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 PRISMording 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 PRISMounts 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, generalpurpose ready-mixes, and even high strength pre-cast and pre-stressed concrete.

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 PRISMounts 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 PRISMounts 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 blastfurnace 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 cement in a concrete mixture is a useful method to make concrete better and more consistent. Portland blastfurnace 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.

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 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.

Structure of the industry Domestic players: Associated Cement Companies Ltd (PRISML) 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. 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 - Jaypee Cemco Grasim's product profile includes viscose staple fiber (VSF), grey cement, white cement, sponge iron, chemicals and textiles. With the acquisition of Jaypee, 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 Jaypee) 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. 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 PRISM, making it the second largest cement group in the country, after Grasim-Jaypee 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. 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. Prism Cement Limited Prism Cement Limited is Indias largest integrated Building Materials Company; with a wide range from cement, ready-mixed concrete, tiles, bath products to kitchens. The company has three Divisions, viz. Prism Cement, H & R Johnson (India), and RMC Readymix (India). Prism Cement Limited also has a 74% stake in Raheja QBE General Insurance Company Limited, a JV with QBE Group of Australia. Prism Cement Prism Cement commenced its production in August 1997 and manufactures Portland Pozzollana Cement (PPC) with the brand name 'Champion' and Ordinary Portland Cement (OPC). It has the highest quality standards due to efficient plant operations with automated controls. It caters mainly to markets of UP, MP and Bihar, with an average lead of 340-370 km of its plant at Satna, MP. It has a wide marketing network with about 2,000 dealers serviced from 46 stocking points. Prism currently sells over 3 MTPA of cement and clinker and is in the process of establishing another unit at the same location with a proposed cement capacity of 3.6 MTPA by 2010-2011. It is also in the process of setting up a 4.8 MTPA capacity cement plant in Andhra Pradesh by 2013-2014. This will take its overall capacity above 11 MTPA.

'Prism Cement Limited is an ISO 9001 : 2008, ISO 14001 : 2004, OHSAS 18001 : 2007 & SA 8000 : 2008 Certified Company. It operates one of the largest single kiln cement plants in the country at Satna, Madhya Pradesh. Equipped with state-of-the-art machinery and technical support from F.L Smidth & Co A.S Denmark, the world leaders in cement technology, Prism Cement has successfully created a niche for itself in the Indian cement industry. The Company is managed by a focused Board comprising of eminent experts from diverse fields ably supported by a professional management team. The Management team ensures high levels of transparency, PRISMountability and equity in all facets of the companys operations. 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. 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.

INTRODUCTION JAYPEE GROUP (CEMENT) With a single minded focus in mind, to achieve pioneering myriads of feat in civil engineering Shri. Jaiprakash Gaur, Founder Chairman of Jaiprakash Associates Limited after acquiring a Diploma in Civil Engineering in 1950 from the University of Roorkee, had a stint with Govt. of U.P. and with steadfast determination to contribute in nation building, branched off on his own, to start as a civil contractor in 1958, group is the 3rd largest cement producer in the country. The groups cement facilities are located in the Satna Cluster (M.P.), which has one of the highest cement production growth rates in India. Jaypee group is the 3rd largest cement producer in the country. The group's cement facilities are located in the Satna Cluster (U.P), which has one of the highest cement production growth rates in India. The group produces special blend of Portland Pozzolana Cement under the brand name Jaypee Cement (PPC). Its Cement Division currently operates modern, computerized process control cement plants with an aggregate capacity of 21.3 MTPA. The company is in the midst of capacity expansion of its cement business in Northern, Southern, Central, Eastern and Western parts of the country and is slated to be 37.55 MTPA cement producer by 2012 with Captive Thermal Power Plants totaling 702MW. All the 156 cement dumps are networked using State-of-the-art TDM/TDMA VSATs along with a dedicated hub to provide 24x7 connectivity between the plants and all the 156 points of cement distribution in order to ensure track the truck initiative and provide seamless integration. This initiative is the first of its kind in the cement industry in India. In the near future, the group plans to expand its cement capacities via acquisition and greenfield additions to maximize economies of scale and build on vision to focus on large size plants from inception. The Group is committed towards the safety and health of employees and the public. Our motto is ' Work For Safe, Healthy, Clean & Green Environment '.

Distinct Features: Higher Compressive strength Optimal fineness Balanced physical and chemical properties Optimal setting time Consistency in quality Low-level of Chloride High-soundness

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

Customer Care and Guidance: Jaypee 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 Jaypee 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

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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 History of Cement Manufacture of cement has a history, which traces back to millennia. The Romans who were prolific builders used burnt calcareous (calcium bearing) rocks along with pozzolanic materials in an era Before Christ. The structures built by them, like the Pantheon, are still there for us to see proving the goodness of cementitious materials as input material for construction. Post industrialization and as infrastructure development started globally, demands for cement have been growing steadily both quantitatively & qualitatively. India is the second largest cement producer in the world after China and cement consumption has been growing at a CAGR of over 8% p.a. in the last five years. The group cement facilities are located in the Satna cluster, which has one of the highest cement production growth rates in India. Manufacturing Process Mining The cement manufacturing process starts from the mining of limestone, which is the main raw material for making cement. Limestone is excavated from open cast mines after drilling and blasting and loaded on to dumpers which transport the material and unload into hoppers of the limestone crushers. Crushing Stacking & Reclaiming of Limestone The LS Crushers crush the limestone to minus 80 mm size and discharge the material onto a belt conveyor which takes it to the stacker via the Bulk material analyser. The material is stacked in longitudinal stockpiles. Limestone is extracted transversely from the stockpiles by the reclaimers and conveyed to the Raw Mill hoppers for grinding of raw meal.

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Crushing Stacking & Reclaiming of Coal The process of making cement clinker requires heat. Coal is used as the fuel for providing heat. Raw Coal received from the collieries is stored in a coal yard. Raw Coal is dropped on a belt conveyor from a hopper and is taken to and crushed in a crusher. Crushed coal discharged from the Coal Crusher is stored in a longitudinal stockpile from where it is reclaimed by a reclaimer and taken to the coal mill hoppers for grinding of fine coal. Raw Meal Drying/Grinding & Homogenization Reclaimed limestone along with some laterite stored in their respective hoppers is fed to the Raw Mill for fine grinding. The hot gasses coming from the clinkerisation section are used in the raw mill for drying and transport of the ground raw meal to the Electrostatic Precipitator / Bag House, where it is collected and then stored and homogenised in the concrete silo. Raw Meal extracted from the silo (now called Kiln feed) is fed to the top of the Preheater for Pyroprocessing. Clinkerisation Cement Clinker is made by pyroprocessing of Kiln feed in the preheater and the rotary kiln. Fine coal is fired as fuel to provide the necessary heat in the kiln and the Precalciner located at the bottom of the 5/6 stage preheater. Hot clinker discharged from the Kiln drops on the grate cooler and gets cooled. The cooler discharges the clinker onto the pan / bucket conveyor and it is transported to the clinker stockpiles / silos. The clinker is taken from the stockpile / silo to the ball mill hoppers for cement grinding. Cement Grinding & Storage Clinker and Gypsum (for OPC) and also Pozzolana (for PPC) are extracted from their respective hoppers and fed to the Cement Mills. These Ball Mills grind the feed to a fine powder and the Mill discharge is fed to an elevator, which takes the material to a separator, which separates fine product and the coarse. The latter is sent to the mill inlet for regrinding and the fine product is stored in concrete silos. Packing Cement extracted from silos is conveyed to the automatic electronic packers where it is packed in 50 Kgs. Polythene bags and dispatched in trucks.

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Electrical Power For total power requirement of 90 MW (Jaypee Rewa Plant and Jaypee Bela Plant), we have CPP CPP CPP 1 2 3 25.0 25.0 37.0 MW MW MW

Four DG sets provide an emergency backup. Technical Services Owning a strong, durable and beautiful home is one of the innate desires of every human being. At Jaypee, the pioneers in the construction of mega Hydroelectric projects and other infrastructure projects, we fully understand that good cement and construction material alone will not ensure strong and lasting structures. Correct construction practices and quality control at the time of construction play an equally important role. Our understanding of the construction practices and related problems has prompted us to extend customized technical services specially tailored for the Individual Home Builders and large projects. We firmly believe that quality construction leads to satisfied customers. The Jaypee Cement Technical Support Service offerings are: Technical Service Engineers Our Area Marketing Offices have a fully functional technical services department aptly supported by qualified Civil Engineers who visit and interact with the customers to asses their needs and PRISMordingly advise them about the best construction practises so that the dream of a strong and durable home is realized. Some of the customer-centric initiatives taken up by the Technical Service Engineers are: Customized solutions to the problems of the individual home builder. Training the masons and contractors so that they are aware about good construction practices. Train the channel partners (Dealers and Retailers) about the product and its correct usage. Interact routinely with the professionals (architects and engineers) and share information regarding latest developments in the product and industry. The services of the Technical Service Engineers can be availed by all users of Jaypee Cement. For more details, please contact nearest Jaypee Cement Area Marketing Office or Jaypee Cement Authorized Dealers.

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Nirman Mitr Services Mobile Concrete Testing Vans Looking at the importance of quality control tests at the time of construction, Jaypee Cement has introduced mobile testing vans under the brand name of Nirman Mitr. The vans are fully equipped to carry out strength and workability tests of concrete. The grading and quality of the aggregates used in concrete can also be tested. The services of Nirman Mitr are meant primarily for assisting the customer in making good concrete for any application viz. footing, beams, columns, lintels, slabs etc. The services of Nirman Mitr can be availed by any prospective Individual Home Builder. The services of Nirman Mitr are free of cost, subject to the availability of the van and on a first come first serve basis. Currently, Nirman Mitr Vans are operating in the following locations: 1) Delhi 2) Dehradun 3) Allahabad 4) Lucknow Disclaimer: The Technical Service and Nirman Mitr Services are non-profit, free of cost services to provide information and guidance to the Jaypee Cement users on the correct application of cement and concrete. The services are meant for general guidance only and in no way replaces the services of professional consultants on projects. No legal liability can be PRISMepted by Jaiprakash Associates Limited for its use. 5) Kanpur 6) Patna 7) Gwalior 8) Indore 9) Faridabad 10) Karnal 11) Panchkula 12) Allahabad

Performance

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Jaypee Rewa Plant Production Clinker Year Production (MTPA) 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2.317 2.173 2.561 2.918 3.106 3.131 3.087 3.204 Sp. Heat Total Cement Sp.Electrical Energy onsumption Conversion Production Consumption, (Net Basis) Factor (MTPA) kWh/t of Clk. Kcal/Kg of Clk. 2.579 768 70.4 0.803 2.413 748 71.9 0.786 2.562 704 67.5 0.769 2.819 708 66.4 0.770 3.207 698 66.3 0.759 3.253 698 65.5 0.759 3.043 691 64.9 0.762 3.218 688 62 .777

Jaypee Bela Plant Production Clinker Year Production (MTPA) 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 1.68 1.646 1.648 1.768 1.996 2.004 2.055 2.042

Sp. Heat Total Cement Sp.Electrical Energy Consumption (Net Conversion Production Consumption, Basis) Factor (MTPA) kWh/t of Clk. Kcal/Kg of Clk. 1.783 716 62.3 0.848 1.837 715 64.6 0.828 2.046 700 63.4 0.863 2.152 691 63.5 0.857 2.414 706 64.1 0.817 2.337 696 63.3 0.797 2.257 694 62.9 0.813 2.387 692 63.7 .801

Jaypee Ayodhya Grinding Operational, Tanda (U.P) Production Clinker Year Production (MTPA) 2005-06 2006-07 2007-08 2008-09 -

Sp. Heat Total Cement Sp.Electrical Energy Consumption Conversion Production Consumption, (Net Basis) Factor (MTPA) kWh/t of CEMENT Kcal/Kg of Clk. 0.756 31.16 0.729 0.88 1.4824 0.91 1.4832 -

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2009-10 -

1.032

30.75

.686

Jaypee Cement Blending Unit, Sadva, Allahabad (U.P) Production Clinker Year Production (MTPA) 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 -

Sp. HeatSp.Electrical Total Cement Consumption Energy Conversion Production (Net Basis) Consumption, Factor (MTPA) Kcal/Kg of Clk. kWh/t of CEMENT 0.325 5.84 0.662 0.453 4.93 0.687 0.553 4.46 0.680 0.587 4.34 0.689 0.58 0.61 0.60 4.39 0.685 .719 4.25 .6835

Jaypee Cement Grinding Unit, Panipat (Haryana) Production Clinker Year Production (MTPA) 2008-09 2009-10 -

Sp. HeatSp.Electrical Total Cement Consumption Energy Production (Net Basis) Consumption, (MTPA) Kcal/Kg of Clk. kWh/t of Clk. 0.666 38.78 1.012 38.04

Conversion Factor 1.259 .7042

DALLA CEMENT FACTORY, Sonebhadra (UP) Production Clinker Year Production (MTPA) 2008-09 0.351 2009-10 1.373

Sp. HeatSp.Electrical Total Cement Consumption Energy Production (Net Basis) Consumption, (MTPA) Kcal/Kg of Clk. kWh/t of Clk. 892 94.38 .146 804 86.79

Conversion Factor .7287

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CHUNAR CEMENT FACTORY, Mirzapur (UP) Production Clinker Year Production (MTPA) 2007-08 2008-09 2009-10 -

Sp. HeatSp.Electrical Total Cement Consumption Energy Conversion Production (Net Basis) Consumption, Factor (MTPA) Kcal/Kg of Clk. kWh/t of CEMENT 0.039 45.80 0.747 0.612 42.30 0.729 1.702 43.91 .7129

Jaypee Gujarat Cement Plant, Sewagram Gujarat Production Clinker Year Production (MTPA) 2009-10 .43

Sp. HeatSp.Electrical Total Cement Consumption Energy Production (Net Basis) Consumption, (MTPA) Kcal/Kg of Clk. kWh/t of Clk. .27 788 74.59

Conversion Factor ..9628

Jaypee Wanakbori Cement Grinding Unit, Gujarat Production Clinker Year Production (MTPA) 2009-10 -

Sp. HeatSp.Electrical Total Cement Consumption Energy Conversion Production (Net Basis) Consumption, Factor (MTPA) Kcal/Kg of Clk. kWh/t of CEMENT .069 54.34 .7936

Jaypee Sidhi Cement Plant , Sidhi Year Production Clinker Production (MTPA)

Total CementSp. Production (MTPA) Consumption (Net

HeatSp.Electrical Energy Basis) Consumption,

Conversion Factor

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2009-10 1.166

.405

Kcal/Kg of Clk. 751.42

kWh/t of Clk. 67.02

.7800

Jaypee Roorkee Cement Grinding Unit , Roorkee Production Clinker Year Production (MTPA) 2008-09 2009-10 -

Sp. HeatSp.Electrical Total Cement Consumption Energy Conversion Production (Net Basis) Consumption, Factor (MTPA) Kcal/Kg of Clk. kWh/t of CEMENT 0.114 57.07 .0.77

Jaypee Himachal Cement Plant , Baga Production Clinker Year Production (MTPA) 2009-10 .206

Sp. HeatSp.Electrical Total Cement Consumption Energy Production (Net Basis) Consumption, (MTPA) Kcal/Kg of Clk. kWh/t of Clk. 796.68 71.24

Conversion Factor -

Jaypee Himachal Cement Grinding & Blending Unit, Bagheri Production Clinker Production Year (MTPA)

2009-10 -

Sp.Electrical Sp. Heat Total Cement Energy Consumption Conversion Production Consumption, (Net Basis) Factor (MTPA) kWh/t of Kcal/Kg of Clk. CEMENT .096 47.42 .82

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Cement Brands Jaypee produces a wide variety of cements, which are specifically designed to cater to the customers requirements for different types of cements in each of its markets. All the brands, which the Company produces, are so evolved in their characteristics and properties that they will surpass BIS Standards. For each brand, the relevant BIS standards are mentioned in enclosed table along with a comparison with the BIS requirement. The state-of-the-art cement plants operated by the Jaypee Group are equipped with the most modern technology from the globally leading technology providers. Extensive Instrumentation & fully automatic and computerized process control system, custom designed Quality Control software like QSO Expert and CADES in the Mines, Cross Belt Expert Analyser using the Prompt Gamma Neutron Activation Analysis - for the first time in India, X-Ray Fluorescence and X-Ray Diffraction analysers and optical microscope, enable production of cement of the highest quality consistently on a sustained basis. Jaypee Rewa Plant Quality control laboratory is PRISMredited laboratory from National PRISMreditation Board for Calibration & Testing Laboratories, for chemical and mechanical Cement testing.

All brands are marketed in attractive HDPE bags, containing 50 Kgs of quality cement from Jaypee. Bags are identified with a conspicuous Jaypee Logo, which also over the years has come to be regarded as a Hallmark of quality. Jaypee produces & markets both Portland Pozzolana Cement (PPC) & all grades of Ordinary Portland Cement (OPC). A brief introduction of each brand is enumerated as below:Particulars Test Results Obtained Requirement IS: OPC-53 S 1 2 CHEMICAL PROPERTIES Lime Saturation Factor (LSF) 0.91 Alumina to that of Iron oxide Ratio % 1.31 (A/F) 0.80 To 1.02 0.66 Min. of

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3 4 5 6 7 8 9 1 2 3 4

In soluble Residue (% by mass) Magnesium oxide (% by mass) Sulphuric Anhydride (% by mass) Total Loss On Ignition (% by mass) Tricalcium Aluminate (C3A) % Tricalcium Silicate (C3S) % Total Chloride ( % by mass) PHYSICAL PROPERTIES Fineness (M2/Kg) Setting Time (Minutes) Initial Final Expansion Le. Chatelier (mm) Auto clave (%) Compressive Strength (MPa) 3 Days 7 Days 28 Days

0.88 3.18 1.86 1.02 6.98 49.49 0.013 407 145 195 1.00 0.18 36.0 47.0 60.0

2.00 Max. 5.00 Max. 5.00 Max. 4.00 Max. 10.00 Max. 45.00 Min. 0.10 Max.(For 0.05 Max.(For P.C.)* 370 Min. 60 Min. 600 Max. 5.00 Max. 0.8 Max. Not Specified 37.5 Min. Not Specified

N.C.)*

Cement tested at temp.27 2C The above cement complies with IS: 12269 -1987 for 53 Grade Ordinary Portland cement. *N.C.(Normal Concrete Cement) *P.C.(Prestressed Concrete Cement) Despatched on - 12/03/06 Week No : 11/2006 Jaypee OPC-53S Grade cement One of the very few cement manufacturers having the capability to manufacture this special grade of cement which due to its enhanced quality and performance parameters has been approved by the RDSO and is preferred by Indian Railways for manufacture of SLEEPERS. Jaypee OPC-53 S Grade is also used in heavily loaded or prestressed structures, which are subjected to high dynamic loads due to rapidly moving volumes, be it a train passing on the railway sleepers or a great volume of water moving at high speed to generate electricity in a Dam. The characteristics of OPC-53 S Grade cement with the prescribed BIS Standards IS: 12269 1987 can be seen in the table below. Awards

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Cement Division of Jaiprakash Associates Limited with its Plants at Jaypee Rewa Plant (JRP), Jaypee Bela Plant (JBP), JAAGO & JCBU has been awarded the Integrated Management System comprising of ISO-9001:2000, ISO-14001:2004 & OHSAS-18001:1999 by the world renowned Bureau Veritas Certification. ISO-9001:2000 covers Quality Management System. ISO14001:2004 covers all Environmental Issues including conservation of Natural Resources and Reduction of Emissions and Wastes. OHSAS-18001:1999 covers Operational Safety and reduces Risk to People, Plant & Machinery. Environment

Plant Safety

Mines Safety

Energy Conservation

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OBJECTIVE OF THE STUDY Primary objective: To study the credit policy adopt by Cement Company Secondary objectives: 1. 2. 3. 4. 5. To find out the market share of Jaypee cement. To find out the major competitors of Jaypee cement in a particular area. To find out the problems faced by the Jaypee dealers/retailers and try to minimize these problems. To help the Jaypee dealers/retailers to increase their sales. To find out the possible newer methods for advertisement and methods for increasing sales of Jaypee cement. 6. To know the credit policy of the Japyee Cement 7. To Study the component of the credit policy 8. To know the bases for the selection of credit policy 9. To study the impact of the credit policy on sales of cement 10. To know the effectiveness of the credit policy.

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RESEARCH DESIGN (a) General Methodology: The methodology adopted for this project was completely base on primary information. The locale of the study was allahabad.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 didnt 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) Data Sources: The research called for gathering primary data only. Hence, primary sources were considered for the collection of data. *Primary source 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. 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.

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(d) Research Instrument: 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 allahabad and a predetermined structured questionnaire was administered to them. e) Sampling Plan: * Sampling Unit The study was restricted to allahabad and allahabad 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 100 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

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CRISIL Introduction CRISIL is India's leading Ratings, Research, Risk and Policy Advisory Company. At the core of CRISIL are its unimpeachable credibility and unmatched analytical rigor. Leveraging these core strengths CRISIL delivers opinions and solutions that: Make markets function better, and, Help clients mitigate and manage their business & financial risks Help shape public policy.

CRISIL offers domestic and international customers a unique combination of local insights and global perspectives, delivering independent information, opinions and solutions that help them make better informed business and investment decisions, improve the efficiency of markets and market participants, and help shape infrastructure policy and projects. Its integrated range of capabilities includes credit ratings; research on India's economy, industries and companies; investment research outsourcing; fund services; risk management and infrastructure advisory services. CRISIL's majority shareholder is Standard & Poor's, the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data.

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Ratings Offered by CRISIL A CRISIL credit rating indicates CRISILs current opinion of the profitability of default. In other words, the credit rating indicated the probability of an investor in rated instruments, or a lender o a rated entity, not receiving interest and principal payments due on time and in PRISMordance with the terms of the initial contract. The probability is reflected in the form of an easily understandable alphabetical scale, with ratings such as AAA, AA, A, or BBB. A rating is assigned to debt alone and not to equity instruments. Typically, instruments such as non convertible debentures, partially convertible debentures, bonds, fixed deposits, commercial paper, short-term debt and structured debentures, are rated. Entities issuing these instruments can also be rated on their capacity to service their obligations on time. Broadly, CRISILs credit ratings fall under four categories: long-term, short term, fixed deposits and corporate credit ratings. The term long term instruments include bonds, debentures, other securities, term loans, and other fund based and non fund based facilities with an original maturity of more than one year. Long term rating categories range from AAA to D; CRISIL may apply + (plus) or (minus) signs as suffixes to ratings from AA to C to reflect the comparative standing within the range category. The term Short term instruments refers to commercial papers, short term debentures, certificates of deposits, working capital borrowings, and other fund based and non fund based facilities with an original maturity of one year or less. Short term rating categories range from P1 to P5; CRISIL may apply + (plus) or (minus) signs as suffixes to ratings from P1 to P3 to reflect the comparative standing within the range category.

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CRISIL assigns ratings to the fixed deposit programs of corporate banks and financial institutions with the prefix, F. Fixed deposit rating categories range from FAAA to FD; CRISIL may apply + (plus) or (minus) signs as suffixes to ratings from FAA to FC to reflect the comparative standing within the range category. CRISIL also assigns corporate credit rating to issuers. The corporate credit rating categories range from CCR AAA to CCR D and CCR SD (indicating selective default); CRISIL may apply + (plus) or (minus) signs as suffixes to ratings from CCR AA to CCR C to reflect the comparative standing within the range category.

Rating For PRISM Cement Ltd. Rs.4 Billion Non-Convertible Debenture Issue Rs.1 Billion Non-Convertible Debenture Issue Rs.1.50 Billion Cash Credit Rs.5.00 Billion Letter of Credit Rs.2.25 Billion Bank Guarantee AAA/Stable AAA/Stable AAA/Stable P1+ P1+

CRISIL has assigned its rating of AAA/Stable to PRISM Ltds (PRISMs) non-convertible debentures. The ratings on the companys other debt programmes and bank facilities have been reaffirmed at AAA/Stable/P1+. The ratings continue to reflect PRISMs leading market position in cement, and its strong financial risk profile. These rating strengths are partially offset by the commoditized and cyclical nature of the cement industry. For arriving at the ratings, CRISIL has combined the business and financial profiles of Prism Cement and Ambuja Cements Ltd (Ambuja Cements). This is because both the companies have a substantive common shareholder, the international cement major Holcim Ltd. In CRISILs view, the common ownership and common line of business create incentives for the companies to operate symbiotically, exploiting synergies on the operating and financial fronts. PRISM is the largest cement producer in India, with a total capacity of 19.9 million tonnes per annum (mtpa) across 14 units. The company has a large marketing infrastructure and a pan-India presence, translating into an overall market share of 12.3 per cent. The nationwide presence derisks PRISMs operations from regional price volatility and demand-supply imbalances. Moreover, PRISMs cost structure has improved significantly over the past few years, led by its stringent control over power, fuel, and freight costs, and its voluntary retirement schemes for employees. These factors have led to an improvement in its operating margins.

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PRISM has an exceptionally strong financial risk profile marked by strong cash flows, healthy gearing, sound debt protection measures, and financial flexibility. In 2007 (refers to calendar year, January 1 to December 31), the company had net cash PRISMruals of Rs.13.02 billion. Its strong cash flows and superior profitability translate into sound debt protection measures; its interest coverage and net cash PRISMruals to total debt ratios stood at 30.61 times and 4.14 times, respectively, for 2007. As on December 31, 2007, the company had a gearing of 0.08 times.

CRISIL expects PRISM to maintain its strong debt protection measures on the back of its healthy earnings and cash flows and expected cost reduction because of synergies with Ambuja Cements. Even if cement prices were to soften, PRISMs financial risk profile would remain strong enough to support the rating at the current level. Inorganic growth or higher-than-expected capital expenditure in an unfavorable operating environment could strain the PRISM-Ambuja Cements combines financial risk profile; these have, therefore, been identified as key rating sensitivity factors that could lead to a revision in outlook to Negative. Rating of Ambuja Cement Rs.5 Billion Proposed Long-Term Bank Loan Facilities Rs.1 Billion Short-Term Debt Programme Rs.0.15 Billion Non-Convertible Debenture Programme Rs.0.30 Billion Non-Convertible Debenture Programme AAA/Stable P1+ AAA/Stable AAA/Stable

CRISIL has assigned its bank loan rating of AAA/Stable to the proposed bank facilities of Ambuja Cements Ltd (Ambuja Cements), and has reaffirmed its rating on the companys shortterm debt programme at P1+. The ratings continue to reflect Ambuja Cements robust financial risk profile, superior operating efficiency, and leading market position in northern and western India. For arriving at the ratings, CRISIL has taken a consolidated view of the businesses of Ambuja Cements and PRISM Ltd (PRISM), both of which have a substantive common shareholder, namely, the international cement major, Holcim. In CRISILs view, the common ownership as well as the common line of business holds incentives for both the Indian companies to operate symbiotically, exploiting synergies on operating and financial fronts. Ambuja Cements has an exceptionally strong financial risk profile marked by strong cash PRISMruals, a healthy gearing, sound debt protection measures, and good financial flexibility. Its strong cash flows and superior profitability translate into sound debt protection measures: the interest coverage and the ratio of net cash PRISMruals to total debt (NCATD) for 2005-06 (refers to the 18-month period, July 1, 2005 to December 31, 2006) were 18.93 times and 1.13 times,

29

respectively. CRISIL estimates that, for 2007 (refers to calendar year, January 1 to December 31), the interest coverage and the NCATD ratios were at 37 times and 4.3 times, respectively. Also, as on December 31, 2006, the company had a gearing of 0.22 times; this is estimated to have improved to 0.07 times as on December 31, 2007.

Ambuja Cements has a strong presence in the western and northern regions of India; it has market shares of around 17 per cent in both these regions. CRISIL expects Ambuja Cements presence to be strengthened by its alliance with PRISM, which has a pan-India presence. CRISIL expects Ambuja Cements to maintain its strong debt protection measures over the medium term. Even if the market softens, the financial profile is likely to remain strong enough to support the current rating. The outlook may be revised to Negative if Holcim seeks to utilize Ambuja Cements financial resources to support its group companies. Inorganic growth plans or higher-than-expected capital expenditure in an unfavorable operating environment may strain the financial profile; these have, therefore, been identified as key rating sensitivity factors. Rating of KCP Limited Rs.3321 Million Term Loan (Enhanced from Rs.936 Million) Rs.425 Million Cash Credit (Enhanced from Rs.350 Million) Rs.336 Million Letter of Credit/Bank Guarantee

A-/Stable A-/Stable P2+

The KCP group was founded in 1941 by Mr. V Ramakrishna, a first-generation entrepreneur who set up a sugar manufacturing unit. The companys cement division commenced operations in 1958. KCP operates a cement plant with a capacity of 0.66 million tonnes per annum (mtpa) in Andhra Pradeshs Guntur district. The company is in the process of setting up additional capacity of 1.2 mtpa, which will take its total cement capacity to 1.86 mtpa. The companys heavy engineering division was established in 1955 in Chennai (Tiruvottiyur). This division is involved in casting, fabrication, and machining heavy equipment for core industries such as sugar, cement, steel, and power. CRISILs ratings on The KCP Ltds (KCPs) bank facilities continue to reflect the buoyancy in cement business realizations because of robust demand in South India, and the companys strong market position in both cement and engineering businesses. These rating strengths are partially offset by KCPs planned debt-funded capital expenditure (capex), which will adversely

30

affect its existing capital structure, and its diversification into new, unrelated businesses. For arriving at the ratings, CRISIL has combined the financials of KCP and its subsidiaries, as all the entities are under a common management and have operational linkages.

CRISIL believes that KCP will be able to maintain its sound debt protection measures and will continue to see healthy earnings and cash flows over the medium term. The outlook may be revised to Positive if the company manages to strengthen its market position in cement after the capacity expansion, while maintaining its current operating margins. Conversely, it may be revised to Negative in case the company takes on more-than-expected debt to fund it capex or inorganic growth plans, or seeks to increase its exposure to group entities. Rating of Lafarge India Rs.375 Million Cash Credit Rs.75 Million Working Capital Demand Loan Rs. 500 Million Letter of Credit* Non Convertible Debenture Aggregating Rs.950 Million Rs.1000 Million Short Term Debt Programme AA-/Stable AA-/Stable P1+ AA-/Stable P1+

CRISIL has assigned its bank loan ratings of AA-/Stable/P1+ to the various bank facilities of Lafarge India Pvt Ltd (Lafarge India). These ratings are driven by the strong support that the company receives from its parent, Lafarge SA (rated 'BBB/A-2/Stable' by Standard & Poors), and Lafarge Indias strong market position in eastern India and its improving operating efficiency. These rating strengths are, however, partially offset by Lafarge Indias large, debt-funded capital expenditure (capex) plan. CRISIL has also withdrawn the ratings assigned to the short-term debt and non-convertible debentures of the company, following a request from Lafarge India. No amounts are outstanding against these instruments. Lafarge SA has consistently extended managerial, technological, and financial support to Lafarge India. The Lafarge group considers the Asia-Pacific region to be strategically-important to its growth. Owing to Indias strong gross domestic product (GDP) growth and healthy demand potential, Lafarge SA considers investing in India important to its business. Lafarge India is the third largest cement manufacturer in eastern India. Its strong brand equity, as a result of its good quality products and innovative promotional campaigns, helps it command a premium in price. CRISIL believes that with expansion of capacity, Lafarge India will continue to generate stable revenues over the medium term. Reduction in power consumption and

31

transportation costs and use of captive power have helped Lafarge India improve its operating efficiency. However, Lafarge Indias large, debt-funded capex is likely to constrain significant improvement in its capital structure. In the past, the company has had a highly-leveraged capital structure, with a gearing of more than 1. Due to the borrowings to fund the capex, the gearing is likely to remain high. CRISIL believes that Lafarge India will continue to receive support from Lafarge SA in the event of distress. Lafarge India is likely to generate stable revenues over the medium term, backed by its strong market position. The outlook may be revised to Positive if Lafarge India takes on lesser debt than expected to fund its capex programme. Conversely, the outlook may be revised to Negative if there are time and cost overruns on Lafarge Indias projects, or if the company takes on more debt than expected to fund its capex. Rating of Madras Cement Ltd. Rs.0.8 Billion* Non-Convertible Debentures Issue Fixed Deposit Programme Rs.1.45 Billion Short-Term Debt Programme A+/Stable FAA-/Stable P1

CRISILs rating on Madras Cements Ltds (Madras Cements) debt programme reflects the companys strong market position in South India; healthy operating efficiencies marked by low freight costs, low dependence on grid power; and extensive use of blending. The ratings also factor in Madras Cements above-average operating margins and financial flexibility. These rating strengths are, however, partially offset by expected delays in Madras Cements capital structure improvement programmes and the companys exposure to the loss-making Ramco Systems. Madras Cements is a leading cement manufacturer in South India and ranks second in its core markets of Tamil Nadu and Kerala. The companys operating efficiency levels are the highest in the Indian cement industry. These factors, in conjunction with a buoyant cement price outlook, underpin CRISILs expectation that Madras Cements operating margins will improve despite fuel and freight cost pressures. CRISIL believes that Madras Cements cost competitive operations give it a competitive edge over its peers, enabling it to offset the impact of price volatility in its markets. The company enjoys strong financial flexibility, as it has PRISMess to the capital markets to refinance its existing debt and obtain debt at competitive interest rates. However, regular debt-funded expansions and support to Ramco Systems, a loss-making group company, have impaired Madras Cements capital structure and weakened its financial risk

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profile. The gearing as on March 31, 2007, adjusted for a guarantee of Rs.890 million provided to Ramco Systems, was 1.02 times. Madras Cements has a total exposure of Rs.1.09 billion in Ramco Systems, which amounts to about 17 per cent of Madras Cements tangible net worth as on March 31, 2007. However, given the groups significant reliance on Madras Cements for financial support, due to its status as the main revenue-generating company for the group, the delayed financial improvement in Ramco Systems could lead to write-down of this exposure over the medium term. CRISIL expects that Madras Cements strong operating efficiencies and established position in the cement market in southern India will help it counter the volatility inherent to the industry. The outlook may be revised to positive if the companys capital structure undergoes material correction. Conversely, the outlook could be revised to negative if cement realizations in South India deteriorate over the medium term, either due to greater than expected capacity additions or a slowdown in demand. Rating for Jaypee Group Rs.400 Million Cash Credit Limits * Rs.570 Million Term Loans Rs.233 Million Letter of Credit Rs.119 Million Bank Guarantee Rs.48 Million Proposed Short Term Bank Loan Facility AA-/Stable AA-/Stable P1+ P1+ P1+

Incorporated in 1984 as Devi Cements Ltd, MHIL got its present name after promoter, Dr. J Rameswar Rao, acquired the shares of the other initial promoter, Dr. Nani Gopal. Dr. Rao divested 42 per cent of his stake in MHIL to the Dublin-based CRH group for Rs.13.37 billion in May 2008. The CRH group invested Rs.5.17 billion in MHIL in May 2008, to increase its stake in the company to 50 per cent. The company manufactures ordinary Portland cement (OPC) and Portland pozzolana cement (PPC), and has three units with a combined capacity of 3.2 million tonnes per annum. MHIL also owns a 15 mega watt (MW) captive power plant. MHILs cement is marketed under the MAHA brand. For 2007-08 (refers to financial year, April 1 to March 31), MHIL reported a profit after tax (PAT) of Rs.1759 million on net sales of Rs.7651 million, as against a PAT of Rs.910 million on net sales of Rs.4260 million for 2006-07. CRISIL has assigned its ratings of AA-/Stable/P1+ to the various bank facilities of Jaypee Group. The ratings reflect MHILs improving market position in the cement industry, with leadership position in Andhra Pradesh, and healthy operating efficiency, supported by backward integration for raw materials. The ratings are underpinned by MHILs strong financial position, backed by a comfortable capital structure and debt protection measures. These strengths are,

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however, partially offset by MHILs exposure to risks relating to the cyclical and commodity nature of the companys business.

CRISIL expects MHIL to maintain its established market position in Andhra Pradesh, and strong cash PRISMruals. Substantial improvement in market position, backed by geographical diversification initiatives, may lead to a revision in outlook to Positive. Conversely, the outlook may be revised to Negative in the event of large, debt-funded capital expenditure, and unrelated diversifications. Rating for Sagar Cement Rs.480 Million Cash Credit Limit Rs.2500 Million Term Loan Limits* Rs.35 Million Bank Guarantee Rs.115 Million Letter of Credit BBB/Stable BBB/Stable P3+ P3+

Sagar Cements began operations in 1985 with a single cement manufacturing unit at Nalgonda, Andhra Pradesh, with an ordinary Portland cement (OPC) capacity of 60,000 tonnes per annum (TPA) and a clinker capacity of 66,000 TPA. Currently, SCL has a clinker capacity of 550,000 TPA and cement capacity of 297,000 TPA. The primary market for the Sagar brand is Hyderabad, Khammam, Nalgonda, Krishna, and East and West Godavari districts. The company is expanding its cement and clinker capacities by 2.2 million TPA and 1.5 million TPA. SPL has two hydel power plants with a total capacity of 8.3 mega watt (MW). The group reported a profit after tax (PAT) of Rs.331 million on net sales of Rs.2.231 billion in 2007-08 (refers to financial year, April 1 to March 31), as against a PAT of Rs.312 million on net sales of Rs.1.98 billion for the previous year CRISIL has assigned its ratings of BBB/Stable/P3+ to the various bank facilities of Sagar Cements Ltd (Sagar Cements). The ratings reflect Sagar Cements operating efficiencies, supported by backward integration for raw material, and above-average financial profile. These strengths are, however, partially offset by the companys marginal market position and exposure to cyclicality in, and commodity nature of, the cement business. CRISIL has combined the financials of Sagar Cements and its subsidiary, Sagar Power Limited (SPL), for arriving at the ratings; this is because Sagar Cements and SPL (referred to as the Sagar group) have strong operational linkages and are under a common management.

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The Sagar Groups strong cash PRISMruals will help it maintain its credit risk profile despite its large capital expenditure (capex) plans. Aggressive debt funding of the projects which are in planning stage or any debt-funded capital expenditure in addition to that already expected may drive a change in outlook to Negative. Conversely, an improvement in business profile of the company while maintaining the above average financial profile may have a positive impact on the rating. Rating of Ultratech Cement Ltd. Rs.1.44 Billion Long-Term Buyers Credit Rs.2.49 Billion Short-Term Buyers Credit USD100 Million Foreign Currency Loans (Enhanced from USD60 Million) Non-Convertible Debentures Aggregating Rs.10.65 Billion Rs.2.5 Billion Cash Credit Rs.1.0 Billion Short-Term Debt Programme Rs.6.0 Billion Letter of Credit Rs.1.5 Billion Bank Guarantee AAA/Stable P1+ AAA/Stable AAA/Stable AAA/Stable P1+ P1+ P1+

CRISIL has assigned its ratings of AAA/Stable/P1+ to UltraTech Cement Ltds (UltraTechs) buyers credit and foreign currency loan, and reaffirmed its ratings on the companys other debt programmes and bank facilities at AAA/Stable/P1+. The ratings continue to reflect Grasim Industries Ltds (Grasims; rated AAA/Stable/P1+ by CRISIL) ownership of UltraTech, and the two companies common line of business; these serve as incentives for Grasim to support UltraTech in times of distress. CRISIL believes that both Grasim and UltraTech will operate symbiotically, exploiting synergies on both the operating and financial fronts. These rating strengths are partially offset by UltraTechs improving, but average, operating efficiency and modest financial risk profile. For arriving at its ratings, CRISIL has combined the financials of UltraTech and its subsidiaries, Dakshin Cements Ltd and UltraTech Ceylinco Pvt Ltd, because of their common management and strong business synergies. CRISIL has also combined the business profiles of UltraTech and Grasim, in its analysis of UltraTechs credit risk profile. UltraTech is an important part of Grasims growth plans. The UltraTechGrasim combine is the eleventh largest cement producer globally, and the second largest cement combine in India, with a share of 17.4 per cent of the domestic market, as on September 30, 2008. The two companies have operational synergies in several fields, including procurement of raw materials, manufacturing, common branding, dealer networking, logistics, and exchange of key personnel.

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The combine has market shares of around 28 per cent in the western region of India, and around 15 per cent in the southern region. However, UltraTechs operating margins are likely to be adversely affected in the coming years because of the downturn in the cement industry and the subsequent pressure on realizations. CRISIL believes that UltraTechs capital structure will remain constrained over the medium term, given the companys large capital expenditure (capex) plans of around Rs.18 billion, spread over the next three years. UltraTechs profitability is expected to be adversely affected in the medium term on PRISMount of the downturn in the cement industry, however, CRISIL expects UltraTech to maintain a robust credit risk profile on the back of operational and financial support from parent, Grasim. The outlook may be revised to Negative if Grasims credit risk profile or UltraTechs financial risk profile weakens considerably from current levels or, UltraTech undertakes higher than expected debt funded capex. Rating of Grasim Industries Rs.20.00 Billion Non Convertible Debenture # Rs.40.00 Billion Proposed Long Term Bank Loan Facility # Rs.6.00 Billion Short Term Debt Programme # AAA/Stable AAA/Stable P1+

CRISIL has assigned its ratings of AAA/Stable/P1+ to the debt programmes and various bank facilities of Grasim Industries Ltd (Grasim). The ratings reflect the strong combined market position of Grasim and its subsidiary UltraTech Cement Ltd (UltraTech; rated AAA/Stable/P1+ by CRISIL) in the domestic cement market, Grasims leading market position in the viscose staple fibre (VSF) business in India, and its strong financial risk profile supported by healthy cash PRISMruals. These rating strengths are partially offset by the cyclical nature of the companys businesses. For arriving at the ratings, CRISIL has combined the financials of Grasim and its subsidiaries, including UltraTech. CRISIL has also combined the business profiles of Grasim and UltraTech, in its analysis of Grasims cement business. The Grasim-UltraTech combine is the eleventh-largest cement producer globally, and is slated to become the seventh-largest after completion of its expansion plans. It is among the two largest cement combines in India, with a share of 17.4 per cent of the domestic market as on September 30, 2008. The combine enjoys market shares of around 28 per cent in the western region, and around 15 per cent in the southern region. In VSF, Grasim is the sole producer in the domestic

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market, and has 11 per cent global market share. Grasims presence across the VSF value chain and strong backward integration, combined with its strong market position, strengthen its VSF business. However, Grasims operating margins are likely to be adversely affected in the coming years on PRISMount of the downturn in the cement industry and the subsequent pressure on realizations. Through 2007-08 (refers to financial year, April 1 to March 31), the company had a robust capital structure, with a consolidated gearing of 0.68 times as on March 31, 2008. The debt protection measures are also strong; for 2007-08, the ratio of net cash PRISMruals to total debt (NCATD) and interest coverage were at 0.65 times and 26.81 times, respectively. CRISIL believes that Grasim will retain its robust financial risk profile over the medium term, as the company will continue to post strong cash PRISMruals and will have relatively small fixed commitments, in the form of debt repayments and capital expenditure (capex). CRISIL expects Grasim to maintain its strong debt protection measures over the medium term. Even if the market softens, the cash PRISMruals are likely to remain strong enough to support the current rating. The outlook may be revised to Negative if Grasim announces capex that is significantly higher than expected, or announces any major inorganic growth plan or any material increase in exposure to group companies from existing levels.

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DATA ANALYSIS & FINDINGS

Market share graph for distt. Allahabad:

12%

0% 6%

3%

ultra tech Acc Prism J.P. Other 37%

42%

The graph clearly shows that the Jaypee Cement has largest market share in Allahabad, followed by PRISM cement and J.P. Cement.The main reason behind this excess market share goes to the higher number of dealers of Jaypee cement than other brands.PRISM 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 Allahabad.

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Satisfaction level of Dealers/Retailers:

70 60 50 40 30 20 10 0

highly satisfied

satisfied average not satisfied highly dissatisfied highly satisfied s atis fied average not satisfied highly dis satisfied

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 didnt 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 80 70 60 50 40 30 20 10 0

NO

M AY B E Y ES NO Y ES MAY BE

The graph shows that about 84% of the dealers and retailers dont 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 Jaypee. This portion shows the dealers who may shift to a new brand if it proves beneficial for them. So if Jaypee assures them some better services and mainly the better incentives then these can be the new suppliers for it

The major competitor for Jaypee in Allahabad is PRISM Cement. The reason behind this is the presence of more no. of retailers for PRISM Cement. The two brands under PRISM i.e. PRISM CHAMPION is well established here. PRISM provides the benefit of low cost and quality to the customers as compared to higher price of Jaypee cement.

The competitor for Jaypee in Allahabad is PRISM cement. It seems that PRISM has given more importance to Allahabad.It has just 4 dealers in Allahabad but in Allahabad it has about 12 dealers.

The total cement consumption in Allahabad is much higher than that in Allahabad.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 Allahabad.So Jaypee need to concentrate more in Allahabad.

Jaypee 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

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the other hand, customers are very sure about the thing that Jaypee cement provides much better quality. LIMITATIONS OF THE STUDY

1. The major problem of the survey was that most of the respondents being very loyal to
their brands didnt give exact answers .like they didnt 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 Allahabad & Allahabad 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 atall.So the actual figures
can be somewhat different from the one that we have found out

5. Being new to the Allahabad, it is quite possible that I was unable to explore some of the
dealers/retailers.

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RECOMMENDATIONS Based upon the time spent by me in the market, usefull suggestions of the dealers & retailers and the findings from the survey, following recommendations can be suggested for increasing sales and effectiveness of Jaypee Cement:

What matters for most of the cement buyers is the price of the cement and then the quality. While visiting market for cement purchase, they dont care about which brand they are going to buy. They simply know that X is ongoing price of the cement, if any brand costs higher than X, they will not buy that brand. Jaypee Cement usually costs 4-5 Rs. Higher than the other counterparts. So the buyers, to much extant not interested in buying Jaypee cement. This extra price is the main reason behind lower sales.therefore, Jaypee need to take some serious steps to reduce the selling price somehow.

The second thing is that a good percentage of buyers is still unaware of the fact that Jaypee cement is the changed name of Birla cement.Birla cement had a very good image and it is still very popular among the customers. But people are not so much sure about Jaypee cement. so Jaypee need to take some steps to make people familiar with the Birla cement and Jaypee relation. Because this will bring the old Birla loyal customers to Jaypee cement.

The number of retailers and sub dealers for Jaypee cement is very less as compared to the main competitors PRISM, PRISM etc.So Jaypee need to be oriented in this direction. They need to increase the no. of retailers as much as possible. Although Jaypee has taken a right step with the retailer registration scheme to increase the no. of retailers. but this scheme needs some improvements. For ex-margin for the retailers can be increased, we can assure them some gifts also. While working, I saw that the main condition for this new scheme was that the retailer will not sell any other brand of cement. Most of the retailers refused the scheme due to this particular reason. So Jaypee needs to give them some relaxation in this case.

Many of the Jaypee dealers used to shop other type of building materials along with cement, in the same shop. This should not be permitted by Jaypee.Because selling of these building materials is more profitable than cement, so the cement selling becomes less important for these dealers. They dont give proper attention to the company officials

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and also to the various schemes of increasing sales. This in turn brings reduced sales to the company

Jaypee Cement has market image of a modern cement with very good quality. It should try to encash this image. Its mainly the younger section of people who care about quality first and then the price. So Jaypee needs to give proper attention to the youngsters. May be, they are not the cement buyers at present but future possibility lies with them.

Jaypee also should have a check on the upcoming threat of imported cement from Pakistan. The import of cement from Pakistan has just started and very quickly it has become successful in the southern markets. The main reason behind this success is the lower price. The Pak cement brands like Lucky, Mapple Leaf and Elephant costs 10-15 Rs. Lesser than the local Indian brands. Jaypee which is already facing charges of higher price needs to be prepared for this.

Some of the Jaypee dealers complained that they are losing the customers loyal to their shops, due to the high price of the cement provided by them. So at some point, the dealers are not satisfied with the company. This need to be taken seriously by Jaypee.Some more incentive schemes should be introduced for the dealers and also the frequency of visits from company officials need to be increased.

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POSSIBLE ADVERTISEMENT METHODS All of the cement brands use the similar methods of advertising like- painting walls, use banners, giving free gifts to the dealers and masons etc.There are still many possible methods of advertisement and creating brand awareness, which are untouched. Some of these methods are as below:

Local cable T.V. can be used for advertising as well as to give details about the major dealer/dealers in the city. Details like address, contact no. of the dealer, different schemes, current market price etc can be shown.

Local F.M. stations of allahabad are also reaching a good part of listeners. So these can also be used for the same purpose. Banners, paintings are used mainly on the tractor trolleys, dealers shop and on walls only. We can think about using banners on rickshaws and autos also. Different type of incentive schemes, free gifts are mainly for dealers and sometimes for the masons. As a change, we can also try to attract the customers directly. For exdiscount coupons, small free gifts, scratch cards etc can be made available for the customers.

A number of meetings are organized by all the cement companies with the local masons. Most of the masons are very less educated. They attend many meetings. So it may become difficult for them to recognize a particular cement brand. What we can do in this case is to take help of Advertising i.e. we need to put the Jaypee logo on the hands of these masons. So that next time they saw this logo, they found themselves a bit familiar with the company.

The masons meet are organized by the company regularly. This needs some improvements. We need to decrease the frequency of these meets. What we can do is that organize a big meet with a no. of people, higher company officials, entertainment, and snacks for all. The presence of company officials in the meeting is not alone sufficient. We need to call some big personalities from that city only. The people like these masons are more impressed by the presence of Govt.officials.

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CONCLUSION

Jaypee has one major competitor- PRISM CEMENT. Jaypee is well established in the markets as far as quality is concerned. Introduction of new attractive incentive schemes can bring new dealers & retailers for Jaypee 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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ANNEXURE QUESTIONNAIRE Dear Sir/Madam, We are conducting a survey on behalf of Jaypee 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: _ _ _ _ _ _ _ _ ADDRESS & CONTACT NO. : _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1. WHICH CEMENT YOU DEAL IN: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ YOU ARE A: >DEALER >RETAILER 2. YOUR AVERAGE MONTHLY SALE (IN BAGS): _ _ _ _ _ _ _ _ _ _ _ 3. HOW MUCH ARE YOU SATISFIED WITH THE SERVICES PROVIDED TO YOU BY THE BRAND YOU DEAL IN: >HIGHLY SATISFIED >DISSATISFIED >SATISFIED >AVERAGE

>HIGHLY DISSATISFIED

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4. WHAT TYPE OF PROBLEMS ARE YOU FACING WITH YOUR CURRENT BRAND(IF ANY): _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ 5. WHAT ARE THE REASONS FOR SELLING THIS PARTICULAR BRAND: _________

__________________________ _________________________ _______________________________________ ____________ 6. DO YOU WANT TO SHIFT TO ANY OTHER BRAND: >YES >NO 7. MODE OF PURCHASE THE CEMENT: (a) CASH (b) CREDIT > MAY BE

8. IN WHICH BASES COMPNAY OFFERS YOU CREDIT: (a) SALES (b) PAST RECORDS (c) SECURITY AMOUNT

(d) AVAILABITY (e) MARGIN 9 DO COMPANY WANT SECURITY AMOUNT FOR SENDING THE STOCK IN CREDIT: (a) YES (b) NO

10. WHAT IS SECURITY CHARGE AMOUNT CHARGED BY COMPANY: ____________________________________________________ 11. HAVE CREDIT POLICY HELP IN INCREASING THE SALES OF CEMENT: (a) YES (b) NO _____________________________________

USEFUL COMMENTS:

____________________________________________________

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THANKS A LOT DEEPA K KUMAR NAMDEO

BIBLIOGRAPHY www.cement.com www.pca.com www.ceicdata.com www.jail.com Economics Times Business Today

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