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Jaypee Cement Ltd.



Develop Marketing Strategy Targeting at Increase in Market share for Jaypee Cement

Develop Marketing Strategy Targeting at Increase in Market share for Jaypee Cement



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    Jaypee Cement Ltd. Jaypee Cement Ltd. Document Transcript

    • EXECUTIVE SUMMARY "Many small things have been made large by the right kind of advertising." Mark TwainWhile working with Jaiprakash Associates during my 8 weeks summer internship I came to know about variousaspects of marketing and various process that occurs in marketing/sales department. And I suppose sole aim ofmarketing is to create satisfied customers and selling more to more number of people, more often at higher prices.The Jaypee Group is an Indian conglomerate based in Noida, India. It was founded by Jaiprakash Gaur which isinvolved in well diversified infrastructure conglomerate with business interests in Engineering & Construction,Power, Cement, Real Estate, Hospitality, Expressways, Sports & Education (not-for-profit).After getting the opportunity to undergo my 8 weeks summer training in Jaiprakash Associates Ltd. I carried outmy project” Develop the marketing strategy for Jaypee cement targeting at increasing market share “.I spent the first week in getting knowledge about the company profile, got the product knowledge from company’smarketing department followed of various function and knowing how to find the target customer (Dealers, Sub-Dealers& Retailers).The remaining time I spent in studying, analyzing and finding potential for Jaypee cement brand and othercompetitive brand in the Ghaziabad segmented market (area wise segmentation).My product was Cement and my aim was to search the Market Potency of particular brand, to find out whichbrand is most preferable in the market, and develop a strategy to increase the market shareMy product’s cement complies with IS: 8112 -1989 for 43 Grade Ordinary Portland Cement and surpassesIS:1489:1991, the laid down BIS standards for fly ash based PPC cement.Features of my product are:• High Compressive Strength and rate of strength gain.• The superfine particles of cement provide great finish to the structure.• Cement provides unsegregated concrete of better integrity.• Impermeable concrete for durable construction.• Resistant under aggressive environment even in coastal areas.• Resistance to corrosive attack on steel reinforcement.• Resistant to lime leaching.
    • • Low heat of hydration – Crack less construction.• Reduces shrinkage and swelling.• Beneficial effect on workability due to spherical shape of particles and their high fineness.We categorize target customers by Cement Company as Dealer, Sub-Dealer, and Retailer etc.During the Industry analysis I have found that in the last ten years cement sector has recorded a CAGR of 8%,against the world cement industry average of 3.5% and China’s cement industry growth rate of 7.2%. Today thisindustry not only outshines that of developed countries such as US and Japan but also has become the secondlargest cement producer in the world after China.The growth of cement industry has been trajectory in fashion over the past ten years. Domestic cement demandgrowth has surpassed the economic growth rate for the past three years. Cement demand in the country grows atroughly 1.5 times the GDP growth rate. According to CRISIL industry is expected to grow at a CAGR of around 8 percent in the next five years.The key drivers for cement demand are real estate sector, infrastructure and industry expansion projects.Among these real estate sector is the key driver of cement demand. The demand for cement is closely related tothe growth in the construction sector. Consequently, cement demand has been posting a healthy growth rate ofaround 8 per cent since 1997-98, propelled by the increased thrust on infrastructure development, and the higherdemand from the housing sector and industrial projects.Cement being a bulky commodity cannot be easily and economically transported over long distances. Thismakescement a regional market place, with the nation being divided into five regions. Each region is characterizedby its own demand-supply dynamics.With increase in infrastructure development activity with projects such as state and national highways, and globaldemand has led Indian cement industry to increase their production capacity. This in turn has attracted the topcement companies in the world to enter the Indian market and take the advantage of growth in demand.I have also done detailed financial analysis of Jaiprakash Associated Ltd. to understand the its financial position.Since Jaiprakash Associates Ltd. does not publish its cement division financial statements, the comparative analysishas been done between ACC Cement Ltd. and Ambuja Cement Ltd. for last three year. 2|Page
    • INTRODUCTION& OBJECTIVESIntroduction to Jaiprakash Associates Ltd.The Jaypee group is a Rs. 18,000 crore well diversified infrastructure conglomerate with business interests inEngineering & Construction, Power, Cement, Real Estate, Hospitality, Expressways, Sports & Education (not-for-profit). It is Indias third largest cement producer, the largest private sector hydropower company with 1,700 MWin operation. The Group has successfully completed projects in 18 states of India, and in Bhutan.The Jaypee Group — has also been in the limelight after a group staged Indias first Formula One race on October30, 2011Introduction to Summer Internship ProjectToday’s successful companies share one thing in common: “Strong customer oriented approach and strongcommitment to marketing.”Marketing, more than any other business function, deals with customers. Marketing can be defined as a process tocreate satisfied customers at minimal cost.In my Summer Internship project I had to develop a marketing strategy for Jaypee cement targeting at increase inmarket share by understanding my customers and the market place environment and delve deeper into marketstrategies and tactics used by its competitors.Introduction to Internship ReportIn this report I tried to understand the cement industry on a whole i.e. its structure, political economic, social andtechnical factors and also how hostile is this Industry for all companies in it.I have done the financial analysis of Jaiprakash Associated Ltd. And as it doesn’t publish its cement divisionfinancial statement I have done comparative analysis between ACC Ltd. and Ambuja cement Ltd.Objectives To understand the various processes of marketing and sales department and develop marketing strategy for Jaypee cement targeting at increase in market share. To understand the structure of the cement industry. To know how various Political, Economic, Social, and Technological factors affect the cement industry. To know about the strengths & weaknesses of cement sector and the various opportunities and threats present in the industry To do the financial analysis of the company. 3|Page
    • Company Profile SHRI JAIPRAKASH GAUR JIWith a single mined focus to pioneer a myriad of feats in civil engineering, ShriJaiprakash Gaur Ji, the foundingfather of Jaiprakash Associated Ltd. Acquired a diploma in civil engineering in 1950 from the University of Roorkee.After a stint with government of U.P he branched off on his own, to start as a civil contractor in 1958 with thesteadfast determination to contribute in nation building. This has been possible with the active support of hishonest colleagues such as ShriS.K.Jain, Shri N.C. Sharma, Shri G.P. Gaur, Shri P.K Jainanad Young Generation AblyHeaded By ShriManoj Gaur And Shri Sunil K. Sharma. Transforming challenges into opportunities has been thehallmark of the Jaypee Group, ever since its inception four decades ago.The Jaypee group is a Rs. 18,000 crore well diversified infrastructure conglomerate with business interests inEngineering & Construction, Power, Cement, Real Estate, Hospitality, Expressways, Sports & Education (not-for-profit).The Group has always believed in “growth with a human face” and to fulfill its obligations it has set upJaiprakashSewaSansthan (JSS), a ‘not-for-profit trust’ which primarily serves the objectives of socio-economic 4|Page
    • development, reducing the pain and distress in society .The Group has always believed in “growth with a human face” and to fulfill its obligations it has Set upJaiprakashSewaSansthan (JSS), a ‘not-for-profit trust’ which primarily serves the Objectives of socio-economicdevelopment, reducing the pain and distress in society For over 4 decades now, Jaypee Group has supported thesocio-economic development of the Local environment in which it operates and ensured that the economically andeducationally Challenged strata around the work surroundings are also benefited from the Group’s growth byProviding education, medical and other facilities for local development.The Group also undertakes Comprehensive Rural Development Programme (CRDP) which Covers a wide range ofprojects such as free medical camps, health check-ups for village school Children, literacy campaigns like Balwadi’sfor young boys and girls, safe drinking water supply, Creating huge water reservoirs in different villages, self-employment which includes tailoring Classes for women and animal husbandry. Some other important activitiesundertaken include. The renovation of old temples, other schools and hospital buildings in the adjoining adoptedVillages.Today the group is the 3rd largest cement producer in the country .The groups cement facilities Are located in theSatna Cluster (M.P.), which has one of the highest cement production growth Rates in India. The group producesspecial blend of Portland Pozzolana Cement under the brand Name ‘Jaypee Cement’ (PPC). Its cement divisioncurrently operates modern, computerized Process control cement plants with an aggregate capacity of 22.80MnTPA. 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 MnTPA by FY12 (expected) with CaptiveThermal Power plants totaling 672 MW.The company is awarded with "National Safety Award" by the national safety council of India for developing andimplementing effective management systems. 5|Page
    • PROMISEWe remain committed, as a Group to strategic business Development in infrastructure,as the key to nationbuilding in the 21st century.We aim to achieve perfection in everything we undertake and we have acommitmentto excel. It is the determination to transform every challenge intoopportunity; to seize every opportunity to ensuregrowth and to grow with a Human facethat drives us. Jaiprakash Gaur -ChairmanVISION STATEMENT“To be dynamic and vibrant responsive to the changing economic scenario: and flexibleenough to absorbEnvironmental and physical fluctuations. Harness and inherentstrength of available human resource and materialhave a capacity to learn from successand, more than anything else, ensure Growth with human face “MISSION STATEMENT“Our solitary Mission is to achieve Excellence in every sector that we operate in - be itEngineering & Construction,Cement, Real Estate or Consultancy. To augment our corecompetencies and adopt the most comprehensivemodern technology to overtake theobstacles in our path of achievement.To obtain sustainable developmentandsimultaneously enhancing the shareholders’ value and fulfilling our obligations towardsbuilding a better India". 6|Page
    • SUBSIDIARIESThe Jaypee Group operates through its various subsidiaries in different business segments.Jaiprakash Power Ventures Limited (JPVL)The company with its operational power plants - 300 MW Baspa-II (Himachal Pradesh) and 400 MW Vishnuprayag(Uttarakhand) is India’s largest Private sector Hydropower producer and is on its way to be an integrated powerproducer with expansion in Thermal & Power Transmission.www.jppowerventures.comJaypeeKarcham Hydro Corporation Limited (JKHCL)The Government of Himachal Pradesh again invited the group for the KarchamWangtoo a 1000 MW project. Thegroup formulated JKHCL for this project. Still under execution, the project is to commence its operations in theyear 2011.Jaypee Arunachal Power LimitedThe company is setting up two hydropower projects - Lower Siang Project (2700 MW) and the Hirong Project (500MW) in Joint Venture with the Government of Arunachal Pradesh.Bina Power Supply Co. LimitedBPSCL, the wholly owned subsidiary of JPVL, is setting up a Coal based Thermal Power Plant of 500 MW (2x250MW) in the first phase against the total proposed capacity of 1500 MW at Bina, Distt. Sagar, MP.Jaypee Power Grid Ltd. (JPL)JPL has been formed for execution of the transmission system between Wangtoo in Kinnaur district of HimachalPradesh &Abdullapur in Yamuna Nagar district of Haryana for evacuation of 1000 MW power fromKarchamWangtoo HEP in Himachal Pradesh.www.jaypeepowergrid.comBhilaiJaypee Cement Limited (BJCL)Incorporated in the state of Chhattisgarh as a Joint Venture with Steel Authority of India Ltd. (SAIL). The saidcompany is to produce a 2.2 MTPA split-located Cement Plant at Bhilai in the State of Chattisgarh and at Babupur,Satna in the State of Madhya Pradesh.www.bjcl.co.inGujarat Jaypee Cement & Infrastructure Limited (GJCIL)The Group has signed an Agreement with Gujarat Mineral Development Corporation Limited (GMDCL) for settingup of a 2.4 MTPA capacity cement manufacturing plant with captive power station and captive Jetty in districtKutch of Gujarat.BokaroJaypee Cement Limited (BOJCL)BOJCL, the second joint venture between the Company and SAIL with management control vested in the Company,is incorporated to set up a 2.1 MTPA capacity cement plant at Bokaro in Jharkhand.Madhya Pradesh Jaypee Minerals Limited (MPJML)A Joint Venture company between JAL and the Madhya Pradesh State Mining Corporation Limited (MPSMCL) todevelop the Amelia (North) Coal block. 7|Page
    • PRESENCE ACROSS INDIAWith its solitary mission is to achieve excellence in every sector that the group operates in - be it Engineering &Construction, Cement, Real Estate or Consultancy, the Jaypee Group has marked its presence all over the nationovertaking the obstacles in path of achievement. The group has not only obtained sustainable development butalso enhanced the shareholders’ value and fulfilled obligations towards building a better India. 8|Page
    • PRODUCTSJaypee produces a wide variety of cements, which are specifically designed to cater to the customer’srequirements 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, therelevant 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 technologyfrom the globally leading technology providers. Extensive Instrumentation & fully automatic and computerizedprocess control system, custom designed Quality Control software like QSO Expert and CADES in the Mines, CrossBelt Expert Analyzer using the Prompt Gamma Neutron Activation Analysis - for the first time in India, X-RayFluorescence and X-Ray Diffraction analyzers and optical microscope, enable production of cement of the highestquality consistently on a sustained basis. JaypeeRewa Plant Quality control laboratory is accredited laboratoryfrom National Accreditation Board for Calibration & Testing Laboratories, for chemical and mechanical Cementtesting.All brands are marketed in attractive HDPE bags, containing 50 Kgs of quality cement from Jaypee. Bags areidentified with a conspicuous Jaypee Logo, which also over the years has come to be regarded as a “Hallmark” ofquality. Jaypee produces & markets both Portland Pozzolana Cement (PPC) & all grades of Ordinary PortlandCement (OPC). A brief introduction of each brand is enumerated as below:-JAYPEE CEMENT (PPC)Jaypee Cement (PPC) is a market leader among all blended/composite cements in the markets of U.P, Bihar, M.P.,Punjab, Haryana, and Delhi& Nepal. Its unique design and blend, with high strength clinker and superior quality flyash has made it the popular cement for construction of large number of strong and durable structures in thesestates. 9|Page
    • Qualities of Jaypee Cement PPCUnmatched characteristics of Jaypee Cement (PPC) which form the basis of sound & durable Construction are: Better workability due to spherical shape of fly ash particles and better slump retention. Better palpability – provides more cohesive concrete and mortar. Superfine particles provide great finish to the structure. Provides un-segregated concrete of better integrity. Low heat of hydration. Reduced shrinkage and swelling. Better pore refinement, reduced permeability. Better resistance to chloride and sulphate attack Better resistance to alkali-silica reaction. Resistance to corrosive attack on steel reinforcement. Reduced lime leaching. High compressive strength. High modulus of elasticity especially at later ages. Improved bondage of concrete to steel. Long term strength gain.USAGE:-Jaypee Cement (PPC) is being used for a number of applications like housing, commercial complexes, roads, wells,canals, dams etc. which establishes Jaypee preferred choice of the discerning customer. It is particularly well suitedfor the tropical climatic conditions of India. 10 | P a g e
    • ORDINARY PORTLAND CEMENT43 Grade Conforming to IS: 8112-198953 Grade Conforming to IS: 12269-198753 S Grade Conforming to IRST-40(53 S)Jaypee Cement (OPC-43 Grade)Jaypee Cement (OPC-43 Grade) is produced from enriched limestone most suited to make high quality clinker,which on grinding gives a cement with characteristics surpassing those specified in IS: 8112 1989. Jaypee Cement(OPC-43 Grade) is available in 50 Kgs HDPE bags of a distinctive design and cover. Jaypee Cement (OPC-43 Grade),has emerged as the top choice of Engineers and Engineering Companies engaged in construction of mega projects– such as National Highways, Bridges, Transmission lines, power plants, Industrial and Residential structures.Jaypee Cement (OPC-53 Grade)One of the very few cement manufacturers having the potential to manufacture this special grade of super finecement which due to its enhanced quality and performance parameters has been approved by the RDSO of IndianRailways for manufacture of “RAILWAY SLEEPERS”.Jaypee Cement (OPC-53 S Grade) is also used in heavily loaded or pre stressed structures, which are subjected tohigh dynamic loads due to rapidly moving volumes, be it a train passing on the railway sleepers or a great volumeof water moving at high speed to generate electricity in a penstock . Source: http://www.jalindia.com/cementbrands.htm 11 | P a g e
    • PRICEIn cement industry price is the key factor that differentiate various competitors’ brands. The prices of differentbrands in the same segment remain more or less similar, with just a difference of 2-5 rupee per bag. Sometimesprice varies with the type of order placed by the customer (trader or non-trade).Pricing decisions in the cement industry largely depend on the price of the inputs like clinker, other raw materials,excise duties and taxes and the general operating profits. Generally increase or decrease of input cost affects allbrands in the market. Most of the cement companies offer a 5% -10% margin to the dealer and particular amountof money against per tonnes of the sales to the sales organizers for promoting their sales in his region. Due tointernal competition, the dealers pass on this advantage to the customers by reducing their own margins by 2- 3%.This is a cause of concern for the cement companies as they are not able to fix the prices and have to keep aconstant check on the market. Cement companies offer lot of discounts like cash discounts, volume discounts,seasonal discounts, foreign tours and allowances to dealers for promoting healthy sales.Jaypee produces a wide variety of cements, which are specifically designed to cater to the customer’srequirements 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. Thus basic prices fordifferent brands of JAYPEE CEMENT in Ghaziabad are given below:JAYPEE CEMENT (PPC) PPC stands for PORTLAND POZZOLANA CEMENT Price of Jaypee Cement (PPC) containing 50 Kgs is INR 270-320 per bag.Jaypee Cement (OPC-43 Grade) Jaypee Cement (OPC-53 Grade)OPC stands for Ordinary Portland CementPrice of Jaypee Cement (OPC-43 Grade INR. Rs.250-340per bag contains 50 Kgs is INR 250-340 per bag 12 | P a g e
    • DISTRIBUTION NETWORKJaypee cement has around 156 cement dumps and all are networked using State-of-the-art TDM/TDMA VSATsalong with a dedicated hub to provide 24x7 connectivity between the plants and the points of cementdistribution.This insures “track – the – truck” initiative and provides seamless integration. This initiative is the firstof its kind in the cement industry in India.JAL has set up new capacities in Northern, Central, Western & Southern parts of the country and is targeting acapacity of 26 MTPA in 2010 and 32.80 MTPA by 2012, along with Captive Thermal Power Plants (CPPs) totaling375 MW.Now the group has 12 integrated cement plants supported by 375 MW of captive thermal power, 9 split locationplants, 11 railway sidings and a jetty, giving the group a pan-India presence in the cement sector. Source:http://www.jalindia.com/geographicalspread.htm 13 | P a g e
    • Jaypee Cement Blending Unit (JCBU) JaypeeAyodhya Grinding Operations (JAAGO) Village-SadwaKhurd, ParaganaArail P.O HusainpurSudhana, Village Khanaura Tehsil-Bara, Distt. Allahabad (U.P.) Teh: Tanda, Distt. Ambedkar Nagar (U.P) Phone: (0532) 2425012 Phone: (05273) 284809, 281020, 281015 Mob: 09956290958 Fax : (05273) 284609 Mob: 09935522345 CAPACITY – 1.0 MTPA CAPACITY – 0.6 MTPA Dalla Cement Factory (DCF) Chunar Cement Factory (CCF) (A Unit Of Jaiprakash Associates Ltd.) (A Unit Of U.P Cement Plant) S.H.5,Kota, PO: Dalla, Sonebhadra(UP) P.O. Chunar, Mirzapur (U.P)-231311 Phone : (05445) 265778, 265801 Tel: (05443) 222926, 222265, 222602 Fax : (05445) 265776 Fax:(05443) 225079 CAPACITY – 0.5 MTPA CAPACITY – 2.5 MTPA JaypeeRewa Plant (JRP) JaypeeBela Plant (JBP) Jaypee Nagar P.O. Jaypee Nagar JaypeePuram P.O. JaypeePuram Rewa 486450 (M.P) Rewa 486450 (M.P) Tel : (07662) 400700, 229601-09 Tel : (07662) 409301 Fax : (07662) 229218 Fax : (07662) 229662 CAPACITY – 3.0 MTPA CAPACITY – 2.4 MTPA Jaypee Cement Grinding Unit (JCGU) Jaypee Himachal Cement Blending Unit (JHCBU) Village Khukhrana, P.O: Asan Kala, Vill. – Tikari (Pandiyana) Teh: Madlauda P.O. – Khilian, Tehsil – Nalagarh, Distt.Panipat (Haryana) Solan (H.P.)-174101 Phone: (0180) 2566811 Phone: (01795) 229100, 266937,266934 Phone: (0180)2566812 Fax: (01795) 266935 Fax: (0180) 2566164 CAPACITY – 2.5 MTPA CAPACITY – 1.5 MTPA JaypeeSidhi Cement Plant (JSCP) Gujarat Anjan Cement Limited (GACL) JaypeeVihar, Majhigawan “Sewagram” Vill. Vayor, Taluka – Abdasa P.O. Bharatpur, Sidhi – 486776 Distt.Kutchh (Bhuj), Gujarat – 370511 Phone: (07802) 276701 - 276714 Phone: (02831) 279200 Fax: (07802) 276715 Fax : (02831) 279279 CAPACITY – 2.0 MTPA CAPACITY – 2.4 MTPAJaypee cement division has 7 state of the art fully computerized ingenerated cement plants- ICP, 6 grinding units &2 blending units with an aggregate capacity of 21.3 MTPA (million tonnes per annum.)JAL is in the process of setting up new capacities in Northern, Central, Western & Southern parts of the countryand is targeting a capacity of 26 MTPA and 32.80 MTPA, along with Captive Thermal Power Plants (CPPs) totaling375 MW.0Once the expansion plans have been implemented, the group will not only have 12 Integrated Cement Plantssupporting 375MW of captive thermal power but also 9 split location plants, 11 railway sidings and a jetty, givingthe group a pan-India presence in the cement sector. 14 | P a g e
    • Distribution ChannelA channel to market is the method of getting the product into the customer’s hand. Channel components vary withchange in category of sale (direct sale or indirect sale). In direct sale the product is delivered to end customerdirectly from manufacturers. But in indirect sales channel involves various components such as sale promoters,distributors, retailers. Most of the companies have two tier distribution channels i.e. they only havedistributors/dealers and retailers whereas Jaypee cement follows three tier distribution channels. They includesales promoters in their distribution channel to promote their sales. Companies invariably hire C & F agents totransport cements to own or government warehouses either via roadway or railways. Incase of exports, cementreaches the nearest port via roadways or railways and is then transferred to the importing country.Domestically, from C & F agents or warehouses the cement is transported to the dealers/distributors and in turn tosub-dealers who finally sell it to the end users. There may or may not be physical ownership of goods. In thesecond case, dealers and sub dealers take order from buyers and place it to the companies, co -ordinate andmonitor the timely dispatch of said orders, transportation of goods and final delivery. Distributor network incement industry is of high importance and companies are compelled to hire them as the companies do not reallyhave that rapport and touch with the end consumer. The distributors have storage facilities which help them incontrolling the entire supply chain as they are the ones who bring orders. 15 | P a g e
    • PROMOTIONJaypee Cement’s advertising has created brand awareness, highlighted what the brand has to offer and hasconsistently brought all of it top-of-the-mind for the customer. But the outreach effort does not end there. JaypeeCement has recognized the importance of communicating to and involving key players who influence the finalbrand choice. These include channel partners, contractors and masons, on whom Jaypee cement focuses byinitiating and developing innovative activities and promotions. This helps build the Jaypee cement family so thatcustomers get a high degree of personalized service and professional guidance to facilitate their final decision.The company also does press releases to tell about their achievements and upcoming projects to market. Jaypee Group to Invest Rs 33,000 Crore in Gujarat New Delhi, January 15, 2011: “Jaiprakash Associates Ltd (JAL) has committed to invest Rs 33,000 crore more in Gujarat over the next 3 to 5 years. Hon’ble CM of Gujarat, Shri Narendra Modi inaugurates Jaiprakash Associates cement plant in Gujarat “JAL invested Rs 1500 crore in the cement plant having capacity of 2.4 MTPA JAL’s first cement plant in Gujarat” Jaiprakash Associates to set up cement plant in Assam. “Total project cost is Rs 1050 crore 2.00 MMTPA plant in JV with Assam Mineral Development Corporation Limited” 16 | P a g e
    • INDUSTRY OUTLOOKCement is one of the core industries in India which plays a vital role in the growth and expansion of the nation. Theindustry places itself at an important place because of its strong linkages to other sectors such as Construction,Coal, Power and Transportation. At present India is the second largest producer of cement around the globe.Keeping in tune with global standards the Indian cement industry has transited itself into more advanced stage. Itis engaged in several varieties of cement such as ordinary Portland cement (OPC), Portland Pozzolana Cement(PPC), White cement, etc. The products are produced in compliance with the Bureau of Indian Standards (BIS)Specifications and Standards to make their quality comparable with the best in the world.At present as per Cement Manufacturing Association (CMA, India) there are around 365 mini and 140 largecement plants in India with combined production capacity of approximately 234 million tones (Mt). Governmentinitiatives in the infrastructure sector and the housing sector provide stimulus towards growth of cement industryin India.Currently, the top Players in Indian cement industry as per the data available on websites are Ultratech, Ambuja,ACC, Jaiprakash Associates, India cements, Shree cement. These companies collectively hold more than half of thecement market of India. Over all there are around 40 players in the industry across the country.Due to the general economic slowdown, financial institutions have tightened their credit norms. This led to a creditcrunch and impacted upcoming real estate, infrastructure and other projects. With that the demand for cementhas moderated. However, stimulus packages and agricultural income, government spending on the infrastructure,rural demand gives an impetus to the demand for the commodity. The cement industry is likely to maintain itsgrowth momentum and continue growing at around 8% to 8.5% in line with the development of the economy.According to data provided by CMA it can be concluded that Indian cement industry has performed better inFY2012. The industry has grown by 6.4% in 2011-12 as against less than 5% in 2010-2011. The cement productionhas increased from 137.16 million tonnes (MT) in 2010-2011 to 145 million tonnes (MT) in 2011-2012. While thecement dispatches increased from 136.18 MT to 143.96 (MT).The main drivers of cement demand are Housing Growth Buoyant real estate market Government spending in various infrastructure projects. 17 | P a g e
    • STRUCTURE OF THE INDIAN CEMENT INDUSTRY It is a fragmented industry. There are 40 cement companies in India, operating 140 large and 365 mini plants, where majority of the production of cement (94%) in the country is by large plants.HIGHLIGHTS OF INDIAN CEMENTINDUSTRY AS ON 31 ST MARCH 2011STATISTICS –LARGE CEMENT PLANTS STATISTICS –MINI & WHITE CEMENT PLANTSCompanies (Members) (Nos.) 42 Cement Plants (Nos.) 365Cement Plants (Nos.) 140 Installed capacity (Mn.t) 11.10Installed capacity (Mn.t.) 234.3 Cement Production (Mn.t) 2010-11 6Cement Production (mn.t.)2009-2010 168.29Plants with capacity Million tones 97& above (Nos.)Manpower employed(approx.) 120000Turnover in 2010 (Mn. US$) around 18000 Source :CMA , IndiaCement industry is being segmented regionally i.e. Central Souther Region Region Northern, Central, Western, Southern and Eastern. 12% 36% Cement, being a bulk item transporting it over long Westerndistances can prove to be uneconomical as it attracts Region 16%very high amount of freight. Northern Region EasternThus, it has resulted in cement being largely a regional 22% Regionplay with the industry divided into five main regions. 14% 18 | P a g e
    • Regional (capacity) Segmental Information Source: http://www.iseindia.comIndia has total capacity of 257 MT in FY 2010 comprised of Northern Region 55.6 MT, Central Region 30.7MT, Eastern Region 36.89 MT, Western Region 40.4 MT and Southern Region 93.4 MT.Rajasthan, Andhra Pradesh, TamilNadu, Madhya Pradesh and Gujarat are the prominent cement industrycontributor states.The southern region having the biggest share (36 %), it generally has an excess capacity trend in the pastowing to profuse availability of limestone whereas the western and northern regions generally have moredemand than availability. 19 | P a g e
    • PRICING THE CEMENTThe demand for cement heavily depends on the level of development and the rate of growth of the economy. Atpresent there are no actual substitutes for this product. The demand for cement is, therefore, price inelastic. Thisimplies that price cutting does not help in boosting the demand in an oversupply condition. At the same time ifsupply falls short of demand, the prices can increase substantially without hurting the demand. This makes theindustry conducive for growing monopolies.Since the government directs a main portion of the cost of production, through administered prices of fuel andpower and through taxes, there is very little scope for cost cutting. The companies can therefore either raiseprices or volumes in order to increase their profits. In a competitive market scenario, it is difficult for a singlemanufacturer to control prices. The companies can increase their volumes or market share through productdifferentiation or through acquisitions. There is limited scope of product differentiation given the nature of theproduct. One of the key factors that seem to have a major say on stock price movements of cement companies isthe price of cement. 20 | P a g e
    • PEST ANALYSIS Technology Social Environment Political EconomicalPEST ANAYLSYS aid us in understanding the big picture of the Political, Economic, Socio-Cultural and Technologicalenvironment in which the industry operates in.PoliticalThe price of cement is primarily governed by the coal rates, power tariffs, railwaytariffs, freight, and royalty.Interestingly government controls all of these prices. Government is also one of the biggest consumers of thecement in the country. Most state governments, in order to attract investments in their respective states, offerfiscal incentives in the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff for5 years, while Gujarat offers exemption from electric duty.Government Initiatives The Government of India has approved a package of fiscal incentives and other concessions for the North East Region, namely the North East Industrial and Investment Policy, 2007 In a bid to attract foreign investors to its ambitious highways building programme, the Ministry of Road Transport plans to roll out projects worth US$ 120 billion by 2016 With an aim of accelerating and sustaining growth in the cement industry the Government has taken various measures in the Union budget 2011-12. The infrastructure sector has received an impetus in the form of improved funds and tax related incentives offered to attract investors for tapping the infrastructure opportunities around India. Introduction of tax free bonds, formation of infrastructure debt funds and formulating a comprehensive policy for developing public private partnership projects (PPPs) are some of the steps that will provide required stimulus for growth. 21 | P a g e
    • Measures taken in the Union Budget 2011-12 include: Allocation of Rs 214,000 crore (US$ 46.5 billion) for infrastructure in 2011-12. This is an increase of 23.3 per cent over 2010-11 Government to come up with a policy for developing PPP projects IIFCL to achieve cumulative disbursement target of Rs 20,000 crore (US$ 4.3 billion) by March 31, 2011 and Rs 25,000 crore (US$ 5.4 billion) by March 31, 2012 Under take out financing scheme, seven projects sanctioned with debt of Rs 1,500 crore (US$ 325.6 million). Another Rs 5,000 crore (US$ 1.1 billion) will be sanctioned during 2011-12 To boost infrastructure development, tax free bonds of Rs 30,000 crore (US$ 6.5 billion) proposed to be issued by Government undertakings during 2011-12 Source:http://www.ibef.orgEconomicCurrent ScenarioAt present, our country is the second major cement producing country after China; we have 140 large and 365 minicement plants. Leading players in the industry are Ultratech Cement, Gujarat Ambuja Cement Limited, JK Cements,ACC Cement, Madras Cements etc. Indian Cement Industry is engaged in the production of several varieties ofcement such as Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace SlagCement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, WhiteCement, etc. Their production is strictly as per the Bureau of Indian Standards (BIS) specifications to make theirquality comparable with the best in the world.The demand for cement mainly depends on the level of development and the rate of growth of the economy.There are no close substitutes for cement and hence the demand for cement is price inelastic. During the October– 2011 14.78 MT were produced and 14.38MT was consumed. Source: http://www.iseindia.comAs per the data available on iseindia.co, for the FY 2011 – 12 (Apr - Oct), 97.84 MT was consumed where 98.91 MTwas produced. During the first half of the year, there was marginally poor off take in cement demand due topassive construction activity, which leads to excess supply, thus putting downward pressure on realizations. Thishas been coupled with rise in input costs, especially prices of coal and petroleum products. As a result, both thetop line and bottom line have been affected, leading to demand supply mismatch. And, this demand supplymismatch scenario is expected to prevail for some time until we have stable prices in substitute products. 22 | P a g e
    • Growth of Cement IndustryOver the past ten years, the cement industry has grown in tandem with India’s economic growth. And this growthin domestic cement market is likely to remain strong, with the resumption in the housing markets, regulargovernment spending on the rural sector and infrastructure. The average growth in the demand for cement in thecountry was 9.1%, while its average GDP Growth was 7.1% during the period of FY01-FY10.Cement Manufacturing Association (CMA) is targeting to achieve 550 MT capacities by 2020 as revealed inresearch paper published at Iseindia. Few international cement players like Holcim, Lafarge, Italcementi, etc. havealready entered the domestic cement market seeing the potential growth of this industry. Our country standssecond among major cement producing country following the China having a total capacity of around 230 MT(including mini plants). However, on account of low per capita consumption of cement in the country (156Kgs/year as compared to world average of 260 Kgs) there is an enormous potential for growth of the industry.Cement dispatches rose by 4.5% to 2088 lakh tonnes during thefinancial year ended March 2011, compared to the previous year, asper data released by the Cement Manufacturers Association.A sharp growth in dispatches was recorded by Ultra Tech Cementand Jaiprakash Associates at 87.2% and 38.6%, respectively.Although growth in demand for cement has slowed down infinancial year 2010-2011, cement companies have been raisingprices since February 2011 on account of higher raw material prices.A sharp rise in cost of raw materials, which account for 70-75% ofthe cost of cement production, has been exerting downwardpressure on profit margins of cement manufacturers.This Increase 23 | P a g e
    • in cement prices resulted in higher realizations for the companies. However, it did not compensate fully for the risein costs.SocialUsually, the cement industry in India consists of both the organized sector and the unorganizedsector. Organizedsector comprises of the well-known cement manufacturing companies whilethe main players of the unorganizedsector are the regional and local cement-producing units invarious states across the state.Key Players in Indian Cement Industry 24 | P a g e
    • DOMESTIC PLAYERS:Jaiprakash Associates LimitedJaiprakash Industries, now known as Jaiprakash Associates Limited (JAL) is part of the Jaypee Group withbusinesses in civil engineering, hospitality, cement, hydropower, design consultancy and IT. Jaypees cementbusiness is housed in Jaiprakash Associates, a listed company that has a cement-making capacity of 28 milliontonnes a year, making it Indias third-largest cement producer, behind capacities owned by Germanys Holcim andthe Aditya Birla Group.The company is in the midst of capacity expansion of its cement business in Northern, Southern, Central, Easternand Western parts of the country and is slated to be a 35.90 MnTPA by FY13 (expected) with Captive ThermalPower plants totaling 672 MW.Jaiprakash Associates has decided to concentrate on its core business ofconstruction and engineering and leave its cement plant to its subsidiary JaypeeRewa Cement Ltd. The companymanufactures a wide range of world class cement of OPC grades 33, 43, 53, IRST-40 and special Blends ofpozzolana cement. At present, the company has a market share by installed capacity of 7 per cent with the cementdivision contributing Rs.13, 904.07crore to revenue in 2010-11.The Jaypee Group — which has been in the limelight after a group company staged Indias first Formula One raceon October 30 — has said it plans to raise capacity to 35 million tonnes by the middle of 2012. The cementbusiness generated revenues of Rs 5,455.79 crore in FY 2010 but that was dwarfed by debt of Rs 11,500 crore.The groups three listed companies have a total debt of over Rs 40,000 crore, the result of rapid expansion. Apartfrom Jaiprakash Associates, the cement-maker, the other listed firms are JaypeeInfratech, which executes realestate and infrastructure projects, and Jaiprakash Power Ventures, which builds power plants and transmissionsystems."Right now, the type of solid assets the company has and the growth plan the company is working on would enablethe company to deliver and register growth, not just comparable to but better than peers."Associated Cement Companies Ltd (ACCL)ACC (ACC Limited) is Indias foremost manufacturer of cement and concrete. ACCs operations are spreadthroughout the country with 16 modern cement factories, more than 40 Ready mix concrete plants, 21 sales 25 | P a g e
    • offices, and several zonal offices. It has a workforce of about 9,000 persons and a countrywide distributionnetwork of over 9,000 dealers.The history of ACC spans a wide canvas beginning with the lonely struggle of its pioneer F E Dinshaw and otherIndian entrepreneurs like him who founded the Indian cement industry. Their efforts to face competition forsurvival in a small but aggressive market mingled with the stirring of a countrys nationalist pride that touched allwalks of life - including trade, commerce and business.The house of Tata was intimately associated with the heritage and history of ACC, right from its formation in 1936up to 2000. Between the years 1999 and 2000, the Tata group sold all 14.45 per cent of its shareholding in ACC inthree stages to subsidiary companies of Gujarat Ambuja Cements Ltd (later called Ambuja Cement Ltd), who thenbecame the largest single shareholder in ACC.A new association was forged between ACC and the Holcim group of Switzerland in 2005. In January 2005, Holcimannounced its plans to enter into a long-term strategic alliance with the Ambuja Group by acquiring a majoritystake in Ambuja Cements India Ltd. (ACIL), which at the time held 13.8 per cent of the total equity shares in ACC.Holcim simultaneously announced its bid to make an open offer to ACC shareholders, through Holcim Cement Pvt.Limited and ACIL, to acquire a majority shareholding in ACC. An open offer was made by Holcim Cement Pvt.Limited along with Ambuja Cements India Ltd. (ACIL), following which the shareholding of ACIL increased to 34.69per cent of the Equity share capital of ACC. Consequently, ACIL filed declarations indicating their shareholding anddeclaring itself as a Promoter of ACC. Presently market capitalization of ACC is Rs. 22,826.53 cr.Ultratech CementUltratech Cement Limited is Indias largest manufacturer of cement with an installed capacity of 52 Million TonnesPer Annum.Ultratechs products include Ordinary Portland Cement, Portland Pozzolana Cement and Portland BlastFurnace Slag cement. Ultratech is the most trusted and preferred brand of Engineers, builders, contractors andindividual house builders.Ultratech’s success is attributed to its diverse product offerings. Different products are handled by differentproduct groups, which are also known as profiles. Product groups decentralize control and encourage innovation.They also ensure better customer segmentation, which in turn leads to better customization of product offeringsand guarantees cent percent customer satisfaction. Ultratech Cement, Birla White, Ultratech Concrete, UltratechBuilding Products and Ultratech Solutions are the different profiles of Ultratech, each catering to varied needs. Thisversatility has been a key competitive advantage for Ultratech over the years. 26 | P a g e
    • Company has produced 32.92 MMT of cement with effective capacity utilization of 81% in 2011. Company’s Netturnover stood at Rs.13210 crore with net profit after tax of Rs.1404 crore.Ambuja Cements Ltd (ACL)Ambuja Cements Ltd. (ACL) is one of the leading cement manufacturing companies in India. The Company, initiallycalled Gujarat Ambuja Cements Ltd., was founded by Narotam Sekhsaria in 1983 with a partner, Suresh Neotia.Sekhsaria’s business acumen and leadership skills put the company on a fast track to growth. The Companycommenced cement production in 1986. The global cement major Holcim acquired management control of ACL in2006. Holcim today holds little over 46% equity in ACL. The Company is currently known as Ambuja Cements Ltd.Its current cement capacity is about 25 million tonnesSHREE Cement Ltd.Shree Cement Ltd (SCL) is present in the cement and power sector. It is the largest cement producer in North Indiaand among top six cement manufacturing groups in the country. It has cement capacity of 13.5 million ton andpower capacity of 560 MW. SCL has manufacturing facilities at Beawar and Ras in Ajmer and Pali district andgrinding units at Khushkhera, Suratgarh and Jaipur respectively in Rajasthan and Roorkie in Uttarakhand. SCLboasts of highly recognized brands like Shree Ultra Jung Rodhak, Bangur Cement and Rockstrong. SCL is an ISO9001, ISO 14001, OHSAS 18001 and SA 8000 certified company and pursues best practices in Manufacturing,Energy Conservation and Environment Management. SCL has received numerous awards and recognitions atnational and international levels for Excellence in Energy Management, Environment Management and CorporateGovernance practices.Company’s turnover for 12 months period of April’11-March’12 was Rs 4625 cores. SCL is a consistent dividendpaying company (120% dividend for April’11-March’12). SCL commitment to energy efficiency and environmentmanagement is reflected in the fact that it set up Waste heat recovery plants of 46 MW which is the largest suchcapacity in the world cement industry excluding china. SCL commissioned Unit VIII in World Record time of 330days against average period of 630 days. It enjoys approx. 19% market share in North India and is leader in marketsof Rajasthan, Delhi and Haryana. 27 | P a g e
    • FOREIGN PLAYERS:HeidelbergHeidelberg Cement is the global market leader in aggregates and a prominent player in the fields of cement,concrete, and other downstream activities, making it one of the world’s largest manufacturers of buildingmaterials. In 2011, Group revenue amounted to €12.9 billion. The core activities of Heidelberg Cement include theproduction and distribution of cement and aggregates, the two essential raw materials for concrete. Wesupplement our product range with downstream activities such as ready-mixed concrete, concrete products, andconcrete elements, as well as other related products and services. Around 52,500 employees in more than 2,500locations make sure on a daily basis that our slogan “for better building “is brought to life. Source: www.in.heidelberg.com/Italcementi GroupThe Italcementi group is one of the largest producers and distributors of cement with 60 cement plants, 547concrete 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. Allinitiatives in southern India are routed through the joint venture company, while Italcementi is free to buy deals .Inits individual capacity in northern India. The joint venture company has a capacity of 3.4 million tonne and amarket share of 2.1 per cent Source: www.italcementigroup.com/ENG/Italcementi+Group/A.../India/Lafarge IndiaLafarge the worlds largest cement manufacturer entered the Indian market in 1999 through its cement business,with the acquisition of Tata Steels cement activity. This acquisition was followed by the purchase of the RaymondCement facility in 2001.Lafarge is one of the leading players in the cement industry in Eastern and Central India, with its leading brands -Concreto and Dura guard. The company currently has four cement plants in India: two integrated cement plants inthe state of Chhattisgarh (Sonadih and Arasmeta) and Grinding Units in Jharkhand (Jojobera) and West Bengal(Mejia).Lafarges total cement production capacity in the Indian market is currently over 8 million tons and the Group haslaunched an ambitious program to more than double its capacity in the next five years. Source: http://www.lafarge.in/ 28 | P a g e
    • HolcimHolcim, earlier known as Holder bank, has a cement production capacity of 141.9 million tonne. It is a key player inaggregates, concrete and construction related services. It has a strong market presence in over 70 countries and isa market leader in South America and in a number of European and overseas markets. Holcim entered India bymeans 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 theregion adjoining the Indian Ocean. Holcim also intends to use India as an additional base for its IT operations, R&Dprojects as well as a procurement sourcing hub to generate additional synergies and value for the group. Source: http://www.holcim.comTECHNOLOGYFrom mining to production the entire process depends on technology. Several companies have adopted innovativestrategies and technologies to reduce their operational and production costs. The Government of India is alsolooking forward to study and possibly acquire new technologies from the cement industry of Japan. Thegovernment is discussing technology transfer in the field of energy conservation and environment protection tohelp improve efficiency of the Indian cement industry.Cement industry has made tremendous strides intechnological up-gradation and assimilation of latest technology. Cases of successful use of alternate fuels in cement production Company/Plant Strategy Benefit Madras Cement’s Use bioenergy through burning of Annual Cost Savings of USD 1.7 Alathiyur Plant coffee husk and cashew nut shells million India Cements Ltd.’s Use low sulphur heavy stock sludge Annual savings of USD 6500 approx. Dalavoi Plant as alternate fuel Ultratech Gujarat Use tyre, chips and rubber dust as Reduction of about 30,000 tonnes Cement Works alternate fuel of carbon emission annually Source: CMA 29 | P a g e
    • PORTERS FIVE FORCES MODELThreat of New Entrants (High):The existing companies are struggling hard to expand their productioncapacity to face therising competition. With the announcement of the Indian Government in the budget for theFY2010-2011 to pump in more than Rs.1.73 trillion in infrastructure (Thomson Reuters Corporate), the cementindustry becomes a very attractive market to enter, thus increasing the threat ofnew entrants.But the high capital costs acts as a major entry barrier for the entry of new players. Cement being a high volumelow value commodity results in high freight costs, which makes cement imports economically unfeasible. Acquisitions by foreign cement giants in Indian Cement Industry Since 1999S.No New Entrant Country Purchased 1 Holcim Ltd. Switzerland 14.8% of Ambuja Cement 2 Lafarge Cement France Raymond Cement TISCO 3 Italcementi Italy Zuari Industries 4 Heidelberg Germany Indo Rama Cement Mysore Limited Diamond Cement Companies that have announced their plans to enter the Indian Cement Industry in future Future Companies Current BusinessReliance ADAG InfrastructureWonder MarblesMurli Agro Agro Products 30 | P a g e
    • Competitive rivalry between existing players (High):Being a non-consolidated industry therivalry is strong among the players. During the last few years the industry has become more consolidated with theTop 3 players having a combined market share of 70 percent in 2011-12 as compared to 32 percent in 1999-2000.Still rivalry persist to great extent to acquire maximum market share.The Indian cement industry has large number of cement producers thus making it a lowconcentration market. Thefour biggest cement players in the Indian cement industry are:1. Ultratech cement2. Ambuja Cement3. ACC cement4. Jaypee CementBargaining power of Buyers (Low):In the present day context, cement producers have become morepowerful than buyer because of housing growth. In thecurrent situation, most of the companies are moving intodirect marketing, thus removingmiddlemen.Despite enough competition from high institutional demand of cement, small-timebuyers are still targeted as aprimary market by the cement companies.Around 80 percent of the total sales are being contributed by retail andthe rest by institutional sales. But as institutional players buy in bulk they get a discount of 5%-1. Thus the primarytarget isnot left with much bargaining power.Bargaining power of Suppliers (Low):The basic raw materials used in the cement manufacturingprocess are limestone, sand, shale, clay, and iron ore. The main material, limestone, is usually mined on site whilethe other minormaterials may or may not be mined there. Since all the raw materials are natural resources, theyare under the Government’s control. To mitigate the high costs of power the cement players have set up captivepower plants .Hence, Companies have to buy rights from the government to setup the cement plant. So there areno such suppliers in the cement industry.Threat of Substitutes (Low):Now-a-days Timber is also being considered as one of the substitutes ofcement. Inmany countries like Japan, Indonesia, Singapore etc. are now using timber in construction sincethoseareas are high earthquake affected. They now prefer timber which is cheap and long lastingfor years.But timbercannot be considered, as one of the major substitutes of cement, thereforecement is one of the main componentsof any construction. Without cement, construction workis next to impossible as it provides strength to thebuilding. 31 | P a g e
    • INDUSTRY SWOT ANALYSIS Strength Weakness Opportunities ThreatsStrengths: Double digit growth rate Cement demand has grown in tandem with strong economic growth; derived from:  Growth in housing sector 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 driverWeakness: Low value commodity Cement Industry is highly fragmented Industry is also highly regionalized which leads to threat of infiltration Low – value commodity makes transportation over long distances uneconomicalOpportunities: Demand–supply gap Substantially lower per capita cement consumption as compared todeveloping countries. Limited green field capacity addition in pipeline for next two years, leading to favorable demand – supply scenarioThreats: Rising input costs Government intervention to adjust cement prices Transportation cost is scaling high; bottleneck due to loading restrictions Coal prices climbing up; industry players say current shortage of coal in the country is estimated to be over 10 million tones 32 | P a g e
    • ROAD AHEADCement companies were able to raise prices as the demand picked up across the country. However, the demandfor cement is likely to subside during the monsoon season as construction activity slows down and interest onhome loans rise. Also, with new capacities likely to come on stream in the coming months, cement prices areexpected to fall from the current levels. Prices are expected to gradually recover post-monsoon. Availability of railwagons also affects dispatches, post rains, as railway wagons get diverted to transport fertilizers as a priority.Cement production in the country is estimated to increase to 315-320 million tonnes by end of financial year 2011-12 from the current 300 million tonnes, according to CMA. This reflects nearly 6% year-on-year growth inproduction compared to FY 2011. CMA is targeting to achieve 550 million tonnes capacity by 2020.Increased focus of cement companies using alternate fuels for manufacturing has likely to result in lower fuel costburden on the companies in the medium term period. Cement companies are using alternate sources like tyrechips, rubber dust, coffee & rice husk, hazelnut shells or paper sludge among other inputs for producing energy.However, coal will continue to remain the primary source of fuel for cement companies. 33 | P a g e
    • FINANCIAL ANALYSIS Jaiprakash Associates Ltd. Ratio Analysis Liquidity Ratio 2009 2010 2011 2009-2011 FY2010 FY2011Current asset 916160 1309899 1315233 43% 0% 44%Current liability 503670 585289 564665 16% -4% 12%Liquid Asset 793298 1154536 1148588 46% -1% 45%Current Ratio 1.81896877 2.238037961 2.329227064 23% 4% 28%Quick Ratio 1.57503524 1.972591318 2.034105177 25% 3% 29%The Liquidity ratios are mainly used to determine a companys ability to pay off its short-terms debts. The higherthe value of the ratio, the larger is the margin of safety that the company possesses to cover short-term debts.Current Ratio:It is an indication of a companys ability to meet short-term debt obligations; the higher theratio, the more liquid the company is. Current ratio is equal to current assets divided by current liabilities. If thecurrent assets of a company are more than twice the current liabilities, then that company is generally consideredto have good short-term financial strength. If current liabilities exceed current assets, then the company may haveproblems meeting its short-term obligations. Current ratio =Analysis:The current ratio of the company has increased by 28 % from FY09 to FY11. This increase is because of 44percent increase in company’s current assets with respect to 12 percent increase in its current liabilities fromFY09-FY11.The current ratio of the company was less than the ideal ratio which is 2:1; hence, we can say that company mighthave problems paying its bills on time. It might requireextra time for raising extra finance to pay its creditorsduring FY09. However, the ratio has been more than the ideal ratio in FY10 &FY11, indicating that the companypossesses the larger margin of safety to cover its current debts. It may also imply the inefficient use of cash andother short-term assets. 34 | P a g e
    • Quick Ratio: It is a measure of a companys liquidity and ability to meet its obligations. Quick ratio oftenreferred to as acid-test ratio, is obtained by subtracting inventories from current assets and then dividing bycurrent liabilities. Quick ratio is viewed as a sign of companys financial strength or weakness (higher numbermeans stronger, lower number means weaker).Quick Ratio=Analysis:Quick ratio of the company has shownsignificant increase of 29% from 2009-2011. The reason for this is45 percent growth in quick assets with respect to 12 percent growth in current liabilities from FY09-FY11. It reflectsthat the company is at a better financial position and is using its liquid assets efficiently to pay of its currentliabilities in FY11 than in FY09.Since thecompany’s quick ratio has been higher than ideal ratio which is 1:1 from 2009 to 2011, it implies thesufficient availability of cash within the company. Profitability Ratio 2009 2010 2011 2009-2011 FY2010 FY2011Net Profit 89701 170836 116778 90% -32% 30%Total Asset 2555706 3350940 3797208 31% 13% 49%Total equity 669801 850072 939737 27% 11% 40%ROA 3.50983251 5.098151563 3.075364847 45% -40% -12%ROE 13.3921866 20.09665064 12.42666831 50% -38% -7%Profitability ratios are used to assess a businesss ability to generate earnings as compared to its expenses andother relevant costs incurred during a specific period of time. For most of these ratios, having a higher valuerelative to a competitors ratio or the same ratio from a previous period is indicative that the company is doingwell.ROA Ratio:The return on assets ratio looks at the ability of a company to utilize its assets to gain net profit. 35 | P a g e
    • Analysis:The ROA of the company increased considerably from 2009 to 2010 by 45%. This shows that companywas making an effective use of its assets to generate profit in FY10. The reason for this surge wasan increase in netoperating profit by 90% compared to total assets which increased by 31%. It implies that the company was gettingfavorable returns on money invested.The ratiodecreased in the financial year 2011 by 40 percent from FY10.The reason for this fall is increase in assetsby 13% and decrease in company’s net profit by 32%. This decrease in ratio indicates that the company was in abetter financial position in FY10 as it generatedhigher net income from the utilization of its assetscompared to theFY11.ROE Ratio:ROE ratio measures how well a company uses reinvested earnings to generate additional earnings.It is used as a general indication of the companys efficiency; in other words, how much profit it is able to generategiven the resources provided by its stockholders. Investors usually look for companies with returns on equity thatare high and growing.Analysis:The ROE of the company increased considerably by 50 percent in FY2010. Its net profit increased by 90percent compared to a 27 percent increase in shareholder funds. This shows that company was able to satisfy itsshareholders in FY10 by proper utilization of funds.The ratio has decreased in the financial year 2011 by 38 percent from the financial year2010. This decline in ratioisthe result of a decrease of 32% in the net profit with respect to 11 percent increase in shareholder’s funds fromFY10. This means that the company was in a better position to satisfy its shareholders in FY10 than in FY11.Return on Capital Employed (ROCE):Return on capital employed establishes the relationshipbetween the profit and the capital employed. It indicates the percentage of return on capital employed in thebusiness and it can be used to show the overall profitability and efficiency of the business. ROCE should always behigher than the rate at which the company borrows; otherwise any increase in borrowing will reduce shareholdersearnings.ROCE 36 | P a g e
    • Analysis:ROCE has increased significantly by 131 percent from FY09 to FY10 because of increase in capitalemployed. The reason for this rise is the significant hike in EBIT by 211 percent with respect to an increase in thecapital employed by 35 percent from FY09-FY10, leading to increase in shareholders’ earnings.Due to the fall in EBIT by 4 percent and increase in capital employed by 17 percent from FY10 to FY11 the ROCEdecreased by 17 percent, leading to an overall increase of 91 percent in ROCE from FY09-FY11.This overall increasein ratio indicates that the company is more profitable in FY11 than FY09. Activity Ratio 2009 2010 2011 2009-2011 FY2010 FY2011Inventories 122862 155363 166645 26% 7% 36%Total Sale 614793 1167178 550963 90% -53% -10%Sundry Debtors 102204 228503 281063 124% 23% 175%Net Sales 223600 362272 493495 62% 36% 121%Fixed Asset 1189985 1451032 1830956 22% 26% 54%Inventory Turnover Ratio 5.00393124 7.512586652 3.306207807 50% -56% -34%Debtors Turnover Ratio 6.01535165 5.107932937 1.960282926 -15% -62% -67%Fixed Asset Turnover Ratio 0.18790153 0.249665066 0.269528596 33% 8% 43%Inventory Turnover Ratio:Inventory turnover ratio measures how well a company is turning theirinventory into sales.The costs associated with retaining excess inventory and not producing sales can be burdensome. If the inventoryturnover ratio is too low, a company may look at their inventory to appropriate cost cutting.Analysis:The inventory turnover ratio was 5.0 in 2009, 7.5 in 2010 and 3.3 in 2011. The inventory turnover ratiomeasures the velocity of conversion of stock into sales. The increase in ratio signifies that the company iseffectively managing its inventory and cutting its cost associated with retaining the inventory. 37 | P a g e
    • The ratio increased in FY10 by 50 %. This implies that the company was managing its inventory efficiently andreducing its cost associated with holding the inventory. The ratio decreased by 56 % in FY11 from FY10. The reasonfor this fall is significant fall in sales (53%) compare to 7% raise in inventory. This implies that the company wasmore efficient in managing its inventory in FY10 than FY11.Debtor Turnover Ratio:The debtor turnover ratio is used to calculate how well a company is managingtheir receivables. The lower the amount of uncollected money from its operations, the higher this ratio will be. Incontrast, if a company has more of its revenues awaiting receipt, the lower the ratio will be.Analysis:The debtor turnover ratio was 6.01 in 2009, 5.1 in 2010 and 1.96 in 2011. It implies companies’inefficiencyin managing its debtors.Fixed Asset Turnover Ratio:This ratio indicates the company’s ability to generate net sales revenuefrom its fixed assets such as property, building and other equipment. The higher the ratio, the better it is for thecompany.Analysis:The fixed assets turnover ratio of the company has increased from 0.18 in 2009 to 0.26 in 2011. Thereason for this increase is increase in net sales by 121 percent compared to increase of 54% in fixed assets. Thisimplies that the company is efficiently utilizing its assets to generate net sales revenue. 38 | P a g e
    • Leverage Ratio 2009 2010 2011 2009-2011 FY2010 FY2011Debt 1382621 1886479 2292806 36% 22% 66%Total Equity 669801 850072 939737 27% 11% 40%EBIT 125098 389352 375650 211% -4% 200%Interest Expenses 50432 105579 139418 109% 32% 176%Total Asset 2555706 3350940 3797208 31% 13% 49%Debt Equity Ratio 2.81619615 2.907716052 3.040713519 3% 5% 8%Interest Coverage Ratio 2.48052824 3.68777882 2.694415355 49% -27% 9%Debt Ratio 0.73807042 0.737634216 0.752518956 0% 2% 2% Leverage ratios are those accounting ratios that measure a company’s ability to meet its financial obligations.Debt Equity Ratio:Investing in a company with a higher debt/equity ratio may be riskier, especially intimes of rising interest rates, due to the additional interest that has to be paid out for the debt. It is importantto realize that if the ratio is greater than 1, the majority of assets are financed through debt. If it is smaller than 1,assets are primarily financed through equity.Analysis: Debtequity ratio has shown the gradual increase of 8 percent from 2009-2011. This increase in ratioindicates that the company has been aggressive in financing its growth with debt and could be at risk if the interestrates were also rising.Interest Coverage Ratio:Interest coverage ratio is used to measure a companys earnings relative to theamount of interest that it pays. The interest coverage ratio is considered to be a financial leverage ratio in that itanalyzes one aspect of a companys financial viability regarding its debt. 39 | P a g e
    • Analysis:The interest coverage ratio of the company has increased considerably by 49% from FY09-FY10. Thismeans that the company’s debt burden decreased to a great extent .There is increase inEBIT(by 211 %) in FY10with respect to the interest expenses (by 109%).The interest coverage ratio in 2011 of the company has decreased by 27 %, implying that the company is notgenerating enough profit to meetitsinterest payments on outstandingdebt in FY11. Consequently, the financialposition of the company is growing weak.Debt Ratio:This ratio implies how much the company relies on debt to finance assetsAnalysis:The Debt ratio of the companyincreased in FY11 to 0.75 from 0.73. The reason for this 2 percent increaseis 16 percent increase in debt in FY11 with respect to 13 percent increase in total assets. Thus, the company isunfavorable in the eyes of creditors as they prefer low debt ratios. The lower the ratio, the greater is the cushionagainst creditors’ losses. It also reflects that the company’s reliance on debt for asset formation is decreasing.Hence, making the company more risky. 40 | P a g e
    • Analysis of Consolidated Cash Flow Statement of Jaiprakash Associated Ltd. Jaiprakash Associates Ltd. Rs in lakhs Cash flow from Operating Activities 2009 2010 2011Net Profit before tax & exceptional items as per P&L account 94571 200679 308769Add backa) Depreciation 33260 47220 64635b) Deffered Revenue on account of advance against depreciation 6260 7530 7905c) Miscellaneous Expenses(Amortized) 3478 2015 1419d) Interest of Borrowings 70617 128638 187469e) Employee compensation expense 0 21194 0f) Loss on sale of Assets[Net] 747 98 179 114362 206695 261607 208933 407374 570376Deduct:a) Interest Income 13838 15840 23749b) Dividend Income 575 758 1561c) Profit on sale of shares from in beneficiary trust 0 131635 51316d) profiton sale/redemption of share/mutual funds 24 849 180e) other Income 60 119 426 14497 149201 77232operating Profit beforeWorking CapitalChanges 194436 258173 493144Deduct:a) (Increase)/decrease in Sundory Debtors 885 -68884 -121506 Less:Transfer from Transferor companies -808 0 0 1693 -68884 -121506b) (Increase)/decrease in inventory -27271 -34375 -24741 Less:Transfer from Transferor companies 485 0 0 -26786 -34375 -24741c) (Increase)/decrease in projects under develeopment -46374 -265268 -148225 Less:Transfer from Transferor companies 0 0 0 -46374 -265268 -148225d) (Increase)/decrease in other receivables -515 656 1114 Less:Transfer from Transferor companies 0 0 0 -515 656 1114e) (Increase)/decrease in loan & advances -112803 -117516 -105000 Less:Transfer from Transferor companies 5560 0 0 -107243 -117516 -105000 -179225 -485387 -398358 15211 -227214 94786Add:a) Increase/ (Decrease) in Trade payables & other liabilities 104721 161391 160930 Less:Transfer from Transferor companies -6210 98511 0 161391 160930 cash generated from operations 113722 -65823 255716Deduct:a) TaxPaid(Including frindge benefit tax) -37709 -35690 -80547Cash Inflow/(Outflow) from operating activities 76013 -101513 175169 Investing Activities B 2009 2010 2011 Outflow Rs in lakhs a) Purchase of fixed assets(including CWIP) -691329 -1050815 -1290924 less:Transfer from Transferor activities 19643 -671686 0 -1050815 0 b) Purchase of investments -107608 -181003 -341395 less:Transfer from Transferor activities 81963 -25645 0 -181003 0 c) Miscellaneous Expenditure -447 -2995 -301 d) good will on consolidation -10494 -18 -708272 -1234831 -1632620 Inflow a) sale/transfer of fixed assets 18825 2336 less:Adjustment is on account of Jaypee Hotels Limited, Gujarat Anjan Cement Limited and Jaypee Cement Limited amalgamating -18309 516 3702 with the Parent Company, Consequently extinguishing as subsidiary of the Parent Company w.e.f. 01.04.2008 b) sale of investments 10024 149185 310568 c) Interest received 17050 13204 22433 d) Dividend received 575 758 1561 e) Other Income 60 119 426 f) sale of share held in trust 0 168079 57316 28225 335047 394640 Deduct: tax paid on sale os shareheld in trust 0 -22371 -10228 Net cash used in Investing Activities -680047 -922155 -1248208 41 | P a g e
    • Cash Flow from Financing Activities 2009 2010 2011Inflow:a) Increase in Share capital 4606 311 36 Increase in Share Capital & Share Premium is on account of Conversion of Foreign Currency Convertible Bonds into (i) Conversion of Foreign Currency Convertible Bonds into Equity Shares. Correspondingly, the Borrowings have been decreased. (ii) Conversion of Equity Share Warrants into Equity Shares. Less: Shares allotted to Shareholders of Transferor 4301 305b) upfront payments of equity warrants 0c) Increase in security premium 53441 8348 144236 less:Adjustment is on account of Jaypee Hotels Limited, Gujarat Anjan Cement Limited and Jaypee Cement Limited amalgamating 4862 with the Parent Company, Consequently extinguishing as subsidiary of the Parent Company w.e.f. 01.04.2008 48579d) Increase in Minorty interest -431 9624 46857 less:Adjustment is on account of Jaypee Hotels Limited, Gujarat Anjan Cement Limited and Jaypee Cement Limited amalgamating 1585 with the Parent Company, Consequently extinguishing as subsidiary of the Parent Company w.e.f. 01.04.2008 1154e) Capital Reserve on Buy back of foreign currency convertible bonds 8664 5700 2929f) Increase in Reserves on account of Shares Allotted by Transferor Companies after 01.04.2008 but before valuation date 16278g) increase in borrowings 783298 1595093 914840 858278 1619076 1108898Outflow interest paid 67141 119503 178894 upfront payment of equity warrants adjusted 23970 dividend paid( including tax on dividend) 18023 19527 23601 109134 139030 202495 Net cash from financing activities C 749144 1480046 906403 Adjusted cash & cash equivalents D 546 0 -23 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS “A+B+C+D” 109315 97059 -166659 CASH AND CASH EQUIVALENTS AS (OPENING BALANCE) 246215 392141 848519 CASH AND CASH EQUIVALENTS AS (CLOSING BALANCE) 392141 848519 681860 Interpretation: Net cash used in investing activities increased from 2009 to 2011 .It was Rs. 680 crore in 2009 and then it increased to Rs.1248.208 crore in 2011.During the cash flow analysis it is observed that the cash outflowfor investing activity is higher for all the last three years compared to inflows. This implies that the company is concentrating on acquiring more and more fixed assets and investments than selling of its assets. During FY 09 & FY11 there was cash inflow from operational activities. It is observed that there is decrease insundry debtors and inventory during FY09. Cash inflow proceeds from sale of goods and rendering of services .But in FY10 there is cash outflow, rendering from payments to employees for compensation and an increase in interest of borrowings. It is also observed that Company started various projects and made loans & advances to third parties in FY10. There is cash inflow in the company from FY09 to Fy11. And this cash inflow from financing activity has increased by 21% from Fy09-FY11. This cash inflow proceeds from issue of shares. It is also observed that the long term borrowings from banks/financial institutions have increased compared to that in FY09. 42 | P a g e
    • INTERCOMPANY ANALYSIS:Profitability Ratios: ROE ROA ROCE ACC Ambuja ACC Ambuja ACC Ambuja FY09 26.7 18.8 FY09 1509 13.75 FY09 0.34 0.25 FY10 17.3 17.24 FY10 10.08 12.24 FY10 0.2 0.21 FY11 18.4 15.2 FY11 11.15 11.6 FY11 0.19 0.22 ROE ROA ROCE 30 18 0.4 16 0.35 25 14 0.3 20 12 0.25 10 15 0.2 8 0.15 10 6 0.1 4 5 2 0.05 0 0 0 FY09 FY10 FY11 FY09 FY10 FY11 FY09 FY10 FY11 ACC AMBUJA ACC AMBUJA ACC AMBUJADuring the comparative analysis between the financial statements of ACC ltd. and Ambuja cements Ltd. it has beenfound that ROE of ACC is consistently better than that of Ambuja over the last three years. Hence we conclude thatACC has a better financial position than Ambuja and is generating more profit from the resources provided by thestockholders.The higher ROA of ACC in FY09 indicates that it has done better utilization of its assets for generating profits thanAmbuja. But for FY10 & FY11 the ROA of Ambuja is found to be higher implying that Ambuja has improved its assetinvestments and has a better financial position.A higher ROCE indicates better profitability on assets engaged within the business. A higher ROCE of ACC in FY09indicates that it is an efficiently managed company and management is using the funds in the most efficientmanner in order to maximize gains. But the ROCE of Ambuja is found to be better in FY10 & FY11 indicating that itwas earning sufficient revenues and profits in order to make best use of its capital assets. 43 | P a g e
    • Liquidity Ratio Current Ratio Quick Ratio ACC Ambuja ACC Ambuja FY09 0.72 1.13 FY09 0.48 0.74 FY10 0.73 1.3 FY10 0.49 0.93 FY11 0.98 1.42 FY11 0.68 1.07 1.6 1.2 1.4 1 1.2 0.8 1 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0 0 FY09 FY10 FY11 FY09 FY10 FY11 ACC AMBUJA ACC AMBUJAThe Current Ratio of Ambuja cement has been consistently better than that of ACC over the last three years whichimplies short term solvency position is better of Ambuja than of ACC.In the event where short-term obligations need to be paid off immediately, Current Ratio could overestimate acompanys short-term financial strength.Hence, Quick Ratio is a better liquidity indicator than Current Ratio, as it takes only those assets that are readilyrealizable. Consequently we can say that Ambuja is more liquid than ACC as its current ratio is better than that ofACC. 44 | P a g e
    • Activity Ratios Inventory Turnover Ratio Debtor Turnover Ratio Fixed Asset Turnover Ratio ACC Ambuja ACC Ambuja ACC Ambuja FY09 11.19 11.3 FY09 39.4 46.4 FY09 1.27 1.14 FY10 9.35 9.15 FY10 43.2 57.6 FY10 1.16 1.12 FY11 9.52 10.36 FY11 36.2 35.35 FY11 1.42 1.2512 70 1.6 60 1.410 50 1.28 1 406 0.8 304 0.6 20 0.42 10 0.20 0 0 FY09 FY10 FY11 FY09 FY10 FY11 FY09 FY10 FY11 Inventory Turnover Ratio Debtor Turnover Ratio Fixed Asset Turnover Ratio ACC Ambuja ACC Ambuja ACC AmbujaInventory Turnover Ratio measures companys efficiency in turning its inventory into sales. Its purpose is tomeasure the liquidity of the inventory. During the comparative analysis it has been observed that inventoryturnover ratio of both the companies (ACC Ltd. & Ambuja Cement Ltd.) has reduced by 19 % and 16 % respectivelyfrom FY09 to FY10. It indicates that either both the companies were suffering from poor liquidity or they havebeen overstocking in anticipation of raise in prices in FY10.Debtor Turnover Ratio of Ambuja cements ltd. was higher than of ACCfor FY09 & FY10. This indicates the efficiencyof Ambuja Cements Ltd. in collection of receivables and healthy liquidity of the company. But in FY11 debtorturnover ratio of ACC is found to be higher than of Ambuja.This reflects that ACC has reassessed its credit policiesand improved its efficiency in collection of imparted credit that is not earning interest for the firm.In terms of generating more net sales revenue from fixed assets of the company, ACC is found to be consistentlybetter than Ambuja. It implies that ACC has done proper utilization of its assets than Ambuja in generating netsales revenue. 45 | P a g e
    • Leverage Ratio: Debt Equity Ratio Interest Coverage Ratio Debt Ratio ACC Ambuja ACC Ambuja ACC Ambuja FY09 0.61 0.29 FY09 28.2 80.5 FY09 0.36 0.21 FY10 0.66 0.33 FY10 26.7 34.35 FY10 0.38 0.23 FY11 0.58 0.33 FY11 16.8 33.68 FY11 0.35 0.25 0.7 90 0.4 0.6 80 0.35 70 0.3 0.5 60 0.25 0.4 50 0.2 0.3 40 0.15 30 0.2 0.1 20 0.1 10 0.05 0 0 0 FY09 FY10 FY11 FY09 FY10 FY11 FY09 FY10 FY11 Debt Equity Ratio Interest Coverage Ratio Debt Ratio ACC Ambuja ACC Ambuja ACC AmbujaInvesting in a company with a higher debt/equity ratio may be riskier, especially in times of rising interest rates. Asdebt equity ratio of ACC has consistently been higher than of Ambuja, it can be concluded that investing in ACC isriskier than Ambuja.It has also been noticed that the Debt Ratio of ACC is higher than that of Ambuja for the lastthree years implying that ACC relies heavily on debt to finance its assets.During the analysis it has been observed that the interest coverage ratio of Ambuja has been higher than that ofACC for the last three years.Thus, it can be concluded that the Ambuja has less debt burden compared to ACC. It isgenerating more profits to meet its interest payments on outstandingdebt. Consequently, the financial position ofAmbuja is better than that of ACC. 46 | P a g e
    • PROJECT WORK 47 | P a g e
    • OBJECTIVE OF THE STUDYPrimary objective:- “To understand the various processes under marketing/sales department anddevelop market strategy for Jaypee cement targeting at increase in market share”Secondary objectives: To find out the market share of Jaypee cement and its competitors in particular area. To find out the reach and depth of Jaypee and its competitors in the market. To know how many dealers/retailers prefer to sell one brand or multiple brand To find out the most preferable way for brand promotion To discover which brand dealers/retailers find more profitable To find out the primary customer and its preference among the cement brand. To determine which cement company has most preferred accounting System To determine which company provides best technical support in market To determine which cement company has most preferred logistics System To find the opinion about the price of Jaypee cement with respect to its competitors To find what are the various reasons that result decline in saleRESEARCH DESIGN(a) General Methodology:The methodology adopted for this project was completely base on primary information. The locale of the studywas Distt. Ghaziabad which includes ( Indirapuram, Sahibabad, Loni,Vasundhra,NH24, Rajnagar,SanjayNagar,GanjMarket, Chaprola, Lalkua, Gt Road Ghaziabad,VijayNagar,Bhopura and Link Road) .The first stage included gathering information about the general cement market of the region. That was, to findout which are the major players, what is general distribution pattern, what type of incentive schemes the differentbrands are using.The second stage comprised determining the objective of the study and drafting the questionnaire. Thequestionnaire was designed keeping in mind the objective of the study. It was designed with due guidance of thecompany guide, Mr. VaibhavMathur. It was assured that the questionnaire can collect all the required informationto understand the market and design strategy to increase the market share of the company. Keeping in mind theeducation level of the respondents who were mainly dealers/retailers, the questionnaire was kept simple andprecise. 48 | P a g e
    • b) Data Sources:The research called for gathering primary data only. Hence, primary sources were considered for the collection ofdata.*Primary sourceThe primary data is gathered for specific purpose and is collected by the researcher himself. It includes directcommunication and feedback from the customers i.e. Dealers and retailers. For the purpose of collectinginformation 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 thereal nature of problems and to suggest possible solutions. For the purpose of this project, I went for aquestionnaire- based survey of customers. The questionnaire was drafted with consultation from senior officers.This was done to ascertain which questions are ambiguous, wrongly worded or in any way objectionable.d) Research Instrument:1. Personally administered questionnaire 2. Structured interview 3. Unstructured interviewFor the purpose of this project, a questionnaire was designed to collect data that consisted of close endedquestions & open ended questions. A survey technique is being used to collect the data. During the project asurvey of customers using personal interview was done at random locations in Ghaziabad and a predeterminedstructured questionnaire was administered to them. The areas covered were as following: Indirapuram, Sahibabad,Loni,Vasundhra, NH24, Rajnagar, Sanjay Nagar, Ganj Market, Chaprola, Lalkua, Gt Road Ghaziabad,VijayNagar,Bhopura and Link Road.e) Sampling Plan:* Sampling UnitThe study was restricted to city region only. Keeping in mind the objective of the study I sampled dealers andretailers of each and every brand. I try to explore out as many shops as could be possible.*Sample SizeThe sample size taken for the purpose of study was around 150 respondents. All the respondents were chosenrandomly.*Sampling ProcedureI try to find out almost all of the cement dealers and retailers in the market. 49 | P a g e
    • *Contact MethodI personally visited most of the customers. Few shopkeepers due to their busy schedule or loyalty for their brandrefused to respond at all.f) Analytical tools:The data, which was collected, was summarized and tabulated on MS-excel for further analysis. The analysisperformed was mainly comparative analysis using statistical analytical tools.The tools that have been used are as follows: Bar Chart Pie Chart 50 | P a g e
    • PROCESSES UNDER MARKETING /SALES DEPARTMENT:- 1. Market planning: - To divide the overall dump territory into smaller segment on the basis of districts, markets etc. to facilitate comprehensive market coverage and review of company’s participation of market across the entire territory including non-trade customer. 2. Classify the stockiest:- Authorized- active Non authorized-active authorized-inactive None of the above but having high sale potentialIdentify target stockiest from the above and break up the monthly sales target among the stockiest. Prioritiesmarket and stockiest from the above and break up the monthly sales target among the stockiest. Pay specialattention to weaker market and maintain continuous focus on strengthening stockiest network. Continuousupdate of the market constituting stockiest, total cement outlet, professionals such as architects, structureengineers etc. and bulk user such as builders’ contractor and government buyers. Based on the customer profileplan for market visits could be made for the month which may be further spilt up in weekly and daily customercoverage. 3. Receipt storage and sale of material:- Keep an up to date knowledge of economical route. Visiting godowns to ensure proper unloading, stocking and analysis of entries in stock inward and stock outward register. Matching of physical stock with booked stock. Grade wise matching of physical stock with booked stock. Proper compliance of the prescribed quality procedure. Maintenance of godown register. Verify the stock of empty bags. To check the practice of misuse of cements bags. Visits the railway siding on arrival of cement by sail to check the following: Condition of material Verify the quantity of cut and torn bags. Ensure coverage of all stock by waterproof tarpaulins in all season. Due compliance of all insurance formalities arrangement of all security and safely of material at the siding. Ensure proper record of all direct and indirect sales scrutinizing the record on weekly basis at the sales promotes office. Ensure recovery in respect of damages from the freight payable to the truckers 51 | P a g e
    • 4. Control of non-conforming products:-On receipt of stock at the dump office the field offices assesses the same for any damage deterioration or lossduring transit and propose a go down discrepancy report(GDR) At the end of each month field officer proposesmonthly statement of cut and torn bags on the basis of GDR and submit to concerned AMO who consolidates thereport in the prescribed format for their respective zone and submit the same to RMO-marketing with a copy tocustomer-CPAC for necessary corrective and preventive action.Field officer sends a salvage /disposal proposal inthe beginning of the month for last month for seeking permission for salvaging of confirming product to respectiveAMO. Then respective Area managerauthoress field officer to undertake the process of salvaging of conformingstock and segregation of non-conforming products. 5. Verification of challan:-The field officer should ensure that when the cement is received at the godown it should have aproper challan .Aproper challan should also be made at the time of dispatch of the cement fromthe dump .There are four copiesofchallan:- Customer copy:-this copy is retained by the customers. Acknowledgement copy:-this copy is retained by the customer of receiving and signing the copy. Sales a/c copy:-this copy is send to the sales a/c for faster processing and billing. Dump copy:-this copy is maintained at the dump freer record. The field officer should verify each and every challan. If he is on tour then he should verify the challan as soon as he is back. Field officer should also ensure that there is no back dating of challan and the stock is being sent to designated place maintained in the challan. 6. Monitoring the credit limit:-The field officer should ensure that no stockiest should cross its credit limit at any point of time. If under specialcircumstances excess credit is to be given them the FO should take a prior approval. The AMO I/C has the power toextend the credit limit up to 50% and the RMO I/C has the power to extend the same up to 100%.in this case thefield officer should also frame out the recovery of these credit within the stipulated. 7. Pricing:-The field officer has to maintain a price register at the dump which shows the price of w/s and retail of all thebrands available in the market. The FO should enter the prevailing prices of all the brands a daily basis. The prices 52 | P a g e
    • have to be cross checked by regular interaction with the stockiest, competitor’s staff and sales promotes. Based onthe price register the FO can send their proposal for billing price to their respective AMO I/C. 8. Insurance formalities:-On the arrival of cement rake the FO should unload the cement in his presence.If any damage occur during theunloading it has to be communicated to (DGM accounts) Jaypee nagar Reewa in the rake arrival report. If the lossis loss then Rs. 1lack then final survey can be done by any local survey else intimate the insurance companythrough for final survey. If there is any seal of damage when rake is unloaded then damage /shortage deliverycertificate has to be taken from the railway officer. In case the seal of wagon is found open on the arrival of rakethen an open delivery certificate has to be taken from railway authorities. If railway office refuses to give thecertificate then a protest letter has to be send to the chief goods superintendent/station by registered post. Important Information Which Field Officer Should Keep. Sales promotees names Phone no. Family details of sp. No of worker. Security deposit of sp. Competitors:- Potential of dump. Major Player. Area covered through dump. Mode of supply –by rake and road Market structure. Plant from which supply is provided. Discount structure. S p staff details. Incentive structure. Weakness of dump. Sale Promotion Activities Pricing. Source of supply.Profile of the dealers:- Mode of supply. Firm name. Feedback of competitor. Proprietor. Weakness of competitors. Phone no. Average monthly sales. Untapped market:- Target of the current financial year. Details of the market. Limit being availed. Potential of the market. Security deposit Force of action to be to be taken Payment circles 53 | P a g e
    • DRIVING FORCES AND IMPLICATIONS FOR THE COMPANY IN ORDER OF MAGNITUDE OF EFFECT Driving Force Implication/Impact Housing Growth As the housing segment accounts for major portion of domestic cement demand. It is estimated that demand for housing units will be about 4.3 million, leading to a higher demand for cement in homebuilding. Increasing number of households and higher employment are primarily driving the demand for housing. Government Initiatives by the government like low-cost housing in urban and rural areas under schemes like JAWAHARLAL NEHRU NATIONAL URBAN RENEWAL MISSION (JNNURM) and INDIRA AAWAS YOJANA provide impetus to construction activity through large infrastructure and housing development projects. It plans to increase investment in infrastructure to USD1 trillion in the 12th Five Year Plan (2012–17), compared with USD514 billion under the 11th Five Year Plan (2007–12) through various infrastructure projects such as Dedicated Freight Corridors as well as new and upgraded airports and ports ,leading to further drive construction activity The government 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 Commercial real estate Growth The boom in the cement industry in India came in 2003, when the real estate rates started rising. Over the past few years (FY03-11), cement demand has grown at a CAGR of 9.1% which is higher than the CAGR of supply at 4.84%. Estimated demand by real estate segment between 2010 and 2014: Office (240 million sq. ft.), Retail (55 million sq. ft.), Hospitality (78 million room nights Source: www.ibef.org;CMA;Cushman &Wakefield, Aranca Research 54 | P a g e
    • MARKET ANALYSISAfter completing the first level of analysis in identifying the driving forces that lead to changes in our industry.The next step is to analyze individual consumers (individuals, and organizations) and to set out our primary andsecondary segments or target markets. Customer Need Analysis Key Customer Groups Customer Needs 1. Independent House Builders (IHB) 1. Availability 2. Quality 3. Price 4. Services 2. Builders 1. Availability 2. Price 3. Quality Product/Service Analysis Product/ Services Benefit 1. Technical Support Improves customer acceptance 2. Discounts Allures the customers to buy in bulk, leading to increase in sale 3. Logistic Increase life time value of customer Target Segments on Order of Priority Primary Secondary Tertiary Peripheral Market Market Market MarketName GT Road,LalKua, Vasundhra,Nh24 Indirapuram,Linkroad, Bhopura,RDC Chaprola, sec 23 Sahibabad, Loin VijayNagar,Ganj Rajnagar RajnagarCharacteristics 70% IHB, 68%IHB, 68%IHB,32% Builder 67%IHB,33%builders 30% Builder 32%buildersSales Potential >1500Mt. 1000-1500Mt. 500-1000Mt. <500Mt.Share Estimate 50% 30.5% 15.5% 3% 55 | P a g e
    • Competitive Analysis Competitor Strength Weakness 1. Ambuja Customer Acceptance High Billing Price Quality Check 2. ACC High Customer Acceptance Logistic Accounting System Technical Support 3. Shree Low Billing Price Low Customer Acceptance in term of Logistic quality Technical Support Competitive Pricing Strategy Competitor Ambuja ACC Shree Price Usually Rs.3-5 High Usually Rs.3-5 High Rs. 6-12 Less Competitive AnalysisThis analysis has been the done on the basis of findings from market survey. The markets which have been covered during the survey are of Local Ghaziabad and Sahibabad Region Jaypee Ambuja ACC Shree1. Key Success factors Technical Support Customer Quality Logistic &Builder Acceptance Preference2. Best Logistic C B D A3. Best Technical Support A B C D4. Market Share C B D A5. IHB Preferred Brand C A B D6. Builders preferred brand B C D A7. Best Accounting System D A B C8. Best Reach B A C A9. No. of Exclusive dealers B A C D10. Most Profitable Brand C B D A *Grade: A-1st; B-2nd; C-3rd; D-4th 56 | P a g e
    • Various major cement companies and their market share in market Jp others 16% 20% Ultratech Ambuja 8% 19% Shree Acc 22% 15%The graph clearly shows that the Shree Ultra Cement has the largest market share, followed by Ambuja andJ.P. Cement. The main reason behind this excess market share of Shree Ultra cement goes to its low price,healthy reach and having 3 brands in one group i.e. Shree, Bangur and Rockstrong. Ambuja Cement on theother hand is having a good market share due to a nicely balanced supply chain of dealers along with manyretailers’ i.e. having the reach 33.33 and high customer acceptance of 37%. All the other brands likeUltratech, Binani, Birla, and Jk Lakshmi are struggling to find market in this region. Jaypee on the other handis having good reach of around 27.33 but due to high rate fluctuations, not well accepted accounting systemand low customer acceptance it has only 16 % market share.Action Plan:Company should concentrate to satisfy its dealers and retailers by improving its accountingsystem as dealers and retailers are the face of the company in the market and they must be satisfied with thecompany as most of the buyers buys from their fix shops so they believe in the word of the dealer/ retailer.Company can also increase its share in the market by adopting certain methods such as increasing its marketpenetration by associating more exclusive potential dealers with it. As this will not only increase the reach ofthe company but will also aid company to acquire more market share. Company can also upscale itsmarketing mix to increase its sales.Company lags in advertisement as it has been found during the market survey that Jaypee doesn’t have anybig wall paintings or hoardings like other companies’ such as Shree, Ambuja, Ultratech etc. As advertisementplays vital role in customer acceptance,company should increase its focus on advertisement. Company shouldadvertise its products more frequently and promote companys image to the public through institutionaladvertising and publicity. Company can hire advertisement agencies like Ogilvy & Mather, J WalterThomsons, etc. to promote its products and brand image more frequently. 57 | P a g e
    • The number of dealers/retailers present in the market associated with Jaypee and its competitors. Depth= Total Sale of Company /Potential of counters selling the same company product Reach = Total No. of counters selling Jaypee/ Total No. of counters in Market Reach Depth others others Ultratechultratech shree Shree acc ACC ambuja Ambuja jp JP 0 10 20 30 40 0 20 40 60 80 From the market survey it has been found that Shree Ultra and Ambuja have well balanced depth and reach in the market which bolsters their hold in the market. Jaypee has good reach in market of around 27.45 and it should strengthen its reach by 6-7% more to be at par with Ambuja and Shree Ultra. It has also been found that Ultratech has the lowest reach in market which has been supported by results of the total market share. Action plan:- Though Jaypee has good reach in the market; company still has to work more on its reach in order to lead the market. More the number of potential counters in market more it will have the market share. So the company should continue with its good work to look for more potential retailers and dealers to increase sales in the market. As it can be seen that company has good depth, so, the company should focus its interests in increasing the reach by associating more potential dealers. During the survey it has been seen that the competitors like Ultratech, Ambuja, ACC has better short term and long term incentive schemes like providing gold/silver coins with respect to target sales, international tours to dealers , insurance to family members , scholarship programs to its sale promoter’s/dealer’s children . Company should provide such long term /short term schemes to capture the potential dealers/retailers in order to increase its reach. 58 | P a g e
    • How many dealers/retailers prefer to sell one brand or multiple brands? Single Brand Multiple Brand 47% 53%From the graph it can be concluded that almost half of dealers/ retailers prefer to sell multiple brands as thisenables them to increase their portfolio and meet customer requirements. And 53% prefer to sell singlebrand as it makes them exclusive and companies do provide incentives of being exclusive.Action Plan: -As it has been found that sale of dealers/ retailers who prefer single brand is 7210 mt.tonneswhereas sale of dealers/retailers who prefer multiple brands is 9645 Mt. tonnes. Company should stillpromote more exclusive schemes in market to associate more and more exclusive dealers with company as itis possible that dealers/retailers who are selling multiple brands are just taking the dealership of the variouscompanies to increase their portfolio to reduce the risk and increase all over sale. Moreover, it doesn’t helpthe company to increase its share in market particularly. Hence the company should focus more to cater theneeds and promote exclusiveness in the market among dealers by promoting its long term and short termincentive schemes such as providing gold/silver coins, international tours etc. By which company will havemore loyal and life time value dealers/retailers in its basket; leading to increase in its “reach” in the marketwhich will further result in increase in market share. 59 | P a g e
    • The most preferable way for advertisement banners others 7% 1% tv 12% hoardings 21% wall/shop painting 59%An effective advertisement is very effective tool to catch the eye of audience, builds customerrelationship and company image in consumers mind.It has been found that most of the dealers/retailers (59%) prefer wall/shop painting as it catches the eyeof the customer and tells the customer about the product available in the market and at the shop. It hasbeen found that 21% of dealers/retailers also demand for advertisement through hoardings as they canbe placed at several places in the city to promote the brand.Action Plan: During the survey it has been seen that company has provided wall/shop paintings but itdoes lack in providing big wall/paintings and hoardings at different location which are very essential forbrand promotion. Company should do persuasive and comparative advertisement to build selectivedemand and increase its customer acceptance as its customer acceptance is quite low than itscompetitor Ambuja. Company can use various promotional techniques such as coupon, contests,sweepstakes, opening exclusive outlets to build its product awareness, creating interests, providinginformation, stimulating the demand and reinforcing the brand. 60 | P a g e
    • Which brand dealer/retailer finds more profitable 40 35 30 25 20 15 10 5 0 jp ambuja acc shree ultratech othersFrom the graph it can be depicted that 31.6 % of dealers /retailers in the market found Shree Ultra to bemost profitable brand. Because of its low price it is more sellable and during shortage it can be sold atpremium price with respect to other brands, resulting in more profit .On the other hand only 12 %dealers/retailers found Jaypee to be profitable and only 9% dealers/retailers found Ultratech to be profitable.It is because of Ultratech’s low reach in the market. But if we consider the dealers and retailers who haveUltratech and other brands, most of them have reveal that they earn more profit in Ultratech than fromother brands. It has been supported by findings from the analysis that which company’s incentive scheme ispreferred most and it has been found that in spite of low reach Ultratech incentive Schemes are morepreferred in the market.Action Plan:Any company’s most valuable asset in the market is its dealers and retailers. And as they are thelife time value for the company, the company should take care that they earn suitable profits. By suchcompany will not only maintain but will also multiply its assets. As only 12% dealers/retailers found Jaypee tobe profitable, company should promote its long term and short term schemes to allure its dealers /retailersand make them believe that it is fruitful to be associated with company. Company should also increase itsdealer-retailer network as it will lead to win-win situation for both. It will not only create selective demandbut will also promote brand image and increase market share of company. 61 | P a g e
    • Which cement company has most preferred accounting system? others jp 9% 13% ultratech 16% ambuja 23% shree 18% acc 21%Accounting System followed by the company reveals its strength and commitment to its associates.So, accounting system plays major role in strengthening its associate’s faith in company. Marketanalysis shows that most of the dealers/ retailers have preferred accounting system of ACC andAmbuja whereas only 13 % of dealers and retailers have preferred accounting system of Jaypee.Shree has been average in the preference. And Ultratech results were low because of its low reach.Action Plan: Company should strengthen its accounting system as it plays crucial role in satisfyingthe dealer/retailer. During the survey it has been found that most of the dealers were not happywith accounting system of the company. They also reported that they have not been delivered whathave been promised. Such responses could damage brand’s image in market. During the marketsurvey it has been noticed that many dealers of Jaypee are not satisfied with pricing strategy of thecompany. Company should have check on its accounting system in order to gain customeracceptance and should associate right people with it that can contribute towards its growth. 62 | P a g e
    • Which company provides best technical support in market? others 6% ultratech 13% jp shree 41% 6% acc 10% ambuja 24%In the construction business technical support has always been acknowledged by the customers. Itnot only builds up faith in the brand but also create supportive image in customers mind. It alsohelps to achieve one of the main objectives of company “To create satisfied customers”.It has been found that 41% of dealers/retailer found technical support of Jaypee cement to be mosteffective and supportive, followed by Ambuja which is 24%.Action Plan:Company has made distinctive image of itself in this domain and has beenacknowledged by the market for its initiative. It has been found that even dealers/retailers who arenot in association with Jaypee also prefer technical support of Jaypee which is remarkable for thecompany. Hence, the company should continue its operation in good faith. The company is alreadydoing well in this domain; hence, the company should cash its strength to increase its market shareby targeting sites of other dealers and attempt to associate them with the company. 63 | P a g e
    • Which cement company has most preferred logistics System? ultratech 9% others jp 7% 18% ambuja 19% shree 37% acc 10%The logistic is the back bone of every company in market. Company which has strongest distributionlogistic system is most likely to be the market leader. It has been found during the analysis that ShreeUltra has the strongest distribution logistic in the market bolstering its marketing share. 37% of themarket takes logistic system of ShreeUltra to be the most effective one, followed by Ambuja and Jaypee(19% and 18% respectively).Action Plan: Jaypee should strengthen its distribution logistics because the time, place, and quantity ofproduction differ with the time, place, and quantity of consumption. And the availability of the cementis very crucial. The customer doesn’t wait. He demands the product as his need arises and this product issuch that; once the consumption has started it’s not feasible to halt in the middle of project such asconstruction of lenter. As Shree Ultra does i.e. provide small quantities in small vehicles where largetrucks can’t reach; our distribution logistic should consider such strategy to reach out those counterswhere large trucks and vehicles can’t reach. 64 | P a g e
    • Primary Customer in the Region Builders 33% IHB 67%Companies should recognize today that they cannot appeal to all buyers in the market place or atleast not to all buyers in the same way. So, instead of mass marketing company should movetowards target marketing – identify market segments and targeting at selected segment. Companyshould design customer driven marketing strategy that could build right relationships with rightcustomers. As, it can been seen from the Pie chart that the market has been divided into twosegments, 33% builders and 67% independent house builders.Action Plan:Though our primary buyers come out to be independent house buyers which are 67%the company must not neglect builders which are 37%. As though builders are less in ratio but theirconsumption are always more than independent house builders. Hence company should follow“shotgun” approach- scattering their market efforts instead of following “rifle” approach – focusingon the buyers who are greater in number. 65 | P a g e
    • Which brand of cement market prefers the most? IHB Prefernce Builder Preference50 10040 8030 6020 4010 200 0 Beyond deciding which segments of market it will target, the company must decide on value proposition- on how it will create differentiated value for its customers. “Products are created in the factory, but brands are created in the mind”. It is found that Ambuja is the most preferred brand among the IHB, followed by ACC. Whereas Jaypee, and all others are struggling hard to position themselves in the mind of customers. On the other hand in builders Shree is the most preferred due to its low cost, and all other brands are struggling to get themselves in the league. Action Plan: The Company should decide on its differentiation and positioning strategy. It should identify a set of possible differentiations that could create competitive advantage, and build a value proposition on those advantages. As our domestic market flows with emotions rather than logic, company must add a personal touch to its campaign, to be more acceptable among the customers. Different models are suggested in literature for different relational stages in marketing. Model that suits the most for our industry is relationship marketing that involves various models such as: (Dwyer, 1987) – Awareness, Exploration, Expansion, Commitment. (Payne, 1995) – Prospects, Customers, Clients, Advocates, Members, Partners. (Kotler, 1997) – Suspects, Prospects, First time customers, Repeat customers, Clients, Advocates, Members, and Partners. 66 | P a g e
    • Which brand of cement has best quality? others 11% jp 21% ultratech 20% ambuja 22% shree 3% acc 23%As cement is the most important element in construction and the strength of any building dependsheavily on the quality of cement. From the Pie chart it can depicted that Jaypee, Ambuja, ACC andUltratech all been perceived equally in terms of quality in view of customers whereas Shree Ultraand other brands are still struggling to come in that image.Action Plan:What matters for most of the today’s cement buyers is the price of the cement and thenthe quality. While visiting the market for cement purchase, they don’t care about which brand theyare going to buy. They simply know that the ongoing price of the cement and if any brand costshigher than that price they do not buy that brand. But there is another section perhaps which is notmuch prominent right now but future possibility lies with them, the younger section of people whocare about quality first and then the price. So Jaypee needs to give proper attention to theyoungsters and should cash this opportunity to increase its customer acceptance in market in longrun. 67 | P a g e
    • Some other reasons by Dealers/Retailers for brand preference:Jaypee Better quality Technical Support Timely available Relatively less price. Good relationship with the company people.Ultratech High Incentive Schemes Best QualityShree Ultra Price is low and affordable for people Low price helps to sell easily. More profit selling the brand. Good service and relationshipAmbuja People ask for Ambuja. Service is good. ”Dhalai karne ke liye” people ask for Ambuja. Very superior quality cement as compared to others Customers preferenceACC Customers preference Superior quality Good accounting system 68 | P a g e
    • PROBLEM FACED BY STOCKIEST None of the stockiest have any complains about the brand, in regards to the price, transport, service etc. but much of them are not satisfied with company’s accounting system Stockiest are satisfied with the companies service majorly with the technical support. Only selected stockiest should be wholesalers, leading to stable market.RETAILERS REGRETS (Jaypee) The stockiest occasionally inform about the price change in the market. Price should be stabilized in the market. Price stability in regard to the price set by the company as well as wholesalers (i.e. all the wholesalers should have the same price offered in the market). Low incentive schemes with respect to its competitors 69 | P a g e
    • JAYPEE SWOT ANALYSISStrength People are satisfied with quality of the cement. Technical Support provided by company is most accepted in the market. Good reach in marketWeakness Great need of strategic way for promotion and advertisement for both dealers and customers. Not an easy task to overtake Ambuja,Shree Ultra and ACC. Price and margins is not match with dealers and retailers expectation respectively. Need to improve its accounting system Need to improve its logisticsOpportunity Strong infrastructure requirement for the development of the country and the country is developing in the utter pace. No of the medium class people is growing. Institutional market like corporate and government offices, school society complexes are growing in large scale, which will increase the requirement.Threats Cheap priced brand are grabbing rapidly a large chunk of lower income customer base. Other brands like Wonder and Grasim Ultratech provide maximum profit to the both dealers as well as to the retailers. It was found from my survey that Ambuja’s maximum market share is due to brand loyalty. Dealers expect more margin and gift to sell of the Jaypee cement. Tax levied by CCI on PAT for FY10 &FY11. 70 | P a g e
    • LIMITATIONS OF THE STUDY1. The major problem of the survey was that most of the respondent being very loyal to their brands didn’t give exact answers like they didn’t 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, I had to restart the conversation in a 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.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 is attached with the market image of their shop.4. Many of the dealers/retailers refused to answer any question at all. So the actual figures can be somewhat different from the one that i have found out.5. As the budget and any other financial information was not disclosed by the company while drafting the strategy. Hence, the investment plan for making the marketing strategy has not been considered. 71 | P a g e
    • RECOMMENDATIONSBased upon the time spent by me in the market, useful suggestions of the dealers & retailers and thefindings from the survey, following recommendations can be suggested for increasing sales andeffectiveness of Jaypee Cement:1. 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 don’t care about which brand they are going to buy. They simply know the ongoing price of the cement and if any brand costs higher than that price they do not buy that brand. Jaypee cement usually costs same as Ambuja which has high Customer acceptance around 37%. So the buyers at too much extent are not interested in buying Jaypee cement. This extra price and low customer acceptance is the main reason behind lower sales. Hence the company should either reduce its price or increase its customer acceptance.2. In some areas like Link road, Bhopura, Loni, Vasundhra infiltration from Delhi was major reason for decline in sales. Therefore, Jaypee cement needs to take some serious steps to minimize the price difference between Delhi & Ghaziabad as infiltration not only disturbs the Ghaziabad market but also decreases the profitability of our working dealers as they have to face price competition with their own brand from Delhi.3. A good percentage of buyers are illiterate or they take what mason recommends. As cement comes from various plants and every plant gives somewhat different color. In such situation customer doesn’t trust the quality of the cement. For this customer awareness campaigns should be conducted or advertisement should be done to educate the customers that color of the cement doesn’t reflect strength of the cement.4. Many of the Jaypee dealers shop building materials along with cement, in the same premises. Company should look for those dealers who exclusively deal in cement. Because selling of these building materials is more profitable than cement, hence, the cement selling becomes less important for these dealers. They don’t give proper attention to the company officials and also to the various schemes introduced to increase sales. This in turn brings reduced sales to the company. 72 | P a g e
    • 5. Jaypee Cement has market image of modern cement with very good quality. It should try to ancash this image. Primarily young people care about the quality first and then the price. So Jaypee needs to give proper attention to the youngsters.6. Some of the Jaypee dealers complained that they are losing their regular customers, due to the high price fluctuations of the cement prevailing in the market. So at some point, the dealers are not satisfied with the company. This needs to be taken seriously by the company. Some more incentive schemes should be introduced for the dealers.CONCLUSIONTo attain the objective of the project detailed information was collected from the market of Ghaziabad.The market research has revealed many facts and figures about the cement scenario in theprevailingmarket.1. In the market, Jaypee cement is well known brand of cement as far as quality and technical support is concerned. This is the result of the good quality of the cement along with their effective marketing effort.2. Jaypee cement has two major competitors in Ghaziabad region - Ambuja cement and Shree Ultra cement.3. Introduction of new attractive incentive schemes can bring new dealers & retailers for Jaypee cement.4. Price is the major factor that matters for a customer while purchasing cement.5. Market share increases with the increase in no. of dealers.6. The market survey undertaken shows that effective marketing efforts play a vital role in creating the goodwill for the brand. And company should focus on how to increase its customer acceptance.7. The distribution channel of cement industry should be well designed and effective .This ensures timely availability of cement to the customers. Jaypee should strengthen its distribution logistics because the time, place, and quantity of production differ with the time, place, and quantity of consumption. 73 | P a g e
    • KEY LEARNING1. India ranks second in world among cement producing countries.2. Sector is highly capital-intensive. The sector operates with a high level of fixed cost and therefore volume growth is decisive to have good growth margins.3. Since cement is a bulk commodity, transporting the product is a costly affair. Companies that have plants located closer to the markets as well as to the source of raw materials have an advantage over their peers, as this leads to lower freight costs.4. Given the soaring potential for growth, few MNCs have been eyeing the Indian cement market and are planning to acquire domestic companies. Presently, we have few MNCs like Lafarge, Heidelberg, Italcementi and Holcim who have made a couple of acquisitions or increased their stake in domestic cement companies to gain full control.5. To increase market share company’s logistics, accounting system and its customer awareness are the key components the company should focus on. 74 | P a g e
    • Annexure-I Jaiprakash Associates Ltd. 2009-Ratio 2009 2010 2011 FY2010 FY2011 2011ROA 3.509832508 5.098151563 3.075364847 45% -40% -12%ROE 13.39218663 20.09665064 12.42666831 50% -38% -7%Current Ratio 1.818968769 2.238037961 2.329227064 23% 4% 28%Quick Ratio 1.575035241 1.972591318 2.034105177 25% 3% 29%Debt Equity Ratio 2.816196154 2.907716052 3.040713519 3% 5% 8%Interest Coverage Ratio 2.480528236 3.68777882 2.694415355 49% -27% 9%Inventory Turnover Ratio 3.989280656 5.979164923 7.247862222 50% 21% 82%Debtors turnover ratio 6.01535165 5.107932937 1.960282926 -15% -62% -67%Fixed asset turnover ratio 0.187901528 0.249665066 0.269528596 33% 8% 43%ROCE 0.060962868 0.140781321 0.116208818 131% -17% 91%debt ratio 0.73807042 0.737634216 0.752518956 0% 2% 2%Particulars 2009 2010 2011 fy2010 fy2011 2009-2011Net Profit 89701 170836 116778 90% -32% 30%Total Asset(FA+CA) 2555706 3350940 3797208 31% 13% 49%Total equity 669801 850072 939737 27% 11% 40%Current Asset 916160 1309899 1315233 43% 0% 44%Current Liability 503670 585289 564665 16% -4% 12%liquid Asset 793298 1154536 1148588 46% -1% 45%DEBT 1886291 2471768 2857471 31% 16% 51%sundory debtors 102204 228503 281063 124% 23% 175%ebit 125098 389352 375650 211% -4% 200%interest expenses 50432 105579 139418 109% 32% 176%total sale 614793 1167178 550963 90% -53% -10%COGS(sales-gp) 490131 928941 1207820 90% 30% 146%inventories 122862 155363 166645 26% 7% 36%net sales 223600 362272 493495 62% 36% 121%fixed asset 1189985 1451032 1830956 22% 26% 54%capital employed 2052036 2765651 3232543 35% 17% 58% 75 | P a g e
    • Annexure-II ACC 2009 2010 2011 2009-2011 FY10 FY11 -ROA 15.9361365 10.08903494 11.15 -30% 37% 11% -ROE 26.7111243 17.3121838 18.42617 -31% 35% 6%Current Ratio 0.72779188 0.734928278 0.987327 36% 1% 34%Quick Ratio 0.48064721 0.490700455 0.687221 43% 2% 40% -Debt Equity Ratio 0.61814894 0.660058212 0.5805 -6% 7% 12% -Interest Coverage Ratio 28.2169632 26.73881648 16.89991 -40% -5% 37% -Inventory Turnover Ratio 11.1995687 9.35945048 9.528408 -15% 16% 2% -Debtors turnover ratio 39.4059892 43.28769352 36.24538 -8% 10% 16%Fixed asset turnover ratio 1.27110055 1.161332021 1.420875 12% -9% 22%debt ratio 0.36879413 0.384662642 0.351271 -5% 4% -9% -Return on Capital Employed 0.34314628 0.206425973 0.199209 -42% 40% -3% Particulars 2009 2010 2011 FY10 FY11 2009-11 Net Profit 1607 1120.01 1325.26 -30% 18% -18% Total Asset(FA+CA) 10084 11101.26 11885.74 10% 7% 18% Networth/Shareholders funds 6016.22 6469.49 7192.27 8% 11% 20% Current Asset 2294 2753.35 3617.94 20% 31% 58% Current Liability 3152 3746.42 3664.38 19% -2% 16% liquid Asset 1515 1838.37 2518.24 21% 37% 66% debt 3718.92 4270.24 4175.11 15% -2% 12% sundory debtors 203.7 178.28 260.41 -12% 46% 28% ebit 2378.69 1518.23 1637.77 -36% 8% -31% ineretst expenses 84.3 56.78 96.91 -33% 71% 15% total sale(gross/net) 8724.24 8563.71 10478.39 -2% 22% 20% COGS(sales-gp) 5973.92 6612.81 8311.78 11% 26% 39% inventories 778.98 914.98 1099.7 17% 20% 41% net sales 8027 7717.33 9438.66 -4% 22% 18% fixed asset 6315 6645.24 6642.85 5% 0% 5% capital employed 6932 7354.84 8221.36 6% 12% 19% 76 | P a g e
    • Annexure-III Ambuja 2009- Ratio 2009 2010 2011 FY10 FY11 2011ROA 13.75008182 12.24838247 11.60303095 -16% -11% -5%ROE 18.82844736 17.24396666 15.23113149 -19% -8% -12%Current Ratio 1.136839566 1.309563191 1.420935412 25% 15% 9%Quick Ratio 0.744418726 0.932874721 1.077709725 45% 25% 16%Debt Equity Ratio 0.294671529 0.335494741 0.339987607 15% 14% 1%Interest Coverage Ratio 80.53499777 34.35346067 33.68820065 -58% -57% -2%Inventory Turnover Ratio 11.3011826 9.155556295 10.36609836 -8% -19% 13%Debtors turnover ratio 46.49717477 57.65330005 35.35395474 -24% 24% -39%Fixed asset turnover ratio 1.149874806 1.126790629 1.258918882 9% -2% 12%Debt ratio 0.215193402 0.238301777 0.259001554 20% 11% 9%Return on capital employed 0.253717486 0.211047814 0.224486773 -12% -17% 6% Particulars 2009 2010 2011 FY10 FY11 2009-2011 Net Profit 1218.37 1264 1229 4% -3% 1% Total Asset(FA+CA) 8860.82 10319.73 10592.06 16% 3% 20% Networth/Shareholders funds 6470.9 7330.1 8069 13% 10% 25% Current Asset 1979.34 3135.33 3828 58% 22% 93% Current Liability 1741.09 2394.18 2694 38% 13% 55% liquid Asset 1296.1 2233.47 2903.35 72% 30% 124% Total Debt 1906.79 2459.21 2743.36 29% 12% 44% sundory debtors 152.2 128.18 240.85 -16% 88% 58% ebit 1806.4 1672.67 1773.01 -7% 6% -2% ineretst expenses 22.43 48.69 52.63 117% 8% 135% total sale(gross/net) 7721.42 8257.03 9588.33 7% 16% 24% COGS(sales-gp) 5548.74 6013.83 7112.96 8% 18% 28% inventories 683.24 901.86 924.97 32% 3% 35% net sales 7076.87 7390 8515 4% 15% 20% fixed asset 6154.47 6558.45 6763.74 7% 3% 10% capital employed 7119.73 7925.55 7898.06 11% 0% 11% 77 | P a g e
    • Referenceshttp://www.indiainbusiness.nic.in/industry-infrastructure/industrial-sectors/Cement.htmhttp://www.ibef.org/industry/cement.aspxhttp://business.mapsofindia.com/cement/http://www.icra.in/Files/PDF/SpecialComments/2010-January-Cement-Industry.pdfhttp://india.mapsofindia.com/indian-economy/major-economic-sectors.htmlhttp://capitaline.com/http://www.jkcement.com/http://www.indiacements.co.in/http://www.ultratechcement.com/http://www.gujaratambuja.com/http://www.acclimited.com/http://www.thaindian.com/newsportal/business/manufacturing-sector-is-indias-largest-employer-census_10054253.htmlhttp://www.rrfinance.com/Research/Fundamental%20Research/Cement%20Industry.htmlhttp://www.emt-india.net/cement_code/2007/Chapter_2.htmlhttp://www.equitymaster.com/research-it/sector-info/cement/http://www.tradechakra.com/indian-economy/industries/cement-industry.htmlhttp://www.iseindia.comhttp://cemweek.comhttp://cmaindia.org 78 | P a g e
    • Questionnaire 1. Name of the Dealer:___________________ Name of the firm:________________________ 2. Location:_______________________ 3. Dealer Consignee/ Retailer 4. Nature of the shop: a. Cement outlet b. Cement cum hardware c. Cement/ Building material 2. No. of years in Business ____________ 3. Exclusive or non-exclusive? If non-exclusive what other brands do you sell? Jaypee ACC Ambuja Ultratech Shree Others Sales 4. Which brand consumer prefers the most?______________ 5. Which brand of Cement has highest Customer Availability Profitaility Quality Branding acceptance 6. What kind of incentive schemes are being provided by the companies Jaypee ACC Ambuja Ultratech Shree Others 79 | P a g e
    • Long TermShort Term 7. Opinion about the Incentive Scheme? o Very Good o Good o Satisfactory o Poor 8. Comparing to other brand cements how is the price of Jaypee cement? Billing Price Whole Sale Price Retail Price Very Good Good Satisfactory Poor 9. What type of customer buys the product constantly? o IBH o Builders o Both 10. What could be the best means for advertisement for the product o TV o Wall Shop Panting o Newspaper o Hoardings o Banners o Others 11. Do the Jaypee/ others provide Technical Support? o Yes o No 12. If yes, how would you rate it among Jaypee ACC Ambuja Ultratech Shree Others 80 | P a g e
    • 13. Frequency in which companies conduct Brand promotional meetings Jaypee ACC Ambuja Ultratech Shree Others14. How often company Officer does visits you? o Daily o Weekly o Monthly15. Does he convey all the communications efficiently? o Yes o No16. What are the various reasons that cause decline in sale of cement? _____________________________________________________________________________________ _____________________________________________________________________________________ __17. How would you rate cement companies for their Distribution/ Logistic System? Jaypee ACC Ambuja Ultratech Shree Others18. Which company has the best accounting system? ________________________ 81 | P a g e