Market Survey of Jaypee Cement in the

districts of UP, MP and Bihar and proposed

distribution plan from four Jaypee plants
Corporate Internship Presentation
Presented to
Shri Alok Gaur ji

Presented by
JBS TEAM

Presentation Date : 23rd May 2019

 INTRODUCTION
 Cement is the glue that holds the concrete together, and is
therefore critical for meeting society needs of housing and
basic infrastructure.
 Cement is a cyclical commodity with a high correlation with
GDP.
 The Indian cement industry is the second largest market
after China.
 India is the second largest consumer of cement.
 Cement, being a bulk commodity, is a freight intensive
industry and transporting it over long distances can prove
to be uneconomical.
 PROBLEM STATEMENT
 Jaypee Cement is one of the reputed manufacturers of
cement in North India.
 The company was facing problems in gaining market share
and also has issues with its supply chains.
 It aims to re-establish itself in the cement market and
develop relationships with dealers for maintaining regular
availability of their product in different districts of UP, Bihar
and MP.
 The allocation of their production is also not uniform with
sales teams aiming different areas but some areas were
overlooked.
 A distribution plan was required for logical allocation of
their production quantities.
 OBJECTIVES
 List of districts in UP, MP and Bihar that fall within 300 KM of
each plant and the districts which fall between 301 to 400 KM
from each plant.
 List of overlapping districts i.e. common districts within 300 KM
or 301 to 400 KM from more than one plant
 Prevailing freight per MT from each Jaypee Plant for the above
districts.
 Prevailing price per MT of leading brands in each district
 Present market share of ACC, UTCL, Jaypee and other leading
cement brands that are sold in the district.
 Potential cement demand of districts in UP, MP and Bihar
 Proposed distribution plan of the total production of 4.5 L MT
per month in each district considering prevailing prices and
prevailing freight with an aim to maximize net revenue viz. Price
- freight.
 INDUSTRY ANALYSIS
The Sales figures of leading brands in Rs. Million

S.NO Company Brands Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

1 A C C Ltd. GOLD, SURAKSHA 124578 130623 132301 124338 140378
2 Bhilai Jaypee Cement Ltd. Jaypee 7877.6 6895.6 4507.2 797.2 2079.7
3 Birla Corporation Ltd. SAMRAT, GOLD, Perfect 34603.6 36753.3 37057.4 38286 38581.5
4 Heidelberg Cement India Ltd. MYCEM 15952 23684.8 19162.5 20021.2 19622.3
5 Nuvoco Vistas Corporation Ltd. Nuvoco, Lafarge 39065.9 58515.9 58768.9 58036.3 62482.4
6 Prism Johnson Ltd. CHAMPION, PLUS, DURATECH53619 60243.5 57503.9 55237.7 55508
7 Shree Cement Ltd. Shree, Bangar 66550.4 73474.2 68111.1 96945 101596
8 Ultratech Cement Ltd. UTCL 230385 260211 267454 269645 303286
9 Ultratech Nathdwara Cement Ltd. UTCL 21191 19661.6 17645 15268.7 8014.4
CEMENT INDUSTRY
 DETAILED RESEARCH
FIRST OBJECTIVE

 Each team was allotted one plant of Jaypee for identification of the
districts in Uttar Pradesh, Madhya Pradesh and Bihar that fall within 300
KM, between 301 to 400 KM and above 400 KM from the respective
plant.
 All the districts of the given three states, viz. UP, Bihar and MP were
identified using a district map.
 The teams figured out the distance from the plant till the district
headquarters with the help of Google Maps.
 In case of Google Map showed multiple routes, the route with minimum
distance was chosen.

Master Sheet: Calculated Distances of all Districts from Jaypee Plants

 DETAILED RESEARCH Cont.
SECOND OBJECTIVE

 For the overlapping Districts i.e. common Districts within 300 KM or

301 to 400 KM from more than one plant, the distance of such
districts to be shown separately from each plant.
 The distance of each district headquarter was calculated using
Google Maps and the districts were classified in three ranges, 0-300
KM range, 201-400 KM range and 401 and above KM range.
 Subsequently, the overlapping districts were also identified so as to
identify the Jaypee Plant which is at the least distance from its
headquarter.

Master sheet: Calculated distance of all Overlapping districts in all states

 DETAILED RESEARCH Cont.
THIRD OBJECTIVE

 Primary data collection : different dealers in the district headquarters

and their locations.
 Formation of FOUR team for each plant (4 teams were created
comprising of 2 members each)
 Team A- Rewa Cement Complex, Rewa, M.P.
 Team B- Churk Cement Factory, Churk, Sonbhadra, U.P.
 Team C- Chunar Cement Factory (CCF), Mirzapur, U.P.
 Team D- Jaypee Cement Blending Unit, Sadva Khurd, Allahabad, U.P.
 Total of 206 questionnaires have been filled in 47 districts by the
students based on their interactions with dealers.
 DETAILED RESEARCH Cont.
THIRD OBJECTIVE

 To get the accurate freight data from the plant to the respective district
headquarters
 Data collected from transporters in the respective regions as well as
websites such as truckbhada.com
 The freight rate of 10 chakka truck which has a capacity of 360 cement
bags was taken as standard.
 The freight data received per truck was divided by number of bags to
get the “freight per Metric Tonne” (MT)

Master sheet: Calculated freight of all visited districts in all states

 DETAILED RESEARCH Cont.
FOURTH OBJECTIVE

 Collection of prevailing price per MT of the leading brands in each

district.
 The structured questionnaires were used to collect the data on
prevailing market price of major brands
 It is noticed that the price of cement varies greatly in the three states.

Master sheet: Price for all visited districts and average price of all states
 DETAILED RESEARCH Cont.
FIFTH OBJECTIVE

 Collection of present monthly volume and present Market share of

ACC, UTCL, Jaypee and other major cement brands that are sold in the
district.
 The questionnaire was designed to capture the annual sales data (for
each quarter) for all the brands sold by a dealer.
 However, the annual or even quarter sales data was not readily
shared by the dealers.
 Therefore, an estimate of last month sales was inquired from the
respondents.
 The monthly sales data was entered in the questionnaire.
 Also an estimate of future demand was inquired.
 DETAILED RESEARCH Cont.
FIFTH OBJECTIVE
 Majority of the dealers have a positive feedback towards the demand in
the upcoming months.
 The expected increase in demand was calculated in terms of percentage,
and an average was calculated for each district.
 The districts having highest sales were sorted for each plant.

Master sheet: Monthly volume of Cement sales for all visited

districts and predicted future volume
 An estimate of the highest selling brands in the district and their market
share was also part of the questionnaire.
 The data has been collected from majority of the dealers and the brands
having highest market share has been identified for each district and the
state overall.
Master sheet: Market share of Jaypee Cement for all visited
districts and market share of all states
 DETAILED RESEARCH Cont.
SIXTH OBJECTIVE

 Potential cement demand of districts in UP, MP and Bihar.

 The market potential has been calculated using the following data
 Population of each visited district form the Census of India.
 Per capita consumption of cement from the April 2019 report of
IBEF.
 The product of the two figures gives the annual consumption of
cement for each district.
 Monthly consumption was calculated by dividing it by 12.

Master sheet: Market Potential Cement of all districts

Master sheet: Market Potential Cement of districts where Jaypee is

operating
 Total Potential Jaypee Cement Difference
Potential in Potential
Uttar Pradesh 3492675.848 2601656.33 891,019.518
Madhya Pradesh 1270457.388 773192.4375 497,264.9505
Bihar 1816581.148 1026110.155 790,470.993

Table: Market Potential vs Jaypee Cement Sales

 DISTRIBUTION PLAN
SEVENTH OBJECTIVE

 Proposed distribution plan of the total production of 4.5 L MT per month in

each district considering prevailing prices and prevailing freight with an aim
to maximize net revenue viz. Price - freight.
 The production quantity provided was as follows:
 Rewa - 1.2 L MT per month
 Sadva - 0.5 L MT per month
 Chunar - 2.0 L MT per month
 Churk - 0.8 L MT per month

Total 4.5 L MT per month

 DISTRIBUTION PLAN Cont.
Proportionate Ratio Method

 To determine the distribution of cement produced by a plant, a ratio was

required to divide the monthly production into each district.
 For this, following data was considered
 Monthly consumption of Cement in the district in MT
 Prevailing price of the cement per MT
 Freight applicable for the district if the material is supplied directly from the
nearest Jaypee Cement Plant
 The districts having highest demand and within the 300 KM range were
identified for each of the Jaypee plant.
 DISTRIBUTION PLAN Cont.
 The steps taken in the calculation of distribution plan are
 Deduct the applicable freight from the prevailing price per MT.
 Multiply it with the monthly consumption to arrive at the distribution
factor (DF) for each district.
 The proportionate fraction (PF) was calculated for the DF based on the
sum of DF for all districts
 The monthly produced quantity was divided into the districts based on
the proportionate fraction (PF)

Distribution Plan for each Jaypee Plant for all visited districts using
Proportionate Ratio Method
 DISTRIBUTION PLAN Cont.
Transportation Model
 The Transportation Method of linear programming is applied to the
problems related to the study of the efficient transportation routes i.e. how
efficiently the product from different sources of production is transported
to the different destinations, such as the total transportation cost is
minimum.
 The Least Cost Method is used to obtain the feasible solution for the
transportation problem. Here, the allocation begins with the cell which has
the minimum cost.
 The data was analysed using excel solver. The MS office version of basic
Excel Solver has a limit to constraints up to 100 cells. Therefore the
operation was done for UP districts first and then for Bihar and MP
combined.
 DISTRIBUTION PLAN Cont.
Transportation Model
 As a next step, using a different logic, The data has been analysed
plant wise and not state wise.
 The visited districts within a range of 300KM have been used to
calculate the allocation for each plant.
 The data was analysed using excel solver.

Distribution Plan for each Jaypee Plant for all visited districts using
Transportation Model
 OBSERVATIONS
 Customers are more satisfied with the policies of Ultratech cement
 They say that the Ultratech has better schemes and free goodies along
with timely availability and brand promotion
 Many dealers have switched from Jaypee to Ultratech and MP Birla
 Jaypee Quality found good at most of the districts including UP, MP and
Bihar. Dealers are ready to deal with Jaypee because of competitive
quality
 Price is competitive w.r.t. other leading brands.
 However the response of Jaypee sales team is not satisfactory
 Packaging needs to be improved as reported by dealers. The blue
packaging is not upto the mark
 Dealers are ready to accept and sell Jaypee Cement, if Jaypee group
maintains the availability of the cement through proper transportation
system and better middle management.
 CONCLUSION
 Cement Industry is characterized by its bulky nature, and is therefore is a
freight intensive industry. Transporting cement over long distances can
prove to be uneconomical. This has resulted in cement being largely a
regional play.
 This research has attempted to propose a distribution plan based on
available mathematical models which have been applied to the limited
amount of data
 gathered through structured questionnaire based on field work,
 from secondary sources where the data regarding consumption of
cement for various districts have been identified.
 The data has been analyzed using excel tools like pivot table and excel
solver.
 CONCLUSION Cont.
 The output was generated in terms of
 distances of all districts in UP, Bihar and MP from each plant,
 overlapping districts from the plants,
 the freight applicable in the covered districts,
 prevailing price of the leading brands,
 volume sales for the previous month and projected sales for the
upcoming months
 approximate market shares of leading brands and the monthly
consumption of cement in each district
 Market Potential of each district
 Based on the collected data, distribution plan has been proposed
using two models.
 CONCLUSION Cont.
 The proportionate ratio method considers the districts which are
closer to the respective plant and take into consideration the
applicable freight, the prevailing price and the market demand
potential.
 The transportation model considers all plants together but due to
limitation of basic Excel Solver tool, has been applied separately for
UP districts and Bihar & MP districts (combined). The allocation is
done mathematically based on the distances, production capacity of
each plant and demand prevailing in the district.
 The same has been done plant wise for districts which are in the 0-
300 KMS range from each plant.
THANK YOU