INTERNSHIP REPORT ON ORGANISATIONAL STRUCTURE OF ULTRA TECH CEMENT

SUBMITTED BY: MOHIT SARAWAGI

CHRIST UNIVERSITY BANGALORE

INTRODUCTION

ULTRA TECH CEMENT

UltraTech is the second largest cement manufacturer in India. It is the part of Aditya Birla group and is subsidiary of Grasim. It has a capacity of 18.2 million tonnes. The company is the largest exporter of cement and clinker from India. UltraTech has a presence in the west, south, north and east. The western and southern regions are its major markets. The company exports both clinker and cement. The company exports are moving towards cement from clinker owing to the higher realization in the cement. In 2005-06 the company exported 1.52 million tonnes of cement. With UltraTech Cement, the Aditya Birla Group has established itself as not only the most respected domestic player but also among the global leaders in cement. Now a look at Aditya Birla groups cement capacity: Currently, the Aditya Birla Group is the 11th largest cement producer in the world and the seventh largest in Asia and Ultra Tech and Grasim together, make it the largest cement producer in India.

The group mainly has two cement units Grasim and Ultra tech. UltraTech Cement Limited, a Grasim subsidiary has an annual capacity of 18.2 million tonnes. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzolana Cement. It has five integrated plants. This also includes the integrated plant and two grinding units of the erstwhile Narmada Cement Company Limited, a subsidiary, which has been amalgamated with the company in May 2006.

Grasim, on the other hand, manufactures grey and white cement. In grey cement, the company has the capacity to manufacture 14.20 mtpa. This includes Grasims capacity of 2.06 mtpa, Vikram Cement 4.2 mtpa, Aditya Cement 1.5 mtpa, Rajashree Cement 4.2 mtpa, the acquired and merged Dharni Cement 1.16 mtpa and the acquired Digvijay Cement 1.08 mtpa. Grasim and Ultra Tech together have a cement capacity of 31.20 mtpa. And when the B K Birla cement companies also come into the fold, the Aditya Birla group would have a cement capacity of 37.86 mtpa, making it clearly the largest cement maker of India. The Aditya Birla Group bought over the cement business of L&T for around Rs. 2,200 crore. L&T allowed its name to be used for about a year. Then from 19th November 2003,the name was changed to ultra tech cemco.This name also didnt last for long and finally the ultra tech cemco

was changed to Ultra Tech cement. These stages of evolution of ultra tech cement are listed below: 2001 :: Grasim acquires 10 per cent stake in L&T. Subsequently increases stake to 15.3 per cent by October 2002 :: Durgapur grinding unit 2002

The Grasim Board approves an open offer for purchase of up to 20 per :: cent of the equity shares of Larsen & Toubro Ltd (L&T), in accordance with the provisions and guidelines issued by the Securities & Exchange Board of India (SEBI) Regulations, 1997. :: Grasim increases its stake in L&T to 14.15 per cent :: Arakkonam grinding unit

2003 :: The board of Larsen & Toubro Ltd (L&T) decides to demerge its cement business into a separate cement company (CemCo). Grasim decides to acquire an 8.5 per cent equity stake from L&T and then make an open offer for 30 per cent of the equity of CemCo, to acquire management control of the company.

2004

:: Completion of the implementation process to demerge the cement business of L&T and completion of open offer by Grasim, with the latter acquiring controlling stake in the newly formed company UltraTech

2006 Narmada Cement Company Limited amalgamated with UltraTech pursuant to a Scheme of Amalgamation being approved by the Board for Industrial & Financial Reconstruction (BIFR) in terms of the provision of Sick Industrial Companies Act (Special Provisions)

TEAM
Board of Directors :: Mr. Kumar Mangalam Birla, Chairman
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:: :: :: :: :: :: :: ::

Mrs. Rajashree Birla Mr. R. C. Bhargava Mr. G. M. Dave Mr. N. J. Jhaver Mr. S. B. Mathur Mr. V. T. Moorthy Mr. S. Rajgopal Mr. D. D. Rathi

Mr. O. P. Puranmalka, Wholetime Director Executive President & Chief Financial Officer :: Mr. K. C. Birla Chief Manufacturing Officer :: :: :: :: Mr. R.K. Shah Mr. S.N.Jajoo Mr. C. B. Tiwari Mr. S. K. Chatterjee Chief Marketing Officer Chief People Officer Company Secretary

ULTRA TECH PRODUCTION UNITS:

Ultra Techs subsidiaries are Dakshin Cement Limited and UltraTech Ceylinco (P) Ltd.UltraTech has five integrated plants, six grinding units and three terminals two in India and one in Sri Lanka. These include an integrated plant and two grinding units of the erstwhile Narmada Cement Company Limited, a subsidiary, which has been amalgamated with the company in May 2006.The details of its different production units is shown on the next page.

Vision To be a premium global conglomerate

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with a clear focus on each business.

Mission To deliver superior value to our customers, shareholders, employees and society at large. Values Integrity Commitment Passion Seamlessness Speed

PROFILE OF THE PRODUCTS

UltraTech is India's largest exporter of cement clinker. The company's production facilities are spread across five integrated plants, five grinding units, and three terminals two in India and one in Sri Lanka. All the plants have ISO 9001 certification, and all but one have ISO 14001 certification. While two of the plants have already received OHSAS 18001 certification, the process is underway for the remaining three. The company exports over 2.5 million tonnes per annum, which is about 30 per cent of the country's total exports. The export market comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. Export is a thrust area in the company's strategy for growth. UltraTech's products include Ordinary Portland cement Portland blast furnace slag cement Portland Pozzolana cement Cement to European and Sri Lankan norms Ordinary Portland cement 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.

Portland blast furnace slag cement

Portland blast-furnace slag cement contains up to 70 per cent of finely ground, granulated blast-furnace slag, a nonmetallic product consisting essentially of silicates and alumino-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 blast-furnace slag cement has a lighter colour, better concrete workability, easier finishability, higher compressive and flexural strength, lower permeability, improved resistance to aggressive chemicals and more consistent plastic and hardened consistency. Portland Pozzolana cement Portland pozzolana cement is ordinary portland cement blended with pozzolanic materials (power-station fly ash, burnt clays, ash from burnt plant material or silicious 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 and mortar.

GOVERNMENT POLICIES
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Government policies have affected the growth of cement plants in India in various stages. The control on cement for a long time and then partial decontrol and then total decontrol has contributed to the gradual opening up of the market for cement producers. The stages of growth of the cement industry can be best described in the following stages: Price and Distribution Controls (1940-1981): During the Second World War, cement was declared as an essential commodity under the Defense of India Rules and was brought under price and distribution controls which resulted in sluggish growth. The installed capacity reached only 27.9 MT by the year 1980-81. Partial Decontrol (1982-1988): In February 1982, partial decontrol was announced. Under this scheme, levy cement quota was fixed for the units and the balance could be sold in the open market. This resulted in extensive modernization and expansion drive, which can be seen from the increase in the installed capacity to 59MT in 1988-89 in comparison with the figure of a mere 27.9MT in 1980-81, an increase of almost 111%. Total Decontrol (1989): In the year 1989, total decontrol of the cement industry was announced. By decontrolling the cement industry, the government relaxed the forces of demand and supply. In the next two years, the industry enjoyed a boom in sales and profits. By 1992, the pace of overall economic liberalization had peaked; ironically, however, the economy slipped into recession taking the
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cement industry down with it. For 1992-93, the industry remained stagnant with no addition to existing capacity The things that primarily control the price of cement are coal, power tariffs, railway, freight, royalty and cess on limestone. Interestingly, all of these prices are controlled by government.

Purchase of materials:
A system is followed in order to purchase the materials. First the requirements are taken from the respective customers or proper valuation is done of the project. Then the various dealers are invited to submit the quotations and finally the one with the lowest quotation and delivering the best quality in the stipulated time.

DEPARTMENTS AND FUNCTIONS:

The various departments at ultratech Kolkata are

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 Accounts Marketing Logistics Technical

Accounts

Secretary Head Accountant

Regional head Accountant

SH-MIS

Accountant

depot accountant

accountant mis

LACF

MARKETING
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Zonal head Regional head

Territory sales manager

Territory sales executive

Long arm sales force

LOGISTICS
Zonal head Regional head logistics

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TECHNICAL (TASC)
Zonal Technical Head Regional Technical Head Territory Technical Sales Manager Long Arm Technical Force

SWOT ANALYSIS
Strengths: Double digit growth rate
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Cement demand has grown in tandem with strong economic growth; derived from:

-Growth in housing sector (over 30%) key demand driver; -Infrastructure projects like ports, airports, power projects, dam & irrigation projects -National Highway Development Programme -Bharat Nirman Yojana for rural infrastructure -Rise in industrial projects -Export potential also demand driver

Capacity utilization over 90%

Weakness: Low value commodity

Cement Industry is highly fragmented Industry is also highly regionalized Low value commodity makes transportation over long distances uneconomical

Opportunities: Demandsupply gap

Substantially lower per capita cement consumption as compared to developing countries (1/3 rd of world average) Per capita cement consumption in India is 82 kgs against a global average of 255 kgs and Asian average of 200 kgs.

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Additional capacity of 20 million tons per annum will be required to match the demand Limited green field capacity addition in pipeline for next two years, leading to favorable demand supply scenario

Threats: Rising input costs Government intervention to adjust cement prices Possibility of over bunching of capacities in the long term as some of the players have already announced new capacities

Transportation cost is scaling high; bottleneck due to loading restrictions

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Coal prices climbing up; industry players say current shortage of coal in the country is estimated to be over 10 million tonnes

PRICES The regional variation in the Indian market has resulted in the cement prices across regions witnessing movement within a band, with no appreciable increase in any region. Differences in regional demand supply situation have translated into price differences across regions. Prices are lower in Southern regions where there is normally a supply surplus. However, prices are higher in Eastern and Western regions where shortages exist. The surplus position had resulted in significant pressure on price realizations in recent years. .The cyclical trough in the late-1990s had a severe impact on the industry financials. However, cement prices have firmed up during the last few years due to improvement in demand-supply position and increasing consolidation in the industry. The Wholesale Price Index (WPI) for cement increased 3.9% during FY2005, as compared with a growth of 1.2% during FY2004. The WPI for March 2006 was 11% higher than the WPI for March 2005.

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Margins Cement prices have firmed up during the last few years due to improvement in demand-supply position and increasing consolidation in the industry. The trend in gross sales realization is similar for the cement companies in our sample (comprising pure cement companies accounting for around twothirds of industry production and sales). The operating profits and margins for cement companies are most sensitive to cement sales realizations. During FY2004-05, riding on high average sales realizations, the cement companies posted increased operating profits and margins. This reversed the decline in operating profits and margins during FY2002-03. This was mainly because of excess capacity and the consequent low price realizations. While sales volume of the sample companies improved 7%, operating income (OI) increased 24.2% to Rs. 183.45 billion

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RETURNS: The key driver of profitability is cement prices, which fluctuate depending on outlook on demand-supply gaps. The fluctuating fortunes of the Indian cement industry are very typical of a commodity industry. The companies make bumper returns during the boom years (FY1994-96, and FY2003-06) while the performance goes down drastically during the lean years (FY19972001). The returns have improved significantly since FY2003 because of higher capacity utilizations, operational efficiency and cost control measures supplemented with higher sales realizations.

the Indian cement industry has undergone vital changes through technological changes in the pursuit of cost efficiency and drive for consolidations. Most of the companies are making profits.

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Key Result Areas:

Sales and Marketing are the chief activities at Ultratech cement Kolkata division. Here the proper distribution of the products is being done and a proper channel/system of accounting is followed

THE ULTRA TECH ADVANTAGE AND FACTORS FOR SUCCESS

UltraTech Cement Ltd is one of the largest premium quality cement producer in India. Advanced instrumentation systems, computerized process control and online quality control through X-ray ensure consistently high quality product at UltraTech Cement plant. The quality of UltraTech Cement has been globally accepted and is India's largest exporter of clinker and cement. UltraTech Cement due to its consistently superior quality has become the first choice amongst discerning users and construction professionals. Raw Material : Careful selection and scientific proportioning of raw material with the use of latest technology enables manufacturing of high quality cement. Rigorous

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hourly tests are conducted on raw material. Laboratories at all plants are equipped with sophisticated facilities. World Class process Technology ensures Quality and Consistency : Quality Assurance is an integral part of Ultra Techs manufacturing philosophy. The quality attributes are consistently ensured through rigorous application of advanced technology. Key features include:

Use of good quality limestone and careful selection of other raw material Computerized mining operation and homogenization of crushed limestone Perfect proportioning of raw materials by QCX ( Quality Control through X-ray ) Online process control through CCR ( Computerized Control Room ) High-quality clinkerisation and close-circuit grinding for optimum particle size distribution

UltraTech Cement plants have been accredited with ISO 9001, 14001, 18001 Certifications by DNV of Netherlands Distinct Features:

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

Higher workability Lower consumption Enhanced durability Quicker construction Overall economy

Customer Care and Guidance: UltraTech 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 UltraTech 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 Slip form constructions Rehabilitation and retrofitting works Cement based products such as pipes, tiles, blocks, poles ,etc. Roads, runways, bridges and flyovers Water retaining structures

2. 3. 4. 5. 6.

Product promotional measures:

Various product promotion techniques are applied at Ultratech for better customer service and to maintain the proper quality..At regular intervals Mason meets and Engineer meets are organized so that they can be trained according to the requirement of the companies. Even the Technical team at Ultratech visits the site on request over phone. Proper care is taken to maintain the quality of the product and various technical methods are applied in the lab to judge the quality of the products. Even advertisements are used as a medium to promote any new product.

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Career Planning and Promotional policy:

Proper career planning is done for each and every level of employees within a certain time period depending on the performance. Generally a person starts at the junior level and moves next to the mid level , than senior level and finally to executive level. Certain experienced candidates are directly appointed to a senior level depending on the kind of experience they are having in a particular area.

Performance appraisal system:

Proper care is taken for the benefit o each and every employee and to maintain the interest of the employees in their respective work.In order to motivate them certain performance appraisal policy is maintained at Ultratech. There are two types of appraisal given in a financial year . Mid- term, appraisal and Full year appraisal. These are generally given in the months of October and April.

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Training Measures:
At Ultratech, Employee training is given regularly both to the existing employees and new interns. A very professional environment is maintained keeping in mind all the work ethics and services to be given to the customers of the company. Before joining the company, every employee has to undergo specific amount of training to get accustomed with the work culture of the company. Every year certain number of interns join the company and get themselves acquainted with the corporate world.

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AWARDS AND CERTIFICATIONS FOR ULTRA TECH

All the plants of UltraTech are ISO 14001 Environment Management Systems certified and adhere to OHSAS 18001 standards. Clean technologies and processes that combine economic progress and sustainable environment have been adopted at UltraTech's plants at Awarpur and Ratnagiri in Maharashtra; Kovaya, Jafrabad and Magdalla in Gujarat; Hirmi in Chhattisgarh; Arakkonam in Tamil Nadu; Tadipatri in Andhra Pradesh; Jharsuguda in Orissa and Durgapur in West Bengal.

Export awards Worldwide, clients have consistently endorsed Ultra Techs highest quality standards. The list of export awards it has won is testimony to Ultra Techs uncompromising standards on product quality. Ultra Tech has been on the roll call of top exporters of the Chemicals & Allied Products Export Promotion Council (Capexil), year after year. Ultratech won the Capexil Certificate of Export Recognition - Top Exporter - Cement, Clinker, Asbestos and Cement Products for the years 2000, 2002 and 2003.

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Other awards that have come its way have included: Year 2001 and 1999 1999 1998 1998 1997 Award Capexil Certificate of Export Recognition - Highest Export in Non-mineral Sector Capexil Certificate of Outstanding Export Performance - Chemicals & Allied Products (for Portland cement) Capexil Certificate of Export Recognition - Top Exporter- Cement, Asbestos, Cement Products Certificate of Outstanding Export Performance, Gujarat state Capexil Certificate of Export Recognition - Certificate of Merit for Export Achievement in Cement and Clinker

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SOCIAL PROJECTS
"To actively contribute to the social and economic development of the communities in which we operate. In so doing, build a better, sustainable way of life for the weaker sections of society and raise the country's human development index." Mrs. Rajashree Birla, Chairperson, The Aditya Birla Centre for Community Initiatives and Rural Development

Our focus areas Our rural development activities span five key areas and our single-minded goal here is to help build model villages that can stand on their own feet. Our focus areas are healthcare, education, sustainable livelihood, infrastructure and espousing social causes.Education

Balwadis (pre-school)

Adult education Non-formal education Continuing education Scholarships for girls, merit and technical education

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Health and family welfare Mobile clinics - doctors visit once a week Medical camps - general and issue-based Health training and awareness Sanitation - toilets, training, smokeless chullahs, biogas Safe drinking water Mother and child health Reproductive health Awareness building Sustainable development and livelihood and agriculture and watershed development Self-help groups SGSY - dairy, readymade garments, jute project, basket making, aggarbati making, bee keeping, durrie making. Check dam Irrigation Land development Soil and water conservation Pasture development Social forestry/ plantation activities/ nursery Horticulture Farmer training

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Infrastructure development Roads Dams Community centres Houses Culverts Electricity Health centres Water channels Schools Social causes Widow / dowry-less mass marriages Women empowerment Awareness drives on knowledge, attitude and practices

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FINANCIAL HIGHLIGHT:

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Balance sheet as on 31 March 2009

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LIMITATIONS OF THE STUDY

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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 Sonepat & Kurukshetra 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 Distts of Sonepat & Kurukshetra, 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 Ultra Tech 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. Ultra Tech Cement usually costs 4-5 Rs. Higher than the other counterparts. So the buyers, to much extant not interested in buying Ultra Tech cement. This extra price is the main reason behind lower sales.therefore, Ultra Tech 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 Ultra Tech 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 Ultra Tech cement. so Ultra Tech need to take some steps to make people familiar with the Birla cement and Ultra Tech relation. Because this will bring the old Birla loyal customers to Ultra Tech cement.

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The number of retailers and sub dealers for Ultra Tech cement is very less as compared to the main competitors ACC, J.K. etc.So Ultra Tech need to be oriented in this direction. They need to increase the no. of retailers as much as possible. Although Ultra Tech 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 Ultra Tech needs to give them some relaxation in this case.

Many of the Ultra Tech dealers used to shop other type of building materials along with cement, in the same shop. This should not be permitted by Ultra Tech.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 and also to the various schemes of increasing sales. This in turn brings reduced sales to the company

Ultra Tech 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 Ultra Tech needs to give proper attention to the youngsters. May be, they are not the cement buyers at present but future possibility lies with them.

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 Ultra Tech 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. Ultra Tech which is already facing charges of higher price needs to be prepared for this.

Some of the Ultra Tech 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 Ultra Tech.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 likepainting 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 sonepat and Karnal 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 ex-discount coupons, small free gifts, scratch cards etc can be made available for the customers.

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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 Handvertising i.e. we need to put the Ultra Tech 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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 Ultra Tech has two major competitors- J.K. CEMENT and ACC CEMENT. Ultra Tech is well established in the markets as far as quality is concerned. Introduction of new attractive incentive schemes can bring new dealers & retailers for Ultra Tech 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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