Table of Contents

GENERIC STRATEGY ANALYSIS ............................................................................................................................ 2

BROAD MARKET ............................................................................................................................................ 2

BALANCE SHEET PERSPECTIVE ...................................................................................................................... 3

INCOME STATEMENT ANALYSIS .................................................................................................................... 4

VALUE CHAIN PERSPECTIVE .......................................................................................................................... 4

REFERENCES ....................................................................................................................................................... 9

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GENERIC STRATEGY ANALYSIS

BROAD MARKET
HOW DO WE NARROW DOW N TO THIS DECISION?

Since cement is a necessity and there is no particular niche that Ultratech has created for
itself, so any random consumer who buys from Ultratech can buy the same from any other
existing brand.
India is the 2nd largest producer of cement and have a huge expected growth in
production of cement till 2020. Also, there is a robust demand, attractive opportunities, long
term potential and increasing investments in this industry.
The demand creator in cement industry is housing, infrastructure, and commercial
construction etc. where housing act as a major driver. Though, nowadays, the industry and
infrastructure sector are also acting as a major driver in the cement industry. Individual
housing is the major consumer (around 65% of demand) followed by government
infrastructure.
There is no exclusive substitute for cement. Cement is an ultimate element used for
almost all types of construction work. Total cement produced in India is 502 MT. There are not
many substitutes of cement and the ones which are available are not that effective to have an
impact on its demand.
There are no specific grades of cement that Ultratech Cement produces which
differentiates itself from any other company.

Henceforth we can conclude that it has a broad market.

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BALANCE SHEET PERSPECTIVE

COST LEADER ANALYSI S FROM BALANCE SHEET

When we consider just the top 6

companies, UltraTech still manages to top
the ladder with a 40.2% market share
among them while the average is 16.67%.
Thus it eats the market share of another
company with a significant margin and
thus proving to be a cost leader.

Thus indicating that in the cement

industry, the average market share of the
top 22 companies is 4.55%. Since UltraTech
is able to have a market share of approx.
30%, thus it is eating out the share of
another company(s) through its cost
leadership strategy.

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INCOME STATEMENT ANALYSIS

TOP 3 Companies
Company Name Net Sales Profit Profit
(Rs. Cr) (Rs. Cr) Margin (%)
UltraTechCement 29,790.10 2,224.59 7.47%
ACC 13,284.60 1,506.63 11.34%
Ambuja Cements 10,446.85 1,249.57 11.96%
TOTAL 53,521.55 4,980.79

So despite of having a lower profit margin of 7.47%, it

has proven to be the cost leader by taking up more
volume and economies of scale
VALUE CHAIN PERSPECTIVE
PRIMARY ACTIVITIES

Inbound Logistics

Procurement practices of the company is based on the protection of the interest of

the society, environment, quality and cost effectiveness. UltraTech engages into long term
contracts with its vendors.
There is a Reverse Auction Process in which real time bidding is done for the
transportation and buying of the raw material. This is done through E-procurement and
it makes the process more efficient and cost effective.

The integrated unit of UltraTech has also been set up close to the mines of
limestone that reduces the procurement cost involved in it.
It has also increased the use of pet coke in place of Coal to give it a cost advantage.
It is also using waste heat to generate power and plan to generate 54 MW. (Economic
times, n.d.)

In year 2016, when compared to the previous year the cost of the UltraTech
Cement for every ton of cement sold was lower. The most important factor responsible
for the same was the fuel cost that was 20% lower.

Recently, UltraTech Cement has made its leadership stronger with the acquisition
of Binani Cement. Its limestone reserves would aid in low cost capacity expansion for
UltraTech. (THEWEEK, n.d.)

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From the analysis of other cement companies, we found that most of the industries
rely on the long-term supplier relationship to be cost effective.

Operations

They have vast scale and complex distribution of network. They have a very well
planned supply chain.

2.Order management 3.Real Time customer

1.Optimisation of
system based on level Service
network
computer mangement

5.Automation at
4.GPS based vehicle secondary service
tracking system. points like warehouses
railheads etc

They prefer the transport options that are fuel efficient and vendors are selected
on the basis of their proximity to the manufacturing locations. The company also tries to
reduce the lead distance through the optimum mix of road, rail and sea transport and
lower down its freight cost.

The capacity addition of Ultra Tech Cement has worked in its favor providing core
competency as compared to its competitors i.e. ACC and Ambuja Cement. In 2018 the
capacity addition amounts to 92.5 MTPA for Ultra Tech as compared to ACC and
Ambuja that stands at 33.33 MTPA and 29.7 MTPA respectively. This has led to
Economies of Scale and efficiency in the operations.

Outbound Logistics

UltraTech has a robust logistics network 30 plants, more than 500 warehouses and
150 plus railheads. Everyday UltraTech caters to 14000 orders through combination of
different logistics modes that includes rail, road and sea. The company tries its best to
make the product available as early as possible and tries to reduce the lead time for its
customers.

The company focuses on the sea mode of transportation because it is very

economical, safe and environment friendly. It operates on the Western Indian coast with

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the loading terminals situated at Pipavav and Jafarabad, Gujarat. The supplies goes to
Magdalla, JNPT-Mumbai, Ratnagiri, New Mangalore, Cochin and export to Sri Lanka,
Persian Gulf, African continent and Far Eastern regions. (www.ultratechcement.com,
n.d.)

SECONDARY ACTIVITIES

General Administration

Performance in 2017
Particulars Ultratech Ambuja
Input Material Costs 1.29% 8.80%
Employee Costs 21% 9.24%
Year on Year Energy Cost saving 18.92% 10.7%
Freight Charges 25% 30.42%

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It simply indicates that Ultratech is pioneer in reducing its cost. Moreover it’s more
efficient in saving the energy cost year on year by 8.22% (percentage points) as
compared to Ambuja.

Procurement
Sourcing of Raw Materials: UltraTech's greatest strength is its sourcing of raw material.
Limestone quarries are usually leased from the government on a long-term basis (usually
at least 25-30 years). UltraTech is capable in identifying and then leasing, higher quality
raw material quarries which makes it a cost leader.
Local Supply - Ultratech aim at procuring from the local supplier as much as possible,
thus reducing the transportation cost which adds to a major part in the cost of
manufacturing cement. It also help the company to setup plants in remotest corner of
India.

Research & Technology

Ultratech Cements through its research, development, and innovation is using industrial
waste as alternative fuel and material in cement manufacturing. Use of such alternative
resources helps in reducing the production cost of the cement. For example in order to
meet the high demand in the market it used pond ash instead of dry fly ash without
having an adverse effect on the quality of the product.

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REFERENCES

(n.d.). Retrieved january wednesday, 2019, from www.ultratechcement.com:

https://www.ultratechcement.com/common/images/downloads/UltraTech%20Sustainability%2
0Report%202016-17.pdf

(n.d.). Retrieved from www.ultratechcement.com: https://www.ultratechcement.com/logistics

(n.d.). Retrieved from Ultratech Cement: https://www.ultratechcement.com/cement

(n.d.). Retrieved from THEWEEK: https://www.theweek.in/news/biz-tech/2018/11/27/Acquisition-of-

Binani-Cement-to-strengthen-Ultratech-leadership-help-low-cost-expansion.html

Damani, A. (2017, June 8). Alpha Invesco. Retrieved January 12, 2019, from alphainvesco.com:
https://www.alphainvesco.com/blog/understanding-indian-cement-industry/

Economic times. (n.d.). Retrieved from

https://economictimes.indiatimes.com/news/company/corporate-trends/et-500-why-ultratech-
cement-continues-to-be-a-leader-in-the-industry/articleshow/29104642.cms?from=mdr

India Brand Equity Foundation. (2018, December 1). India Brand Equity Foundation. Retrieved January
12, 2019, from IBEF: https://www.ibef.org/industry.aspx

Patel, H. (2016, January 22). Cementing its place. Retrieved January 12, 2019, from
https://www.outlookindia.com/outlookmoney/invest/alternate/cementing-its-place-399

Shah, N. C. (2013, August 9). Ideasmakemarket. Retrieved January 6, 2019, from ideasmakemarket:
http://ideasmakemarket.com/2013/09/aug-entry17-analysis-of-cement-industry.html

Singh, N. (2018, September 11). UltraTech Cement pledges to double energy productivity. Retrieved from
Times of India: https://timesofindia.indiatimes.com/business/india-business/ultratech-cement-
pledges-to-double-energy-productivity/articleshow/65771412.cms

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