CHAPTER-1 INDUSTRY PROFILE 1.1 INTRODUCTION “CEMENT” in its broadest term, may be stated as ‘Substance which acts as a binding or bonding agent between two or more materials’. The year 1817 is considered to be the starting point for the revival of the construction industry. It was early in the 1800’s that Louis Vicat (1876 –1861), a young, 22-year old civil engineer conducted work on the hydraulicity of the “lime-volcanic ash” mixture. This binder, which had been used since Roman times, remained the only material known to set in contact with water. In India, cement was first manufactured in 1904, near Madras (Chennai) by the South India Industrial Ltd. and in 1914 the same company has established cement plant in Porabandar (Gujarat) with a capacity of 1000 tons. By 1918, three factories were established, since then the industry has come a long way. During First Five Year Plan (1951-1957), cement production rose from 2.69 million tons to 4.6 million tons. By 1969, the total production was 13.2 million tons and occupied 9 th place in the world. Since 1969, a good rate of growth has been achieved in the country. During 1977, there were 56 cement factories functioning with the production of 19 million tons. The Indian cement industry is 70 years old. It has been decontrolled from price and distribution on 1 st March 1989 and delicensed on 25 th July 1991. However, the performance of the industry and prices of cement are monitored regularly. The constraints faced by the industry are reviewed in the Infrastructure Coordination Committee meetings held in the Cabinet Secretariat under the Chairmanship of Secretary (Coordination). The Cabinet Committee on Infrastructure also reviews its performance. Spread across the length and breadth of the country, there are about 120 large plants belonging to 56 companies besides some 300 mini plants with a total installed capacity of about 118 million tons and a production of 98 million tons realized in 1991. At 1
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CHAPTER-1
INDUSTRY PROFILE
1.1 INTRODUCTION
“CEMENT” in its broadest term, may be stated as ‘Substance which acts as a
binding or bonding agent between two or more materials’.
The year 1817 is considered to be the starting point for the revival of the
construction industry. It was early in the 1800’s that Louis Vicat (1876 –1861), a young,
22-year old civil engineer conducted work on the hydraulicity of the “lime-volcanic ash”
mixture. This binder, which had been used since Roman times, remained the only
material known to set in contact with water.
In India, cement was first manufactured in 1904, near Madras (Chennai) by the
South India Industrial Ltd. and in 1914 the same company has established cement plant in
Porabandar (Gujarat) with a capacity of 1000 tons. By 1918, three factories were
established, since then the industry has come a long way. During First Five Year Plan
(1951-1957), cement production rose from 2.69 million tons to 4.6 million tons. By 1969,
the total production was 13.2 million tons and occupied 9th place in the world. Since 1969,
a good rate of growth has been achieved in the country. During 1977, there were 56
cement factories functioning with the production of 19 million tons.
The Indian cement industry is 70 years old. It has been decontrolled from price
and distribution on 1st March 1989 and delicensed on 25th July 1991. However, the
performance of the industry and prices of cement are monitored regularly. The
constraints faced by the industry are reviewed in the Infrastructure Coordination
Committee meetings held in the Cabinet Secretariat under the Chairmanship of Secretary
(Coordination). The Cabinet Committee on Infrastructure also reviews its performance.
Spread across the length and breadth of the country, there are about 120 large
plants belonging to 56 companies besides some 300 mini plants with a total installed
capacity of about 118 million tons and a production of 98 million tons realized in 1991. At
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an expected 10% growth rate the production is likely to about 158.5 million tons at the
end of 2006 – 2007.
1.2 Capacity and Production
Cement production and consumption in the world is estimated at 1775 to 1800
million tones in 2004. In the last few years, cement consumption is reported to have been
growing at about 2.5% according to different sources.
The cement industry comprises of 125 large cement plants with an installed
capacity of 148.28 million tonnes and more than 300 mini cement plants with an
estimated capacity of 11.10 million tonnes per annum. The Cement Corporation of
India, which is a Central Public Sector Undertaking, has 10 units. There are 10 large
cement plants owned by various State Governments. The total installed capacity in the
country as a whole is 159.38 million tonnes. Actual cement production in 2002-03 was
116.35 million tonnes as against a production of 106.90 million tonnes in 2001-02,
registering a growth rate of 8.84%. Keeping in view the trend of growth of the industry in
previous years, a production target of 126 million tonnes has been fixed for the year
2003-04. During the period April-June 2003, a production (provisional) was 31.30
million tonnes. The industry has achieved a growth rate of 4.86 per cent during this
period.
1.2.1 Exports
Apart from meeting the entire domestic demand, the industry is also exporting
cement and clinker. The export of cement during 2001-02 and 2003-04 was 5.14
million tonnes and 6.92 million tonnes respectively. Export during April-May, 2003 was
1.35 million tonnes. Major exporters were Gujarat Ambuja Cements Ltd. and L&T Ltd.
{Now L&T Ltd (cement division) is named as Ultra Tech Cement Ltd., which is
undertaken by Grasim Industries Ltd. an ADITYA BIRLA GROUPS division}
1.2.2 Industry Inputs
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• Highly capital intensive industry.
• Nearly 55-60% of the inputs controlled by the government.
• Facing problems due to power shortage.
• Coal availability and quality affecting production.
• Mini plants realization of revenue lower than large plants, survival difficult.
1.3 Future
Demand drivers
• Infrastructure & construction sector the major demand drivers. Some demand
determinants:
Economic growth.
Industrial activity.
Real estate business.
Construction activity.
Investments in the core sector.
• Signs of a revival:
Growth in the housing sector.
Central road fund established for national highways and
railway over bridges to provide the necessary impetus.
• Demand - supply balance expected in the next 12 - 15 months.
• Higher capacity utilization likely in the future.
• Encouraging trend in demand due to pick-up in rural housing demand and
industrial revival.
• Industry likely to grow at 8-10% in the next few years.
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1.4 Recommendations on Cement Industry
For the development of the cement industry ‘Working Group on Cement Industry’
was constituted by the Planning Commission for the formulation of X Five Year Plan.
The Working Group has projected a growth rate of 10% for the cement industry during
the plan period and has projected creation of additional capacity of 40-62 million tonnes
mainly through expansion of existing plants. The Working Group has identified
following thrust areas for improving demand for cement;
(i) Further push to housing development programs.
(ii) Promotion of concrete Highways and roads.
(iii) Use of ready-mix concrete in large infrastructure projects.
Further, in order to improve global competitiveness of the Indian Cement
Industry, the Department of Industrial Policy & Promotion commissioned a study on the
global competitiveness of the Indian Industry through an organization of international
repute, viz. KPMG Consultancy Pvt. Ltd. The report submitted by the organization has
made several recommendations for making the Indian Cement Industry more competitive
in the international market. The recommendations are under consideration.
1.5 Technological change
Cement industry has made tremendous strides in technological upgradation and
assimilation of latest technology. At present ninety three per cent of the total capacity in
the industry is based on modern and environment-friendly dry process technology and
only seven per cent of the capacity is based on old wet and semi-dry process technology.
There is tremendous scope for waste heat recovery in cement plants and thereby reduction
in emission level.
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Example: One project for co-generation of power utilizing waste heat in an Indian cement
plant is being implemented with Japanese assistance under Green Aid Plan. The
induction of advanced technology has helped the industry immensely to conserve energy
and fuel and to save materials substantially.
It is manufactured by grinding the raw materials such as limestone, silica, clay,
alumina, and iron oxide etc., mixed in certain proportions and then crushing them in a kiln
at a temperature of about 13000 C to 15000 C, the material sinters and partially fuses to
form modular shaped thing called ‘Clinker’ and then it is and ground to a fine powder
with addition of gypsum. The product thus formed is called ‘Cement’. Depending up on
the use of chemical composition, setting and hardening properties and use of raw
materials, cement of different categories can be manufactured. They are broadly classified
into two groups, namely:
• Portland cement.
• Special cement.
Portland cement
This is most used and is named because of its properties with a well-known natural
Stone Quarry at Portland (UK). Joseph Aspdin of England took the patent for producing
Portland cement on 21stOctober 1824. Later in 1845 Issac Charles Johnson made better
quality cement and established factories during.
Ordinary Portland cement is the most commonly used cement for a wide range of
applications. These applications cover dry-lean mixes, general-purpose ready-mixes, and
even high strength pre-cast and pre-stressed concrete.
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Special cement
These are generally manufactured by adding certain admixture to the cements
during the mixing or grinding. The types of special cement are,
1. Portland Pozzolana Cement (PPC),
2. Portland Blast Furnace Slag Cement (PBFS) or (PSC),
3. Oil Well Cement,
4. Rapid Hardening Portland Cement,
5. Sulphate Resisting Portland Cement
6. White Cement etc.
(PPC and PSC are considered as Blended cement).
Production of these varieties of cement conforms to the Standard Specifications.
It is worth mentioning that some cement plants have set up dedicated jetties for
promoting bulk transportation and export.
1.6New Trend in Cement Industry
Ready Mix Concrete (RMC)
• RMC - ready to use concrete, a blend of cement, sand and aggregate and water
mixed in convenient proportion.
• Launched first in Mumbai a few years ago is gaining ground in other metros in
India.
• Typical cost of a plant - Rs. 7-8 crs (US $ 1.6 to 1.8 mn) to set up a 100 cubic
meter (cum) plant with 4-5 transit mixers. Gestation period is around 3-4 months.
• Currently RMC is at a very nascent stage, accounts for 0.5% of the demand.
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Companies planning to enter this market
• Priyadarshini Cements in Hyderabad.
• Saurashtra Cements in Navi Mumbai.
• Pioneer a world leader entering the market.
• Capacity additions expected in the next few years.
• ACC plans to triple its capacities.
• Grasim is setting up four more plants.
• L&T plans to add another eight more (now Ultra Tech is looking this business).
Ready Mix Concrete Producers and their Capacity
Company name No. of plants Capacity ACC 13 712RMC Readymix 4 440L&T (Ultra Tech Cement) 5 330Fletcher Challenge 3 320HCC 2 240Unitech 2 150Jog Construction 1 120Starmac 1 120Madras Cement 1 56Birla Cement 1 30
Ready Mix Concrete Producers and their Capacity
7
0
100
200
300
400
500
600
700
800
Companies Name
Ca
pa
cit
y
ACC
RMC Readymix
L&T (Ultra TechCement)
FletcherChallenge
HCC
Unitech
Jog Construction
Starmac
Madras Cement
Birla Cement
Indian Cement Industry (Summary)
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Installed capacity 114.8 million tonnes per annum (mntpa).
Production around 87.8 mn tonnes
MAJOR CEMENT PLANTS
• Companies: 59
• Plants: 116
• Typical installed capacity per plant:
Above 1.5 mntpa
• Total installed capacity: 105 mntpa
• Production 98-99: 81.6 mntpa
• Excise: Rs. 350/ tonne
• All India reach through multiple
plants.
• Export to Bangladesh, Nepal, Sri
Lanka, UAE and Mauritius
• Strong marketing network, tie-ups
with customers, contractors
• Widespread distribution network.
• Sales primarily through the dealer
channel
MINI CEMENT PLANTS
• Nearly 300 plants
• Located in Gujarat, Rajasthan, MP,
AP
• Typical capacity < 200 tpd
• Installed capacity around 9 mn.
Tonnes
• Production around: 6.2 mn tonnes
• Excise: Rs. 200/ tonne
• Mini plants were meant to tap
scattered limestone reserves.
However most set up in AP
• Most use vertical kiln technology
• Production cost / tonne - Rs. 1,000
to 1,400
• Presence of these plants limited to
the state
• Infrastructural facilities not the best
The pattern of Region wise consumption of Cement
Cement consumptions are as follows:
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1. South 30 per cent (26 per cent),
2. East 17 per cent (17 per cent),
3. North 20 per cent (21 per cent),
4. Central 16 per cent (17 per cent), and
5. West 18 per cent (20 per cent).
The figures for the current year are for April-November period while the figures
in brackets represent full year for the year 2004-05. Also, there is an increase in the
consumption of PPC cement from 48 per cent to 50 per cent.
Today, cement from Andhra is going all over India, including Assam,
Meghalaya, Jharkhand, Orissa, West Bengal, Chattisgarh, Gujarat and Maharastra.
More cement is likely to flow into Tamil Nadu from the state in view of cut in sales tax.
Any further increase in demand in the South India will benefit the cement
industry here. Cement movement from Gujarat to Mumbai is also coming down due to
exports while cement movement from Orissa into Andhra has stopped and, in fact,
Grasim Industry is operating ‘GLOBALLY’ and it is also the largest Indian
MNC company, when it comes to cement division of the company operating at
National – Level only with dividing market into Regional or Zonal. Today company also
plans to go globally. It is to prove that statement of the group (Aditya Birla Groups’),
i.e., “TAKING INDIA TO THE GLOBE”.
2.6 f. Ownership Pattern
Grasim Industries Ltd. is well established and diversified company.
This company is basically a “PUBLIC LIMITED COMPANY”. Share holders are the
owners of the company.
PATTERN:
7. Share holders.
8. Financiers.
9. Financial institutions.
2.7 g. Competitors Information
The competitive rivalry between the existing market players is very high.
The cement division of Grasim Industries faces intense competition from its competitors
like ACC and Gujarat Ambuja Cements. There is high competition between the
competitors to gain market share and market growth rate. Due to very little differences
between products and services offered by them.
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Major Cement companies market share in India. (2003 – 2004)
In India we have many companies, who are involved in cement business. This
active participation of Entrepreneurs made Indian Cement industry to stand in 2nd Rank in
the world, after China and followed by US.
MARKET SHARE OF CEMENT COMPANIES IN INDIA
CAMPANIES MARKET SHARE IN %ACC 13
Gujarat Ambuja 12
Grasim Industries 10
Ultra Tech 10
India Cement 5
Century Textiles 5
Jaypee 4
Birla Corp 4
Lafarge 4
Madras Cement 3
Others 30
• Over 370 companies in the organized sector.
• However, industry dominated by 20 companies who account for over 70% of the
market.
• Individually no company accounts for over 15% of the market.
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2.8 h. Infrastructural Facilities
Grasim is providing nice, attractive and more comfortable infrastructure in its
work place. Birla Super Bulk Terminal plant (Packing center) at Dodballapur, near
Bangalore, this plant also well furnished with spaciously to get work fast in smooth
manner. Every division of the company is computerized and also have its own power
generators.
MARKET SHARE IN %
13%
12%
10%
10%5%5%
4%4%
4%
3%
30%
ACC
Gujarat Ambuja
Grasim Ind
Ultra Tech
India Cement
Century Textiles
Jaypee
Birla Corp
Lafarge
Madras Cement
Others
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2.9 i. Awards
Beyond Business
A value-based, caring corporate citizen, the Aditya Birla Group inherently
believes in the trusteeship concept of management. Part of the Group’s profits is
ploughed back into meaningful welfare-driven initiatives that make a qualitative
difference to the lives of marginalized people. These activities are carried out under the
aegis of the Aditya Birla Centre for Community Initiatives and Rural Development,
which is spearheaded by Mrs. Rajashree Birla.
• 1993
Rajiv Gandhi National Quality award.
• 1995
Jamnalal Bajaj Uchit Vyavahar Puraskar for fair business practices.
• 1999
Best productivity award by the National Productivity Council.
IMC Ramakrishna Bajaj National Quality award (certificates of merit).
• 2000
National energy conservation award by Ministry of Power, Government of India.
Best energy efficient unit award by CII.
IQRS level 6 rating from DNV, The Netherlands.
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• 2001
National award for 'Quality excellence in the Indian Cement Industry' from the National
Council for Cement and Building Materials.
First in India to be certified ISO 9001:2000 by DNV, The Netherlands.
TPM Excellence award, first category, by JIPM, Tokyo.
• 2003 – 2004
Bihar Caustic: Bihar Caustic and Chemicals Ltd., Rehla, Jharkhand has received the
FICCI Annual Award 2003-2004 in recognition of corporate initiative in family welfare.
Grasim, Nagda: Grasim, Nagda received the FICCI Annual Award 2003-2004 in
recognition of corporate initiative in rural development.
2004
Birla Super Cement received the Environment Excellence Award under the silver
category by GreenTech Foundation.
Birla Super Cement certified with the OHSAS 18001:1999 for their occupational health
and safety management system by Det Norske Veritas (DNV).
The 2004 Stockholm Industry Water Award.
The Asian CSR Award 2005.
• 2006
Grasim Industries Limited, Staple Fibre Division, Nagda, has received the Indian
Chemical Manufacturers Association (ICMA) award for Social Responsibility. At a
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function held in Mumbai on 27 April 2006, Mrs. Rajashree Birla received the award
from Mr. Mukesh Ambani, Chairman, Reliance Industries Limited.
2.6 j. Work Flow Model (End to End)
Process of manufacturing of cement:
The manufacturing process of cement consists of mixing, dry and grinding
of limestone, clay and silica into a composite mass. The mixture is then heated
and burned in a pre-heater and kin and then cooled in an air cooling system to
form clinker, which is the semi-finished form. This clinker is cooled by air
subsequently ground with gypsum to form cement. Limestone is the key raw
material and normally 1.2-1.5 tons are needed for every ton of cement. The
quality of the limestone significantly affect the operating effectively of the unit
under normal conditions to produce one ton of cement, 0.25 of coal, 120 KHz of
power and 0.05 ton of gypsum is required.
BSBT is the only one unit located in Karnataka, which supplies cement
requirements of the state. To this unit, cement comes from MALKHED near
GULBARGA. The cement will be brought in a 40 wagons train. The company
has its own train engine and a separate rail track deviation from
DODBALLAPUR RAILWAY STATION.
The plant constructed on an area of 50 Acers of land, which includes
• Main package plant
• Rail track
• Truck yard
• Canteen
• Park
Process of packaging:
There is a separate railway track inside to the BSBT. The loaded cement
wagons come directly to the unloading section from Malkhed. Then the cement is
unloaded and directly stored in two silos. These two silos having a capacity of
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3500m.t each with a total capacity of 7000m.t. They had the machinery which
automatically loads the fixed quantity of cement into the bags and the packed
cement bags moves automatically in a trolley and falls into a truck with the help
of Material handling system.
The material handling systems are as follows
1. Elevators. 3. Pay loaded.
2. Conveyer belts. 4. Tipper.
The Work flow model at BSBT – Plant of Grasim Industries Ltd.
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Cement from Malkhed in wagons (train)
BSBT – plant at Dodballapur
Loaded into trucks
Packing machine
Material handling system
Stored in Two - Silos
Deliver to End – Customers
2.7 k. Future growth and prospectus
• Company is planning to go globally.
• Grasim wants to achieve 50,000 MT of production of cement by 2010.
• Wants to globally competent company, as it is a ‘Premium Price Brand’ in India.
• Expansion of 8 Mn. TPA at two locations with capacity of 4 Mn. TPA each.
• Total capital outlay of Rs. 2,475 crores.
Greenfield project at Kotputil (Rajasthan) with split grinding unit
Capacity: 4 Mn TPA.
Capital outlay: Rs. 1,275 crores.
Implementation: 21 months.
Expansion at Shambhupura (Rajasthan) and additional split grinding unit
Capacity: 4 Mn TPA.
Capital outlay: Rs. 1,200 crores.
Implementation: 21 months.
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CHAPTER-3
McKINSEY’S 7-S MODEL
HISTORY OF 7-S MODEL
The 7-s model is better known as Mc Kinsey 7s this is because the two persons
who developed this model, Tom Peter and Waterman, have been consultants at Mc
Kinsey & Co at that time. They published their 7s model in their article “Structure is not
organization” (1980) and in their books “The Art of Japanese management” (1981) and
“In search of Excellence” (1982). The model starts on the premises that an organization is
not just structure, but consists of seven elements.
The 7-s model is a tool for managerial analysis an action that provides a structure
to consider the company as a whole, so that the organization problem may be diagnosed
and strategy may be developed and then implemented. The seven-s is a frame work for
analyzing organization and there effectiveness.
It looks at the seven key elements that make the organization successful, or not.
Those elements are as follows:
STRUCTURE.
SKILLS.
STYLE.
STRATEGY.
SYSTEMS.
STAFF.
SHARED VALUES.
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Strategy
Skills
Staff
Style
System
Structure
Shared Value
The model starts on the premise that an organization is not just Structure, but
consists of seven elements:
The Seven S architecture
Those seven elements are distinguished in so called hard S’s and soft S’s. The
hard elements are feasible and easy to identify. They can be found in strategy statements,
corporate plans, organizational charts and other documentation.
The hard S’s of 7 – S model is 3:
• Structure.
• Strategy.
• Systems.
The soft S’s of 7 –S model is 4:
• Skill.
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• Style
• Staff.
• Shared Values.
The four soft S’s however, are hardly feasible. They are difficult to describe since
capabilities, values and elements of corporate culture are continuously developing and
changing. They are highly determined by the people at work in the organization. The soft
factors are below the surface, and then also they have a great impact on the hard
Structures, Strategies and Systems of the organization.
The 7-s diagram illustrates the multiplicity interconnection of elements that
defines as organization ability to change. The theory helped to change the managers
thinking about how companies could be improved. It says that it is not just of devising a
new strategy and following it through. Nor is it a matter of setting up new systems and
letting them to generate improvements. To be effective, your organization must have a
high degree of fit, or internal alignment among all 7-s. Each S must be consistent with
and reinforce the other S’s. All S’s are interrelated, so a change in one has a ripple effect
on all others. It is impossible to make a progress on one without a making progress on all.
Thus to improve your organization you have to pay attention to all of the seven elements
at the same time. There is no starting point or implied hierarchy-different factors may
drive the business in any one organization.
• Structure (virtual organization)
• Skills (competencies)
• Style (culture, leadership)
• Strategy (corporate, business, product\market)
• Systems (processes)
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• Staff (empowerment)
• Shared Values (missions, goals)
Each one of these are described as follows
3.1. STRUCTURE
Structure describes the hierarchy of authority and accountability in an
organization these relationships are frequently diagrammed in organizational charts. Most
organizations use some mix of structures- pyramidal, matrix or structured ones – to
accomplish their goals. A structure is the formalizing of relationships, roles and
responsibilities in order to recognize and perform work.
In simple terms, structure is a pattern in which various parts or components are
inter-related and inter-connected. So organization structure is a pattern of relationships
among various activities and positions. Because various people hold these positions, the
structure defines the relationships among people in the organization.
The structure provides the framework for relationship among different parts of the
organization. The structure sets out formal reporting relationships, mode of
communication among members their respective rules and regulations for carrying out
different task.
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ORGANISATIONAL STRUCTURE
34
Chairman
Chief Marketing Officer(Cement Business)
Business Head Cement
Functional Head Human Resource
Functional Head Finance & Commercial
Functional Head Marketing Services
Functional Head Logistics
Functional Head Technical
Functional Head Key Accounts & RMC
Zonal Mktg Heads (north, east,south, west)
Regional Head Marketing
Area Manger
Vice President Marketing (Zonal Head)
MARKETING RESERCH AT BIRLA CEMENT WORKS
Marketing research is a systemic gathering recording and analysis of data
about the problems relating to the marketers of goods and services. Thus it
includes investigation of market segments, products. The market research answers
the questions in different markets. The areas of market research are
1. Determining the size of both current and also potential market.
2. Assessing the market brands.
3. Ascertaining the strength and weakness of competitors.
4. The current contemplates legislations of the government towards the
particular product, including taxation policy.
5. Demand and sales forecasting.
Advertisement Media
In this competitive world without advertisements any company cannot sell
their product in the market. Advertisement acts as an important tool, which
attracts the consumers. BSBT made huge expenditure on wall painting in rural
areas. Wherever you go you can see the ads of Birla cement in around the
country. The major advertising Medias, which used for BSBT, are as follows:
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Sales Officer
Front Line Sales
Medias
1. WALL PAINTING.
2. TELEVISION.
3. NESPAPERS.
4. WALLPAPERS.
5. HOARDING.
6. MOBILE ADVERTISEMNT. (ads on buses, vans, etc)
WALL PAINTING is playing a major role in the advertising media.
3.2 SKILLS
A skill is the ability, knowledge, understanding and judgment to accomplish a
task, Skills may be defined as what the company does best; the distinctive capabilities
and competencies that reside in the organization.
Company skills
Grasim has variety of skills in doing its business. The company analyses the
potential market so that it can market its products in efficient manner. The company
salesperson is trained and provided with skills to deal with customers personally to know
their needs and wants. Company also strives in providing the better services. It has skilled
staff which also provides market information regularly, which helps to study about
competitors’ move. Grasim educated its customers. It also informs and makes customer
aware of market conditions. Skills are parallel to core competencies and whenever there
is a shift in the strategy, firm may have to acquire expertise in new skills and older skills.
3.3 STYLE
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Firm differs one another in their style of functioning. According to the 7-s
framework, style becomes evident through the pattern of decisions and actions taken by
management over a period of time. Subordinates do not do what you ask them to do; they
do what they see doing. Thus, aspects of management give importance. Style, according
to this framework, also includes the culture of organization.
Company style
The Grasim Company is having its own style of doing the business. All the
employees of the company are influenced to use their skills, values, knowledge,
judgment, attitudes and attributes to the fullest extent. The employees have the freedom
to give suggestions to the top management. Every individual behaves as leader and
expresses his/her character and attitude towards their work. The company also recognizes
value, respect and celebrates the cultural difference and diversity of background and
thought of its employees. It expects its suppliers to follow applicable laws and principles
in the countries in which they operate.
3.4 STRATEGY
Strategy is plan an organization formulates to gain a substantial advantage over
the competition. Strategy is the art of devising and employing a system of activities that
mobilize all resources towards a valuable goal.
Company strategy
The Grasim Industries exists to benefit and refresh everyone it touches. It is
mainly targeted to younger generation. The main company strategy is to use its
significant resources and capabilities to provide active leadership on environmental
issues. Grasim company is striving hard to the market leader in the carbonated cement
industries. Every employee of the organization is expected to maintain higher standards
37
of quality in product, process and relationship. This made them to be the ‘Premium Price
Brands’ in the market.
It also has strategy of maintaining good industrial and customer relationship.
Because of all these strategies Grasim Industries is successful in the market. The supplier
guiding principles is based on the belief that good corporate citizenship and actions in the
marketplace, the environment and the community.
Pricing strategy
Pricing of the cement are more fluctuating from time, it differs from place
to place. Freight from place to place differs because it is charged on the basis of
distance from this unit to the place of delivery that means longer the distance
higher will be the freight and vice-versa.
3.5 SYSTEM
“SYSTEM” refers to the process used to manage the organization. System includes
Management Information System
Performance review technique
Compensation system / Reward system
Customer satisfaction monitoring system
SAP – module1 used in logistics in BSBT.
Follows JIT system for inventory control in BSBT.
Companies Quality System
System in this framework stands for rules and regulations, procedures and
practices that must be followed to carry out tasks in the organization. These include both
the formal and informal system that accommodating an organization structure.
38
Changes in the organization structure lead to changes in the system. Some times
these are referred to as something dull, which hinders management functions, but it is
well known that good system creates working environment in the enterprise.
MIS is a system which provides information support for decision making in the
organization. GRASIM Industries is using computerized processing system. As computer
can store voluminous data, the data from different sources in the organization are
collected and processed in the system so that information regarding any subject is
available at hand. This system helps the Grasim Company to take corporate decision in
its activities.
3.6 STAFF
Staffing has been described as the selection, placement, training and development
of appropriately qualified employees. It refers to the way young recruits are introduced
into the organization and the way they manage their career as they develop into future
managers; it implies staffing included two distinct responsibilities.
- Selecting people for specific position in the organization
- Developing in them the skills to do those and subsequent jobs
effectively.
Company staff
The company compensates its employees fairly and competitively relative to their
industry in full compliance with applicable local and national wage and hour laws. It also
offers opportunities to employees to develop their skills, aptitude, capabilities and
abilities, if the performance of the employee is good to the extent required by the
company to operate its business. Each designation has their own duties and
responsibilities to fulfill the visionary goals of the company.
To carry out the company activities staff is classified into:
• Technical Staff
• Clerical Staff
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3.7SHARED VALUES
According to this postulation, super ordinate goals refer to the set of values and
aspirations, often unwritten that go beyond the normal objectives and goals. These are
shared vision of the company and represent the fundamental purpose around which the
whole business is built. These are the broad notions of future direction that top
management infuses to managers at all levels.
Super ordinate goals should be properly stated because they can impart a strong
base of stability in rapidly changing environments. It provides a basic, although
somewhat abstract meaning to individuals working in the organization.
Company shared values
The reputation of the Grasim Company is built on trust. Those who go business
with Grasim around the world know that the company is committed to managing its
business with a consistent set of values that represent the highest standards of quality,
integrity, excellence and compliance with the law and respect for the value of their
shareholders investment. This is achieved by the sales growth, cost control and wise
investment of resources. Grasim finds its value in being a truly global company by
continuing to build a competitive and profitable world wide refreshment beverage
business. Value creates a path to the future and plan for how to achieve the vision.
The Grasim values are:
• INTEGRITY :
Like Water, flows pure and honest through our action
• COMMITMENT :
Like the Earth, is the solid core that sustains our growth
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• PASSION :
Like Fire, burn within us, with a missionary zeal
• SEAMLESSNESS :
Like Space, is borderless world of free flowing ideas and knowledge
• SPEED :
Like the Wind, is the absolute agility of response that keeps us moving ahead
SWOT – ANALYSIS:
The SWOT Analysis is a conceptual framework for a systematic analysis that
facilitates matching the external threats and opportunities with the internal weakness and
strengths of the organization. It has been common to suggest that the companies identify
their strengths and weakness, as well as the opportunities and threats in the external
environment. But what is often overlooked is that combining these factors may require
distinct strategic choices. To systematize these choices the concept of ‘SWOT’ has been
proposed; where
S --- STRENGTHS
W --- WEAKNESS
O --- OPPURTUNITIES
T --- THREATS
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Company’s SWOT analysis
STRENGTH ♥ Good corporate values are adopted to reach objectives.
♥ Good support from Parental company, i.e.,
(ADITYA BIRLA GROUP).
♥ Company with well diversified portfolio.
♥ Good product positioning in the market.
♥ Company is supplying quality products regularly.
♥ Company is having very good brand image in market.
♥ Company is having Premium Price Brands in market.
♥ Company is having well committed Management
Team.
♥ Recent acquisition of L&T’s cement – renamed as
Ultra Tech Cement.
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♥ The group has strengthened its national positioning,
with leadership in the cement industry in several states.
♥ Good infrastructure with fully computerized offices.
♥ Environmentally free from pollution.
♥ The company is one of the few single kiln cement
plants producing more than eight varieties of cement.
WEAKNESS High cost establishment of plants.
Transportation cost is also high
It has uniform distribution channels for rural markets.
♠ Poor advertisement and sales
promotional activities.
♠ Poor communication between company and individual
builders.OPPORTUNITY ♣ Scope for expansion of the plant in new
places.
♣ Attractive investment opportunity.
♣ Scope for export trade and globalization.
♣ Scope for capturing domestic market in
unrepresentative areas
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♣ To capture potentiality of ready-mix concrete
market.
♣ New innovative techniques to develop quick
hardening cements.
♣ Scope for rationalization on sales tax and
excise duty
THREATS The major threat is cutthroat competition.
Always fluctuation in prices.
Fast change in customer preferences.
Availability of coal and fuel will be a major constraint.
CHAPTER-5
Balance Sheet As 31st March 2006
Profit & Loss Account
For the year ended 31st March 2006
Schedule FY 2006
Rs./Crs.
FY 2005
Rs/CrsIncomeGross Sales 300.12 2656.81
Schedule FY 2006 Rs/Crs. FY 2005 Rs/Crs.Sources of funds:Shareholder’s FundsShare Capital 1 38.34 38.34Reserves and Surplus 2 596.68 538.40Loans: 3Secured 381.00 348.75Unsecured 369.00 195.06
750.00 543.81Deferred Tax Liability
(Net) (Note-B9)
105.21 103.35
Total 1489.23 1233.90Application of Funds:Fixed Block 4Gross Block 1310.61 1148.43Less: Depreciation 46.94 398.30Net block 840.67 750.13Capital work in
progress
77.93 84.33
918.60 834.46
Investments 5 0.53 54.48Current Assets, Loans
and Advances :
6
Inventories 419.41 330.12Sundry Debtors 175.14 156.52Cash and Bank
Balances
231.36 110.43
Other Current Assets 0.21 0.02Loans and Advances 184.39 146.46
1010.51 743.55Less: Current
Liabilities and
Provisions:
7
Current Liabilities 415.72 380.14Provisions 24.95 28.83
440.67 408.97Net Current Assets 569.84 334.58Deferred Revenue
Expenditure (Note B
10)Total 1489.23 1223.90
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Less : Excise Duty 376.60 2625.52 431.32 2225.49
Other income 8 1.18 19.812626.70 2245.30
ExpenditureManufacturing and Other
Expenses
9 2479.58 2046.25
(Increase)/Decrease in
Work Process and finished
goods
10 (76.80) 14.41
Interest 11 50.56 42.94Profit before depreciation,
tax & exceptional items
173.36 141.70
Depreciation 72.94 56.94
Transfer from revaluation
reserve
(0.15) 72.79 (0.15) 56.79
Profit before tax &
exceptional items
100.57 84.91
Provision for tax - current 21.79 3.65
Deferred 1.86 13.63Fringe Benefit Tax 4.55 28.20 17.28Profit after tax before