Topic 1

Nature of the Industry

1
Introduction of Industry:

India is the second largest producer of cement in the world. No

wonder, India's is a vital part of its economy, providing
employment to more than a million people, directly or indirectly.

Ever since it was deregulated in 1982, the Indian cement

industry has attracted huge investments, both from Indian as well
as foreign investors. cement industry.

India has a lot of potential for development in the

infrastructure and construction sector and the cement sector is
expected to largely benefit from it. Some of the recent major
initiatives such as development of 98 smart cities are expected to
provide a major boost to the sector.

Expecting such developments in the country and aided by

suitable government foreign policies, several foreign players such
as Lafarge-Holcim, Heidelberg Cement, and Vicat have invested
in the country in the recent past.

A significant factor which aids the growth of this sector is the

ready availability of the raw materials for making cement, such as
limestone and coal.

2
History:

Cement Industry is one of the largest industries of the world

and occupies predominant place as one of the basic industries for
development and its employment generation capacity. Cement
ranks next to steel in construction material and so is the basis of
all modern construction.
India entered into the Cement Era in 1914, when the Indian
Cement Company Ltd. started manufacturing Cement in
Porbundar in Gujarat. However, even before that a small cement
factory was established in Madras in 1904 by a company named
South India Industrial Ltd.
Indian Cement Company Ltd produced only one type of
cement which was designed by the British standard committee as
“Artificial Portland Cement”.
This company marketed its product in Mumbai, Karachi,
Madras and other parts and became a financial success.
In 1930 “Cement Marketing Company of India” was started
and this was followed by a quota system on the basis of installed
capacity of the factories.
It was followed by “Concrete Association of India” in 1927.

3
Market size:

The housing sector is the biggest demand driver of cement,

accounting for about 67% of the total consumption in India.

The other major consumers of cement include infrastructure at

13% commercial construction at 11 per cent and industrial
construction at 9%
.
India’s total cement production capacity is nearly 425 million
tonnes, as of September 2017.

The growth of cement industry is expected to be 6-7% in 2017

because of the government’s focus on infrastructural
development.

The industry is currently producing 280 MT for meetings its

domestic demand and 5 MT for exports requirement. The
country's per capita consumption stands at around 225 kg.

The Indian cement industry is dominated by a few companies.

The top 20 cement companies account for almost 70 per cent of
the total cement production of the country.

A total of 210 large cement plants account for a cumulative

installed capacity of over 350 million tonnes, with 350 small
plants accounting for the rest. Of these 210 large cement plants,
77 are located in the states of Andhra Pradesh, Rajasthan and
Tamil Nadu.

4
 Topic 2
Players in the Industry

5
 List of Companies in the industry

Sr. no. Name of Companies

1 ACC Ltd.

2 Ambuja Cement

3 Birla Corporation Ltd.

4 Ultra Tech Cement Ltd.

5 JK Cement Ltd.

6
Classification of players into Leaders, Challengers,
Followers & Nichers:

India today is the second fastest growing economy in the

world with the cement and construction sector being the prime
movers.
The Indian cement industry with a total installed capacity of
219 million tonnes is the second largest producer in the world and
has been growing at a rate of 9 to 10% annum. With a large
percentage of Indian population being below the age of 25, the
construction activity is expected to make a significant
contribution in the context of growing housing needs,
development of roads and other infrastructure, urbanization, etc.

It is the construction sector which shares the blame of global

economic slowdown leading to slackening of demand for
housing; but withstanding that hard time, our cement sector is still
growing at a 10 percent when compared to the global average of
5%.
Indian industry is fortunate in having an active support and
services of the National Council for cement & Building Materials
with an excellent R&D Infrastructure and invaluable intellectual
capital.

In a recent International Seminar on Cement & Building

Materials in New Delhi, Shri Jyotiraditya M. Scindia, Minister of
State for Commerce & industry, said: "In spite of global
slowdown and reduction in demand.

7
 cement industry needs to be complimented for weathering the
downturn and recording a commendable growth of around 8
percent in 2007-08 as well as in 2008-09.
In the current year 2009-10 so far, the pace of growth of
cement industry has accelerated significantly above double digit."

The Indian cement industry has achieved an installed capacity

of 242 million tonnes and is targetted to reach 300 million tonnes
by 2011-12 and 600 million by 2020.
India has 97% of the installed capacity through dry process
the Indian cement industry has been adopting latest technologies
for energy conservation and pollution control as well as on-line
process of quality control based on expert systems and laboratory
automation.

Despite having high demand in India, our per capita cement

consumption is very low, where the world average is 396 kg, in
India the per capita consumption is only 156 kg. India being the
country of young population has a huge potential and its ushering
social and economic base will improve the domestic
consumption.

8
Positioning & Differentiation strategy of key players:

This analysis might result in something as simple as

identifying which products or features are the primary reasons to
buy, and rallying your offerings – even your company – around
this highly attractive dimension.
In the end, you’re trying to determine what your brand should
stand for. (Note: not all that you or your products and services can
do.) Then, we’ll work on establishing how you’ll deliver this
brand positioning strategy in your marketing and sales activities.
Here are some terrific articles on other dimensions of brand
strategy.
Good product positioning strategy requires looking both
internally and externally.
First, your business as a whole needs to be properly
positioned, then your product or services portfolio needs to be
positioned. Some companies fail to recognize that their own
offerings need to “hang together” and make sense – relative to
one another and to your business overall.
When a company has diverging offerings or brands, they
might best consider two different company banners. Similarly,
when companies try to extend the brand of a product in too many
directions they can dilute the value of the offering and confuse the
customer.
Positioning strategy, by its very nature, involves your value
relative to your competition. What do you do or offer that’s better

9
(or not as competitive) as others who offer similar products and
services?
When these differences are identified, supported with proof
points, and properly merchandised your prospects will have an
accurate and compelling basis to compare your company to
others.

10
Branding strategy of any 2 key players:
Positioning a brand is serious business. There are several key
questions which have to be answered in brand positioning.
First, you determine WHAT dimensions are critical to the
positioning. This has everything to do with the target customers.
What are the top two to five core criteria for their decision
making? Then, you need to understand WHERE the brand is
currently positioned, assuming you’re already in market, against
these brand criteria.
Often this sort of analysis is conducted to determine what
GAPS are underserved, which presents a potential positioning
opportunity of WHERE you’d like to be positioned.
You then need to determine if the new positioning opportunity
is purely a matter of messaging (relating what you do, why it’s
relevant, and how it’s different) or a matter of bolstering your
offerings.
Your brand is more than your logo, name or slogan — it’s
the entire experience your prospects and customers have with
your company, product or service.
Your brand strategy defines what you stand for, a promise
you make, and the personality you convey. And while it
includes your logo, color palette and slogan, those are only
creative elements that convey your brand. Instead, your brand
lives in every day-to-day interaction you have with your
market.

11
 Branding is crucial for products and services sold in huge
consumer markets. It’s also important in B2B because it helps
you stand out from your competition.
Your brand strategy brings your competitive positioning
to life, and works to position you as a certain “something” in
the mind of your prospects and customers

12
 Topic 3
Pricing Police

13
Pricing policy/strategy adopted by any 2 key player:
Starting a new business or launching a new product or service
requires detailed thought and planning.
A critical piece of that planning is deciding how you should
price your products and services.
The pricing strategy you choose dramatically impacts the
profit margins of your business, and determines the pace at which
your business can grow.
Several pricing strategies exist for products and services, and
choosing the best for your business depends greatly upon your
overall long-term business strategy.
A penetration pricing strategy is used as a loyalty-building or
market-entry tool. The penetration pricing strategy offers a high-
quality product at a much lower than expected price.
This combination helps the business enter a new market even
when strong competitors exist, and it builds loyalty with new
customers from the beginning.

14
 Topic 4

Capacity Analysis

15
Total capacity of the industry and break up capacity
amongst key players:

Between the fiscal year ended 2012 to 2017, approximately

150 MT of additional cement capacity was added, which
accounted for approximately 47% of the total cement capacity as
on March 2012.

The large capacity additions were in anticipation of significant

demand arising from Government, infrastructure plans and
housing development projects.

Regional variations and volatility in prices and margins of

cement vary across regions due to the variation in the supply-
demand balance, the level of concentration and demand growth.

Historically, prices in the Southern region have generally been

the highest in India. Due to a significant increase in
production capacity in 2010 to 2017, prices were subject to
intense pressure.

In recent years, the demand-supply imbalance has corrected

leading to cement prices increasing throughout India.

16
 The key players in the industry as of 31 March 2012 accounted
for approximately 96 to 97% of the total installed capacity, and
can be broadly classified into three segments namely Pan-India
players, regional players, and standalone players.

Pan-India players include the Associated Cement Companies,

Ambuja Cement, Grasim Industries, Century Textiles and
UltraTech Cement Companies, and accounted for approximately
33% of the total installed capacity as of 31 March 2017.
Regional players are restricted geographically to one or two
local regions they operate in and usually dominate sales within
their particular regions.
Regional players accounted for approximately 52% of the
total installed capacity in the country as of 31 March 2017.

17
Planned future capacity additions:
Capacity planning is the process of determining the
production capacity needed by an organization to meet
changing demands for its products.[1] In the context of capacity
planning, design capacity is the maximum amount of work that an
organization is capable of completing in a given period.
Effective capacity is the maximum amount of work that an
organization is capable of completing in a given period due to
constraints such as quality problems, delays, material handling,
etc.
The phrase is also used in business computing and information
technology as a synonym for capacity management. IT capacity
planning involves estimating the storage, computer hardware,
software and connection infrastructure resources required over
some future period of time.
A common concern of enterprises is whether the required
resources are in place to handle an increase in users or number of
interactions.[2] Capacity management is concerned about
adding central processing units (CPUs), memory and storage to a
physical or virtual server.
This has been the traditional and vertical way of scaling up web
applications, however IT capacity planning has been developed
with the goal of forecasting the requirements for this vertical
scaling approach.
A discrepancy between the capacity of an organization and the
demands of its customers results in inefficiency, either in under-
utilized resources or unfulfilled customers. The goal of capacity
planning is to minimize this discrepancy.
18
 Demand for an organization's capacity varies based on
changes in production output, such as increasing or decreasing the
production quantity of an existing product, or producing new
products.
Better utilization of existing capacity can be accomplished
through improvements in overall equipment effectiveness (OEE).
Capacity can be increased through introducing new
techniques, equipment and materials, increasing the number of
workers or machines, increasing the number of shifts, or
acquiring additional production facilities.

19
 TOPIC 5
Geographical spread
Geographical spread of plants/facilities/ capacities
(Domestics as well as Global):

The major contributor to the cement industry of India is the

state of Madhya Pradesh. The 19 cement plants in Madhya
Pradesh contribute 26.23 million tonnes of cement to the total
reservoir of cement in India.

Andhra Pradesh has the maximum number of cement plants

(20) and it contributes 17 million tonnes of cement to India.
Rajasthan, Gujarat and Tamil Nadu have 16, 12 and 10 plants
each and they collectively contribute 35.79 million tonnes of
cement.

Topic 6
Demand supply balance in the industry
Key factors affecting demand:
Factors such as rains and festivities affect cement demand in
India every year from August to November. Even discounts
offered by MNC cement companies to meet their year-end targets
also lead to reduction in realisations.
The second factor is the lower availability of bricks which is
one of the primary materials in construction.

20
 The Supreme Court ordered for the closure of brick-kilns not
having environment clearance. As a result a large number of kilns
were closed and there is a huge shortage of bricks.

Topic 7
Professional Trade bodies of the Industry
Organization Description Website
Texas Aggregates Trade association of concrete
and Concrete ready-mixed producers,
Association aggregate suppliers, and www.tx-taca.org
materials suppliers, such as
cement and admixture
companies.
Texas Concrete Trade association of major
Pavement concrete pavement contractors www.texasconcrea
Association in Texas. te.org
Precast Concrete Trade association of precast
Manufacturer's prestressed concrete www.pcmatexas.o
Association of manufacturers in Texas. rg
Texas
Texas Masonry Trade association of masonry
Council contractors and suppliers in www.texasmasonr
Texas ycouncil.org

21
 CHAPTER 2
Promoters & Management Ethos:

22
 Topic 1
Background of promoter groups
Background of promoter groups of top 3 and bottom 3
players in the industry:

Top 3 players: 1) ACC Ltd.

2) Ultratech Ltd.
3) Ambuja cement Ltd.

Top 3 bottom players: 1) prism cement

2) Heidelberg cement india Ltd.

23
 Topic 2
Profiles
Brief profiles of CMDs, CEOs, and key top
management:
Cement industry is one of the key industries in India. It plays a
dominant role in the national economy. Form the point of view of
economic development of the country, 22 Cement industry ranks
second very next to the Iron and steel industry.
Cement is indispensable in building and construction works.
The production and consumption of cement to a large extent,
indicates a country's progress. In a developing country like India
the need for a well established cement industry is of paramount
importance.
The Indian cement industry continues to suffer from excessive
production capacity a time when demand growth continues to be
sluggish. The industry remains highly fragmented and profit have
been impaired by a series of debilitating price wars as well as
from steadily rising costs.
The recent arrival of Lafarge may herald some much needed
industry consolidation. Meanwhile cement capacity levels
continue to be swollen by a sizeable new building programmed.
Population : 935.7
Density : 314
Area 279190
Capital City : New Delhi
GNP Per Capita : US$310
Urbanization : 26 per cent

24
Per Capita Cement 79kg
Consumption :
Official Language : Hindi, English
Currency : Rupee

Year Production Consumption Exports Imports

1999 48.9 84 0.1
2000 53,61 53,61 0.4 0
2001 53.37 49.86 1.18 0
2002 54.09 52.91 2.83 0
2003 58.35 56.67 2.83 0
2004 69.32 60.64 3.58 0
2005 69.55 67.17 4.8 0
2006 76.22 73.52 2.38 0
2007 80 73.52 2.7 0
2008 84 80.6 3.4 0

25
 TOPIC 3
CSR policy
Discuss about the CSR policy of the key players in the
industry:

Corporate Social Responsibility

ACC was the very first recipient of India's first ever CSR
award instituted by ASSOCHAM in 1976 which was the
ASSOCHAM National Award for outstanding performance in
promoting rural and agricultural development activities.
Today we have one of the country’s leading CSR
engagements. ACC’s earliest initiatives in community
development date back to the 1940's – long before the term
corporate social responsibility was even coined.
In 1952 the company launched its Village Welfare Scheme, as
a full-fledged function at the corporate office and all its cement
plants with a large team comprising social scientists, teachers,
medical personnel, civil engineers and experts in agriculture,
sanitation and crafts.

In keeping with this tradition, the company has a team of

young CSR specialists based at our corporate office and factories
who serve the neighbouring community that comprises the
weaker sections of rural and tribal India to provide them some
access to basic amenities, health, education and livelihoods.
ACC has established schools at most of its locations that
provide high quality education to children of employees and those
from the host communities. In addition, the company also
supports schools in the vicinity.
26
 Technology aided education initiatives such as Smart Classes
and interactive kiosks have been implemented at several ACC
locations for enhancing the quality of learning.
ACC continues to support Government run ITIs under the
Public Private Partnership scheme to upgrade the quality of
education which in turn improves the skills and employability of
students.
Topic 4
Corporate Governance Initiatives

Brief about the corporate governance initiatives taken

by key players:
Initiatives:
New Companies Act – inducing good CG practices through
self regulation, responsive legal framework based on
shareholders’ democracy; disclosure based regime; rational penal
provisions with built-in deterrence and effective protection
Amendments to the Acts governing three professional institutes
(ICAI/ICSI/ICWAI) (ICAI/ICSI/ICWAI) with a view to
strengthen strengthen the disciplinary disciplinary mechanism and
bring transparency in their working.
Notification of Accounting Standards with a view to bring the
disclosure norms in tune with the international reporting
standards; SEBI – Clause 49 – Appointment of IDs, Audit
committee, Code of conduct, disclosures of related party
transactions, remunerations, compliance of accounting standards,

27
certifications of CEO & CFO, Compliance Certification &
Whistle-blower policy (optional);

Initiatives beyond CG:

The Government has renamed the Ministry from “Company
Affairs” to “Corporate Affairs” – with a new vision “We resolve
ourselves to be the leader and partner partner in initiative
initiative for Corporate Corporate Reforms, Reforms, Good-
Governance and Enlightened Regulation, with a view to promote
and facilitate effective corporate functioning and investor
protection.” Introduction of LLP

Other initiatives:
Setting up of Investor Education and Protection Fund
Empowering investors through the medium of education
education and information information with the help of investor
associations, VOs, NGOs, etc.; Launching of websites –
www.investorhelpline.in and www.watchoutinvestors.com ;
Setting up of NFCG in partnership with stakeholders – CII, ICAI
& ICSI transformation in the service delivery mechanism for
transparency and certainty – low-cost, easy compliance;

28
 Topic 5
Initiatives towards environment conservation

Discuss about the initiatives if any taken by key players

for environment conservation:

As the business leaders of ten global cement companies, and

members of the World Business Council for Sustainable
Development (WBCSD), we believe that sustainable development
is a fundamental challenge facing humanity today, and that our
industry needs an agenda for action that will prepare it for this
challenge.
Cement is an essential material in today's society because, as a
major constituent of concrete, it forms a fundamental element of
any housing or infrastructure development.
Taken together, our companies produce approximately one
third of the world's cement and operate in two thirds of the
world's markets.
Our businesses compete with each other, including on some
aspects of sustainable development. As competitors, there are
legal and practical limits to our abilities to cooperate and
collaborate.
But we also recognize that within these limitations there
remain significant benefits for working together to explore what
sustainable development will mean for the cement industry and
our stakeholders.
29
 Our desire to play a part in a sustainable future led us to create
the Cement Sustainability Initiative.
Over the past three years we have worked alongside our
stakeholders and WBCSD to identify the key issues we need to
tackle, and some potential solutions to the challenges they pose.
In signing this document we are committing our companies to
a series of joint projects and individual actions over the next five
years.
Perhaps the most important are those regarding climate
protection and use of fuels and raw materials, issues where our
industry can play a significant role in developing sustainable
solution

The Cement Sustainability Initiative aims to increase both our

contribution to sustainable development and the public's
understanding of that contribution.
A sustainable future cannot be achieved by a single industry
acting in isolation. Some of the measures we have committed to
can be implemented in the short term, and others will require a
longer period of planning and adaptation, and the active
involvement of other parties.
We have therefore set out an action plan for the immediate
actions we can take over the next five years, and the partnerships
we need to develop to deliver them. We will report our initial
progress during 2005
We acknowledge that sustainable development presents our
industry and our companies with long-term strategic challenges.

30
 Individually, each of our companies has already taken
effective action on a range of environmental and social issues,
and has achievements to be proud of. But there is still much to be
done, and we have to continue to find ways of integrating strong
financial performance with an equally strong commitment to social
and environmental responsibility, and open, honest dialogue with
our stakeholders.

31
 CHAPTER 3
External Environment
Topic 1
External Environmt:
Controlling ministry and / or regulatory body if any for
the Industry :

Introduction:
Environmental concern in design, operation and the
upgradation of cement plants has been increasing in recent years.

Cement is the most essential ingredient in any kind of

construction activity and the cement industry, as one of the six
core industrial sectors, plays a vital role in infrastructure
development, especially in a developing country like India.

The Indian cement industry is the second largest in the world,

with an estimated installed capacity of around 349 million t,
which is likely to reach 600 million t by 2020.

There are a number of environmental issues related to the

cement sector, such as control of air pollutants (dust and gaseous
emissions), reduction of greenhouse gases (GHG), the control of
fugitive dust, utilisation of hazardous wastes as alternate fuels and
the conservation of natural resources.

The Indian cement industry has shown phenomenal

performance in terms of improving air quality. Dust emissions are
reduced and cement plants conform to the environmental
parameters set by statutory bodies.
32
 Government polices have energised and motivated the industry
to take innovative actions to protect the environment and improve
the lives of people working in the plant and living nearby.

This article discusses environmental regulations operating in

India that have given new direction to the cement industry in
terms of environmental management.

Environmental Acts/Regulations:

In India, both the Central Pollution Control Board (CPCB) and

the respective State Pollution Control Boards (SPCB) deal with
environmental issues. SPCB regularly inspects the cement
plants/limestone quarries to verify compliance with emission
norms. CPCB also inspects the cement plants to check
compliance with emission standards under environmental
surveillance squad activities.
Cement plants also have to comply with the charter on
Corporate Responsibility for Environment Protection (CREP).
The Indian cement industry must comply with the various
environmental acts and regulations notified by the Ministry of
Environment and Forests (MoEF), etc., which covers different
spheres of the environment, encompassing emissions of air
pollutants, consumption of water, generation and discharge of
trade effluents, utilisation and storage of hazardous waste, noise
generation, utilisation of forest land and wildlife areas.
Specifically, these are as follows:
 Water (Prevention & Control of Pollution) Act, 1974.
 Water (Prevention & Control of Pollution) Cess Act, 1977.
 Air (Prevention & Control of Pollution) Act, 1981.
 Environment (Protection) Act, 1986 (EPA).
33
  Hazardous Waste (Management Handling & Transboundary
Movement), 2008.
 The Forest (Conservation) Act, 1980.
 The Factories Act, 1948.
 The Wildlife (Protection) Act, 1972.
 The Mines Act, 1952.
These Acts/Regulations, together with some of the stringent
conditions that are relevant for environment protection from
industrial pollution and imposed by the pollution control boards,
are discussed in part two of this article.
The full version of this article, written by the National Council for
Cement and Building Materials, India, appeared in the October
2013 issue of World Cement.

Topic 2
Regulatory Policies at the state, national and global
level and their impact on the industry as a whole with
analysis of impact on top player:

Industrial transformation and green production (ITGP) is a new

10-year international research initiative proposed by the Chinese
National Committee for Future Earth.
It is also an important theme for adapting and responding to
global environmental change.
Aiming at a thorough examination of the implementation of
ITGP in China, this paper presents its objectives, its three major
areas, and their progress so far.

34
 It also identifies the key elements of its management and
proposes new perspectives on managing green transformation.
For instance, we introduce a case study on cement industry that
shows the positive policy effects of reducing backward
production capacity on PCDD/Fs emissions.
Finally, to develop different transformation scenarios for a
green future, we propose four strategies: 1) policy integration for
promoting green industry, 2) system innovation and a
multidisciplinary approach, 3) collaborative governance with all
potential stakeholders, and 4) managing uncertainty, risks, and long-
time horizons.

China is struggling to prevent even more environmental

pollution and natural disasters that stem, in part, from more than
30 years of unchecked economic growth and industrial
development.
Though considerable efforts have been made, many
environmental problems remain unsolved and yet more new
problems have emerged, such as climate change, the loss of
biodiversity, overuse of energy and natural resources,
environmental risks, and industrial emissions (He et al., 2012,
2014; Oosterveer et al., 2006).
Consumption of natural resources and utilization of the
environment as a sink for emissions still exceed acceptable long-
term levels.
With the rapid industrialization of the last 20–30 years, the
most common industrial emissions, including CO2, industrial
smoke dust, have increased continuously in China, while
industrial COD discharge has decreased rapidly (Fig. 1). As one
of the world's most fossil-dependent and carbon-intensive
economies, China has the highest CO2emissions of any country.

35
 Topic 3
Challenges and issues faced by the industry:

he first successful attempt to produce Portland Cement in India

was made in October, 1914. Since then, the industry has gone
from strength to strength. Start- ing with a production of less than
1,000 tonnes in 1914, the production of cement in India by all the
units jn the industry, including the three units in the public sector,
has now reached the one crore tonne mark.
Everybody's eyes are on the cement industry on account of the
scarcity of cement experienced by the large fraternity of

36
consumers for putting through their pro- I jects. Some State
Governments are trying to persuade the Centre to import cement
on rupee payment from countries of Eastern Europe to tide over
their immediate requirements
Whilst the seriousness of the situation and the anxiety of the
consumers is understandable, the present scarcity of cement, as
compared to the demand, is not on account of any lack of
enthusiasm or efforts on the part of the cement manufacturing
units to produce more and yet more cement than they have been
able to do.
The 34 units in the private sector, which the Cement
Manufacturers' Association represents, have been producing
cement during the last three years at about 95% oi their installed
capacities. There are several reasons why this performance could
not be bettered.
to about 4 - 4.5% pa in the wake of the sharp slowdown in the
Indian economy. The threat of looming overcapacity, however, is
possibly overemphasized. Players with an intent of sustained
presence in capital-intensive industries are well aware of the
significance of industry cycles and have devised suitable
buffering mechanisms to counter negative impacts in the short
term. A supportive feature has been the low breakeven points in
India, effected principally by the very high percentage of blended
cement consumption e Indian Cement Industry is currently in the
throes of comparatively challenging times with relatively low
consumption growth rates and an over-built capacity.
Even though the cumulative annual growth in the Industry
was 7.8% over the last decade, the last two years have witnessed a
steep decline.
37
 In the FY 2013-14, consumption in India at 262 mio t was
about 78% of the effective installed capacity, over 25 percentage
points above the average breakeven! Thus, industry plight,
although poorer.

Topic 4
Key initiatives by the Government to promote the
industry:

India is the second largest producer of the cement industry

which has undergone mergers and acquisitions, capacity addition
in the past few years.
With the potential for development in the infrastructure and
construction sector, the cement sector is expected to largely
benefit from the country.
Major government initiatives such as ‘smart cities’, ‘Housing
for all’ etc. are expected to provide a major boost to the sector” as
per RNCOS analysis.

“The housing sector in the country accounts for nearly 67% of

the total cement consumption. Further, with the allocation of INR
23,000 Crore by the Finance Minister in 2017, the country has set
a target of building 1 Crore houses by 2019” said, Shushmul
Maheshwari, CEO – RNCOS. He added with the government's
thrust on infrastructure and housing, cement demand is expected
to increase in the future.

Also, in order to develop newer method for efficient cement

production, India has joined hands with Switzerland which would
help in reduction of energy consumption during the process while
meeting its rising demand for cement in the infrastructure sector.

38
 CHAPTER 4
Financials:

Topic 1
Profitability, Revenues, Margins of top 3 & bottom 3
players over the last 3 years and trends/changes therein:

While the operating profitability of cement companies has been

under pressure on account of the rising costs in H1FY18, higher
realisations supported the margins to a large extent except for
south-based players.
However, with expectations of higher power, fuel and freight
costs in FY18 likely to continue, the same will put pressure on the
profitability margins and debt metrics of cement companies in the
coming quarters," said Majumdar.

It is worth noting that cement is an extensively energy-

consuming sector and any rise in fuel prices tends to have an
adverse impact on the profit margins of the cement players.
The sector is dominated by players like
UltraTech, Ambuja Cement, Shree Cement, Dalmia Cement, and
India Cements.
Further, with the ability to discipline prices every time either
not being possible or not lasting for long, given the supply
overhang in the Indian market, cement makers have been taking a
hit on their profits in recent years.
With expectations that the scenario may not ease in the near
future, the upcoming quarters of 2018 look challenging.

39
 Topic 2
Sick players if any and their turnaround strategies, if
any:

Strategy”, narrowly defined, means “the art of the general” (the

Greek stratos, meaning ‘field, spread out as in ‘structure’; and
agos, meaning ‘leader’). The term first gained currency at the end
of the 18th century, and had to do with stratagems by which a
general sought to deceive an enemy, with plans the general made
for a campaign, and with the way the general moved and disposed
his forces in war. Also was the first to focus on the fact that
strategy of war was a means to enforce policy and not an end in
itself. Strategy is a set of key decisions made to meet objectives.
A strategy of a business organization is a comprehensive master
plan stating how the organization will achieve its mission and
objectives.

Every firm competing in an industry has a strategy, because

strategy refers to how a given objective will be achieved.
‘Strategy’ defines what it is we want to achieve and charts our
course in the market place; it is the basis for the establishment of
a business firm; and it is a basic requirement for a firm to survive
and to sustain itself in today’s changing environment by
providing vision and encouraging to define mission.

Topic 3

Key factors contributing to costs:

If the country only imports or only exports goods or services

within the same sector, such that there is no intra-industry trade,
value of the Grubel – Lloyd Index reduces to zero.

40
 The industry underwent a period of rapid technological
upgradation including modernisation and improvement of plant
processes, which helped it in reducing manpower costs11.
This pursuit of cost efficiency and technological upgradation
has made some of the Indian cement companies the most efficient
across global majors.
The Indian business group, Grasim, is amongst the top ten
companies in the world. Indian major, Gujarat Ambuja is one of
the most cost efficient firms in the world

41
 CHAPTER 5
Recent Developments:

Impact of key relevant provisions of the latest Fiscal

policy on the industry and various players therein:

Introducation:
Over the last several years, the national economy has been
undermined by severe weakness in the housing market, a slow-
down in industrial and commercial growth, increased
unemployment, and a variety of other indicators, resulting in an
economic downturn of nearhistoric proportions.
To address these economic trends, policy makers have
traditionally relied upon investment in infrastructure as part of an
integrated approach to reverse current macroeconomic trends.

This Congress, for example, has adopted stimulus legislation,

including the American Recovery and Reinvestment Act of 2009
(ARRA)(Pub. L. 111-5).
As in past efforts, the centerpiece of ARRA has been a
significant outlay for infrastructure, including core investments in
roads, bridges, sewers, and other projects.
Infrastructure investment creates a multiplier effect for the
economy by combining direct employment impacts (e.g.,
construction, planning, and the like) and upstream impacts (e.g.,
the manufacture of construction materials and the like). In the
longer term, improved infrastructure is literally the pathway by
which improved commerce flows. At the same time as ARRA and
other stimulus policies are being implemented, the US
Environmental Protection Agency (EPA) is developing
42
environmental regulations that adversely affect the ability of
future infrastructure investment to deliver the promised economic
stimulus. For example, the EPA is developing air regulations that
will force the cement industry to close production facilities and
will also reduce new capital investments in the United States. The
net result will be the replacement of domestically-produced
cement with more imported product to satisfy new recovery-based
market expansion. This report will first estimate the total direct
and

Introduction Over the last several years, the national economy

has been undermined by severe weakness in the housing market, a
slow-down in industrial and commercial growth, increased
unemployment, and a variety of other indicators, resulting in an
economic downturn of nearhistoric proportions. To address these
economic trends, policy makers have traditionally relied upon
investment in infrastructure as part of an integrated approach to
reverse current macroeconomic trends.
This Congress, for example, has adopted stimulus legislation,
including the American Recovery and Reinvestment Act of 2009
(ARRA)(Pub. L. 111-5). As in past efforts, the centerpiece of
ARRA has been a significant outlay for infrastructure, including
core investments in roads, bridges, sewers, and other projects.

Infrastructure investment creates a multiplier effect for the

economy by combining direct employment impacts (e.g.,
construction, planning, and the like) and upstream impacts (e.g.,
the manufacture of construction materials and the like). In the
longer term, improved infrastructure is literally the pathway by
which improved commerce flows.
At the same time as ARRA and other stimulus policies are
being implemented, the US Environmental Protection Agency
(EPA) is developing environmental regulations that adversely
affect the ability of future infrastructure investment to deliver the
promised economic stimulus. For example, the EPA is developing

43
air regulations that will force the cement industry to close
production facilities and will also reduce new capital investments
in the United States. The net result will be the replacement of
domestically-produced cement with more imported product to
satisfy new recovery-based market expansion. This report will
first estimate the total direct and

This report will first estimate the total direct and indirect
economic impacts of the cement industry on the U.S. economy.
Models demonstrate that the total economic footprint of the 3
industry, when combined with construction projects dependent on
affordable and reliable cement supplies, accounts for millions of
well-paying jobs and more than $1 trillion of the nation's output.
All the while, the industry has been a significant investor in
environmental protection. Next, the report will demonstrate that
the proposed national emissions standard will cause significant
outsourcing of cement production to foreign sources of supply.
Last, the report will demonstrate that the proposed standard will
have significant direct economic impacts and will substantially
undermine the effect of recently-adopted stimulus programs,
reducing potential upstream employment gains for some projects
by as much as 40 percent. Fortunately, there are ways to address
environmental concerns without forcing the Hobson's choice
between severe economic hardship and improved air quality

44
Analysis of Key relevant provisions of latest Exim
Policy in case of industries that are focused on Global
Markets for exports or industries that have Significant
import components:

What does Darjeeling Tea, Basmathi Rice, Indian Carpet,

Kancheepuram Silk, Mysore Sandalwood Oil, Indian Garments,
Indian Software, Surat Diamonds to name a few have in
common. They represent the modern symbols of Indian foreign
trade.

On 1st April 2015, the new Foreign Trade Policy (FTP) for the
period 2015-20 was announced which replaces the 2009-14 FTP
which expired on 31st March 2014. With the announcement of
new policy, exporters’ one-year wait for new FTP has come to
end.

India's Foreign Trade Policy also known as Export Import

Policy (EXIM) in general, aims at developing export potential,
improving export performance, encouraging foreign trade and
creating favorable balance of payments position. Foreign Trade
Policy is prepared and announced by the Central Government
(Ministry of Commerce). Foreign Trade Policy or EXIM Policy
is a set of guidelines and instructions established by the DGFT
(Directorate General of Foreign Trade) in matters related to the
import and export of goods in India.

The foreign trade policy, has offered more incentives to

exporters to help them tide over the effects of a likely demand

45
slump in their major markets such as the US and Europe.

Foreign trade is exchange of capital, goods, and services across

international borders or territories. In most countries, it
represents a significant share of gross domestic product (GDP).
While international trade has been present throughout much of
history, its economic, social, and political importance has been
on the rise in recent centuries.

The Foreign Trade Policy of India is guided by the Export

Import in known as in short EXIM Policy of the Indian
Government and is regulated by the Foreign Trade Development
and Regulation Act, 1992.

DGFT (Directorate General of Foreign Trade) is the main

governing body in matters related to EXIM Policy. The main
objective of the Foreign Trade (Development and Regulation)
Act is to provide the development and regulation of foreign
trade by facilitating imports into, and augmenting exports from
India. Foreign Trade Act has replaced the earlier law known as
the imports and Exports (Control) Act 1947.

Indian EXIM Policy contains various policy related decisions

taken by the government in the sphere of Foreign Trade, i.e.,
with respect to imports and exports from the country and more
especially export promotion measures, policies and procedures
related thereto.

Objectives Of The FTP (EXIM) Policy: -

The main objectives are:
To accelerate the economy from low level of economic activities
46
to high level of economic activities by making it a globally
oriented vibrant economy and to derive maximum benefits from
expanding global market opportunities.
To stimulate sustained economic growth by providing access to
essential raw materials, intermediates, components,'
consumables and capital goods required for augmenting
production.
To enhance the techno local strength and efficiency of Indian
agriculture, industry and services, thereby, improving their
competitiveness.
To generate employment.
Opportunities and encourage the attainment of internationally
accepted standards of quality.
To provide quality consumer products at reasonable prices.

47
Key Alliances in the past 5 years and their performance
& impact on other players in the industry.
Mergers & Acquisitions, if any:

Indian cement sector after liberalization has shown enormous

development. The development is reported to have come in line
with the Gross Domestic Product (GDP) of the country at a faster
pace than GDP in the current decade.
When a sector grows with the economic development of the
country, and is strongly under the influence of infrastructure
sector for which the government is reported to be giving
increasing importance, the study of its consolidation gains
significance.
Mergers and Acquisitions (M&A) has been a tool for many
companies for their fast development across many industries
around the globe. Indian cement industry has been witnessing
M&A after liberalization at an increased pace in different sizes
and types.
Thus, study of the benefits of M&A in the industry had been
taken up to be of immense use to the industry by knowing its
impacts on some of the main objectives of M&A‟s.
The study has also been done to be useful for the future M&A
activities in the cement industry, which is likely to take place at a
brisk pace in next few years.
After the price de-control of Indian cement industry in 1989
and with the economic liberalization adding momentum to it,
Indian cement industry had been expanding very fast such that as
on March 2010 India is the second largest cement producer in the
world.
The structure of the industry looks significant as there are 51
manufacturers in India in competition, and still the top four of
them controlled by two groups account for 40% of the market
share. The factories are located in clusters across India based on

48
the limestone availability for the industry, as it is the basic raw
material for the industry. In the last twenty years big size M&A
deals have taken place with all the top four companies involved in
it.
The deal between Grasim Industries Ltd (GIL) and Larsen and
Toubro Ltd (L&T) was one of the biggest in the country across
industries. The data of M&A had been taken from Center for
Monitoring Indian Economy (CMIE) data base, Securities
Exchange Board of India (SEBI) and the annual reports of the
companies.
The industrial data have been taken from annual reports of the
companies, Cement Manufacturers Association (CMA), and
CRISIL research. 7 To understand the impact of M&A in the
industry, M&A cases have been taken company wise and studied
as the first step. Secondly the overall industry level effect has
been studied.
For understanding the impact, financial parameters, value
additional aspects to the shareholders, operational parameters, and
the combined effect of financial and operational parameters on
the companies post event had been taken up and studied. Since
M&A‟s involve huge capital outlay in cement sector, how the
shareholders react to the event in the industry has also been
viewed. In understanding the reaction of shareholders to the
announcement of an event, first non cement sector cases have
been taken and then cement sector cases have been taken to
understand any pattern existing in reactions of shareholders. After
the study, based on the knowledge gained, an event module had
been prepared for the Indian cement industry with the hope of
making it useful for the future M&A cases. The study had given
beneficial output by way of M&A‟s having positive impact on
the companies in the industry both financially and operationally.
The fact that the M&A has a very significant impact of reducing
power consumption is an extremely welcome sign as power usage
reduction is such a want in India

49
With the Indian cement sector expected to grow at 8% in near
future and capacities and demand expected to balance out by the
year 2013, many more M&A are expected in the industry to cash
in on the opportunities and the results of the study is sincerely
hoped to be very useful for the Indian cement industry.

50
 Topic 4
Technological developments.

Labourunrest if any –reasons thereof and impact on the

particular player and the industry as a whole. :

The more advanced technology becomes, the more it seems to

have control over our lives. Today, the use of technology is
widely available and insistently promoted throughout our society.
While technology makes life easier for people, it also creates
some problems for our society such as the decline in ordinary
social behaviors. Yet, modern societies realized the significance
of intellectual technology which is a form of new knowledge that
achieves goals or solves many problems. The word technology
consists of two parts (Techno) means application, art or skill, and
(Logy) means science and learning. Thus, the linguistic meaning
of the word technology is: the methods and tools that a society
has developed in order to facilitate the solution of its practical
problems and to provide the necessary needs for the community.
Consequently, the use of technology in all areas of life increases
risks, threats and crimes associated with the use of this technique,
which reflects negatively on the possibility of its use in absolute
terms in all walks of life [7]. Since human beings are social by
nature, relationships nowadays become more dominated by the
use of modern technologies such as social media, which reduces
the distances, despite of having negative effects on human
relations in society and family. Currently, people recognize that
the use of modern technologies is a requirement for life and an
indication of the cultural awareness of the community. They have
positive prominent roles as one of the requirements of this era
where they enter in all walks of life to provide services, improve
the quality of life and increase communication and relationships
since it is a developed culture reflects the culture of the

51
community. Thus, there are increased concerns in the speed at
which modern technology spreads as well as its uses and their
false and negative impacts. This was due to the absence of
effective guidance where some groups have become vulnerable to
the negative effects of life-threatening. Since education is an
important area of life, the use of modern technologies makes it an
essential part in education, not just a simple addition [4]. This
research shows the negative impacts of modern technologies on
society and will contribute to raise people's awareness towards the
appropriate ways of using modern technologies. The authors hope
that by presenting the negative effects of modern technologies on
society, it will have positive influences on individuals and society
in general since modern technologies play a major role in people's
lives and future possibilities.

Statement of the Problem :

The most important negative impacts of the use of modern
technologies on society and its impact on individual behavior are:
the formation of personal beliefs, social isolation, reduction in the
family ties between the family and society members, inactivity,
obesity, lack of desire to work different kinetic activities, a waste
of time in things that are not useful, increase in the rate of
violence, especially in children because of watching violent
programs, high crime rate because of spreading video clips
presenting all kinds of these crimes and ways of committing them
and the spread of lies and rumors causing distraction and loss of
trust in such.

52