A REPORT ON SWOT

ANALYSIS AND PEST

ANALYSIS OF BIRLA
GROUP
SWOT ANALYSIS

STRENGTHS

 We are the only company in India, which manufacture eight types of cement

 Low cost of production.

WEAKNESS

 Effect of global recession on Real Estate and Infrastructure

 Demand-Supply gap, Overcapacity
 Increasing Cost of Production
 High Interest rates.

OPPORTUNITIES

 Strong growth of economy in the long run.

 Increase in infrastructure projects
 Growing middle class
 Technological Changes
 Increase in govt spending
 We have big market in western India

 Gujarat government has opened of blocks of lime stone for lease in Kutch district; we
have opportunity to install a 2 million tonne cement plant in this area.

THREATS
  Excess over capacity can hurt margins as well as prices.
Expected competition new arrivals like Jaypee cement, Choromandal king Cement.

PEST ANALYSIS

In 2002 the world production of hydraulic cement was 1,800 million metric tons. The top three
producers were China with 704, India with 100, and the United States with 91 million metric
tons for a combined total of about half the world total by the world's three most populated states.

POLITICAL

The price of cement is primarily controlled by the coal rates, power tariffs, railway tariffs,
freight, royalty and cess on limestone. Interestingly, government controls all of these prices.
Government is also one of the biggest consumers of the cement in the country. Most state
governments, in order to attract investments in their respective states, offer fiscal incentives in
the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff for
5 years, while Gujarat offers exemption from electric duty.

ECONOMIC

Currently, the industry is on the boom, with a lot of government infrastructure and housing
projects under construction. In spite of seeing a fall during 2008-09, the export segment of the
industry is expected to grow again on account of various infrastructure projects that are being
taken up all over the world and numerous outstanding cement plants coming up in near future in
the country.

SOCIAL

Usually, the cement industry in India consists of both the organized sector and the unorganized
sector. Organized sector comprises of the well-known cement manufacturing companies while
the main players of the unorganized sector are the regional and local cement-producing units in
various states across the state. Indian consumers prefer buying branded cement like
ULTRATECH, JAYPEE CEMENT, LAFARGE CEMENT etc. It has been seen in the past, as
well, that mini cement plants with low brand value and image are not able to survive against the
cement giants. With a population of more than 100 billion people, it is expected that cement
industry will create another 25 lakhs jobs in the next 4-5 years.

TECHNOLOGY

From mining to production the entire process depends on technology. The Government of India
plans to study and possibly acquire new technologies from the cement industry of Japan. The
government is discussing technology transfer in the field of energy conservation and
environment protection to help improve efficiency of the Indian cement industry. Cement
industry has made tremendous strides in technological up-gradation and assimilation of latest
technology. At present 93% of the total capacity in the industry is based on modern and
environment-friendly dry process technology.
SUGGESTIONS

 Company should raise funds through short term sources for short term requirement of
funds, which comparatively economical as compare to long term funds.

 Company should improve their Inventory Turnover Ratio, by increasing inventory

turnover ratio they can increase their sales and cut down their cost of production.

 The company has a Production Capacity installed 6071000 (in lacs) and they produce
only 5698004 (in lacs). So they should increase their production level.

Over all company has good liquidity position and sufficient funds to repayment of liabilities.
Company has accepted conservative financial policy and thus maintaining more current assets
balance.