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

1

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

2

• 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.

4

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.

6

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)

8

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,

cement is flowing into Orissa as well.

CHAPTER-2

COMPANY PROFILE

Fact File (Grasim Industries Ltd. – Cement Division)

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• Cement business of Larsen & Toubro Limited demerged and vested in company

in 2004.

• Grasim acquired management control in July 2004.

• Together with Grasim the largest cement producer in India.

• Name changed to UltraTech Cement Limited with effect from 14 October 2004.

• Narmada Cement Company Limited amalgamated with UltraTech in May 2006.

Services (Aditya Birla Group)

The world no. 1 in viscose staple fiber.

The world's largest single location palm oil producer.

Asia's largest integrated aluminum producer.

A globally competitive, fast-growing copper producer.

The world's third largest producer of insulators.

The fourth largest producer of carbon black.

The world's eighth largest producer of cement, and the largest in a single

geography.

India's premier branded garments player.

Among India's most energy efficient private sector fertilizer plants.

India's second largest producer of viscose filament yarn.

The no. 2 private sector insurance company and the fourth largest asset

management company in India.

The Group has also made successful forays into the IT and BPO sectors.

2.1 a. Background and Inception of the Company

Cement

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Grasim ventured into cement production in the mid 1980s, setting up its first

cement plant at Jawad in Madhya Pradesh. Since then, Grasim has grown to become

cement major — it is the 11th largest cement producer in the world and the seventh

largest in Asia.

Grasim’s cement operations today span the length and breadth of India, with five

integrated gray cement plants, two split grinding units at Hotgi in Maharashtra and

Bhatinda in Punjab, one bulk terminal at Bangalore, and six ready mix concrete plants.

Leveraging the strong equity and goodwill of the house mark, the Company has a

portfolio of national brands such as Birla Super, Birla Plus, Birla White and Birla Ready

Mix, also nurturing regional brands such as Vikram Cement and Rajashree Cement.

On 6th July 2004, Larsen & Toubro Limited (L&T) and Grasim announced

completion of the implementation process of demerge of the cement division of L&T.

On successful completion of its open offer, Grasim acquired controlling stake in the

newly formed company, UltraTech Cement Limited (UltraTech), the demerged cement

business of L&T. It manufactures and markets ordinary portland cement, portland blast

furnace slag cement, portland pozzolana cement and grey portland cement.

The Group's combined capacity stands raised to 31 million tpa, of which, 17

million tpa comes from UltraTech. Apart from the long-term strategic value, the

acquisition will also bring significant synergy gains, to be realized in the coming years.

Between Grasim and UltraTech, the Group has cement operations spanning the length

and breadth of India, with 11 composite plants, seven split grinding units, four bulk

terminals (including one in Sri Lanka) and seven ready-mix concrete plants. It gives the

Group a strong national presence, with a leadership position in 18 states.

Mile Stones

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Grasim was incorporated on August 25, 1947; just 10 days after India became

independent, manufacturing textiles made from imported raw materials. It is now a

global leader in viscose staple fiber (VSF), the country's largest merchant producer of

sponge iron and the second-largest caustic soda maker in India; and poised to be India's

largest cement manufacturer.

1947: Grasim Industries Ltd is incorporated.

1950: Grasim launches production of fabrics at Gwalior using imported rayon – a man-

made cellulose fiber.

1954: Grasim begins rayon production at Nagda.

1962: Grasim starts an engineering division to provide plant and machinery for VSF

production.

1963: Grasim sets up its first rayon grade pulp plant at Mavoor, Kerala; the first to make

rayon grade pulp from bamboo and other hardwoods.

Grasim purchases a composite textile mill at Bhiwani, Haryana.

1968: Rayon production commences at Mavoor, Kerala.

1972: A completely indigenous plant based on Grasim's own engineering and know-

how, begins production at Harihar, Karnataka.

Grasim commences production of rayon grade caustic soda – a major raw

material for VSF production – at Nagda; another step towards becoming self-

reliant.

1977: Grasim's third rayon plant – at Harihar, Karnataka – goes into production.

1985: Vikram Cement – Grasim's first cement plant – goes on stream at Jawad, Madhya

Pradesh.

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1987: Vikram Cement's second production line is commissioned.

1991: A third production line is added at Vikram Cement.

1992: Grasim sets up Birla International Marketing Corporation (BIMC), a merchant

exporter.

First GDR issue on December 2, 1992 for US$ 90 million. (Nos: 6,933,745)

1993: Vikram Ispat, India's third-largest gas-based sponge iron plant is commissioned.

Birla Consultancy & Software Services is set up, to provide IT consulting

services and for software development.

1994: Second issue of GDRs on June 15, 1994 for US $100 million. (Nos: 4,878,048)

1995: Grasim commissions two Greenfield cement plants – Grasim Cement at Raipur

(Madhya Pradesh) and Aditya Cement at Shambhupura (Rajasthan).

Grasim sets up two new spinning units – Elegant Spinners at Bhiwani (Haryana)

and Vikram Woollens at Malanpur (Madhya Pradesh).

1998: Grasim's first major acquisition overseas – the Atholville Pulp Mill in Canada.

Grasim acquires Dharani Cements Ltd.

Grasim acquires Shree Digvijay Cements Ltd.

The cement business of Group Company, Indian Rayon and Industries Ltd

(IRIL), is transferred to Grasim in a corporate restructuring exercise.

1999: Grasim's viscose staple fiber (VSF) and rayon grade pulp units at Mavoor are

closed down owing to lack of raw material.

14

Third issue on September 16, 1999 to Indian Rayon's GDRs holders: Three

GDRs in Grasim for every 10 GDRs in Indian Rayon, on demerge of its Cement

business into Grasim. Nos: 1,624,336

2000: The Lawson Competency Center is set up as a division of Birla Consultancy &

Software Services, the software arm of Grasim, following a tie up with Lawson

Software (USA), among Fortune's top five private software companies.

Consultancy and software services are spun off as a separate entity, called Birla

Technologies Ltd.

Merger of Dharani Cements into Grasim.

2001: Grasim acquires 10 per cent stake in L&T. Subsequently increases stake to 15.3

per cent by October 2002.

Four ready-mix concrete plants commissioned, with an aggregate capacity of one

million cubic meters per annum.

Divests holding in Birla Technologies to PSI Data Systems.

2002: VSF Research & Application Centre set up at Karachi in Gujarat

The Grasim Board approves an open offer for purchase of up to 20 per cent of the

equity shares of Larsen & Toubro Ltd (L&T), in accordance with the provisions

and guidelines issued by the Securities & Exchange Board of India (SEBI)

Regulations, 1997.

Grasim increases its stake in L&T to 14.15 per cent.

15

2003: Grasim's Chemical Division receives the SA 8000 (Social Accountability) and

OHSAS 18001 certifications.

The board of engineering major Larsen & Toubro Ltd (L&T) decides to demerge

its cement business into a separate cement company (CemCo). Grasim will

acquire an 8.5 per cent equity stake from L&T and then make an open offer for 30

per cent of the equity of CemCo, to acquire management control of the company.

2004: Completion of the implementation process to demerge the cement business of

L&T and completion of open offer by Grasim, with the latter acquiring

controlling stake in the newly formed company UltraTech.

Board reconstituted with Mr. Kumar Mangalam Birla taking over as Chairman.

The Staple Fibre Division and Engineering & Development Division of Grasim,

Nagda receives SA 8000:2001 certification from SAI in recognition of its social

accountability initiatives.

2.2 b. Nature of Business Carried

Grasim Industries Ltd. is well established and diversified company. This company

is basically a “PUBLIC LIMITED COMPANY”. Grasim carried both manufacturing and

service sectors, this made them to achieve high market share and became Leader in the

industry.

Grasim Industries Limited, a flagship company of the Aditya Birla Group, ranks

among India's largest private sector companies, with a turnover of Rs. 6247.10 crore for

FY 2005. Starting as a textiles manufacturer in 1948, Grasim's businesses today comprise

Viscose Staple Fibre (VSF), cement, sponge iron, chemicals and textiles. The Company

holds a dominant position in its businesses. And company is emerging as cement major.

2.3 c. Vision, Mission and Quality Policy

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Global Vision, Indian Values:

The Aditya Birla Group is India's first truly multinational corporation. Global in

vision, rooted in Indian values, the Group is driven by a performance ethic pegged on

value creation for its multiple stakeholders. A US$ 7.59 billion conglomerate, with a

market capitalization of US$ 7 billion, it is anchored by an extraordinary force of 72,000

employees belonging to over 20 different nationalities. Over 30 per cent of its revenues

flow from its operations across the world. The Group's products and services offer

distinctive customer solutions. Its 66 state-of-the-art manufacturing units and sect oral

services span India, Thailand, Indonesia, Malaysia, Philippines, Egypt, Canada, Australia

and China.

Vision

To be a premium global conglomerate with a clear focus on each business.

Mission

To deliver superior value to our customers, shareholders, employees and society at large.

"To actively contribute to the social and economic development of the

communities in which we operate. In so doing, build a better, sustainable way of life

for the weaker sections of society and raise the country's human development index".

QUALITY POLICY

By providing timely services, before and after sale

Through internal customer focus

By supplying cement of various grades with consistent quality as per

mutually agreed terms.

By providing good quality cement to the customers.

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2.4 d. PRODUCT PROFILE (GREY CEMENT)

With a total grey cement capacity of 13.12 million tonnes per annum (tpa),

Grasim is among the largest producers of grey cement in India. All its plants are located

close to sizeable limestone mines and are fully automated to ensure consistent quality. All

the company’s cement units are equipped with state-of-the-art equipment and are

certified with ISO 9001 for quality systems, and ISO 14001 for environment management

systems. Its national brands are Birla Plus, Birla Super and Birla Ready Mix concrete.

Vikram Cement

The first production line of this unit at Jawad (Madhya Pradesh) went on stream

in 1985, with a capacity of 0.5 million tpa. Today, with a capacity of a 4.20 million tpa,

Vikram Cement has emerged as a premium regional brand, well-reputed for its strength

and consistently superior performance.

The Vikram Cement unit is one of the few plants to have own its Central

Research and Development Centre. The first ISO 9001 cement plant in the country,

Vikram Cement has also taken the lead in innovative raw mix designs and process

conditions. Vikram Cement has won several accolades at the national and international

level for its quality, efficiency and environmental initiatives. These include:

• The first Indian unit to win the coveted TPM award from the Japan Institute of

Plant Maintenance, Tokyo in 1995.

• The Ramakrishna Bajaj National Quality Award in 1998.

• The first cement unit in the world to receive IQRS - Level 6 rating from DNV,

Netherlands.

• The first cement unit in India to receive ISO-14001 (EMS certification from

DNV, Rotterdam, Netherlands) in 1997 and the Occupational Health and Safety

Assessment series - 18001 (certification from DNV, Rotterdam, Netherlands) in

2001.

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Grasim Cement

Grasim Cement was set up as a Greenfield cement plant at Raipur, Chattisgarh,

in 1995. Based on the most advanced technologies, this plant has an annual installed

capacity of 2.06 million tpa. The plant’s unique features include:

• Asia’s first gamma ray belt analyzer from Gamma Matrix (USA) ensuring the

highest standards in online quality control.

• India’s first polycom (blast furnace slag grinder) with a dynamic air separator

from Krupp Polysius Germany, which helps to generate the desired

homogeneous particle size distribution.

• One of the few single kiln cement plants producing more than eight varieties of

cement.

• Its captive power generation ensures a reliable power supply. The plant is also

an ISO 14001, ISO 9001, and IQRS L-5 certified unit.

Rajashree and Birla Super cement (Major Brands of the Company)

Commissioned in 1984, Rajashree Cement has a capacity of 4.20 million tpa. The

salient facts about Rajashree Cement are:

• Coal-based thermal power plant with a 38.5 MW capacity.

• Modern dry process technology from KhD, Germany, with a state-of-the-art

process control system.

• The only cement plant in India with a captive coal washery.

• First in India to achieve Certification ISO 9001:2000 by DNV, Netherlands,

2001.

• Cement varieties catering to different segments: Rajashree Cement for

residential and commercial construction; Birla Super Cement for multi-storied

buildings, dams and bridges; Birla Plus for mass concrete laying and non-

structural applications, Birla Coastal for foundation work and for use in coastal

areas as well as sugar and fertilizer plants, and OPC 53 - S (sleeper grade

cement)

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Some of the awards won by this unit are

• National Award for ‘Quality Excellence in

the Indian Cement Industry’ by the National Council for Cement and Building

Materials, for the year 2000-01.

• IMC Ramakrishna Bajaj National Quality

Award (certificate of merit) in 1999.

• Jamnalal Bajaj Uchit Vyavahar Puraskar

for Fair Business Practices in 1995.

• Rajiv Gandhi National Quality Award in

1993.

Grasim South

Grasim acquired Dharani Cements (since merged with the company) in April

1998. The company has a cement plant at Ariyalur, Tamil Nadu. In April 2000, a state-

of-the-art cement plant, among the most modern in Asia, was commissioned at

Reddipalayam, Tamil Nadu. This unit now has a capacity of 1.16 million tpa.

This is the only plant to be equipped with an auto/ robot lab system for consistent quality

and optimizing cost. Apart from these, the auto/ robot lab assures:

• Quality cement of world class standard.

• Accuracy and consistency.

PRODUCT MIX IN GRASIM INDUSTRIES CEMENT DIVISION

1. Ordinary Portland cement (OPC)• 53 – Grade cement: Birla Super cement.• 43 – Grade cement: Rajashree cement.

2. Blended Cement

a. Portland Pozzolana Cement (PPC)

• Birla Plus cement

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b. Portland Blast Furnace Slag Cement (PBFSC) or (PSC)

• Rajashree Slag cement.

• Birla Coastal cement.

Aditya Cement

Commissioned in a record time of 22 months as a Greenfield 1.0 mtpa plant in

1995 in Shambupura, Rajasthan, and its current capacity is about 1.50 mtpa.

Kamal Cement

Acquired by Grasim in 1998, Shree Digvijay Cement Company Ltd (SDCC) is

situated at Sikka (Gujarat). It has an annual capacity of about 1.08 million tpa. All of

SDCC’s products are marketed under the brand name 'Kamal'.

The company has ISO 9002 certifications for its clinker and cement production

and its oil well cement has been authorized for the use of the monogram of the

American Petroleum Institute.

The company has a captive jetty with a dry cargo capacity of 3 million tpa. This

jetty is used to export cement and clinker and to import coal for captive use.

PRODUCTION CAPACITY OF GRASIM

PLANT LOCATION CAPACITY

(in million tonnes)

Rajashree CementMalkhed and Hotgi

grinding unit4.20

Vikram Cement Jawad and Bhatinda

grinding unit4.20

Grasim Cement Raipur 2.06Aditya Cement Shambhupura 1.50Cement Division South Reddipalayam 1.16

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Shree Digvijay Cement* Sikka, Gujarat 1.08Total *(includes subsidiary) 14.00

2.5 e. Area of Operation

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

24

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.

25

• 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

26

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

27

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.

28

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.

29

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.

30

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.

31

• 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)

32

• 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.

33

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:

35

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

36

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

39

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

40

• 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

41

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.

42

♥ 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

43

♣ 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

44

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

exceptional items

73.37 67.63

Add : Exceptional items 12 5.80195.60 182.72

Deduct Appropriations :General Reserve 50.00 50.00Debenture Redemption

Reserve

1.73

Proposed Dividend 17.25 17.25Dividend tax 2.42 2.42

69.67 71.40Surplus carried to schedule

2

125.93 111.32

Basic & Diluted earnings

per share

(Face value of Rs.10/-

each) (Rs.)

45

Before exceptional items 18.88 17.64After exceptional items 20.39 17.64Significant accounting

policies and notes on

accounts

13

Ratio analysis

Ratio’s 2006 2005

1 Current Ratio 1.87 1.46

2 Quick Ratio 0.92 0.65

3 Net working capital turnover ratio 6.81 11.83

4 Fixed Asset to net worth ratio 144.8% 144.6%

5 Gross profit ratio 3.8% 3.8%

6 Net profit Ratio 2.75% 3.03%

46

7 PBT to net worth ratio 15.86% 14.72%

8 PBT to equity ratio 2.62 2.21

9 C. Liability to net worth ratio 69.5% 71%

10 Asset turnover ratio 1.76 times 1.81times

11 Fixed Asset turnover ratio 2.85 times 2.67 times

12 Sales to net worth ratio 4.14 times 3.85 times

13 Current Asset turnover ratio 3.17 times 3.72 times

14 Proprietary ratio 0.025 0.031

15 Absolute liquid ratio 061 0.36

Interpretation:

Current Ration:

The company’s current ratio for 2005 and 2006 are 1.87 and 1.46 respectively.

The standard norm is 1.33:1. In both the years the current ratio is above the standard

norm. Hence we conclude that the company has got sufficient liquidity and there is

enough waiting capital.

Quick ratio:

The quick ratio in the year 2005 and 2006 are below the standard norms 1:1. If the

quick ratio is below the standard norms of 1:1 the conclusion is that the CO; is not liquid

and sod it cannot pay off its short term liabilities out of its quick realizable assets.

Net W.C. turnover ratio:

There is no standard / ideal W.C turnover ratio. The net W.C. turnover ratio

during the year 2005 & 2006 are 11.83 and 6.81 respectively. A high W.C. turnover ratio

47

indicates the efficiency & a low W.C. ratio indicates inefficiency. The ratios reveal that

efficiency of the company is decreasing.

Fixed asset to new worth ratio:

The fixed asset to new worth for 2005 and 2006 are 144.6% and 144.8%

respectively. In 2006 the F.A to net worth ratio is very high due to the increase in fixed

asset and net worth compare to previous year.

Gross Profit ratio:

As the gross profit is found by deducting cost of goods sold from the net sales,

higher the gross better the result. There are no standard norms for gross profit ratio. It is

calculated to know the trading profit for the year 2005 and 2006 are 3.8% and 3.8%

respectively.

Net profit ratio:

The net profit ratio is calculated to know the actual profit of a concern during the

year the net profit for 2005 and 2006 is 3.03% and 2.75% respectively. Usually while

calculating the net profit the investment / capital of the firm is only is relation to sales. In

2005 the net profit is 3.03% which indicates a satisfactory level. In 2006 it has gone

down to 2.75% which results in decrease of profitability of a concern.

PBT to net worth ratio

The standard ratio is above 13%. The profit before tax to new worth ratio for the

year 2005 & 2006 are 14.72% and 15.86% respectively. Here the ratio is above the

standard norm which indicates a high return on shareholders funds.

PBT to equity ratio

There is no standard net profit to equity ratio. The ratio is a measure of

productivity & profitability of the enterprise form the pint of view of equity shareholders.

In 2005 the ratio is 2.21 and in 2006 it is 2.62. By this we can conclude that the

productivity & profitability is high.

Current liability to net worth ratio

The standard / ideal ratio of C.L to net worth ratio is 33% or 1/3, more than this

there is no adequate cover for long term creditors. The C.L to net worth ratio in the year

2005 and 2006 are 71% and 69.5% respectively. By this we can come to conclusion that

there is no adequate cover for long term creditors.

48

Asset turnover ration

There is no ideal / standard for asset turnover ratio. The asset turnover ratio for

the year 2005 and 2006 are 1.81 times and 1.76 times respectively. We can conclude that

the asset turnover ratio is decreased by 0.05 times when compared with 2005.

Fixed asset turnover ratio

The standard / ideal of fixed asset turnover ratio is 5 times. The fixed asset

turnover ratio for the ear 2005 and 2006 are 2.67 and 2.85 times. By this we can conclude

that the fixed asset turnover ratio is increasing but then also it is below the standard norm.

Sales to net worth ratio

There is no ideal / standard for the sales to net worth ratio. The sales to net worth

ratio in the year 2005 and 2006 are 3.85 times and 4.14 times respectively when the sales

are compared to the net worth it is lowest in the year 2005 and the ratio has increased in

the year 2006. By this we can conclude that the sales to net worth has increase in the

previous year.

Current asset turnover ratio

There is no standard or ideal for current asset turnover ratio. The C.A turnover

ratio for the year 2005 and 2006 are 3.72 times and 3.17times respectively. In the year

2005 the C.A. turnover ratio is the highest and in the year 2006 it is the lowest. By this

we can conclude that the C.A. turnover ration has decreased in the previous year.

Proprietary Ratio:

There is no standard or ideal proprietary ratio. The proprietary ratio for the year

2005 and 2006 are 0.031 and 0.025 respectively. By this we can conclude that the

proprietary ratio has decreased in the previous year and the firm is planning to increase

its proprietary ratio by increasing the total assets.

Absolute liquid ratio

The company’s absolute liquid ratio for 2005 and 2006 are 0.61 and 0.36

respectively. The standard norm is 1:2. Here in both the years the absolute liquid ratio is

below the standard norm but in 2006 is shows a little increase compare to previous year.

49

PART – E

LEARNING EXPERIENCE

It was an opportunity to do Organizational study in Grasim Industries Limited.

It was a live experience where there was interaction with the employees, there working

condition in the company.

The main aim of the project was to know about the company, its nature of

the business carried, background of the company, when it was started, and Industrial

profile, product profile that consists of types of products, vision & quality circle of the

company being adopted, type of ownership pattern that is being followed by the company

in national and international level. The very important part of the project is the study of

7’s frame which consists of structure, skill, style, strategy, system, staff, and shared

values of the company.

50

As it was a very good learning experience were I came to know about each

department were there are seven departments. These departments are divided into sub

departments. Each department has to its own working style and system but under certain

rules and regulations, all the departments are so interlinked that they work together so

that there is no problem in the company, all the departments is being controlled by one

and only the Chairman.

The company is known for its best quality product in the global market it is due

to the vision, mission and quality policy that as been followed and adopted for the

product manufacturing and delivering the products. It is due to its skilled employees who

are trained based on new technologies. The employees are given all recreational facilities

and medical and so. They are also given the benefits as specified by the Factory act.

Customer satisfaction is the main motto of the company and the service

rendered by the company is according to the customer requirement.

Continuous efforts to minimize the cost both in Grasim and Subsidiary to

setup Thermal plant at various locations.

Optimizing efficiency, leverage in benefits that strength for logistics to

usage of alternative fuels and grated trust for value added product mix, which

includes blended cement, will translate into higher earnings for companies cement.

Cost optimizing, utilization of best assets, for right financial management

and other it made became number one company in market.

Talented management is strengthening talent pool in building leadership

across the group.

Marketing Department

The Marketing force is divided on the basis of Geographical division.

51

Marketing VP is the head of entire division and each division is headed by DGM of

concerned division. In each division market is segmented into Urban market and Rural

market, product is pushed through 2 – channels. They are Trade & Non-Trade segment.

Company well knows for its ‘Pricing Strategy’, so this company’s brand stand as

“Premium Price brand” in the market.

Company have very good Marketing network through out the country and

globally also, this helps company to build very good brand image and goodwill in the

market. After acquiring L&T’s Cement business, Grasim became India’s largest and

number – 1 company in Indian market.

Human Resource Management Department

Human plays a crucial role for evolution or ruin of any organization, due to

company’s attractive policies and procedures; employees are working with soul

involvement in their work. In order to motivate people company periodically appraise

each and every employee, on this basis company offers promotion for right performer.

Recruitment and Selection is based on Technical Skill and HR – round result,

which is announced by the Panel of interviewers.

Employees are classified on the basis of their skills and ability. For Technical

department they recruit Civil engineers, Diploma in Civil and related technically

qualifiers. For other department they mainly prefer experienced candidates with certain

qualities as that department needed.

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In order to maintain cordial environment in the company, they follow

Top – Down approach in work place of the company with participative style.

Actual results could differ materially from those expressed or implied.

Important factors that could make a difference to the company’s operations include

global and Indian demand supply conditions, finished goods prices, feedstock availability

and prices, cyclical demand and pricing in the company’s principal markets, changes in

Government regulations, tax regimes, economic developments within India and the

countries with in which company conducts business and other factors such as litigation

and labor negotiations.

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