TAPMI School Of Business

MANIPAL UNIVERSITY, JAIPUR

MASTERS OF BUSINESS ADMINISTRATION
(2018-20)
A REPORT FOR INTERNAL ASSESSMENT ON INDUSTRY
PROJECT

Report Topic:
“UlTRA TECH CEMENT INDUSTRY
ANALYSIS”

UNDER THE GUIDANCE OF

Prof Nilanjan Chattopadhyay

Submitted by
1. Vivek Gupta
2. Aman anand
3. Rishab sharma
4. Ahram hussain
5. Chirag pareek
 ACKNOWLEDGMENT

We want to express our whole hearted thanks to our

teacher Dr. Prof Nilanjan Chattopadhyay Sir who has
given us the oppurtunity to make strategic management
project on “ultra tech cement industry analysis” and
under the guidance of whom we are able to successfully
complete the project. We also wanted to express thanks
to all people who have helped us in making our project.
 Objectives

The cement industry has been considered as the backbone of a nation’s economy, it is because,
the almost all other industries are directly or indirectly inter-related to this industry. It is base of
all other industries, so it would be very interesting and important to know the effect of this
industry. At the same time, it is also important to know the contribution of cement industry in
the National economy. In addition to this, we also wanted to know about the no. of players in
the concerned market, and their respective market share in order to know the intensity and the
depth of the industry. Cement is one of the industries, where lot of research and development
can be done with the advancement in technology, which further makes the health of the
industry more robust. Apart from this, we also wanted to know about the dominance of Indian
cement industry in the global market, which plays an important role in the political as well as
the economical relation of India with rest of the world.
 Table of Content
Sr No Topic Page
1 Executive summary 5
2 Introduction 6
3 Swot analysis of industry 7
4 Upstream & downstream 9
5 Nature of industry 10
6 Growth rate & gdp contribution 10
7 Critical factors 11
8 Description of ultra tech cements 12
9 Mission & Vission 13
10 ultra tech Cement Industry in India GDP 13
11 Swot ananlysis of ultra tech 14
Peer group of ultra tech
12 15
Marketing mix followed by ultra tech cement
13 16

14 Pestel analysis of ultra tech cement 18

15 Conclusion 24
16 Suggestion 25
17 References 26
 EXECUTIVE SUMMARY

The cement industry is one of the key industries in India. Cement industry is a rapidly growing
sector. The Indian cement industry is one of the largest user of power, is the third largest
consumer of coal in the country. As Limestone is found in abundance all over the country, the
cement industry has a huge potential to grow. The Indian Cement Industry comprises
148 large cement plants with around 46 member companies. The major players are, Birla
Corporation Ltd, Dalmia Cement (Bharat) Ltd.

The industry is growing manifold due to increased industrial activity, realestate business,
growing construction activity, and expansion in the infrastructure sector. The production and
consumption of cement to a large extent indicate a country’s progress. The global cement has
always been a good indicator of economic activity, as industry growth patterns consistently
point to the direction in which the economy is likely to move. India is the second largest cement
producer in the world after China and has got a huge cement industry. With the government of
India giving boost to various infrastructure projects, housing facilities and road networks, the
cement industry in India is currently growing at an fast pace. Cement industry plays a vital role
in the economic development of the country. Domestic cement manufacturing industry is going
through a fast rapid phase.
 Introduction of Cement Industry

Introduction
 India is the second largest producer of cement in the world. India's cement industry is a
vital part of its economy, providing employment to more than a million people, directly
or indirectly.
 since it was deregulated in 1982, the Indian cement industry has attracted huge
investments, both from Indian as well as foreign investors.
 India has a lot of potential for development in the infrastructure and construction sector
and the cement sector is expected to largely benefit from it.
 Some of the recent major initiatives such as development of 98 smart cities are
expected to provide a major boost to the sector.
 The cement production capacity is estimated to touch 550 (million tones) by 2020. A
significant factor which aids the growth of this sector is the ready availability of the raw
materials for making cement, such as limestone and coal.

Market Size
 The housing and real estate sector is the biggest demand driver of cement, accounting
for about 65 per cent of the total consumption in India. The other major consumers of
cement include public infrastructure at 20 per cent and industrial development at 15%.
 The Indian cement industry is dominated by a few companies.

Investments
On the back of growing demand, due to increased construction and infrastructural activities,
the cement sector in India has seen many investments and developments in recent times.
Some of the major investments in Indian cement industry are as follows:

 As of December 2019, Raysut Cement Company is planning to invest US$ 700 million in
India by 2022.
 JK Cement is planning to invest Rs 1,500crore (US$ 231.7 million) over the next 3 to 4
years to increase its production capacity.

Government Initiatives
 In order to help the private sector companies thrive in the industry, the government has
been approving their investment schemes. Government of India setting up of an
Affordable Housing Fund of Rs 250 crore (US$ 3.86 billion) under the National Housing
Bank (NHB) which will be utilized for easing credit to homebuyers.
  The government also intends to expand the capacity of the railways and the facilities
for handling and storage to ease the transportation of cement and reduce
transportation costs. These measures would lead to increased construction activity
thereby boosting cement demand.

Road Ahead
 The eastern states of India are likely to be the newer markets for cement companies and
could contribute to their bottom line in future. In the next 10 years, India could become
the main exporter of clinker and gray cement to the Middle East, Africa, and other
developing nations of the world

SWOT ANALYSIS OF INDUSTRY

Strengths
1.) Cement is the building block of the construction industry. Almost every building
constructed relies on cement for its foundation.
2.) There is also a strong reputation behind the cement industry. Cement is a solid material
and consumers rarely have complaints about the product.
3.) Regional distribution plants have also made cement widely available to any type of buyer.
India is the second largest producer of cement in whole world and china is at first place.

WEAKNESS
1.) The cement industry relies on construction jobs to create a profit. But the cement
industry heavily relies on weather ( May and October).
2.) Another weakness is the cost of transport; the cost of transporting cement is high and
this keeps cement from being profitable over long distances. shipping cement costs
more than the profit from selling it.
3.) Demand supply gap.
Opportunities
1.) One such opportunity is the cement industry's efficiency.
2.) The cement industry has recently streamlined its production efforts, using dry
manufacturing instead of wet, which is heavier and more time-consuming.
3.) The cement industry will have 25 percent more production capabilities. Strong growth of
Indian economy, increased infrastructure growth,Technological advancements in machines
and equipments for production.

Threats
1.) The cement industry greatly relies on construction.
2.) The current economy has lessened the number of construction jobs, which in turn hurts
the cement industry.
3.) Overcapacity can decrease margins of cement price.
4.) Power shortage may affect cement production.
5.) Of coal may be a threat in future. Increased competition in local markets and opening
of foreign investment
The cement industry SWOT analysis indicates that the industry has been greatly affected by the
economic downturn. However, with investments, the industry believes it can rebuild and
increase production.
 Upstream industry

 The upstream stage of the production process involves searching for and extracting raw
materials.
 The upstream part of the production process does not do anything with the material
itself, such as processing the material.
 This part of the process simply finds and extracts the raw material. Major raw materials
required to produce cement are:
 Calcium carbonate, silica, alumina and iron ore which are generally extracted from
limestone rock, chalk, clayey schist or clay.
 Suitable reserves can be found in most countries. These raw materials are extracted
from the quarry by blasting.
 The cost of manufacturing of a product of any industry completely depends on the cost
of inputs, suppose the price of the inputs increases
 The cost of manufacturing will increase.

Downstream industry

 The downstream production process involves processing the materials collected during
the upstream stage into a finished product. The downstream
 stage further includes the actual sale of that product to other businesses, governments
or private individuals. The downstream process includes
 Elements such as distribution, wholesaling and retailing, all of which are involved in
ensuring timely delivery to clients. Customer service
 Is also part of the downstream process because it is the final bridge between the
product and the end user. After the collection of the raw material cement industry
 Processes the raw material and convert them into cement, and than work on their 2 tier
distribution channel for selling of their product.
 Nature of Cement Industry
 Cement industry is highly cyclical in nature and depends largely on the economic growth
of the country. There is a high degree of correlation between the GDP growth and the
growth in cement consumption.
 This can be gauged from the fact that after experiencing robust growth from 1994 to
1996, the sector was one of the worst affected due to economic slowdown during 1997
to 1999.
 The industry registered an impressive growth during the 1999 to 2000 which was mainly
due to demand from housing sector which accounts for 60% of cement consumption,
the rest accounted equally between infrastructure and industry/others. This resulted in
huge capacity built up leading to excess capacity.

Growth rate of Cement Industry

 Cement industry in India witnessed growth of 14.4% during FY19.Stable construction
activity in residential real estate; increased demand from affordable housing and robust
demand from infrastructure segment have ensured cement capacity utilization
improves to 70%.
 Construction activity picked up in the housing segment across Western, Eastern and
Southern Region. Affordable housing scheme for rural and urban areas supported
demand for cement in the housing segment.

Role of Cement Industry in India GDP

 India ranks second in the production of cement in the world

 The construction sector alone constitutes 9.1% per cent of the country's gross domestic product
(GDP).
 The cement industry in India constitutes of 365 small cement manufacturing units and 130
large cement manufacturing units
 The total installed capability of the cement manufacturing is 165 million tonnes per year
 The large manufacturing units accounts for 94% of the total output of cement
 The housing and real estate sector is the biggest demand driver of cement, accounting for
about 65% of the total consumption in India.
 The other major consumers of cement include public infrastructure at 20% and industrial
development at 15%.
 The sector grows at the rate of 1.25 to 1.3 times of GDP
 Critical factors that affect Cement Industry

Some factors that affects the cement industry:

 Economic scenario – Phases of growth in the economy are positively linked to

cement company growth.
 Cost structure and competitiveness – There isn’t much that cement companies
can do regarding cost structure because the margins are less to begin with. Cost
advantages are usually due to companies having access to a cheaper power source,
a quality limestone reserve, or being close to bigger markets.
 Legal, regulatory, and environmental scenario – The cement industry is
affected by regulatory norms. This is prominent in developed countries where
environmental issues are more stringent. This adds to the companies’ costs.
 Technological advancement – A disruptive innovation can give the innovating
company an advantage. For example, when companies moved from the wet
manufacturing process to the dry manufacturing process, there was a cost savings of
5%–10% of the overall cost structure.
 Geographic advantages – It’s an advantage for companies to be near limestone
mines or waterways. Ease of transportation is an advantage.

.
 Description About ultra tech cement

 UltraTech Cement Limited is the largest cement company in India and among the
leading producers of cement globally. It is also the country’s largest manufacturer of
white cement and Ready Mix Concrete.
 UltraTech provides a range of products that cater to the various aspects of construction,
from foundation to finish. This includes Ordinary Portland Cement, Portland Blast
Furnace Slag Cement, Portland Pozzalana Cement, White Cement, Ready Mix Concrete,
building products and a host of other building solutions.
 Cement is sold under the brands ‘UltraTech, UltraTech Premium and Birla Super.’ White
cement is manufactured under the brand name of ‘Birla White’, ready mix concretes
under the name of ‘UltraTech Concrete’ and new age building products under the
names of ‘Xtralite, Fixoblock, Seal & Dry and Readiplast’.
 UltraTech Building Solutions is a retail format that caters to the end consumer providing
a variety of primary construction materials under one roof..
 The company's subsidiaries are Dakshin Cements Limited, Harish Cements Limited,
UltraTech Cement Lanka (Pvt.) Ltd and UltraTech Cement Middle East Investments
Limited.
 Mission & Vision

 To be the market leader in cement business and recognized as the benchmark for:

o Customer loyalty

o Quality consistency

o Product range

o Cost competitiveness

o Employee empowerment

MISSION

o To deliver superior value to our customer, shareholder employees & society at

large.

 Values

o Integrity, commitment, seamlessness, passion & speed.

Role of ultra tech Cement Industry in India GDP

 It contributes 1.57% of gdp

 Swot analysis of Ultra tech cements

Strengths
It is India’s biggest cement company.
2. It is the largest exporter of cement clinkers.
3. It is a part of the prestigious Aditya Birla Group that helps the brand.
4. It has an annual capacity of 60+ millions tones.
5. UltraTech accounts to about 30% of the total Indian Exports.
6. Most of the plants have ISO 9001, ISO 14001 and OHSAS 18001 certification.
7. UltraTech Cement Limited has integrated plants, white cement plant and many grinding units
in India.

Weaknesses
Although UltraTech provides various other construction products and services, but the brand is
associated with Cement only, so it has to work on positioning the brand as a construction
materials brand, which can be achieved by implementing branding activities.
2. It is not operating /exporting in US market which is a huge market for Cement industry.
3. Brand awareness of Ultratech is lesser as compared to global players.

Opportunities
It should enter the US market by Mergers and acquisitions.
2. It should do worldwide branding activities that would help the brand grow as a whole.
Threats
It faces strong competition from global players.
2. Mergers and acquisitions involves high risk, so it should be careful while entering new
market.
 Peer group of ultra tech cement

COMPANY MKT CAP SALES PROFIT EPS

(Rs Cr) (Rs Cr) (Rs Cr) (Rs)
UltraTech Cem. 114167.85 9389.62 390.43 75.38
Shree Cement 66753.44 2780.63 301.29 337.53
Ambuja Cem. 45183.47 6728.68 1377.88 7.93
ACC 31191.92 3895.6 732.35 80.2
Odisha Cement 21513.93 2175 31 3.94
The Ramco
17956.25 1015.39 203.2 19.06
Cement
Century Textiles 10208.82 951.11 134.27 50.33
J K Cements 6697.76 1273.19 60.91 36.03
Prism Johnson 4814.64 1439.82 19.02 3.16
JK Lakshmi Cem. 4201.76 935 14.75 5.96
 Marketing mix followed by ultra tech cement industry

Product

The UltraTech products are characterised by reliability, strength, and innovation. With a focus
on research, technology, and technical innovations, the company has been able to move with
time, manufacturing only the very competent products in building and construction. Below are
some of its products:

 Grey cement
 Ready Mix Concrete
 White cement
 Portland blast furnace slag cement
 Ordinary Portland cement
 Portland Pozzolana cement

Pricing

Because of the numerous products it has, UltraTech Cement employs a varied pricingstrategy. The most
important factor of consideration when marking the price of a product is the products demand across
the regionUltra Tech cement being India's largest producer of cement they play "Price
Leadership".

• Price leadership in which the dominant player fix a price and competitor follow the price
• Here the Ultra Tech can play a huge game by lowering price the competitor in market can
reduce in numbers. It mainly depend on the cost of production and market share of the
company
• They reduce the distance to market and have the optimum use of rail, road and sea
transportation
• Increase in the use of pet coke gives them a cost advantage
Place
The company boasts of a very vast and excellent geographical reach. The company doesn’t
just target India but it has been able to conquer the country and across the borders. It has been
able to get to countries such as UAE, Bangladesh, Bahrain and Sri Lanka among others.

UltraTech Cement uses the three-level distribution channel that involves manufacturing-agent –
distribution-retailer and ultimately the end user. Domestically, the cement is transported to the
distributors/dealers from which sub-dealers will collect the cement. Internationally, roads and
the railway are used to transport the cement to the nearest port of the importing country.

Promotion
The product entered the market with the tagline “The Engineers Choice.” This depicts how
premium quality the product is as the company suggests that qualified engineers have
approved the brand. The company is also known to aggressively promote its products with such
an aggressive strategy being an important aspect of its marketing mix.

Such a strategy has involved association with sports such as the most popular game in India-
cricket, and hockey etc to market its brand as a youthful and energetic choice. It is also known
to have promoted “Chak De India,” a widely watched film.
 Pestel Analysis of ultra tech cements

PESTEL Analysis is a strategic management tool that UltraTech Cement leadership can use to
make better decisions. PESTEL stands for – Political, Social, Economic, Technological,
Environmental and Legal factors that impact the macro environment of the company that it
operates in.

UltraTech Cement operates in a dynamic environment where it is influenced by – collective

social trends, increasing regulatory framework for environmental factors, government
decisions, regulatory framework, technological changes, consumer spending behavior,
increasing environmental activism among consumers, and ever evolving legal system.

Political Factors

 Taxation policies – Over the last two decades UltraTech Cement has benefitted from
lower taxation policies throughout the western hemisphere. It has resulted in high
profits and increasing spending in the research and development. The increasing
inequality in India can lead to changes in the taxation policies. Secondly local
governments are also looking into Construction - Raw Materials specific taxation policies
to contain the carbon footprint of the Capital Goods sector.

o Regulatory Practices – UltraTech Cement has to manage diverse regulations in

the various markets it is present in. Over the last few years India and other
emerging economies have changed regulations regarding not only market entry
but also how companies in Construction - Raw Materials can operate in the local
market.

o Government of India has come under increasing global pressures to adhere to

World Trade Organization’s regulations on Construction - Raw Materials
industry.

o Importance of local governments in India – Unlike in most other countries, local

governments play critical role in policy making and regulations in India.
 UltraTech Cement has to closely follow the states and territories it has presence
in rather than devising nation-wide policies in India.

o Other stakeholders such as non-government organizations, protest & pressure

groups, activist movements play critical role in policy making in India. UltraTech
Cement should closely collaborate with these organizations so that it can
contribute better to the community goals as well as with corporate goals.

o Changing policies with new government – Studying the current trends it seems
that there can be a transition of government in India in next election. UltraTech
Cement has to prepare for this eventuality as it will lead to change in governance
priorities of Capital Goods sector.

Economic Factors

 Inflation rate – The easy liquidity in the market post the great recession of 2018 will
lead to increasing inflation in the India economy.

- Economic Performance of India – I believe the economic performance of India in

the near future 5-10 years will remain stable given – government expenditure,
stable demand because of disposable income, and increasing investment into
new industries.

- Increasing liberalization of trade policy of India can help UltraTech Cement to

invest further into the regions which are so far offlimits to the firm.

- Availability of core infrastructure in India – Over the years India government has
increased the investment in developing core infrastructure to facilitate and
improve business environment. UltraTech Cement can access the present
infrastructure to drive growth in sectorname sector in India.

- Government intervention in the Capital Goods sector and in particular

Construction - Raw Materials industry can impact the fortunes of the UltraTech
Cement in the India.
 - Economic Cycles – The performance of UltraTech Cement in India is closely
correlated to the economic performance of the India's economy. The growth in
last two decades is built upon increasing globalization and utilizing local
resources to cater to global markets.

Social Factors

 Media outlets play a critical role in influencing the public opinion India. Both traditional
media and social media are rapidly growing in India. UltraTech Cement can leverage this
trend to better market and position its products.

o Migration – The broader attitude towards migration is negative in India. This can
impact UltraTech Cement ability to bring international leaders and managers to
manage operations in the country.

o Gender roles – The gender roles are evolving in India. UltraTech Cement can test
various concepts to cater to and support these evolving gender roles in India
society.

o Power structure – There is an increasing trend of income inequality in India. This

has altered the power structure that has been persistent in the society for over
last 6-7 decades.

o Societal norms and hierarchy – the society of India is different from the home
market of UltraTech Cement. It should strive to build a local team that
understands the societal norms and attitudes better to serve the customers in
India.

o Access to essential services – By and large over the last decade and half the
wider population in getting access to essential services in India. This has been a
result of increasing investment in public services.
Technological Factors

 Empowerment of supply chain partners – Technology has shortened the product life
cycle and it has enabled suppliers to quickly develop new products. This has put
pressure on UltraTech Cement marketing department to keep the suppliers happy by
promoting diverse range of products. It has added to the cost of operations of the
UltraTech Cement.

o Maturity of technology – The technology in the Construction - Raw Materials

sector is still not reached maturity and most players are vying for new
innovations that can enable them to garner higher market share in India.

o Latest technology based innovations implemented by competitors of UltraTech

Cement – This can provide a good insight into what the competitors are thinking
and where Construction - Raw Materials business model future is.

o Technological innovation is fast disrupting the supply chain as it is providing

greater access to information to not only supply chain partners but also to wider
players in the Capital Goods industry.

o Intellectual property rights and patents protection – If India have higher

safeguards for IPR and other intellectual property rights then more and more
players are likely to invest into research and development.

o Technology transfer and licensing issues for UltraTech Cement – In the Capital
Goods sector there is no strong culture of technology transfer and companies
often are reluctant to transfer or license technologies for the fear of creating
competitors out of collaborators.
Environmental Factor

 Customer activism – Greater awareness among customers have also put environmental
factors at the center of UltraTech Cement strategy. Customers expects UltraTech
Cement to adhere to not only legal standards but also to exceed them to become
responsible stakeholder in the community.

o Recycling is fast emerging as a norm rather than a good thing to do in India

economy. UltraTech Cement has to make plans to adhere to regulations and
expectations in the Capital Goods sector.

o Environmental norms are also altering the priorities of product innovation. In

many cases products are designed based on environmental standards and
expectations rather than catering to traditional value propositions.

o Paris Climate Agreement has put real targets for the national government of
India to adhere to. This can result in greater scrutiny of environmental standards
for UltraTech Cement in India.

o Waste management especially for units close to the urban cities has taken
increasing importance for players such as UltraTech Cement. India government
has come up with strict norms for waste management in the urban areas.

o Extreme weather is also adding to the cost of operations of the UltraTech

Cement as it has to invest in making its supply chain more flexible.
Legal Factor

 Health and safety norms in the India and what Ultra Tech Cement needs to do to meet
those norms and what will be the cost of meeting those norms.

o Business Laws – The business laws procedure that India follows. Are these norms
consistent with international institutions such as World Trading Organization,
European Union etc.

o Data protection laws – Over the last decade data protection has emerged as
critical part of not only privacy issues but also intellectual property rights.
UltraTech Cement has to consider whether India have a robust mechanism to
protect against data breaches or not.

o Legal protection of intellectual property, patents, copyrights, and other IPR

rights in India. How UltraTech Cement will be impacted if there are not enough
protection.

o Employment law in the India and how they are impacting the business model of
the Construction - Raw Materials. Can these conditions be replicated or bettered
in international market?

o Environment Laws and guides – The level of environmental laws in the India and
what UltraTech Cement needs to do to meet those laws and regulations.
 Conclusion

 It can be concluded that Indian cement industry plays animportant role in the
development of country.
 India can become number one in cement production, when there will be no corruption
and industry will concentrate on Research & development.
 The demand for cement will grow in the future, as population is increasing.
 The Indian cement industry is expected to grow rapidly in coming
years due to heavy demand from housing, retail and infrastructure industry.

 Ultra tech cement is going for expansion and modernization of cement plant across the
country. Shortly they opening of unit 2 in malkhed near to unit 1&3 in hotgi.

 Ultra tech have huge opportunity in future now a day’s construction and infrastructure
industry are booming. I hope this occasion will make ultra tech cement huge profit.

 The company has the opportunity to become the market leader in cement industry
throughout globally.
 Suggestions

 They can adopt addition man power for more production.

 At the workplace there will be work stress, so concerned authorities should
make efforts to introduce relaxation technique such as yoga, meditation
etc.
 Provide chance to every employee to grow their skills & talents by using
technique outstation training in their inserted field.
 References

1. www.moneycontrol.com
2. www.scribd.com
3. https://www.ibef.org/industry/cement-india
4. https://www.equitymaster.com/
5. www.ultratech.com
6. www.Marketing.com