6: Permissible Emission

PRODUCTION COSTS Cement 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 17

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 for transportation 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 of growth of the cement industry can be best described in the following stages:  Price and Distribution Controls (1940-1981): During the Second World War, cement was declared as an essential commodity under the 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 fact that 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 unremunerative 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 of India 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 drivers

Housing 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 21

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, not only 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 the rural 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 Crore

2000

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. 24

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

Cement Consumption

completion

(Mn tonnes)

NHDP Phase I

GQ & Portconnectivity

90% complete

-

NHDP Phase II NHDP Phase III

NSEW Corridor Four laning of 10,000 kms of high density National Highways Upgradation of existing 20000 highways to 2 lane Six laning of GQ & other high density highways 1000 kms of expressways

Dec, 2009 Mar, 2010

8.8 12.8

Mar, 2012

18.0

Mar, 2012

3.5

Mar, 2012

4.5 47.5

NHDP Phase IV NHDP Phase V NHDP Phase VI Total

(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 23–25 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 billion–US$ 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 27

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.

SUPPLIE’S ESTIMATE’S *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

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%

5.80%

6.40%

12.00%

9.90%

10.10%

8%

Export (cement + clinker)

Domestic demand growth (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 doesn’t 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 31

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 Cement – Madhya Pradesh Manikgarh Cement – Maharashtra

Figures in Million TPA Units

2008-09

Century Cement

2.1

Maihar Cement

4.2

Manikgarh Cement

1.9

Total

8.2

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,

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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 on sustainable 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

35

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.

39

 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.

40

Customer service: “Customer delight” remains focus of company’s 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 evaluate the degree of satisfaction, which is the key to Birla Gold’s 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 company’s godown / dumps and cement marketing under instruction of the company’s local 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.

42

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,

39%

Institutional Buyers

TOTAL

100%

(Source: company data)

Table 13: Selling Channels of Birla Gold

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

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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. It’s 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.

44

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 11 th 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 country’s 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 45

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

46

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 47

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. It’s 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. 48

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.

49

PROJECT PROFILE

50

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 of limited 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 of 50 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 nontrade segment and is exploratory in nature. Hence instead of probability sampling, a nonprobability 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 made1. 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 perception 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. 54

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.

Market Position of Brands 40 35 30 25

20 15 10 5 0 Jaypee-Buland Prism-Champion

ACC

Birla Gold

Birla Samrat

In the Satna market some area like MAIHAR, Naguad, Singhpur JAYPEE has sales of around 9599%. 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.

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2. Customer Preference of the Brand:

Brand

%

JAYPEE-BULAND

29.2

PRISM-CHAMPION

25.3

ACC

18.0

BIRLA-GOLD (MAIHAR)

18.4

BIRLA-SAMRAT (SATNA)

09.1

Total

100%

9.10%

18.40% 29.20%

JAYPEE-BULAND PRISM-CHAMPION ACC BIRLA-GOLD (MAIHAR) BIRLA-SAMRAT (SATNA)

25.30% 18%

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.

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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.

35%

35% Summer Rains Availability of work

30%

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.

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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%

Decision for selection of brand

5%

10%

Advertisements

35%

Contractors, Masons, Engineers advice Personal Decision

50%

Family Referrals, Word of Mouth

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.

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5. Availability of Promotional Schemes No. of persons

Schemes

58

Availing Promotional Schemes

32

Not Availing any Promotional Schemes

10

Don’t want to disclose their schemes

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50 40 30 20 10

0 Availing Promotional Schemes

Not Availing any Promotion

Don't want to disclose

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.

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6. Ranking of Technical Promotion activity of Birla Gold

Technical promotion

% of customer

Rank

Engineer meet

10

3

Architect Meet / builders meet

30

2

Mason meet

55.7

1

T.S.E. visit

4.3

4

Total

100

4.30%

10%

Engineer meet

Architect Meet / builders meet 30% 55.70%

Mason meet T.S.E. visit

Most of the respondents gave high ranking to mason meet conducted by Birla Gold, but complained that company did not conduct ample builders/engineers meet and also complained that the Technical Sales Executive (T.S.E.) visits are less by the company. This indicates that Maihar Cement should increase Engineer and T.S.E. visits to strengthen their brand and increase its awareness in these segments of customers.

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7. Under the brand promotion re-arrange the importance of the following attempts done on dealer side. Dealer Level

%of customer

Rank

Dealer Meet

40

1

Sub- Dealer

20

3

Gift Item

25

2

Foreign journey

2

5

Van program

5

6

New year calendar& Diary

8

4

Total

100

Dealer Meet

Sub- Dealer

Gift Item

Foreign journey

Van program

New year calendar& Diary

2

5

8 40

25

20

Most of the counters are said that all type of programs provided by the company is utilized by dealers and sub-dealers are using most of the facility what is given by the company. In many counters I found that company gives gift items to the Dealers to distribute it to customer and mason like diary, calendar, pen, stickers, bags etc.

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8. Place these mass publicity media on the basis of its importance under brand promotion.

Advertisement Media

% of customer

Rank

Hoarding

10

4

Wall painting

30

1

T.V. advertisement

8

5

Advertising in Newspaper

25

2

Radio advertisement

5

6

Banners

22

3

10% 22% Hoarding Wall painting

5%

30%

T.V. advertisement

Advertising in Newspaper Radio advertisement Banners

25% 8%

Wall painting is playing important role in mass publicity; this observation is done by large amount of customers and is thus given higher priority. News paper advertisement is in second position and Banner is in third rank in for mass publicity. Hence maximum priority is to be given for promotional activities.

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9. Factors affecting selection of a Brand: In the questionnaire respondents were asked to rate the reasons that why a particular brand is preferred by them. Ranking to different reasons was given and a chart was prepared. Points

A (Price)

B

C

(S.P.S) (Pers.)

D

E

F

G

H

I

J

(C.P.)

(Advt)

(Qlty)

(Ava.)

(Ass.)

(G.I.C)

(S.R.)

1

-

-

-

-

44

-

12

-

40

-

2

-

12

-

-

12

4

8

34

16

-

3

4

12

-

14

20

-

2

26

16

-

4

-

16

9

10

16

2

18

16

-

-

5

-

38

6

20

2

-

20

6

6

-

6

-

18

30

28

-

-

-

-

4

10

7

6

-

30

18

2

8

8

6

4

16

8

14

-

-

10

-

12

8

8

10

34

9

16

-

4

4

-

28

-

-

-

30

10

40

-

2

2

-

42

-

1

-

6

A (Price) = 00+00+12+00+00+00+42+112+288+400 =854 B (Sales Promotion Schemes) = 00+24+36+64+190+108+00+00+00+00 =422 C (Personal Contact) = 00+00+00+36030+180+210+00+72+40 =568 D (Credit Period) = 00+00+42+40+100+168+126+80+36+20 =216 E (Advertisement) = 44+24+60+64+10+00+14+00+00+00 =840 F (Quality) = 00+08+00+08+00+00+56+96+252+420 =840 G (Availability) = 12+16+6+72+100+00+56+64+00+00 =326 H (After Sales Service) = 00+68+78+64+30+00+42+64+00+00 =346 I (Goodwill & Image) = 80+32+48+00+30+24+28+48+00+00 =282 J (Structural Requirement) = 00+00+00+00+00+60+112+272+270+60 =714 67

Calculation Procedure is given in appendix From the above results I prepare a list of rankings of factors that affect the decision of customers to select a particular brand. The list is as follows:

Ranking

Reason

Points

1

Price

854

2

Quality

840

3

Advertisement

840

4

Structural Requirement

714

5

Personal Contact

568

6

Sales Promotion Schemes

422

7

After Sales Service

346

8

Availability

326

9

Goodwill & Image

282

10

Credit Period

216

1. Price: Birla Gold’s price is economic as compared to all the established brands i.e. ACC, ULTRATECH, etc. But competitors such as Jaypee and Prism provide cement at lower prices. Respondents in Satna area rated the price factor as 1st preference. This shows the importance of price factor in the selection of brand. Most of the respondents suggested that the company must reduce the price of the product and control over price hike. So the company has to adopt a suitable price policy to increase its sale. 2. Quality: In this region Birla Gold is an established name. But people perceive Birla Gold to contain more Fly-Ash which reduces quality. Respondents’ ranked quality as 2nd. Birla Gold should try to project that it provides one of the best quality cement.

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3.Advertisement: In my survey this attribute is rated 3rd. So according to the survey most respondents gave this attribute not much importance for selecting the brand of cement. So the company should try to improve services rather than spending more on advertisement. 4. Structural Requirement: This factor is rated 4th. People perceive ACC to be the best while giving foundations/roofing to any structure. Similarly they consider Birla Gold to be optimal while building walls, light construction, etc. Company should strive hard to educate people to use its cement in different structural requirements. 5. Personal Contact: In this survey personnel contact is rated as 5th position. Personnel Contact has an everlasting effect on the relationship among individuals, so the company should try to maintain healthy personnel relationship with stockists, dealers, engineers and contractors. 6. Sales Promotion Schemes: In the non-trade segment Sales Promotion Schemes are effective tools to increase the sales. In my survey sales promotion schemes are rated at 6th position. This aspect should be given more consideration and should provide more sales promotion schemes for those who are not availing it and also for potential buyers. 7. After Sales Services: According to the survey After Sale Service factor is rated at 7th position. To increase the sale company should have to try to handle the complaints of customers immediately and try its level best to satisfy the customers. Service Engineers should be deployed for this and routine checkup of construction site of customers should be made.

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8. Availability: Availability is rated 8th as per the survey. The company must improve its distribution channels and dumps should be formed in Satna region in order to meet the demands of customers as soon as possible. In this world where the time is very precious, the delivery of cement must be immediate. It is an important key for every business to succeed. 9. Goodwill and Image of the Company Goodwill is an important asset for every company and it requires years to form it. The goodwill and image factor is ranked 9th according to the survey. Birla Gold has its biggest attribute in the form of ownership owned by prestigious Birla Group, so it has earned good image in the market but further brand upliftment exercise is also required. By giving the technical assistance in the form of making necessary information available regarding their product and its proper usage can increase the goodwill in the nontrade segment. Company also can conduct seminars and Masons’ meeting to improve the goodwill of the company. 10. Credit Period: In this survey the factor, the respondents rate credit period as 10th preference. The customers demanded the duration of the credit period should be of minimum 90 days, but it is not advisable; keeping in view the risk involved and is not feasible from the industry’s aspect. However by seeing the competition with other brands and the market trend of other building materials as well as goodwill of customers, credit facility can be extended for a reasonable period.

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10. In the questionnaire respondents are asked to give suggestions to the company so that it can improve its sales in the non-trade segment. Out of 50 respondents: 20 [40%] Are suggested that the company is to interact [improve the personal relations] with engineers, contractors, builders, and architects. 17 [34%] Are suggested that the company have to reduce the price and minimize the price variations and also improve and maintain the quality of the cement. 13 [26%] Are suggested that the company have to promote the non-traders by introducing promotional schemes and the company must give more and more technical assistance to them. 11. Level of satisfaction The respondents have made various suggestions that how a company can improve level of satisfaction in a customera) Giving more emphasis on better quality. b) More personal relationship between company and customer. c) Giving promotional schemes to their customers in the form of technical assistance. d) The recent changes in manufacturing technology should be known to customer through representatives of the company.

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FINDINGS

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FINDINGS SWOT ANALYSIS STRENGTH: 1) Marketing team of Maihar Cement is having good relations with its channel partners hence they are able to understand their problem and provide best possible support. 2) People ask for bleakness in cement and Maihar Cement has this. 3) Maihar Cement is having best packaging in comparison to other brands. 4) Due to its delivery promptness and effective delivery system Birla Gold scores over other brands of cement.

WEAKNESS: 1) The competitors are doing much promotional activity rather than Birla Gold that’s why it facing more problems in selling of product in the market. Players such as Jaypee, Prism, Ultratech and Lafarge are spending heavily in advertising compared to Maihar Cement. 2) Company is not having the best demand, as it is not perceived as of better quality than ACC, Ultratech. 3) Company is not having good image in comparison to few leading brands, as company is not projecting its image through advertisement. 4) Lack of awareness program for consumers. They think Birla Gold contains more FLYASH.

OPPORTUNITY: 1) Rapid growth is taking place in Bihar and Madhya Pradesh. People are opting for more stable structures and intensive use of cement is taking place, even government is spending heavily on infrastructure projects. Thus, this is the right time to fully tap these markets. 2) As Indian core industry is also growing at rate of nearly 10% per annum, Birla Gold is having a good future. 3) Foreign direct investment in infrastructure sector going to increase in coming years, which will increase the demand of cement. 73

4) Roads are undergoing through the transformation process through which the traditional method of road building will be replaced by modern concrete roads.

THREATS: 1) Large number of players in cement industry makes it more competitive for Maihar Cement to carefully price its product and at the same time satisfy its dealers and customers. 2) Players such as Jaypee Cement, Prism Cement, and Birla Samrat are eating up considerable market share of Birla Gold in Satna region. 3) Due to India’s exponential growth many new international cement companies are expected in coming years which will bring a tide of change and can start price war. 4) The emergence of small players in this market may increase the competition and start the malpractices, and heavy discounts to retailers. They can also influence many retailers by giving better profit margin, and other benefit.

REASONS STATED BY RETAILER FOR BRAND PREFERENCE:MAIHAR CEMENT (Birla Gold)  Good relationship with the company people  Price is low and affordable for people  Low price helps to sell easily  Quality is good  More profit selling the brand

LAFARGE (Concreto)  Better quality  Good name in the market  Timely available  Immediately respond on the competitors’ strategy  Relatively less price

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 Better packaging  Good offers

ACC (Suraksha)  People ask for ACC, it is having a good image and brand loyalty among consumers  Service is good  “Dhalai karne ke liye” people ask for ACC  Perceived to be of very superior quality cement when compared to others  Selling form the very first day the shop came in to being & sells easily  They have same price prevailing for wholesale at dealers/stockiest retailers end.

PRISM CEMENT (Champion)  Customers preference  Good cement, plastering work is good  Price is suitable as per customers pocket  Rate & profit

JAYPEE CEMENT (Buland)  Rate and profit  Price is suitable as per customers pocket  Service is good  Good relationship with the people Jaypee

ULTRATECH  Good name in the market as it carries the goodwill of L&T  High Brand awareness among customers  Good Advertisements  Famous Brand  Stable price

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PROBLEM FACED BY1. STOCKISTS 

None of the stockists had any complains about any brands, in regards to the price, transport, service etc



Dispatch being closed at the start of the month is a ”trump card“ for them to play in the market to push the sale



Stockists are satisfied with the companies’ service

2. RETAILERS 

The stockists occasionally inform about the price change in the market



They do not make personal visits to the counters frequently



Price should be stabilized in the market



Price stability in regard to the price set by the company as well as wholesalers (i.e. all the wholesalers should have the same price offered in the market)



Dispatch being closed every start of the month is a problem is a problem for them to stick to the commitments made by them to the customers



Small quantity ordered is not furnished on time



Pressurize them for taking more quantity for more quantity for transportation facility



Maihar Cement now does not give any gifts at the counters

3. CUSTOMERS 

Large quantity of cement is not readily available



Cracks in structures



Low Brand Awareness



Less number of people advise to use Birla Gold



A stable pricing strategy has to be adopted

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Based on these the major findings are stated as below: 1. ACC was perceived as the brand with best quality followed by Ultratech and then Maihar Cement. 2. Maihar Cement is having best packaging perceived by the respondents. 3. Maihar Cement is having best delivery system and terms among all cement brands in respondents perception followed by ACC and Lafarge. 4. Marketing team of Maihar Cement is providing best support to its channel partners. 5. Jaypee Cement is investing a huge amount on advertisement in order to address consumers. And also its supply is very fast, that's why it’s becoming extremely popular. 6. Maihar Cement is in more demand due to the reputation of its dealers & credit facilities given to the customers. 7. Word of Mouth publicity and Reference publicity are very important media that affects the sales in cement industry. 8. Buying decision of the end customer is heavily dependant on recommendation from the mason, engineers and contractors. Hence there is a need to maintain good relationship with them. 9. At present cement consumer is flooded with choices due to the existence of numerous brands in the market. Hence the cement companies need to carefully monitor their prices and execute dynamic advertising campaigns to attract the customer. 10. Maihar Cement is very popular in price-sensitive segment of customers.

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RECOMMENDATIONS AND CONCLUSION

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RECOMMENDATIONS AND CONCLUSION In this modern era when globalization and liberalization has brought a tide of change and only those companies can survive, which will ride on it or which will keep them isolated and let the tide go. No company can be untouched from the storm of change and the pace of adaptive-ness will decide its success. The market share of company will be decided from the value it gives to the customer, the relations it has with its channel partners and end consumers, the number of innovative products it has in its basket and its position in consumers mind. 1. The company is having quality products but it is unable to harvest it because they haven't projected their advertisement on quality hence company should project its image through advertisement. Quality accreditation and awards got by the company can be projected. 2. Company is having one of the best marketing supports, delivery term and packaging with which can tap the new opportunity thrown in market buy loss of market share of ACC, as well as Jaypee. 3. Company should increase its reach hence it should increase its numbers of dealer and emphasis on retailing has to be done. But company should be careful in doing so because it may bring dissatisfaction among existing dealers. 4. Company should increase the meets for reference groups like Engineers, Architects, and Builders & Constructions companies as they play major role in influencing buyers purchasing decision. 5. Company should give stress on the quality of cement. 6. The reach to the rural market need to be strengthened and transportation to rural areas need to be strengthened, a significant amount of business is lost because of this. 7. Effective Branding needs to be done. Cement is merely the means to an end—a dream home. The challenge, therefore, is to develop an identity or personality for the product that consumers can relate to. Hence innovative advertisements should be used to stand out in the crowd. 79

Based on my research I would like to suggest 2 lateral strategies for the company to adopt-

1) “Micro-lending” in Rural areas: People in the rural regions of Madhya Pradesh are less affluent. Their inability to secure credit emerged as a primary obstacle to financing construction projects. I discovered that in these regions communities would conduct lotteries in which a group of families contribute a specific sum each month to a pool and one lucky family would win the entire amount at the end of the month. The winnings are then diverted to purposes such as Weddings and celebration of festivals. I will recommend that working with the local leaders, Maihar Cement should help community organizers establish similar financing pools in which, instead of cash, the winners can receive building materials, including cement. In addition, Maihar Cement can provide construction advice and blueprints to the winners. Hence this program can be aimed to these potential customers by appealing to their aspirations and thus provide them psychological satisfaction through financial benefits. This program can create loyal customers and will enhance the image of the company.

2) “Retailing” in Urban Areas: Maihar Cement can strengthen its hold over distribution, by its foray into retailing. It can increase cement usage in these areas by providing building solutions to retail consumers. It can thus open company- owned retail outlets. The company can tap the segment where customers are keener to build their homes rather than buy a pre-built flat. This is evident in Tier II cities and smaller towns. As Bihar and M.P. have no major metropolitan cities, this concept can work well here. Here flat culture isn’t popular and individuals still build their homes through local contractors and laborers. Each retail outlet can have a qualified civil engineer who will assist customers. This will help Birla Gold to establish loyalty among its urban customers.

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LEARNING OUTCOME

81

Following are the learning outcomes of the study1. Understand the Market demands and offerings What are the market demand and its corresponding offering in cement sector? How market demands and offerings influence this sector. Market demand is when the market is being backed by the buying power then there wants become their demand so understanding the market demand is one of the learning outcome of this project, similarly market offerings is the combination of products, services, information, or experience ordered to the market to satisfy the needs and wants. One of the major learning outcomes of this project is the understanding of the Market demand and offering.

2. How Marketing and Branding has become immensely important even for a commodity such as cement As Indian economy is growing, there is tremendous increase in consumption of cement. This has led to the emergence of many players in this sector. Increased competition leads to higher efforts to distinguish their brand and this sector which used to seldom market and advertise its offering has suddenly increasing its spending on advertisements and endorsements to improve its brand recognition. Now cement is being pushed to customers as a brand, appealing to the emotive side of the audience. Emotive appeals take their cue from packaged goods strategies, and help cement majors stand out in a crowd. Brands in this category are largely dissipated in their individual imageries and are crying for awareness. Further, many operate in the space of the quasi-brand and even more operate with tough competition from the space of commodities. Vivid brand building adds power to the expansion drive of cement companies entering newer markets. The goal is to prevent pricing becoming the only determinant of a purchase decision. Hence I can say that “Cement is merely the means to an end—a dream home. The challenge, therefore, is to develop an identity or personality for the product that consumers can relate to.”

3. Knowledge about cement sector Working in a cement factory and having a practical experience in this sector exposed me to gain knowledge about various operations right from Manufacturing to Sales. I being in the sales and marketing department was to know about the competitors standing in the market and follow their strategies closely. It helped me know the intricate details how this sector has seen

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tremendous shift in terms of advertising and how difficult it has become to distinguish your product offering. Suddenly companies are spending heavily on endorsements such as Jaypee selecting Sachin Tendulkar, Binani Cements choosing Amitabh Bacchhan and Lafarge Cement using M.S. Dhoni as their Brand Ambassador. Maihar cement is also planning to launch an innovative advertising campaign using mobile phones as its medium. Promotion activities have exponentially increased in recent times.

4. How to interact with customers effectively One of the major learning outcomes from this project was how to interact with the customers effectively. It gives the experience that how to deal with the customers and convincing them by explaining and by giving presentations. Customers generally have a wide range of queries which have to be answered patiently and convincingly, as a consequence that will satisfy the customer. So to deal with customers is a fine art which has been learned from this project.

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REFERENCES

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REFERENCES Sources of On-line Journals and Write ups: 1. www.articlenext.com 2. www.capitaline.com 3. www.maiharcement.co.in 4. www.economywatch.com 5. www.globusz.com 6. www.ibef.org 7. www.mospi.nic.in 8. www.rbi.org.in 9. www.researchandmarkets.com

The following reports were referred to L. G. Burange and Shruti Yamini (2008), “Performance of Indian cement industry: The competitive landscape”, University of Mumbai, Department of Economics. Anupam Rastogi (2007), The Infrastructure Sector In India. Economic Advisory Council, Review of the Economy 2008/09 Reserve Bank of India Trends and Progress Reports ‘Industry Analysis Service, Economic Intelligence Service and Prowess’- Centre for monitoring Indian Economy Pvt. Ltd (CMIE) Database. ICRA Report on Cement Industry. Annual Report of Century Textile, 2007-08.

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ANNEXURE

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ANNEXURE CALCULATION PROCEDURE 1. All the reasons are given points according to their ranking. For example: The reason which is ranked 1st by the non-traders is given 10 points and the reason ranked 2 is given 9 points like this allotment of points is made to all the reasons (‘k’ to ‘t’). 2. Division of all the reasons is made separately according to their ranking. 3. To calculate the total points of each reason, all the ranking is multiplied with its points and then their addition is made. Total points for each factor is calculated as: A = ak + al + am + an + ao + ap + aq + ar + as + at B = bk + bl + bm + bn + bo + bp + bq + br + bs + bt C = ck + cl + cm + cn + co + cp + cp + cr + cs + ct D = dk + dl + dm + dn + do + dp + dp + dr + ds + dt E = ek + el + em + en + eo + ep + ep + er + es + et F = fk + fl + fm + fn + fo + fp + fp + fr + fs + ft G = gk + gl + gm + gn + go + gp + gp + gr + gs + gt H = hk + hl + hm + hn + ho + hp + hp + hr + hs + ht I = ik + il + im + in + io + ip + ip + ir + is + it J = jk + jl + jm + jn + jo + jp + jp + jr + js + jt

Abbreviations: a = Price b (S.P.S) = Sales Promotion Schemes c (Porc.) =Personal Contact d (C.P.) =Credit Period

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e (Advt.) = Advertisement f (Qu.) = Quality g (Aval) =Availability h (A.S.S.) = After Sales Service i (G.I.C.) = Goodwill and Image of the Company j (S. Req.) = Structural Requirement

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.

QUESTIONNAIRE: Name: …………………………………………………………………………………………………………. Name of the Business (in case of stockist/dealer): ..………………………………………. Address: ………………………………………………………………………………….………………….. Contact Details: Ph. …..………………… Mob: …….………………… Fax: ……………...……... E - mail: ………………………………………………………………………………………………………. Category: Contractors/Engineers/Builders/Institutions (non-trader) 1. Name the Brand of Cement you sell: a. Jaypee Buland b. Birla Gold c. ACC

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d. Prism Champion e. Birla Samrat f. Ultratech 2. Which Brand do you prefer? a. Jaypee Buland b. Birla Gold c. ACC d. Prism Champion e. Birla Samrat f. Ultratech

3. Is your decision influence by anyone? o Yes o No

4. If yes then by whom?  Engineers or Architects  Masons  Advertisements  Personal Discussion  Contractors  Brand Image of the company

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5. Name the different promotion schemes offered by different companies known to you

6. Under the brand promotion Re-arrange the importance of the following attempts done on dealer side? a. Dealer meet b. Sub-Dealer meet c. Gift item d. Foreign tour e. Van program f. New year Calendar and Dairy

7. Rate the following attempts done for mass publicity on the basis of its importance under the brand promotions. a. Hording b. Wall panting c. TV advertisement d. News paper Advertisement e. Radio advertisement f. Hoarding and Banner

8. Do you get any technical assistance from any company? If Yes, How?

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9. What according to you the company does to increase its sales in this segment?

10. During which month/period your purchasing is  Maximum, Reason?  Minimum, Reason?

11. Do you have any complaint with any company? o Yes o No

12.

Are you satisfied with the service given by the company regarding

complaint resolution? o Yes o No

13. How a cement company can improve the level of satisfaction of you? Please explain.

Thank you for your support…….!

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List of traders surveyed in Satna ZoneSurvey Area Satna City: 1. Prem Nagar 2. Pateri Road Kothi Road

Dhawari

Unchehra

Maihar

Sajjanpur

Devendra Nagar

Panna

Nagaud

Dealer/Sub-Dealer Name

Name of the shop

Contact Number

Nitin Yadav

Rameshwara Traders

9300114276

R.M. Tiwari

Piyush Traders

07672-227320

Ghanshyam Shukla

Palak Traders

9993866985

Imran Khan Munna Mishra Rahul Gupta Gyan Singh Vinya Singh Anand Tiwari Ashok Sharma Satya Prakash Singh Vijay Bahadur Singh Pushpraj Singh Santosh Tambrakar Ashok Pandey Shatrugan Chaurasiya Upendra Singh Bhola Agarwal Laxmandas Sanjay Gupta Abdul Raheem Sunil Anil Agarwal Vijay Pathak Premchandra Sanjeev Jain Sanjeev Jaiswal Pawan Shukla Ram Prakash Harish Jain Shirish Agarwal Vinod Gupta Shiv Khare Neeraj Jain Rohit Jain Arvind Agarwal Manoj Mishra Arunesh Pathak Dharmendra Singh Vinod Agarwal

Kareem Traders Baba Traders Rahul Steel Traders Singh Traders Vishveshwara Traders Anand Traders Prabha Traders Sudhanshu Traders Shubham Traders Ram Traders Santosh Traders Ashok Traders Chaurasiya Traders Pushkar Traders B.K. Traders Raj Steel Agency Sainath Traders Puja Traders Rewa Iran Enterprises Deep Traders Lucky Traders Ganesh Traders Jain Traders Sanjeev Traders Ruchi Traders Mamta Traders Lucky Traders Agarwal H/W Gupta Traders S.K. Enterprises Jain Agency Singhal Traders Agarwal Traders Mishra Traders Pathak Traders Baba Traders Vinod Traders

9827716157 9893881141 07672-405103 07672-227644 9826935669 9303320831 07672-237569 9406727771 07672-23860 9425841685 9893825178 9425842216 9893065520 9993827742 07672- 233090 07672- 234103 9827585260 9827270883 07672- 233882 9907003449 07672- 32174 9425837547 9425168326 07672- 272476 9424356851 9425839941 07672-272589 9826998095 07672- 252878 9425167029 07672- 252407 9893817427 9425470762 9826616422 9977520824 982693567 9826958757

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Madhav Garh Singhpur Kotar Birsinghpur

Chotelal Pathak Rajmani Bagari C.S. Namdev Pradeep Singh Prabhakar Gautam Badrish Pandey Sandeep Agrawal Shri Ram Shukla Satyabhan Patel B. L. Dwivedi

Anshu Traders Ajay Cement Store Namdev Agency Jagdamba Traders Gautam Traders Badrish Traders Mittal Traders Shriram Traders Patel Traders Ankur Traders

9926686805 982634123 9893760874 9425470571 9977113253 9993499118 9934927689 9993203629 9993078503 9993220825

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