Click icon to add picture A look into the Indian Cement Industry

Deciding the Strategic direction

Presented by: Group 4 (Aninda Basu, Ankur Shukla, Sumit Kumar and Tanuj Goyal) 4/4/12

Indian Cement Industry A brief

India is the 2nd largest cement market in the world, accounting for 78 % of global cement production and the country also exports cement to more than 30 countries It has a total capacity of about 300 m tonnes (MT). The top three players alone control almost 35% of the capacity; the balance capacity being quite fragmented The Housing segment accounts for a major portion of the total domestic demand for cement in India. Between 2010 and 2014, demand for housing 4/4/12 units is estimated to be 4.3 million, leading to a

Key Points
Supply
The demand-supply situation is high skewed with the latter being significantly higher.

Demand

Housing sector acts as the principal growth driver for cement. However, recently industrial and infrastructure sectors have also emerged as demand drivers.

Barriers to entry

High capital costs and long gestation periods. Access to limestone reserves (key input) also acts as a significant entry barrier.

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Key Points
Bargaining power of suppliers Licensing of coal and limestone reserves, supply of power from the state grid etc. are all controlled by a single entity, which is the government. However, nowadays producers are relying more on captive power, but the shortage of coal and volatile fuel prices remain a concern. Cement is a commodity business and sales volumes mostly depend upon the distribution reach of the company. However, things are changing and few brands have started commanding a premium on account of better quality perception. Intense competition with players expanding reach and achieving pan India presence.
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Bargaining power of customers

Competition

Industry Potential

Despite the fact that the Indian cement industry has grown at a commendable rate in the last decade, registering a growth of nearly 9% to 10%, the per capita consumption still remains substantially poor when compared with the world average. While China registered the highest per capita cement consumption in 2010 of about 1,380 kg, India stood much lower at 230 kg. This underlines the tremendous scope for growth in the Indian cement industry in the long term. 4/4/12

Recent Performance
Table 1: demand growth for last decade Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Dispatches (Mt) 102.37 111.07 >117.23 127.14 141.57 155.26 167.69 180.95 200.29 209.54 Change (%) 9.56 8.50 5.50 8.45 11.35 9.67 8.01 7.91 10.68 4.61 4/4/12

Source: http://www.cemnet.com/

Recent Performance
Hopes for an end to the current downturn have failed to transpire into reality as estimates by policy makers and cement companies have fallen for the FY10-11 period. These are uncertain times for the industry and cement manufacturers have no option but to wait patiently for the next up-cycle.

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Future seems bright

Between 2010 and 2014, demand for housing units is estimated to be 4.3 million, leading to a higher demand for cement for homebuilding The government is strongly focused on infrastructure development to boost economic growth. It plans to increase investment in infrastructure to USD1 trillion in the 12th Five Year Plan (201217), compared with USD514 billion under the 11th Five Year Plan (200712)
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Vision , Mission, Goals

Vision
The vision of a company lays out some desired future state; it articulates, often in bold terms, what the company would like to achieve.

Mission
A companys mission describes that what it is that the company does.

What is our business? What will it be? And what should it be? 4/4/12

Goals

India Cements
The India Cements Ltd was established in 1946 and the first plant was setup at Sankarnagar in Tamilnadu in 1949. Since then it has grown in stature to seven plants spread over Tamilnadu and Andhra Pradesh. The capacities as on March 2002 have increased multifold to 9 million tons per annum.

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India Cements
Vision
The new millennium will bring with it new challenges and greater opportunities. The successful corporates will be those who equip themselves to meet the challenges and convert opportunities into winning strategies. If we are to keep pace, it is imperative that we learn to successfully tread the global pathway. In this journey, clarity of vision, a readiness to cultivate a global mindset, effectiveness, harnessing of human resources to enhance job and knowledge skills of employees, a strong accent on R & D and innovation and a move away from selling, to innovative marketing in recognition of the fact that the Customer is truly King, are some of the strategies that will help corporates to survive and succeed. In order to move with the changing times, values and ideas must be ceaselessly re-examined so as to ensure that they are in tune with the organisation's goals. 4/4/12

The India Cements Limited is committed to contribute

India Cements
Mission

Aiming High:

We should be one of the largest Cement Companies in the Country. Our growth in size will be through continuous review of potentials of the existing manufacturing resources, strategic acquisitions and expansions

Core Competency:

Cement will be our mainstay. However, we shall venture into related fields which afford purposeful synergy.

Quality Quest:

Product quality, consistency and customer service will be pursued as an act of faith throughout the organisation. 4/4/12

Modern Mind set:

India Cements

Pursuit Of Excellence:

The growing size of our business permit us to have an R & D set up of our own. We shall continuously challenge methods, systems, operating parameters. We shall constantly review our manufacturing systems to upgrade quality and value of products. 4/4/12

India Cements

Company Highlights

The Company is the largest producer of cement in South India. The Company's plants are well spread with three in Tamilnadu and four in Andhra Pradesh which cater to all major markets in South India and Maharashtra. The Company is the market leader with a market share of 28% in the South. It aims to achieve a 35% market share in the near future. The Company has access to huge limestone resources and plans to expand capacity by de-bottlenecking and optimization of existing plants as well as by acquisitions. The Company has a strong distribution network with over 10,000 stockists of whom 25% are dedicated. The Company has well established brands- Sankar Super
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India Cements

Business Model

Value Proposition

The Company value proposition consist of manufacturing varieties of cement like Ordinary Portland Cement, Portland Pozzolona cement & Sulphate resistance cement.

Target Customer

The company main revenue comes from Housing, Infrastructure & Commercial Projects.

Value Configuration

The company uses cutting edge technologies and many key processes like mining, crushing, grinding, homonizing etc., are done in house to speed up the production and 4/4/12 manufacturing process.

India Cements

Cost Structure

The major cost element of the total cost is energy (28% of the total cost). Followed by transportation & handling which represents (20% ), raw material (15%), staff cost(9% ).

Partner Network

The Company in its partner network includes mainly dealers, retailers & renowned business associates.

SOURCE: BSEINDIA.COM

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India Cements-Evolution of
company from 2000 to 2010

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India Cements-Evolution of
company from 2000 to 2010

20072009

20102011
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Ambuja Cements

Ambuja Cements was set up in 1986. In the last decade the company has grown ten fold. The total cement capacity of the company is 16.5 million tonnes. It achieved capacity utilization of 100% in 1st 6 months. Capacity built up from 0.7 MT in 1986 to16.5 MT as of today at CAGR of 18%. Organic growth through acquisitions.
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Ambuja Cements

Vision

To be the most admired and competitive company in our industry

Mission

Create value for all

Delighted customers Inspired employees Enlightened partners Energised society

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Ambuja Cements

It defines a personal mission for its employees

The spirit of I Can.

Give a man orders and he will do the task reasonably well. But let him set his own targets, give him freedom and authority and his task becomes a personal mission.

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Ambuja Cements- Evolution of

company from 2000 to 2010

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Ambuja Cements- Evolution

of company from 2000 to 2010

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Ambuja Cements

Summary

Solid market position built up within short period of time through organic growth and acquisitions Pioneered export through sea transportation and expanded globally. High use of alternative raw materials in production of 4/4/12

Ambuja Cements

Strategic Direction

Ambuja cement has been doing activities in parallel to become the most admired and competitive company(the vision) Admired : CSR activities (triple bottom line) Competitive : Technological innovations, expertise and sustainability It has followed its mission and is in the right direction to achieve the vision.
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Ambuja Cements

Strategic Direction-The mission

Sustainability The way of Life

Some of the most efficient plants in the world Global standards for environment protection Innovation in technology Worked on the triple bottom line

Ambuja Cement Foundation

CSR organization supported by Ambuja Cements Works with communities surrounding manufacturing sites
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Natural resource management, Agricultural

References

http://www.ibef.org (India Brand Equity Foundation) http://www.indiacements.co.in/milestone.htm http://indiacements.co.in/trends.htm http:// www.moneycontrol.com/company-facts/indiacements/history/IC# http://indiacements.co.in/visionandmission.htm http://www.ambujacement.com/vmv.php http://www.ambujacement.com/milestones.php

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