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Dr.

Rafiq Zakaria Campus


Maulana Azad Educational Trust’s
Millennium Institute of Management
Rauza Baugh, Aurangabad.

PROJECT REPORT
ON
“SALES & DISTRIBUTION NETWORK OF
ULTRA TECH CEMENT”
Submitted By

Mohammed Ziauddin
(MBA 4th SEM)

ROLL.NO. 20(Batch I)

Guided By
DR. SHAIKH SALEEM MR. SYED FARHANUDDIN

(Director) (Lecturer)

Dr. Babasaheb Ambedkar Marathwada University,


Aurangabad.
For the academic year 2011-12

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Dr. Rafiq Zakaria Campus
Maulana Azad Educational Trust’s
Millennium Institute of Management
Rauza Baugh, Aurangabad.

CERTIFICATE
This is certifying that MOHAMMED ZIAUDDIN student of
M.B.A. (4th sem.) has completed his project on the topic

“SALES & DISTRIBUTION NETWORK OF


ULTRA TECH CEMENT”
and submitted satisfactory report as per the requirement of
Dr. BABASAHEB AMBEDKAR MARATHWADA UNIVERSITY in
the partial fulfillment of the Master of Business Administration
(M.B.A) academic year 2011-12

MR. SYED FARHANUDDIN SIR. Dr. Shaikh Saleem

Guide Director

Place: Aurangabad.
DATE ;

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ACKNOWLEDGEMENT

It gives me an immense pleasure to acknowledge


all the people who directly or indirectly helped me during the
Project. My thanks go to Dr. Shaikh Saleem (Honorable
Director MIM Aurangabad), MR SYED FARHANUDDIN SIR who
guided me for project.

My special thanks go to all colleagues, who guided and


cooperated me to accomplish my project effectively.

MOHAMMED ZIAUDDIN
(MBA 4th sem )

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DECLARATION
I the undersigned MOHAMMED ZIAUDDIN here by
declare that all the information present in this report is based on
my personal observation and any flaw thereby would be
attributed solely to me. I also promise that the information
collected from the sources would only be used for the completion
of my MBA.

I here by declare that this report is submitted by me in the


partial fulfillment of Master of Business Administration is
genuine work of me.

It has not been submitted either fully or partially or any other


institute prior in other connection.

MOHAMMED ZIAUDDIN

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Index

S.NO. Chapters Page


1. Abstract 1-5

2. Introduction 6-9

3. Executive summary 10-13

4. Indian cement industries an overview 14-45

5. Company profile & other information 46-59

6. Reviews of literature 60-68

7. Objectives of study 69

8. Research Methodology 70-73

9. Data Analysis 74-78

10. Conclusion 79

11. Limitation of the study 80

12. Recommendation 81-82

13. Annexure 83-84

14. Bibliography 85

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1. INTRODUCTION

Indian economy is facing a boom in the real estate. This is directly


related with the cement sector. Ultra Tech cement being one of the
top three players in the Indian market and the most exported Indian
cement is an important part of the sector. Ultra Tech Ltd is India's
foremost manufacturer of cement and concrete. Their operations
are spread throughout the country with 14 modern cement
factories, 19 Ready mix concrete plants, 19 sales offices, and
Several zonal offices. It has a workforce of about 9000 persons and
a countrywide distribution network of over 9,000 dealers. Ultra
Tech research and development facility has a unique track record
of innovative research, product development and specialized
consultancy services. Since its inception in 1936, the company has
been a trendsetter and important benchmark for the cement
industry in respect of its production, marketing and personnel
Management processes. Its commitment to environment
friendliness, its high ethical standards in business Dealings and its
on-going efforts in community welfare Programs have won it
acclaim as a responsible corporate citizen. Ultra Tech Co has made
significant contributions to the nation building process by way of
quality products, services and sharing its expertise.

In the 70 years of its existence, UTC has been a pioneer


In the manufacture of cement and concrete and a trendsetter in
many areas of cement and concrete technology including
improvements in raw material utilization, process improvement,
energy conservation and development of high performance
concretes. UTC’S brand name is synonymous with cement and
enjoys a high level of equity in the Indian market. It is the only
cement company that figures in the list of Consumer Super Brands
of India. The company's various businesses are supported by a

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Powerful, in house research and technology backup facility - the
only one of its kind in the Indian cement industry. This ensures not
just consistency in product quality but also continuous
improvements in products, processes, and application areas.
UTC has rich experience in mining, being the largest user of
Limestone and it is also one of the principal users of coal. As the
largest cement producer in India, it is one of the biggest customers
of the Indian Railways, and the foremost user of the road transport
network services for inward and outward movement of materials
and products.

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What is the Project

This projet about the sales & distribution network of Ultra tech
cement. In this project a brief study has been done regarding their
policies & strategies and how they distribute their product
according to the fluctuating demand of the market.

In this project we define what actually cement is? Its mixture, the
government rules & regulation and policies regarding this segment.
The details of Ultra Tech cement industry has been defined over
here. Their export to various countries and the deep knowledge
about the overall cement industry, the state wise capacity,
production capacity, operations. Various research designs has been
done over here & with the help of survey

The Co has been awarded with various types of quality standards


like ISO 9000-9001

Various graphical representations show the market share of the Co


in Marathwada Region like Jalna & Aurangabad. Personal visit has
been given to the dealers of the Co & many questions have been
asked according to the question ere shown below. During my
project, I carried out a research for Ultra Tech cement and tried to
find out its current market position, reasons behind any

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shortcomings and also found out some methods of increasing Ultra
Tech cement sales.

The report also gives a detailed idea about the Indian cement
industry and the key players.

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WHAT IS CEMENT?

 Cement is a mixture of limestone, Clay, Silica and Gypsum. It is a fine


powder which when mixed with water sets to a hard mass as a result of
hydration of the constituent compounds. It is the most commonly used
construction material. Cement is manufactured by burning a mixture of
limestone and Clay at high temperatures in a kiln, and then finely
grinding the resulting clinker along with Gypsum. The end product thus
obtained is called Ordinary Portland Cement (OPC).

Different Types of Cement

There are different varieties of cement based on different compositions


according to specific end uses, namely Ordinary Portland Cement, Portland
Pozolona Cement, Portland Blast Furnace Slag Cement, White Cement and
Specialized Cement. The basic difference lies in the percentage of clinker
used.

1. Ordinary Portland cement (OPC):

 OPC, popularly known as grey cement, has 95% clinker and 5% of


Gypsum and other materials. It accounts for 70% of the total
consumption. White cement is a variation of OPC and is used for
decorative purposes like rendering of walls, flooring etc. It contains a
very low proportion of iron oxide. Ordinary Portland cement is the most
commonly used cement for a wide range of applications. These
applications cover dry-lean mixes, general-purpose ready-mixes, and
even high strength pre-cast and pre-stressed concrete.

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2. Portland Pozolona Cement (PPC):

 Portland pozzolana cement is Ordinary Portland Cement blended with


pozzolanic materials (power-station fly ash, burnt clays, ash from burnt
plant material or Siliceous earths), either together or separately. Portland
clinker is ground with Gypsum and Pozzolanic materials which, though
they do not have cementing properties in themselves, combine
chemically with Portland cement in the presence of water to form extra
strong cementing material which resists wet cracking, thermal cracking
and has a high degree of cohesion and workability in concrete. PPC has
80% clinker, 15% pozolona and 5% gypsum and accounts for 18% of the
total cement consumption. It is cheaply manufactured because it uses fly
ash/burnt clay/coal waste as the main ingredient. It has a lower heat of
hydration, which helps in preventing cracks where large volumes are
being cast.

3. Portland Blast Furnace Slag Cement (PBFSC):

 PBFSC consists of 45% clinker, 50% blast furnace slag and 5% Gypsum
and accounts for 10% of the total cement consumed. It has a heat of
hydration even lower than PPC and is generally used in construction of
dams and similar massive constructions. Portland blast-furnace slag
cement contains up to 70 per cent of finely ground, granulated blast-
furnace slag, a nonmetallic product consisting essentially of Silicates and
Aluminum-silicates of Calcium. Slag brings with it the advantage of the
energy invested in the slag making. Grinding slag for cement
replacement takes only 25 per cent of the energy needed to manufacture
Portland cement. Using slag cement to replace a portion of Portland

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cement in a concrete mixture is a useful method to make concrete better
and more consistent. Portland blast-furnace slag cement has a lighter
colour, better concrete workability, easier finish ability, higher
compressive and flexural strength, lower permeability, improved
resistance to aggressive chemicals and more consistent plastic and
hardened consistency.

4. White Cement:

 White Portland cement has essentially the same properties as gray


cement, except for color, which is a very important quality control issue
in the industry. It is manufactured using fuel oil (instead of coal) and with
iron oxide content below 0.4% to ensure whiteness. Special cooling
technique is used. It is used to enhance aesthetic value, in tiles and for
flooring. White cement is much more expensive than grey cement.

5. Specialized Cement:

 Oil Well Cement: is made from clinker with special additives to prevent
any porosity.
 Rapid Hardening Portland cement: It is similar to OPC, except that it
is ground much finer, so that on casting, the compressible strength
increases rapidly.
 Water Proof Cement: OPC, with small portion of calcium stearate or
non-saponifibale oil to impart waterproofing properties.

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INDIAN CEMENT INDUSTRY-AN OVERVIEW

Cement production commenced in India as early as 1914. The first cement


unit was set up at Porbandar in 1914 with a capacity of 1,000 tones per
annum.Cement is the preferred building material in India. It is used
extensively in household and industrial construction. Earlier, government
sector used to consume over 50% of the total cement sold in India, but in the
last decade, its share has come down to 35%. Rural areas consume less than
23% of the total cement. Availability of cheaper building materials for non-
permanent structures affects the rural demand.

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 countries
where the demand has reached a plateau. In India too, the demand for
cement will be affected by spending on infrastructure (including housing).

With the boost given by the government to various infrastructure projects,


road network and housing facilities, growth in the cement consumption is
anticipated in the coming year. The favorable housing finance environment
is expected to fulfill the vast housing requirements, both in rural and urban
areas. The increase in infrastructure projects by the government coupled
with the construction of the Golden Quadrilateral and the North-South and
East-West corridor projects have led to an increase in consumption of
cement. This increase is expected to continue in the future. The reduction in

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import duties is not likely to affect the industry as the cement produced is at
par with the international standards and the prices are lower than those
prevailing in international markets. The graph below show the consumption
of cement in different areas of housing, infrastructure and industries.

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Structure of the industry
Domestic players:
Associated Cement Companies Ltd (ACCL)
Associated Cement Companies Ltd manufactures ordinary Portland cement,
composite cement and special cement and has begun offering its marketing
expertise and distribution facilities to other producers in cement and related
areas. It has twelve manufacturing plants located throughout the country
with exports to SAARC nations. The company plans capital expenditure
through expansion of existing units and/or through acquisitions. Non-core
assets are to be divested to release locked up capital. It is also expected to
actively pursue overseas project engineering and consultancy services.

Birla Corp
Birla Corp's product portfolio includes acetylene gas, auto trim parts,
casting, cement, jute goods, yarn, calcium carbide etc. The cement division
has an installed capacity of 4.78 million metric tones and produced 4.77
million metric tones of cement in 2003-04. The company has two plants in
Madhya Pradesh and Rajasthan and one each in West Bengal and Uttar
Pradesh and holds a market share of 4.1 per cent. It manufactures Ordinary
Portland cement (OPC), Portland pozzolana cement, fly ash-based PPC,
Low-alkali Portland cement, Portland slag cement, low heat cement and
sulphate resistant cement. Large quantities of its cement are exported to
Nepal and Bangladesh. Going forward, the company is setting up its captive
power plant to remain cost competitive.

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Century Textiles and Industries Ltd (CTIL)
The product portfolio of CTIL includes textiles, rayon, cement, pulp &
paper, shipping, property & land development, builders and floriculture.
Cement is the largest division of CTIL and contributes to over 40 per cent of
the company's revenues. The company has an installed capacity of 4.7
million tones with a total cement production of 5.43 million tones in 2003-
04. CTIL has four plants that manufacture cement, one in Chattisgarh, two in
Madhya Pradesh and one in Maharashtra. Going forward, the company has
scripted a three-pronged strategy closing down its shipping business,
continuing with its chemicals and adhesive division, and
Focusing on cement, rayon and paper as its long-term business plan.

Grasim-UltraTech Cemco
Grasim's product profile includes viscose staple fiber (VSF), grey cement,
white cement, sponge iron, chemicals and textiles. With the acquisition of
UltraTech, L&T's cement division in early 2004, Grasim has now become
the world's seventh largest cement producer with a combined capacity of 31
million tones. Grasim (with UltraTech) held a market share of around 21 per
cent in 2005-06. It has plants in Madhya Pradesh, Chattisgarh, Punjab,
Rajasthan, Tamil Nadu and Gujarat among others. The company plans to
invest over US$ 9 million in the next two years to augment capacity of its
cement and fiber business. Its also plans to focus on its international
ventures, ramping up the capacity of Alexandra Carbon Black in Egypt to
1,70,000 tone per annum (from 1,20,000 tpa) and raising the capacity of the
carbon black plant in China from 12,000 tpa to 60,000 tpa.

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Gujarat Ambuja Cements Ltd (GACL)
Gujarat Ambuja Cements Ltd was set up in 1986 with the commencement of
commercial production at its 2 million tonne plant in Chandrapur,
Maharashtra. The group has clinker manufacturing facilities at Himachal
Pradesh, Gujarat, Maharashtra, Chattisgarh, Punjab and Rajasthan. The
company has a market share of around 10 per cent, with a strong foothold in
the northern and western markets. Its total sales aggregated US$ 526 million
with a capacity of 12.6 million tonne in 2003-04. Gujarat Ambuja is one of
India's largest cement exporter and one of the most cost efficient firms.
GACL has a 14.45 per cent stake in ACC, making it the second largest
cement group in the country, after Grasim-UltraTech Cemco. The company
has free cash flows that it is likely to use to grow inorganically. The
company is scouting for a capacity of around two million tonne in the
northern and western markets. It has also earmarked around US$ 195-220
million for acquisitions
India Cements
India Cements is the largest cement producer in southern India with a total
capacity of 8.81 million tonne and plants in Andhra Pradesh and Tamil
Nadu. The company has a market share of 5.4 per cent with a total cement
production of 6.36 million tonne in 2003-04. Its product portfolio includes
ordinary portland cement and blended cement. The company has limited its
business activity to cement, though it has a marginal exposure to the
shipping business. The company plans to reduce its manpower significantly
And exit non-core businesses to turnaround its fortune. It also expects the
export market to open up, with the Gulf emerging as a major importer.

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Jaiprakash Associates Limited
Jaiprakash Industries, now known as Jaiprakash Associates Limited (JAL) is
part of the Jaypee Group with businesses in civil engineering, hospitality,
cement, hydropower, design consultancy and IT. It has an annual capacity of
4.6 million tonne with plants located in Rewa & Bela (Madhya Pradesh) and
Sadva Khurd (Uttar Pradesh). The company has a market share of 3.8 per
cent with the cement division contributing US$ 172 million to revenue
in 2003-04. The company is upgrading its capacity to 6.5 million tonne
through the modernizing of the existing units and the commissioning of a
new grinding unit at Tanda (Uttar Pradesh) with an investment of US$ 163
million. Jaiprakash Associates has decided to concentrate on its core
business of construction and engineering and leave its cement plant to its
subsidiary Jaypee Rewa Cement Ltd. The company manufactures a wide
range of world class cement of OPC grades 33, 43, 53, IRST-40 and special
Blends of pozzolana cement.
JK Synthetics
JK Synthetics, a Singhania Group company, started manufacturing nylon at
Kota in 1962. Subsequently, it diversified into PSY/PFY, nylon tyre-cord,
cement (in 1975), acrylic and white cement (in 1984). The company has a
market share of 2.7 per cent. JK Synthetics Limited is restructuring its
business divisions into two separate entities- JK Cements and JK Synthetics.
After the restructuring, it will be left with a cement plant at Nimbahera in
Rajasthan, with a capacity of 3.26 million metric tonne and manufacturing
white cement.

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Madras Cements
Madras Cements Ltd is one of the oldest cement companies in the southern
region and is a part of the Armco group. The company is engaged in cement,
clinker, dolomite, dry mortar mix, limestone; ready mix cements (RMC) and
units generated from windmills. The company has three plants in Tamil
Nadu, one in Andhra Pradesh and a mini cement plant in Karnataka. It has a
total capacity of 5.47 million tonne annually and holds a market share of 3.1
per cent. Madras Cements plans to expand by putting up RMC plants.
As Karnataka is a promising market, the company is further expanding its
capacity from the present 1.5 million tonne to 3.4 million tonne through an
investment of US$ 9 million.
Foreign players:
Holcim
Holcim, earlier known as Holder bank, has a cement production capacity of
141.9 million tonne. It is a key player in aggregates, concrete and
construction related services. It has a strong market presence in over 70
countries and is a market leader in South America and in a number of
European and overseas markets. Holcim entered India by means of a long-
term strategic alliance with Gujarat Ambuja Cements Ltd (GACL). The
alliance aims to strengthen their clinker and cement trading activities in
South Asia, the Middle East and the region adjoining the Indian Ocean.
Holcim also intends to use India as an additional base for its IT operations,
R&D projects as well as a procurement sourcing hub to generate additional
synergies and value for the group.

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Italcementi Group
The Italecementi group is one of the largest producers and distributors of
cement with 60 cement plants, 547 concrete batching units and 155 quarries
spread across 19 countries in Europe, Asia, Africa and North America.
Italcementi is present in the Indian markets through a 50:50 joint venture
company with Zuari Cements. All initiatives in southern India are routed
through the joint venture company, while Italcementi is free to buy deals
In its individual capacity in northern India. The joint venture company has a
capacity of 3.4 million tonne and a market share of 2.1 per cent.
Lafarge India
Lafarge India Pvt Ltd, a subsidiary of the Lafarge Group, has a total cement
capacity of 5 million tonne and a clinker capacity of 3 million tonne in the
country. Lafarge commenced operations in 1999 and currently has a market
share of 3.4 per cent. It exports clinker and cement to Bangladesh and Nepal.
It produces Portland slag cement, ordinary portland cement and portland
pozzolana cement. The Indian cement plants are located in Chhattisgarh and
Rajasthan. Lafarge Cement has become the largest cement selling firm in the
Indian markets of West Bengal, Bihar, Jharkhand and Chhattisgarh.

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Two players call all the shots;
For the first time in India, two companies - Grasim and Gujarat Ambuja,
along with their associate companies, control almost 50% of India’s cement
capacity and supply. In a commodity business, where profits move
disproportionately with even small changes in cement prices, this is a
significant development The emphasis laid by the government on the
development of physical infrastructure mainly roads, airports, seaports and
railroads and the boom in housing driven by easy availability of cheap
housing credit have been the key growth drivers for the sector.
Government is the single largest buyer of cement. Historically, in the last
year, drive to complete pending infrastructure project has driven demand
growth. One of the major cement consuming projects is the Golden
Quadrilateral Project-Besides construction and modernization of four
airports and two seaports. Gujarat Ambuja has always traded at a premium
to its peers due to its higher operational efficiency, presence in high growth
markets and fiscal benefits. This edge got further sharpened post ACC
acquisition that added to scale as well as geographical diversity. Grasim and
ultra tech on the other hand are doing so well to capture the more and more
market share.

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Major Consolidations

With an installed capacity of around 157 million tonne per annum (mtpa) at
end-March 2007, large cement plants accounted for 93% of the total
installed capacity in India. The installed capacity is distributed over across
approximately 129 large cement plants owned by around 54 companies. The
structure of the industry is fragmented, although, the concentration at the top
is increasing. The fragmented structure is a result of the low entry barriers in
the post decontrol period and the ready availability of technology. However,
cement plants are capital intensive and require a capital investment of over
Rs. 3,500 per tonne of cement, which translates into an investment of Rs.
3,500 million for a 1 mtpa plant. The cement industry has witnessed
substantial reorganization of capacities during the last couple of years.
Some examples of the consolidation witnessed during the recent past
include: Gujarat Ambuja taking a stake of 14% in ACC; Gujarat Ambuja
taking over DLF Cements and Modi Cement; India Cement taking over
Raasi Cement and Sri Vishnu Cement; Grasim's acquisition of the cement
business of L&T; Indian Rayon's cement division merging with Grasim;
Grasim taking over Sri Dig Vijay Cements; L&T taking over Narmada
Cements; ACC taking over IDCOL. Multinational cement companies have
also initiated the acquisition process in the Indian cement market. Swiss
cement major Holcim has picked up 14.8% of the promoters stake in Gujarat
Ambuja Cements (GACL). In January 2006, Holderind Investments (Holcim
Mauritius), an indirect, wholly-owned subsidiary of Holcim, acquired 200
million equity shares of GACL at a price of Rs.105 per share from the
promoters. Post-sale, the share of promoters in the company is 9%. Holcim
also made an open offer to acquire an additional 20% stake in GACL at Rs.

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90.64 per share. Earlier, Holcim had entered into a strategic alliance with
GACL, and acquired a 67% controlling stake in Ambuja Cement India.
Through this holding company, Holcim acquired a majority in Ambuja
Cement Eastern and a substantial stake in ACC. Ambuja Cement India holds
a 34% share in ACC and a 97% share in Ambuja Cement Eastern. Holcim's
acquisition has led to the emergence of two major groups in the Indian
cement industry, the Holcim-ACC-Gujarat Ambuja Cements combine
(capacity of 33.5 mt) and the
Aditya Birla group through Grasim Industries and Ultratech Cement
(combined capacity of 31.1 mt). Lafarge,
the French cement major, had acquired the cement plants of Raymond and
Tisco in the recent past, and has an installed capacity of 5 mtpa. Italy based
Italcementi has acquired a stake in the K.K. Birla promoted Zuari Industries'
cement plant in AP, with a capacity of 3.4 mtpa. Recently, Heidelberg
Cement has entered into an equal joint-venture agreement with S P Lohia
Group controlled Indo-Rama Cement. Heidelberg Cement is expected to
take a 50% controlling stake in Indo-Rama's grinding plant of 0.75 mtpa at
Raigad in Maharashtra. As on March 2006, ACC was the largest player with
a capacity of 18.64 mtpa. UltraTech CemCo Ltd.1 now occupies the second
slot with a capacity of 17 mtpa (which includes 1.5 mtpa of subsidiary
Narmada Cement).
The Gujarat Ambuja group has emerged as the third largest player with a
capacity of 14.86 mtpa. Grasim ranks fourth with a capacity of 14.12 mtpa.
Other leading players include India Cements, Jaypee group, Century
Textiles, Madras Cements, Lafarge, and Birla Corp.

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Reasons behind these consolidations;
As discussed above, the cement industry is witnessing a number of Mergers
& Acquisitions (M&As). The extent of concentration in the industry has
increased over the years. This concentration is mainly because of the focus
of the larger and the more efficient units to consolidate their operations by
restructuring their business and taking over relatively weaker units. The
relatively smaller and weaker units are finding it difficult to withstand the
cyclical pressure of the cement industry. Some of the key benefits accruing
to the acquiring companies from these acquisition deals include:
❑ Economies of scale resulting from the larger size of operations
❑ Savings in the time and cost required to set up a new unit
❑ Access to new markets
❑ Access to special facilities / features of the acquired company
❑ And, benefits of tax shelter.

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State wise Capacity

As cement is a low value commodity, freight costs assume a significant


proportion of the final cost. Transporting costs render the prices of cement in
distant destinations uncompetitive. For instance, it is financially infeasible to
transport cement by road over 250 kms. Railways are mostly used to
transport cement over longer distances. However, its bulky nature and
infrastructure bottlenecks render even rail transport unviable over very long
distances (that is why Madras Cements or India Cements, located in the
south, can hardly make a difference to the fortunes of west-based companies
like Gujarat Ambuja). Therefore, manufacturers tend to sell cement at the
nearest market first and sell in distant markets only if additional realization
is greater than freight costs incurred. This is the reason for showing regional
demand rather than state demand in case of cement.

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Region wise Capacity

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


 North (Punjab, Delhi, Karanataka, Himachal Pradesh, Rajasthan,
Chandigarh, J&K and Uttranchal);
 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); and
 Central (Uttar Pradesh and Madhya Pradesh).

Northern Region
Punjab 2173.34
Delhi 500.00
Karanataka 172.00
Himachal Pradesh 4060.00
Rajasthan 16299.34
J&K 200.00
TOTAL 23404.68
West
Maharashtra 8950.00
Gujarat 12937.00
TOTAL 21887.00
South

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Tamil Nadu 12913.18
Andra Pradesh 19831.02
Karnataka 9744.00
Kerala 420.00
TOTAL 42908.20
East
Bihar 1000.00
Orissa 2761.00
West Bengal 2291.66
Assam Meghalaya 400.00
Jharkhand 3475.01
Chattisgarh 11287.33
TOTAL 21215.00
Central
U.P. 6297.00
M.P. 16185.00
TOTAL 20482.00

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


with Andra 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.

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Maharashtra and Gujarat have production capacity of 6.89% and 9.96%
respectively. East and Central Regions account for 16.33% and 15.77% of
the total production capacity of the country respectively.

Trade between these regions is on a very low scale mainly because of the
transportation bottlenecks and uncompetitive cost of transportation. The
Southern region dominated the cement consumption at 44.5 mn tonnes in FY
07, accounting for about 30% of total domestic cement consumption. During
FY 03-07, Southern region has witnessed highest CAGR of cement demand
growth at 10.4% followed by Northern and Eastern regions at 8.9% and 9%,
respectively

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Mechanics of Distribution Channels of Sector
Companies invariably hire agents or transport cements to own or
government warehouses either via roadway or railways. Incase of exports,
cement reaches the nearest port via roadways or railways and is then
transferred to the importing country. Domestically, from agents or
warehouses the cement is transported to the dealers/distributors and
in turn to sub dealers who finally sell it to the end users. There may or may
not be physical ownership of goods. In the second case, dealers and sub
dealers take order from buyers and place it to the companies, co ordinate and
monitor the timely dispatch of said orders,

ENERGY AND TRANSPORT REQUIREMENTS


The cement industry is dependent on three major infrastructural sectors of
the economy: coal, power and transport. The inputs from these three sectors
account for roughly 50% of the cost of cement. Both the availability and the
cost of these inputs have a vital bearing on the fortunes of the cement
players. All these sectors are largely in the State sector, and, historically
cement companies have had virtually no control on the cost or availability of
these inputs. Hence, the industry response has largely been in the form of
achieving efficiency gains and finding alternatives (captive power, use of
waterways). One additional external influencer of the cement industry
performance is the taxes and levies imposed by the Central and State
Governments. These together account for around 30% of the selling price of
cement in the Indian context.

30
The shortage in domestic coal production coupled with the poor quality has
resulted in cement companies resorting to importing coal, or going in for
open market purchase of coal, or using alternative fuel such as lignite or pet
coke.
Use of imported coal has become an essential feature of the Indian cement
industry and has shown a rising trend during the last few years.

31
Power and Fuel cost form the largest proportion of the cost structure. This
reflects the effects of the trend in rising global oil and fuel prices. On the
other hand Employee costs form the smallest proportion of over all cost.
This is essentially because cement industry is a very capital intensive
industry. This also accounts for the huge depreciation and interest costs
which accrue on the plant and machinery. Moreover, the labour employed is
essentially semi-skilled excluding the top management which bring down
labour costs.

32
GOVERNMENT POLICIES
Government policies have affected the growth of cement plants in India in
various stages. The control on cement for a long time and then partial
decontrol and then total decontrol has contributed to the gradual opening up
of the market for cement producers. The stages of growth of the cement
industry can be best described in the following stages:

Price and Distribution Controls (1940-1981):


During the Second World War, cement was declared as an essential
commodity under the Defense of India Rules and was brought under price
and distribution controls which resulted in sluggish growth. The installed
capacity reached only 27.9 MT by the year 1980-81.

33
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
The things 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.
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%
34
compared to imported coal of high calorific value (7,000-8,000 kcal/kg) with
low ash content 6-7%. Lignite is also used as a fuel by blending it with coal.
However this process is not very common.
Electricity:
Cement industry consumes about 5.5bn units of electricity annually while
one ton of cement approximately requires 120-130 units of electricity. Power
tariffs vary according to the location of the plant and on the production
process. The state governments supply this input and hence plants in
different states shall have different power tariffs. Another major hindrance to
the industry is severe power cuts. Most of the cement producing states like
AP, MP, experience power cuts to the tune of 25-30% every year causing
substantial production loss.
Limestone:
This constitutes the largest bulk in terms of input to cement. For producing
one ton of cement, approximately 1.6 ton of limestone is required.
Therefore, the cement plant location is determined by the location of
limestone mines. The major cash outflow takes place in way of royalty
payment to the central government and cess on royalties levied by the state
government. The total limestone deposit in the country is estimated to be 90
billion tons. AP has the largest share -- 34%, Karnataka 13%, Gujarat 13%,
M.P 8%, and Rajasthan 6.5%. The plants near the limestone deposit pay less
transportation cost than others.
Transportation:
Cement is mostly packed in paper bags now. It is then transported either by
rail or road. Road transportation beyond 200 kms is not economical
therefore about 55% cement is being moved by the railways. There is also
the problem of inadequate availability of wagons especially on western
35
railways and southeastern railways. Under this scenario, manufacturers are
looking for sea routes, this being not only cheap but also reducing the losses
in transit. Today, 70% of the cement movement worldwide is by sea
compared to 1% in India. However, the scenario is changing with most of
the big players like L&T, ACC and Grasim having set up their bulk
terminals.

36
Incentives in States:
Most state governments, in order to attract investments in their respective
states, offer fiscal incentives in the form of sales tax exemptions/deferrals. In
some states, this applies only to intrastate sales, like Madhya Pradesh and
Rajasthan. States like Karanataka offer a freeze on power tariff for 5 years,
while Gujarat offers exemption from electric duty.
Opening up the FDI channel:
The impact of government policies on cement demand has been
steadily decreasing with the sector being gradually deregulated. At
present, 100 per cent foreign direct investment (FDI) is permitted
in the cement industry. Lafarge was the first foreign company to
enter the Indian market in 1999.
The French
Declining Role of Public Sector:
Historically, cement has been one of the most important areas of operations
for the Indian private sector. Unlike much of heavy industry and utilities,
cement was not deemed to be the exclusive preserve of the State sector in
the post-independence development strategy. Cement was also the industry
of choice of many corporate diversifying away from the troubled traditional
areas of jute and textiles.
Over the years, the share of the public sector in cement production has
declined. While the private sector (large companies) accounts for around
95% of the total installed capacity, the share of public sector companies has
declined from a level of 11% in FY1996 to around 4.4% in FY2006. The
share in production of the public sector companies is even lower at 1.2% in
FY2006 as compared to 6.5% in FY1996.

37
Export of cement from India
The Indian cement industry exported around 6 mt of cement during FY2006,
accounting for around 4% of the total production. There has been a
significant year on year variation in the export trend, implying that
Companies rely on cement exports to balance out the domestic demand
supply situation. As seen from above there is excess production, so the
difference in supply and demand is met by exporting. The export of Indian
cement has increased over the years, giving a boost to the Indian cement
industry.
The demand for cement in the foreign countries is a derived demand, for it
depends on industrial activity, real estate, and construction activity. Since
growth is taking place all over the world in these sectors, Indian export of
cement is also increasing.
The cement industry in India has around 300 mini cement plants and 130
large cement plants. The total production capacity of these plants is around
167.36 million tons. The India cement industry is technologically very
advanced, as a result of which the quality of Indian cement is now
considered the second best in the world. This has given a major boost to the
Indian export of cement. The production of cement in India is not only able
to meet the domestic demand, but large amounts are also exported. A fair
amount of clinker and cement by-products are also exported by India. As the
quality of Indian cement is very good, its demand in the international market
is always high.

38
The graph shows that the production of cement in India is at 2nd place after
China, this higher production is a good reason for exporting cement .
In 2001-2002, 3.38 million tons of cement was exported from India. That
figure stood at 3.47 million tons in 2002-03, and 3.36 million tons in 2003-
04. In 2001-2002, 1.76 million tons of clinker was exported from India. In
2002- 2003 clinker exports amounted to 3.45 million tons, and in 2003-
2004 the figure stood at 5.64 million tons. This shows that the export of
Indian cement has been increasing at a steady pace over the years.
The major companies exporting Indian cement are:
 Gujarat Ambuja
 Ultra Tech Cement
 L&T Limited

39
Export of Indian cement has registered growth a fair amount of growth,
giving a boost to the Indian economy. India has an immense potential to tap
cement markets of countries in the Middle East and South East Asia due to
its strengths of locational advantage, large-scale limestone and coal deposits,
Adequate cement capacity and world-class cement production with the
latest technology. India has an estimated total of 90 billion tonnes of
limestone deposit in the country.

40
Indian technology advantage
The manufacturing process of cement consists of the mixing, drying
and grinding of limestone, clay and silica into a composite mass.
The mixture is then heated and burnt in a pre-heater and kiln to be cooled in
an air cooling system to form clinker, which is the Semi-finished form. This
clinker is cooled by air and subsequently
ground with gypsum to form cement. The dry and semi-dry processes are
more fuel-efficient. The wet process requires 0.28 tonne of coal and 110
kWh of power to manufacture one tonne of cement, whereas the dry process
requires only 0.18 tonnes of coal and 100 kWh of power. Coal and power
costs account for 35 per cent of the total cement production costs. With 95
per cent of the total capacity based on the modern dry process technology,
the Indian cement industry has become more cost efficient.

Top companies in the cement industry match quite well with world standards
in terms of energy (thermal energy Kcal/kg of clinker - India 665 against
690 of Japan) and pollution norms (SPM of 40 in India against 20 in Japan).

41
PORTER’S 5-FORCE MODEL FOR CEMENT
INDUSTRY

42
Threat of New
Entrants: The high capital costs acts as a major entry barrier for the entry
of new players. The high freight costs make it difficult to import cement.
Cement being a high volume low value commodity results in high freight
costs, which makes cement imports economically unfeasible. Domestic
Cement industry is highly insulated from global cement markets. With GoI
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.

Bargaining power of
Suppliers: The major inputs are coal and power. The Prices of both coal
and power are determined by the government. To mitigate the high costs of
power the cement players have set up captive power plants.
Competitive rivalry
between existing players: Previously the rivalry was strong among the
players, as the industry was not consolidated. During the last few years the
industry has become more consolidated with the Top 3 players having a
combined market share of 49 percent in 2005-06 as compared to 32
percent in 1999-2000.

43
Bargaining power of
Buyers: Retail sales constitute about 80 percent of the total sales and the
rest is institutional sales. The retail buyers don’t have any bargaining power
while the institutional buyers get a discount of 5 to 10 percent as they buy
cement in bulk.
Threat of Substitutes: There are no good substitutes for cement.

44
ULTRA TECH CEMENT
UltraTech is the second largest cement manufacturer in India. It is the part of
Aditya Birla group and is subsidiary of Grasim. It has a capacity of 17
million tonnes. The company is the largest exporter of cement and clinker
from India. UltraTech has a presence in the west, south, north and east. The
western and southern regions are its major markets. The company exports
both clinker and cement. The company exports are moving towards cement
from clinker owing to the higher realization in the cement. In 2005-06 the
company exported 1.52 million tonnes of cement. With UltraTech Cement,
the Aditya Birla Group has established itself as not only the most respected
domestic player but also among the global leaders in cement. Now a look at
Aditya Birla group’s cement capacity:
Currently, the Aditya Birla Group is the 11th largest cement producer in the
world and the seventh largest in Asia and Ultra Tech and Grasim together,
make it the largest cement producer in India.
The group mainly has two cement units – Grasim and Ultra tech.

45
UltraTech Cement Limited, a Grasim subsidiary has an annual capacity of
17 million tonnes. It manufactures and markets Ordinary Portland Cement,
Portland Blast Furnace Slag Cement and Portland Pozzolana Cement. It has
five integrated plants. This also includes the integrated plant and two
grinding units of the erstwhile Narmada Cement Company Limited, a
subsidiary, which has been amalgamated with the company in May 2006.
Grasim, on the other hand, manufactures grey and white cement. In grey
cement, the company has the capacity to manufacture 14.20 mtpa. This
includes Grasim’s capacity of 2.06 mtpa, Vikram Cement 4.2 mtpa, Aditya
Cement 1.5 mtpa, Rajashree Cement 4.2 mtpa, the acquired and merged
Dharni Cement 1.16 mtpa and the acquired Digvijay Cement 1.08 mtpa.
Grasim and Ultra Tech together have a cement capacity of 31.20 mtpa. And
when the B K Birla cement companies also come into the fold, the Aditya
Birla group would have a cement capacity of 37.86 mtpa, making it clearly
the largest cement maker of India.
The Aditya Birla Group bought over the cement business of L&T for
around Rs. 2,200 crore. L&T allowed its name to be used for about a year.
Then from 19th November 2003,the name was changed to ultra tech
cemco.This name also didn’t last for long and finally the ultra tech cemco
was changed to Ultra Tech cement. These stages of evolution of ultra tech
cement are listed below:

2001
:: Grasim acquires 10 per cent stake in L&T. Subsequently increases stake
to 15.3 per cent by October 2002

:: Durgapur grinding unit

46
2002

The Grasim Board approves an open offer for purchase of up to 20 per


:: cent of the equity shares of Larsen & Toubro Ltd (L&T), in accordance
with the provisions and guidelines issued by the Securities & Exchange
Board of India (SEBI) Regulations, 1997.

:: Grasim increases its stake in L&T to 14.15 per cent

:: Arakkonam grinding unit


2003
:: The board of Larsen & Toubro Ltd (L&T) decides to demerge its cement
business into a separate cement company (CemCo). Grasim decides to
acquire an 8.5 per cent equity stake from L&T and then make an open
offer for 30 per cent of the equity of CemCo, to acquire management
control of the company.
2004
:: Completion of the implementation process to demerge the cement
business of L&T and completion of open offer by Grasim, with the latter
acquiring controlling stake in the newly formed company UltraTech
2006
Narmada Cement Company Limited amalgamated with UltraTech
pursuant to a Scheme of Amalgamation being approved by the Board for
Industrial & Financial Reconstruction (BIFR) in terms of the provision of
Sick Industrial Companies Act (Special Provisions)

47
ULTRA TECH PRODUCTION UNITS:
Ultra Tech’s subsidiaries are Dakshin Cement Limited and UltraTech
Ceylinco (P) Ltd.UltraTech has five integrated plants, five grinding units
and three terminals — two in India and one in Sri Lanka. These include an
integrated plant and two grinding units of the erstwhile Narmada Cement
Company Limited, a subsidiary, which has been amalgamated with the
company in May 2006.The details of its different production units is shown
on the next page.

48
Details of units:

PLANT/UNIT KILN CAPACITY(tpd) CAPACITIES(million tpa)

A. Composite integrated
Plants.
1. AndraPradesh Cement 8000 2.3
Works.

2. Awarpur Cement works 9500 3.3

3. Gujrat cement works 15000 5.3

4. Hirmi cement works 8050 1.6

5. Narmada cement works 4350 0.4

B.Grinding Units
6. Arakkonam cements works 1.2

7. Jharsuguda cements works 0.8

8. Narmada cement (Ratnagri) 0.4


Works

9. Narmada cement(Magdala) 0.7


Works

10.West-Bengal cement works 1.0

TOTAL

49
THE ULTRA TECH ADVANTAGE
UltraTech Cement Ltd is one of the largest premium quality cement
producer in India. UltraTech Cement is manufactured in the state of the art
dry process plant at Tadipatri (Andhra Pradesh) and grinding unit at
Arakkonam (Tamil Nadu). Advanced instrumentation systems,
computerized process control and online quality control through X-ray
ensure consistently high quality product at UltraTech Cement plant. The
quality of UltraTech Cement has been globally accepted and is India's
largest exporter of clinker and cement.
UltraTech Cement due to its consistently superior quality has become the
first choice amongst discerning users and construction professionals.

50
Raw Material :
Careful selection and scientific proportioning of raw material with the use of
latest technology enables manufacturing of high quality cement. Rigorous
hourly tests are conducted on raw material. Laboratories at all plants are
equipped with sophisticated facilities.
World Class process Technology ensures Quality and Consistency :
Quality Assurance is an integral part of Ultra Tech’s manufacturing
philosophy. The quality attributes are consistently ensured through rigorous
application of advanced technology. Key features include:
 Use of good quality limestone and careful selection of other raw
material
 Computerized mining operation and homogenization of crushed
limestone
 Perfect proportioning of raw materials by QCX ( Quality Control
through X-ray )
 Online process control through CCR ( Computerized Control Room )
 High-quality clinkerisation and close-circuit grinding for optimum
particle size distribution
UltraTech Cement plants have been accredited with ISO 9001, 14001,
18001 Certifications by DNV of Netherlands
Distinct Features:
 Higher Compressive strength
 Optimal fineness
 Balanced physical and chemical properties
 Optimal setting time
 Consistency in quality
 Low-level of Chloride
51
 High-soundness

Advantages:
 Higher workability
 Lower consumption
 Enhanced durability
 Quicker construction
 Overall economy

Customer Care and Guidance:


UltraTech Cement offers customers a range of "product plus" services. A
full- fledged Technical Services Network has been set up exclusively for
technical advice and guidance in usage of cement
UltraTech Cement is marketed nationwide through large network of
stockist's, sales officers and representatives. Cement dumps have also been
established at strategic locations to facilitate faster delivery of cement.
Value Added Services :
 Mobile concrete lab services ( Concrete cube testing facilities )
 Training Programmes for masons, site supervisors on good
construction practices
 Field visits by qualified civil engineers
 Educating individual house builders on various aspects of building
material and construction
 Non-destructive testing of concrete
 Any other customer specific services

52
Applications :
1. All Kinds of constructions including precast and prestressed concrete,
masonry works
2. Slip form constructions
3. Rehabilitation and retrofitting works
4. Cement based products such as pipes, tiles, blocks, poles,etc.
5. Roads, runways, bridges and flyovers
6. Water retaining structures

53
AWARDS FOR ULTRA TECH

Export awards

Worldwide, clients have consistently endorsed Ultra Tech’s highest


quality standards. The list of export awards it has won is testimony to
Ultra Tech’s uncompromising standards on product quality. Ultra
Tech has been on the roll call of top exporters of the Chemicals &
Allied Products Export Promotion Council (Capexil), year after year.

Ultratech won the Capexil Certificate of Export Recognition - Top


Exporter - Cement, Clinker, Asbestos and Cement Products for the
years 2000, 2002 and 2003.

Other awards that have come its way have included:


Year Award
Capexil Certificate of Export Recognition - Highest Export in Non-mineral
2001 and 1999
Sector
Capexil Certificate of Outstanding Export Performance - Chemicals & Allied
1999
Products (for Portland cement)
Capexil Certificate of Export Recognition - Top Exporter- Cement, Asbestos,
1998
Cement Products
1998 Certificate of Outstanding Export Performance, Gujarat state
Capexil Certificate of Export Recognition - Certificate of Merit for Export
1997
Achievement in Cement and Clinker

54
National awards won by Awarpur Cement Works
Year Award
Indo-German Greentech Environment Excellence Awards by the Greentech
2000-2001
Foundation, New Delhi
1999-2000 Business / Trade Award Jamanalal Bajaj Uchit Vyavahar Purashkar
1999 ISO 14001 Certification By M/S Det Norske Veritas in November
ISO 9001 Certification By M/S Der Norske Veritas
1996
FIMI National Social Awareness Awards
1995-96 FIMI National Social Awareness Awards
Indira Priyadarshini Vrikshmitra (IPVM) National Award By Ministry of
1995
Environment & Forests, Goverment of India
Special Gold Award By The Council of Industry & Trade Development for
1994-95
Quality
Delhi Commendation Certificate - Rajiv Gandhi National Quality Award By
1994
Bureau of Indian Standards

Awards won by Gujarat Cement Works:


Year Award
Bhartiya Udyog Ratan Award presented to Sh. KYP Kulkarni By Indian
2004
Economic Development & Research Association (IEDRA), New Delhi
2002-2003 Greentech Gold Safety Award By Greentech Foundation, New Delhi
2002 Gujarat State Safety Award By Gujarat Safety Council (GSC), Vadodara
Greentech Environment Excellence Award By Greentech Foundation, New
2001-2002
Delhi
Awards for Excellence in "Industrial Relations" By Federation of Gujarat
2001
Industries (FGI), Vadodara

55
Awards won by Andhra Pradesh Cement Works:
Year Award
2004-2005 State and Zonal level I prize for overall performance in Mines safety
2003-2004 Energy efficient unit award from CII
Energy Conservation Award from PCRA
Excellence Award in Water Conservation & Pollution Control by APPCB
2002-2003 Gold medal for Six Sigma Project on Optimisation of Compressed air energy
at HIMER National Conference
FIMI environment award for mines
Award for six sigma project on reduction in specific fuel
consumption at NIQR
2001-2002 Energy efficient unit award from CII
Best rural development effort award from FAPCCI
Appreciation award from NSC for achieving OHSAS-18001

Awards won by Hirmi Cement Works:


Year Award
2001-2002 Environment Energy Foundation award for water conservation.
Fuller Energy award for reduction in specific power consumption (KWH/T) per
2001-2002
tonne of cement

56
ULTRA TECH CEMENT EXPORTS

UltraTech Cement recently bagged an award for being the highest exporter
of the year from CAPEXIL for the eighth time in a row for its sterling
performance. A leading cement exporter, its plants have also received
various awards for environment protection, social awareness, safety and
management of better industrial relations.
The company has been credited with boosting its exports of cement and
clinker last year by 25 per cent to 4 million tonnes from 2.8 million tonnes in
2005-2006. stringent quality control and testing in the best laboratories
ensure that cement and clinker produced from its plants conform to and
surpass international standards. The laboratory is equipped to test cement as
per ASTM, British and Euro standards. All the plants are ISO 9001 certified
for the latest production process and 14001 certified for environmental
management. The cement plant in Gujarat has an additional OHSAS 18001
certification as well for occupation hazards and safety parameters.
The company has a captive jetty at the Gujarat plant. The jetty length of 337
meters and width of 23 meters is capable of handling ships of 45,000 DWT
with 11 meters draft. Loading of cement and clinker onto the ship is carried
out by a ship loader, which is fed by a four km long conveyor belt that
connects the plant to the jetty. UltraTech Cement is the first and only Indian
cement company to obtain an EC certification for this plant. The
accreditation, given by Bureau Veritas, is a pre-requisite to supply cement to
EC member countries. UltraTech is one of the few Asian cement companies
to receive this recognition. The export markets span countries around the
Indian Ocean, Africa, Europe and the Middle East.

57
The Hirmi Cement Works in Chattisgarh and the Jharsuguda Cement Works
in Orissa make them ideal locations for export of cement and clinker to
Nepal and Bangladesh. With captive railway sidings to facilitate loading of
railway rakes and a high-tech production facility for cement and clinker,
UltraTech Cement has found wide acceptance in these neighboring countries

58
REVIEW OF LITERATURE
Ultratech Cement Results – Review

October 16, 2009 · Author: Komal Meswani· Category: business

Ultratech Cement Ltd (UTCL) Q2FY10 net profit at Rs2.51 bn (up 53%

yoy) is below our expectation (Rs2.75 bn), primarily on account of higher

than freight & fuel cost. Revenues for the quarter increased by 8.7% yoy to

Rs15.41 bn on the back of volumes (+by 3.9%) increase to 4.16 mt and

realizations (+4.7% yoy) to Rs3704/ton. Though on sequential basis,

domestic cement realization per tonne seems to have increased by Rs 70 per

tonne, the net plant realization (excluding freight) seems to have declined by

Rs 45/tonne, in lne with expectations. EBITDA for the quarter at Rs 4.7bn

grew by 48.1% on y-o-y was below our expectation (Rs 4.9 bn), mainly on

account of higher than expected power and coal cost as well as higher freight

cost due to increased lead distance.

EBIDTA margins stood at 30.5% registering a massive 810 bps


improvement on a yoy basis. UTCL, which imports 40-45% of its coal
requirements, had bought 10 handymax cargoes of South African coal at
USD 52-53 FOB South Africa for delivery in July- September. Therefore
going forward, we expect power and fuel cost per tonne to decline. We
maintain our estimates for the FY2010 of EPS at Rs 94.3. We believe that
the Grasim-Ultratech restructuring would be positive for Ultratech as it
provides significant re-rating triggers for the stock.

59
LITERATURE REVIEW ON CEMENT KILN DUST USAGE IN

SOIL AND WASTE STABILIZATION AND EXPERIMENTAL

INVESTIGATION

M. K. Rahman, S. Rehman & O. S. B. Al-Amoudi Center for Engineering

Research, Research Institute, King Fahd University of Petroleum and

Minerals, Dhahran, Saudi Arabia ABSTRACT The globally growing

demand of cement results in towering collection of kiln dust from cement

plants. The disposal of this fine dust is very difficult and poses an

environmental threat. To overcome this problem, research is being carried

out in different parts of the world to find out economical and efficient ways

and means of using cement kiln dust (CKD) in various applications like soil

stabilization, cement production, pavements, waste product stabilization,

agriculture and cement products, etc. This study presents a research review

on CKD usage in soil and waste utilization and the results of experimental

investigation on its usage in building block manufacturing and soil

stabilization. The experimental results clearly showed that the use of 34%

CKD may bring the pH of sludge above 10, which is enough to stabilize the

sludge. Furthermore, the final concentrations of heavy metals were found to

be within acceptable international limits. Tests conducted on blocks made

using aggregates in the Eastern Province (Type-N) and light-weight

60
pozzollanic aggregates (Type-P) indicated that addition of CKD to cement

results in significant gain in strength of the blocks. Keywords: Cement kiln

dust, soil stabilization, sewage treatment, pH, cement blocks. 1.

INTRODUCTION Cement kiln dust (CKD) is a fine powdery material

similar in appearance to Portland cement. Fresh cement kiln dusts can be

classified as belonging to one of four categories, depending on the kiln

process employed and the degree of separation in the dust collection system

[Collins and Emery 1983]. There are two types of cement kiln processes:

wet-process kilns, which accept feed materials in a slurry form; and dry-

process kilns, which accept feed materials in a dry, ground form. In each

type of process, the dust can be collected in two ways: (1) a portion of the

dust can be separated and returned to the kiln from the dust collection

system (e.g., cyclone) closest to the kiln, or (2) the total quantity of dust

produced can be recycled or discarded. Large quantities of cement kiln dust

are produced during the manufacture of cement clinker by the dry process.

CKD contains a mixture of raw feed as well as calcined materials with some

volatile salts. It is derived from the same raw materials as Portland cement

but, as the CKD fraction has not been fully burnt, it differs chemically from

the former. With modern manufacturing techniques, it is technically possible

to introduce most CKD back into the clinker-making cycle. However, it is

61
not done due to the restrictions on the alkali and chloride contents in the

cement. The UK cement industry has estimated that over 200,000 tons a year

of landfill space could be saved if the surplus CKD could be recycled into

the clinker-making process or if alternative uses could be found [Aidan and

Trevor 1995].

Approximately 15 million tons of CKD are produced annually by the

American cement industry [Portland Cement Association 1992]. A medium

size cement plant may produce up to 30,000 tons of CKD annually. Based

on an analysis of existing data, including data collected by the Portland

Cement Association (PCA) from operators of cement manufacturing

facilities, the Agency estimates that in 1995, the cement industry had a

clinker capacity of 77 million metric tons and a net CKD generation of 4.08

million metric tons which were disposed in land fills. The 1995 data indicate

that 24 of the 110 cement plants (22 percent) recycle all collected dust back

to the kiln, and an additional 12 plants (11%) ship all generated CKD off site

for beneficial use. PCA estimates that the remaining two-thirds of cement

plants (74 facilities) had a combined annual CKD land-disposal requirement

of 3.3 million metric tons in 1995. The obvious and best use of CKD is its

re-incorporation in the clinker production cycle. However, this can only be

done when the existing restrictions on the alkalis and chloride concentrations

62
in cement are revised. From alkalis point of view, it is estimated that most of

the CKD could be utilized in the clinker-making process if the cement alkali

levels could be raised by around 0.1%. Similarly, the limits on the required

chloride concentration on the performance of cement in reinforced concrete

construction need to be evaluated. According to Bhatty [1995], alternative

applications of CKD include agriculture - potash/lime source and animal

feed; Civil engineering - fill, soil stabilization, fly ash stabilization, and

blacktop filler; building materials - lightweight aggregates, blocks, low

strength concrete, and masonry cement; sewage and water treatment;

coagulation aid and sludge stabilization and pollution control as sulfur

absorbent, waste treatment, and solidification.

The present study provides a literature review on the usage of CKD for soil

and waste stabilization. The paper also includes the results of preliminary

experimental investigations on CKD usage in soil and waste stabilization

and building block manufacturing.

Research Review on CKD Usage for Soil Stabilization

In the field of geotechnical engineering in general and soil stabilization in

particular, the parent soils are practically categorized under either

cohesionless soils (i.e., sandy and larger particle-sized soils) or cohesive

soils (i.e., primarily clay and silt). Since the soil stabilization mechanism of

63
fine-grained soils requires calcium (in the form of lime) as the major

stabilizing agent, it is possible that some CKDs, especially those high in free

lime, would similarly be useful in stabilizing clay soils. In the case of sandy

soils, which are commonly selected in the pavement layers, the usage of

CKD may provide cementitious materials when it is mixed with water in a

way similar to the mechanism by which Portland cements provide their

binding characteristics.

Any potential application of CKD, including sand and clay stabilization, is

governed by the physical and chemical composition of the dust. In practical

terms, the dusts vary markedly from plant to plant in chemical,

mineralogical, and physical composition, depending upon the feed raw

materials, type of kiln operation, dust collection facility, and the fuel used

[Klemm, 1980].

Nicholson presented a number of patents [1977, 1982] for a series of

investigations on CKD and fly ash mixtures for producing subbase materials

with different aggregates. CKD was used up to 16% by weight of the

mixture, producing a durable mass by reacting with water at ambient

temperatures. Collins and Emery [1983] demonstrated the effectiveness of

substituting CKD for lime in a number of lime-fly ash-sandy aggregate

systems for subbase construction. The results indicated that the majority of

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the CKD-treated fly ash and aggregate mixtures resulted in materials which

were comparable in strength, durability, dimensional stability, and other

engineering properties, to those of the conventional lime-fly ash-aggregate

mixtures. Miller, et al. [1980] have also reported the use of CKD and fly ash

as the cementitious ingredients in developing pozzolanic bases that

demonstrated comparable properties to those of a stabilized base. It was

pointed out, however, that the use of any particular CKD-fly ash

combination would require an appraisal of the chemical and strength test

data to establish optimum properties for a suitable mix design.

Napeierala [1983] examined the possibility of using CKD in stabilizing

sandy soils for pavement subgrade applications. It was reported that an

addition of 15% CKD having 5.9% free CaO and MgO, and 0.97% total

alkalies (K2O + Na2O) ensured a compressive strength of 360 psi (2.5

MPa), which is a standard practice in Poland for the subgrade within 14 days

of the treatment. Baghdadi and Rahman [1990] studied the effects of CKD

on stabilizing siliceous dune sand in highway construction. It was deduced

that a mix proportion of 30% CKD and 70% sand gave peak performance for

application as base materials. In a somewhat similar study conducted later,

Baghdadi et al. [1995] reported that the use of CKD between 12 and 50%

was satisfactory to stabilize dune sand. For light applications, 12 to 30%

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CKD was found sufficient, and for heavily-loaded applications, about 50%

CKD gave satisfactory stabilization.

A number of CKDs and clay-type soils were used by McCoy and Kriner

[1971] to study the soil stabilization. Soil-CKD mixes containing 3, 8, and

10% of CKD were tested for various engineering properties, such as the

unconfined compressive strength, moisture-density relationship, liquid limits

(LL), plastic limit (PL), plasticity index (PI), and shrinkage limit. The study

found that the use of CKD was potentially promising in stabilizing soils for

subbase applications. Bhatty et al. [1996] reported that CKD with high free

lime (26.6%) and moderate alkalies ( 4.6%, expressed as Na2O equivalent)

produced mixtures with compressive strengths comparable to those obtained

with cement and lime. CKDs having low free lime (0.5%) and low alkalies

(2.2% Na2O equivalent) gave lower strengths.

In general, CKDs with high free lime and moderate alkalies gave enhanced

stabilization in terms of improved compressive strengths and reduced

plasticity. It might also be pointed out that higher alkalies in CKDs can

counter the stabilization reactions because of the ionic interference.

Baghdadi [1990] reported the usage of CKD for stabilizing pure kaolinite

and a 50:50 kaolinite-bentonite clay mixtures. Pure bentonite clay was

66
highly plastic (PI 520), whereas the kaolinite was less plastic (PI 9).

The 50:50 kaolinite-bentonite clay mixtures gave a PI of 150.

A study on the use of CKD in clay stabilization was also reported by Zaman

et al. [1992] and Sayah [1993]. They established potentially useful

correlations among the engineering properties of the clays and their

stabilized counterparts. However, their investigations were based on only

one CKD and primarily one clay soil, a dark grey "fat" clay, although, at

times, some selected tests were also carried out on other potentially

expansive clays. The primary clay used in the investigations belonged to the

CH group [Spangler and Handy, 1992]. The clay-CKD mixtures containing

5% to 40% CKD by weight were cured for up to 56 days. The results

showed that, with the exception of the dry densities, the engineering

properties of the CKD-clay mixtures were comparable to those of fly ash-

soil and cement-soil mixtures. According to Southgate and Mahboub [1994],

the CBR test also positively correlates with the modulus of elasticity and

strength of the stabilized soils.

67
OBJECTIVE OF THE STUDY

Primary objective:
To study the distribution channel of Ultra Tech cement along with other
brands, in Aurangabad and Jalna distt. Of Maharashtra .

Secondary objectives:
1. To find out the market share of Ultra Tech cement.
2. To find out the major competitors of Ultra Tech cement in a particular
area.
3. To find out the problems faced by the Ultra Tech dealers/retailers and
try to minimize these problems.
4. To help the ultra tech dealers/retailers to increase their sales.
5. To find out the possible newer methods for advertisement and
methods for increasing sales of Ultra Tech cement.

68
RESEARCH METHODLOGY

(a) General Methodology:


The methodology adopted for this project was completely base on
primary information. The locale of the study was distt. Thirthahalli and
shimoga of Karanataka.The first stage included gathering information about
the general cement market of the two cities. That was, to find out which are
major players, what is general distribution pattern, what type of incentive
schemes the different brands are using.
The second stage comprised determining
the objective of the study and drafting the questionnaire. The questionnaire
was designed keeping in mind the objective of the study. It was designed
with due guidance of the company guide. It was assured that the
questionnaire didn’t exceed more than 10 questions. Keeping in mind the
education level of the respondents who were mainly dealers/retailers, the
questionnaire was kept simple and precise.

b) Research Tools:
The research called for gathering primary data only. Hence, primary sources
were considered for the collection of data.
*Primary tool
The primary data is gathered for specific purpose and is collected by the
researcher himself. It includes direct communication and feedback from the
customers. For the purpose of collecting information from customers a
structured questionnaire was formulated and is contacted directly.

69
c) Research Approach:
The research conducted was exploratory in nature and the goal was to gather
preliminary data to shed light on the real nature of problems and to suggest
possible solutions. For the purpose of this project, we went for a
questionnaire- based survey of customers. A pilot test of this questionnaire
was done for the preparation of final questionnaire. It involved, applying the
draft questionnaire to a sample of 5 people. This was done to ascertain
which questions are ambiguous, wrongly worded or in any way
objectionable.

(d) Research Tool:


1. Personally administered questionnaire
2. Structured interview
3. Unstructured interview

For the purpose of this project, a questionnaire was designed to collect data
that consisted of close ended questions & open ended questions. A survey
technique is being used to collect the data. During the project a survey of
customers using personal interview was done at random locations in
aurangabad and jalna and a predetermined structured questionnaire was
administered to them. The areas covered were as following:
1.Auranagabad
(a Phulambri
(b) Sillod
(c) Waluj
(d) Laad Saungi
(e) Gangapur
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Sampling Plan

* Sampling Unit

The study was restricted to Aurangabad and jalna only.


Keeping in mind the objective of the study we sampled
dealers and retailers of each and every brand. We try to
explore out as many shops as could be possible.

*Sample Size

The sample size taken for the purpose of study was around
150 respondents from the two distt.All the respondents were
chosen randomly.

*Sampling Procedure

We try to find out almost all of the cement dealers and


retailers in the market.

*Contact Method

I personally visited most of the customers after seeking prior


appointment. Few shopkeepers due to their busy schedule or
loyalty for their brand refused to respond at all.

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f) Analytical tools:

The data, which was collected, was summarized and


tabulated on MS-excel for further analysis. The analysis
performed was mainly comparative analysis using statistical
analytical tools. The tools that have been used are as follows:

 Bar Chart
 Pie Chart
 Line Graph

72
Data Analysis
 Market share graph for district Aurangabad

ultra tech

Acc
6%
9% J.k.
27%
8% J.P.

BINANI
9%
4% Ambuja

12% 15% Shree Ultra

10% Tuff Cemento

Bangur

The graph clearly shows that the Ultra Tech Cement has largest market share
in aurangabad, followed by J.K. cement and J.P. Cement.The main reason
behind this excess market share goes to the higher number of dealers of
Ultra Tech cement than other brands.J.K. Cement on the other hand is
having a good market share due to a nicely balanced supply chain of dealers
along with many retailers. All the other brands like Sri Ram and Bangur are
struggling to find market in aurangabad

73
The graph shows that the Ultra Tech is lagging behind ACC cement in
jalna.although it has a good 20% share. The credit for ACC success goes to
the no. of dealers it has in jalna.Its no. of dealers is almost double than the
Ultra Tech dealers plus retailers. The possibility behind Ultra Tech success
lies at the chances of getting some more retailers.

 Market Share Graph for Jalna

3%
1% 3% ultra tech
Acc
20% J.k.
12%
J.P.
9% BINANI
Ambuja
25%
6%
Shree Ultra
21% Tuff Cemento
Bangur

 Satisfaction level of Dealers/Retailers:

74
70 highly satisfied

60

50

40

30
satisfied
20
average
10 not satisfied
highly dissatisfied
0
highly satisfied average not satisfied highly
satisfied dissatisfied

the graph clearly shows that most of the dealers are well satisfied with the
services provided to them by the brand they deal in. The services include
timely supply of cement, regular visits by the company officials, different
type of incentive schemes meant for the dealers etc.The other side of the fact
can be that-being loyal to their respective cement brands, the dealers didn’t
want to give a poor image of the company.i.e.they were not satisfied with
the company but responded positively.

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Want to Shift to Other Brand?

90 NO

80
70
60
50
40
30
20 MAY BE
10 YES

0
NO YES MAY BE

The graph shows that about 84% of the dealers and retailers don’t want to
shift to any cement brand other than the one in which they are currently
dealing. But the last portion of the graph i.e. MAY BE part is of crucial
importance for Ultra Tech.This portion shows the dealers who may shift to a
new brand if it proves beneficial for them. So if Ultra Tech assures them
some better services and mainly the better incentives then these can be the
new suppliers for it

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INTERPRETATION

 The major competitor for Ultra Tech in Aurangabad is J.K.


Cement.The reason behind this is the presence of more no. of retailers
for J.K. Cement.The two brands under J.K. i.e. J.K. SUPER & J.K.
LUXMI are both well established here.J.K. Provides the benefit of low
cost and quality to the customers as compared to higher price of Ultra
Tech cement.
 The competitor for Ultra Tech in jalna is ACC cement. It seems that
ACC has given more importance to jalna.It has just 4 dealers in
aurangabad but in jalna it has about 12 dealers.
 The total cement consumption in aurangabad is much higher than that
in jalna .The reasons behind this are construction of a no. of malls,
presence of major real estate players like ANSAL, DLF etc and other
Govt.projects in Aurangabad So Ultra Tech need to concentrate more
in Aurangabad
 Ultra Tech cement lags behind other brands only at the price point. It
costs nearly 4-5 rupees higher than the other cements. This is the main
reason for some lower sales. On the other hand, customers are very
sure about the thing that Ultra Tech cement provides much better
quality.
 Ultra Tech should try to increase the number of ‘MOBILE
CONCRETE HELP’ vans. These vans are the feature that no other
brand is offering. These are very popular among the local customers.
So Ultra Tech should introduce some more of these vans.

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CONCLUSION

 Ultra Tech has two major competitors- J.K. CEMENT and ACC
CEMENT.

 Ultra Tech is well established in the markets as far as quality is


concerned.

 Introduction of new attractive incentive schemes can bring new


dealers & retailers for Ultra Tech cement.

 Price is the major factor that matters for a customer while purchasing
cement.

 Market share increases with the increase in no. of dealers.

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LIMITATIONS OF THE STUDY

1. The major problem of the survey was that most of the respondents

being very loyal to their brands didn’t give exact answers .like they
didn’t talk much about what problems they are facing, what are the
different marketing schemes of the brand in which they deal etc.
2. Once we got the questionnaire filled, we need to restart the

conversation in a very generalized way and talk about the local market
conditions. Like who is the main dealer, which cement is mostly sold
in that area etc.so this survey demands a good piece of time while
talking to the respondent. Also Aurangabad & jalna are both big
Distts. With a number of small towns and villages. So to complete the
survey within 2 months time seems to be a bit difficult.
3. Some of the respondents may have told their average monthly sale

more than the actual. Because all of them think that the monthly sale
attached with the market image of their shop.
4. Many of the dealers/retailers refused to answer any question at all. So

the actual figures can be somewhat different from the one that we
have found out
5. Being new to the Distts of Aurangabad & jalna , it is quite possible

that I was unable to explore some of the dealers/retailers.

79
RECOMMENDATIONS

1) The Co has only a single C&F agent for a single state. They
should appoint more then one C&F agent for a single state.
If they do this their sales will increase spontaneously
Co should have their own transport facility so as to reduce their
transportation expenses.

2) The Co should organize a small event in every 6 months for the


dealers so as to increase their morality and attachment towards the
CO.

3) They should held a training & development programs for their


dealers to increase the sales.

4) They should tie up them with various selling schemes so as to


increase the sales force and potential.

5) I think the Co has poor advertisements.UTC should think much


about the advertisements.

6) Customer satisfaction plays a vital role in every business. They


should think about customer retentions so as for a smooth relation.

80
7) UTC should pay much more attention on their competitors.
They should not lack behind in the competitive business.

8) Secrecy of their policies & strategies should be kept vey


confidential.

9) Gunny bags in which they pack their cement should be of good


quality.

10) Considering the environment security they should use paper


bags instead of their regular bags. It should be recyclable.

11) Export should be majorly done so as to increase Gross


domestic progress of the country.

12) Government norms & regulations should be strictly followed.

13) As India is the land of the villages, so the development is


getting day by day in these areas. The distribution network to
these areas should be very strong.

14) UTC should give more attention on their consumption of Raw


material so as to reduce the cost of the product.

81
ANNEXURE 1

QUESTIONNAIRE
SOLICITATION

Dear Sir/Madam,
We are conducting a survey on behalf of ultra tech cement as a part of
my ‘summer training project.’ I would be extremely benefited if you answer
the following questions.I assure you that the information provided by you
will be used for my project work only.

NAME: ELLORA STEEL


ADDRESS & CONTACT NO. : Plot No 5 Maulana Azad Chowk TV
center road Aurangabad

WHICH CEMENT YOU DEAL IN: ultratech cement orient cement


and all kinds of cement
YOU ARE A:
>DEALER
>RETAILER

YOUR AVERAGE MONTHLY SALE (IN BAGS): 50000 to 80000


bags

HOW MUCH ARE YOU SATISFIED WITH THE SERVICES


PROVIDED TO YOU BY THE BRAND YOU DEAL IN:

>HIGHLY SATISFIED
>SATISFIED
>AVERAGE
>DISSATISFIED
>HIGHLY DISSATISFIED

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WHAT TYPE OF PROBLEMS ARE YOU FACING WITH YOUR
CURRENT BRAND(IF ANY):
Late delivery of product and service provided by the CNF agent to the
retailer and customer.

WHAT ARE THE REASONS FOR SELLING THIS PARTICULAR


BRAND:
Because of best quality and customer response.

DO YOU WANT TO SHIFT TO ANY OTHER BRAND:


>YES
>NO

USEFUL COMMENTS:
Hope this cement industry which has ever green market not only in urban
areas as well as rural areas.

THANKS A LOT

83
BIBLIOGRAPHY

► www.cemnet.com
► www.pca.com
► www.ceicdata.com
► WWW.ULTRATECH.COM

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