College Intern Project

ABSTRACT

This project report entitled:” A study on dealer level of satisfaction on Konark

cement” Is intended to determine the dealer satisfaction, Products awareness,

fluctuation of demand and needs and wants of the dealers.

Primarily the well defined objectives are framed according to the study. Then

questionnaire is prepared based on the defined objectives. The prepared

questionnaire is used to get way of personal interview from the dealers.

The response given by the customers are analyzed and interpret using different types

of statistical tools such as percentage analysis, weighted average method and by

frequency.

From the analysis some general findings one raised and that one more related with

the framed objectives for this study. According to the findings the suggestion are

given and the conclusions one also based on the findings which will be more helpful

for the organizations

TABLE OF CONTENTSLIST OF TABLESLIST OF CHARTS

CHAPTER TITLE PAGE NO.

1 INTRODUCTION ABOUT CEMENT INDUSRTY IN INDIA

9-33

2 COMPANY & PRODUCT PROFILE 35-45

3 REVIEW OF LITERATURE 47-51

4 OBJECTIVES AND SCOPE OF THE PROJECT

53-64

5 RESEARCH METHODOLOGY 66-67

6 DATA ANALYSIS AND INTERPRETATION

69

7 PROJECT FINDINGS 71

8 CONCLUSION 73

ANNEXURESREGIONAL DEMEND AND SUPPLY BALANCE LIST OF COMPANIES WITH ICRA-RATINGSBIBLOGRAPHYQUESTIONNARIES

LIST OF TABLESTABLES TITLES PAGE NO.1.1 Growth in cement demand 81.2 Cement supply-demand indicator. 91.3 Cement supply-demand indicator all India 121.4 Share of capacity of top players in the Northern Region 141.5 Demand-supply indicators for Northern Region 141.6 Share of capacity of top players in the Eastern Region 161.7 Demand-supply indicators for Eastern Region 161.8 Demand-supply indicators for Northern+Eastern Region 171.9 Available capacity for Northern+Eastern Region 181.10 Share of capacity of top players in the Wertern Region 191.11 Demand-supply indicators for Western Region 201.12 Share of capacity of top players in the Southern Region 201.13 Demand-supply indicators for Southern Region 211.14 Demand-supply indicators for Southern+Western Region 211.15 List of companies with IACR ratings 221.16 Overview of Policies regarding the cement industry16 Nature of shop 4817 Quantity of cement sold by the dealers

per month48

18 Since how many years you are in this business

48

19 Highest selling brand from counter (customer pull)?

49

20 Factors affecting highest selling brand. 4921 Recommendation by dealer 5122 Personal visits by marketing peoples 5123 Credit enjoyed by dealers 5224 Profit margin 5225 Availability throughout the year 5326 Effective promotional activities. 5427 Effective method of sales promotion 5428 Quality and packaging of brands 5629 Quick delivery system 5730 Brands which satisfy most on

damage claim settlement57

31 Small quantity supply directly to customers faster

58

32 The incentive schemes which satisfy dealer.

58

33 Test certificates and vouchers for customers about different grades and quality

59

34 effective technical services 59

35 After sale service satisfy the dealer most?

60

LIST OF CHARTSCHARTS TITLES PAGE NO.1 Growth in cement consumption in major states 92 Trend in cement capacity utilisation 103 All India Quarterly capacity addition 114 Region-wise capacity Distribution 115 All India Yearly capacity addition 116 All India effective capacity addition 117 Monthly capacity utilisation trend 128 Inventory level as % of monthly dispatch 129 Overall Demand-Supply Balance at 10% demand Growth 1310 Overall Demand-Supply Balance at 8% demand Growth 1311 Share of OPC in product mix(2001-09) 1412 Share of OPC in product mix(2008-09) 1413 Price trend in key northern market 1614 Capacity utilisation in northern region 1615 Price trend in key Eastern market 1716 Capacity utilisation in Eastern region 1717 Capacity utilisation for Northern+Eastern region 1818 Price trend in key Western market 2019 Capacity utilisation in Western region 2020 Price trend in key Southern market 2221 Capacity utilisation in Southern region 2222 Nature of shop 4923 Quantity of cement sold by the dealers

per month49

24 Since how many years you are in this business

49

25 Highest selling brand from counter (customer pull)?

50

26,27,28,29,30 Factors affecting highest selling brand.

50,51

31 Recommendation by dealer 5232 Personal visits by marketing peoples 5233 Credit enjoyed by dealers 5334 Profit margin 5335 Availability throughout the year 5436 Effective promotional activities. 5537,38,39,40,41,42,43 Effective method of sales promotion 55,5644 Quality and packaging of brands 5645 Quick delivery system 5746 Brands which satisfy most on

damage claim settlement57

47 Small quantity supply directly to customers faster

58

48 The incentive schemes which satisfy 58

dealer.49 Test certificates and vouchers for

customers about different grades and quality

59

50 effective technical services 59

51 After sale service satisfy the dealer most?

60

CHAPTER-1

INTRODUCTION

1.1INDIAN CEMENT INDUSTRY

Cement Industry originated in India when the first plant commenced production in 1914 at

Porbandar, Gujarat. The industry has since been growing at a steady pace, but in the initial

stage, particularly during the period before Independence, the growth had been very slow.

Since indigenous production was not sufficient to meet the entire domestic demand, the

Government had to control its price and distribution statutorily. Large quantities of cement

had to be imported for meeting the deficit. The industry was partially decontrolled in 1982

and this gave impetus to its pace of growth. Installed capacity increased to more than

double from 27 million tons in 1980-81 to 62 million tons in 1989-90.

The cement industry responded positively to liberalization policy and the Government

decontrolled the industry fully on 1st March 1989. From 1991 onwards cement industry

got the status of a priority industry in schedule III of the industry policy statement, which

made it eligible for automatic approval for foreign investment up to 51% and also for

technical collaboration on normal terms of payment of royalty.

After the globalization and liberalization of Indian economy, the cement industry has been

growing rapidly at an average rate of 9 percent. The country is now the second largest

producer of cement in the world next only to China with a total capacity of 217.80 million

tonnes. Additionally, in the last two decades, the industry has undergone rapid

technological up gradation and growth, and now, some of the cement plants in India are

comparable to the worlds best operating plants in all respects.

Till a few years ago India was importing cement from other countries, as the production

could not meet the demand for the whole country. Now the tables have turned as India has

started exporting large quantities of cement and clinker to Bangladesh, Nepal, Sri Lanka,

Maldives, Mauritius, Africa, Seychelles, Burma, UAE, and Singapore etc.

India is today the second largest producer of cement in world with an installed capacity of

close to 217.80 million tons per year. 95 % is consumed domestically and only 5% is

exported. Demand is growing at more than 10 % per annum. More than 90 % of production

comes from large cement plants. There are a total of 146 large and more than 350 small

cement manufacturing units in the country. More than 80% of the cement manufacturing

units use modern environment friendly “dry” process.

In the cement industry there are two sectors – one consisting of large plants and the other

consisting of mini cement plants. A factory with an installed capacity exceeding

2,97,000 tonnes per annum (900 tons per day) is a large plant and with capacity up to and

including 2,97,000 tons is a mini cement plant. At present, there are 146 large plants and

about 365 mini cement plants. Since mini cement plants are scattered all over the country

with a number of associations representing different types of processes, sizes etc. And

some of them are even tiny units; it has not been possible to obtain correct data of this

sector. The present installed capacity of large plants is 217.80 million tons and the

estimated capacity of mini cement plants is 11.8 million tons.

1.2 OVERVIEW OF PERFORMANCE OF CEMENT INDUSTRY

The Indian cement Industry not only ranks second in the production of cement in the world

but also produces quality cement, which meets global standards. However, the industry

faces a number of constraints in terms of high cost of power, high railway tariff; high

incidence of state and central levies and duties; lack of private and public investment in

infrastructure projects; poor quality coal and inadequate growth of related infrastructure

like sea and rail transport, ports and bulk terminals. In order to utilize excess capacity

available with the cement industry, the government has identified the following thrust

areas for increasing demand for cement:

· Housing development programmers & Promotion of concrete highways and roads;

· Use of ready-mix concrete in large infrastructure projects;

· Construction of concrete roads in rural areas under Prime Ministers Gram Sadak Yojana.

In India, the different types of cement are manufactured using dry, semi-dry, and wet

processes. In the production of Clinker Cement, a lot of energy is required. It is produced

by using materials such as limestone, iron oxides, aluminum, and silicon oxides. Among

the different kinds of cement produced in India, Portland Pozzolana Cement, Ordinary

Portland Cement, and Portland Blast Furnace Slag Cement are the most important because

they account for around 99% of the total cement production in India.

The types of cement in India have increased over the years with the advancement in

research, development, and technology. The Indian cement industry is witnessing a boom

as a result of which the production of different kinds of cement in India has also increased.

By a fair estimate, there are around 11 different types of cement that are being produced in

India. The production of all these cement varieties is according to the specifications of the

cement.

1.3 CURRENT SCENARIO

The Indian cement industry is the second largest producer of quality cement. Indian

Cement Industry is engaged in the production of several varieties of cement such as

Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast

Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement,

Sulphate Resisting Portland Cement, White Cement, etc. They are produced strictly as per

the Bureau of Indian Standards (BIS) specifications and their quality is comparable with

the best in the world.

The industry occupies an important place in the national economy because of its strong

linkages to other sectors such as construction, transportation, coal and power. The cement

industry is also one of the major contributors to the exchequer by way of indirect taxes.

1.4 FACTS OF INDIAN CEMENT INDUSTRY (1982 – 2009)

The Industry recorded an exponential growth with the introduction of partial

decontrol in 1982 culminating in total decontrol in 1989.

The capacity, which was 29 Mn.t in 1981-82, rose to 219 Mn.t at the end of FY09.

While it took 8 decades to reach the 1st 100 Mn.t capacity, the 2 nd 100 Mn.t was

added in just 10 years.

India ranks second in world cement producing countries.

It contributes to environmental cleanliness by consuming hazardous wastes like Fly

Ash (around 30 Mn.t) from thermal power plants and the entire 8 Mn.t of slag

produced by steel manufacturing units.

As a part of Corporate Social Responsibility (CSR), the cement Industry employs

around 0.1 million people and takes care of the social needs not only of the

employees but also adopts several villages around the factories providing free

drinking water, electricity, medical and educational facilities.

The cement Industry produces a variety of cement to suit a host of applications

matching the world's best in quality.

Exports Cement/Clinker to around 30 countries across the globe and earns precious

foreign exchange.

1.5 STATISTICS

Figures in Million Tonnes

Description January2012

December 2011

January2012

2011-2012

2010-2011

(Apr-Jan)

Cement Production

16.47 15.72 14.82 145.00 137.16

Cement Despatches

16.27 15.76 14.73 143.96 136.18

1.6 KEY DRIVERS OF THE CEMENT

Buoyant real estate market

Increase in infrastructure spending

Various governmental programmes like National Rural Employment Guarantee

Low-cost housing in urban and rural areas under schemes like Jawaharlal Nehru

National Urban Renewal Mission (JNNURM) and Indira Aawas Yojana

1.7 TECHNOLOGICAL ADVANCEMENTS

Modernization and technology up-gradation is a continuous process for any

growing industry and is equally true for the cement industry. At present, the quality

of cement and building materials produced in India meets international standards

and benchmarks and can compete in international markets. The productivity

parameters are now nearing the theoretical bests and alternate means. Substantial

technological improvements have been brought about and today, the industry can

legitimately be proud of its state-of-the-art technology and processes incorporated

in most of its cement plants. This technology up gradation is resulting in increased

capacity, reduction in cost of production of cement.

1.8 MAJOR PLAYERS ON CEMENT INDUSTRY

1.8.1 ULTRATECH CEMENT

UltraTech is the second largest cement manufacturer in India. It is the part of Aditya Birla

group and is subsidiary of Grasim. It has a capacity of 17 million tonnes. The company is

the largest exporter of cement and clinker from India. UltraTech has a presence in the west,

south, north and east. The western and southern regions are its major markets. The

company exports both clinker and cement. The company exports are moving towards

cement from clinker owing to the higher realization in the cement. In 2005-06 the company

exported 1.52 million tonnes of cement. With UltraTech Cement, the Aditya Birla Group

has established itself as not only the most respected domestic player but also among the

global leaders in cement.

1.8.2 CENTURY CEMENTS

Century Cement is a division of Century Textiles and Industries Ltd, a

flagship company of BK Birla Group. The company is well diversified

having interest in cement, textiles, rayon, chemicals, pulp and paper.

Century Cement is situated at Baikunth (Tilda), Dist. Raipur in the State

of Chhattisgarh. Baikunth is 35 Kms east of Raipur on Mumbai - Howrah

(via Nagpur), South East Central Railway Main Line. The name

'Baikunth' was formed out of letter/s of adjacent villages in sequence i.e.

'Ba' of Bahesar, 'Kun' of Kundru and 'T' of Tandwa Village. The installed

capacity of Century Cement is 2.10 Million TPA.

Apart from this, company has cement plants namely Maihar Cement &

Maihar Cement Unit no. 2 at Sarlanagar, Dist. Satna, in the State of

Madhya Pradesh with an installed capacity of 4.20 Million TPA and

Manikgarh Cement at Gadchandur, Dist. Chandrapur, Maharashtra with

an installed capacity of 2.20 Million TPA. The combined Capacity of all

cement plants taken altogether is 8.50 Million TPA

Company is expanding its cement manufacturing capacity by setting up

grinding unit at Sagardighi, Dist. Murshidabad, West Bengal of 1.5

Million TPA capacity namely Sonar Bangla Cement and brown field

expansion of 2.8 Million TPA capacity adjacent to the company's existing

plant Manikgarh Cement at Gadchandur. After expansion, capacity will

stand increased to 12.8 Million TPA by September 2013.

All Cement plants are equipped with captive thermal power plants, for

uninterrupted power supply, with synchronized support of grid power.

The company sells its cement under its premium brand name - BIRLA

GOLD. Century Cement is pioneer in producing Blended Cement i.e.

Portland Pozzolana Cement. The motivation for the production of

Blended cement has been primarily with the aim of preserving

limestone reserves and environment.

1.8.3 MADRAS CEMENTS

Madras Cements Ltd is one of the oldest cement companies in the southern region and is a

part of the Armco group. The company is engaged in cement, clinker, dolomite, dry mortar

mix, limestone; ready mix cements (RMC) and units generated from windmills. The

company has three plants in Tamil Nadu, one in Andhra Pradesh and a mini cement plant

in Karnataka. It has a total capacity of 5.47 million tonne annually and holds a market

share of 3.1 per cent. Madras Cements plans to expand by putting up RMC plants. As

Karnataka is a promising market, the company is further expanding its capacity from the

present 1.5 million tonne to 3.4 million tonne through an investment of US$ 9 million.

1.8.4 ACC

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's

operations are spread throughout the country with 16 modern cement factories, more than

40 Ready mix concrete plants, 21 sales offices, and several zonal offices. It has a

workforce of about 9,000 persons and a countrywide distribution network of over 9,000

dealers.

Since inception in 1936, the company has been a trendsetter and important benchmark for

the cement industry in many areas of cement and concrete technology. ACC has a unique

track record of innovative research, product development and specialized consultancy

services. The company's various manufacturing units are backed by a central technology

support services centre - the only one of its kind in the Indian cement industry.

ACC has rich experience in mining, being the largest user of limestone. As the largest

cement producer in India, it is one of the biggest customers of the domestic coal industry,

of Indian Railways, and a considerable user of the country’s road transport network

services for inward and outward movement of materials and products.

Among the first companies in India to include commitment to environmental protection as

one of its corporate objectives, the company installed sophisticated pollution control

equipment as far back as 1966, long before pollution control laws came into existence.

Today each of its cement plants has state-of-the art pollution control equipment and

devices.

1.8.5 GUJARAT AMBUJA CEMENT LIMITED

Cement Industry originated in India when the first plant commenced production in 1914 at

Porbandar, Gujarat. The industry has since been growing at a steady pace, but in the initial

stage, particularly during the period before Independence, the growth had been very slow.

Since indigenous production was not sufficient to meet the entire domestic demand, the

Government had to control its price and distribution statutorily. Large quantities of cement

had to be imported for meeting the deficit. The industry was partially decontrolled in 1982

and this gave impetus to its pace of growth. Installed capacity increased to more than

double from 27 million tons in 1980-81to 62 million tons in 1989-90.

The cement industry responded positively to liberalization policy and the Government

decontrolled the industry fully on 1st March 1989. From 1991 onwards cement industry

got the status of a priority industry in schedule III of the industry policy statement, which

made it eligible for automatic approval for foreign investment up to 51% and also for

technical collaboration on normal terms of payment of royalty.

After the globalization and liberalization of Indian economy, the cement industry has been

growing rapidly at an average rate of 9 per cent. The country is now the second largest

producer of cement in the world next only to China with a total capacity of 217.80 million

tones. Additionally, in the last two decades, the industry has undergone rapid technological

up gradation and growth, and now, some of the cement plants in India are comparable to

the worlds best operating plants in all respects.Till a few years ago India was importing

cement from other countries, as the production could not meet the demand for the whole

country. Now the tables have turned as India has started exporting large quantities of

cement and clinker to Bangladesh, Nepal, SriLanka, Maldives, Mauritius, Africa,

Seychelles, Burma, UAE, and Singapore etc.

1.8.6 GRASIM INDUSTRIES

Grasim's product profile includes viscose staple fiber (VSF), grey cement, white cement,

sponge iron, chemicals and textiles. With the acquisition of UltraTech, L&T's cement

division in early 2004, Grasim has now become the world's seventh largest cement

producer with a combined capacity of 31 million tones. Grasim (with UltraTech) held a

market share of around 21 percent in 2005-06. It has plants in Madhya Pradesh,

Chattisgarh, Punjab, Rajasthan, Tamil Nadu and Gujarat among others. The company plans

to invest over US$ 9 million in the next two years to augment capacity of its cement and

fiber business. Its also plans to focus on its international ventures, ramping up the capacity

of Alexandra Carbon Black in Egypt to 1,70,000 tone per annum (from 1,20,000 tpa) and

raising the capacity of the carbon black plant in China from 12,000 tpa to 60,000 tpa.

1.8.7 INDIA CEMENTS LIMITED

India Cements is the largest cement producer in southern India with a total capacity of 8.81

million tonne and plants in Andhra Pradesh and Tamil Nadu. The company has a market

share of 5.4 per cent with a total cement production of 6.36 million tonne in 2003-04. Its

product portfolio includes ordinary portland cement and blended cement. The company has

limited its business activity to cement, though it has a marginal exposure to the shipping

business. The company plans to reduce its manpower significantly. And exit non-core

businesses to turnaround its fortune. It also expects the export market to open up, with the

Gulf emerging as a major importer.

1.8.8 JAIPRAKASH ASSOCIATES

Jaiprakash Industries, now known as Jaiprakash Associates Limited (JAL) is part of the

Jaypee Group with businesses in civil engineering, hospitality, cement, hydropower, design

consultancy and IT. It has an annual capacity of 4.6 million tonne with plants located in

Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar Pradesh). The company has a

market share of 3.8 percent with the cement division contributing US$ 172 million to

revenue in 2003-04. The company is upgrading its capacity to 6.5 million tonne through

the modernizing of the existing units and the commissioning of a new grinding unit at

Tanda (Uttar Pradesh) with an investment of US$ 163 million. Jaiprakash Associates has

decided to concentrate on its core business of construction and engineering and leave its

cement plant to its subsidiary Jaypee Rewa Cement Ltd. The company manufactures a

wide range of world class cement of OPC grades 33, 43, 53, IRST-40 and special Blends

of pozzolana cement.

1.8.9 JK CEMENTS.

JK Synthetics, a Singhania Group company, started manufacturing nylon at Kota in 1962.

Subsequently, it diversified into PSY/PFY, nylon tyre-cord, cement (in 1975), acrylic and

white cement (in 1984). The company has a market share of 2.7 per cent. JK Synthetics

Limited is restructuring its business divisions into two separate entities- JK Cements and

JK Synthetics. After the restructuring, it will be left with a cement plant at Nimbahera in

Rajasthan, with a capacity of 3.26 million metric tonne and manufacturing white cement.

1.8.10 HOLCIM

Holcim, earlier known as Holder bank, has a cement production capacity of 141.9 million

tonne. It is a key player in aggregates, concrete and construction related services. It has a

strong market presence in over 70 countries and is a market leader in South America and in

a number of European and overseas markets. Holcim entered India by means of a longterm

strategic alliance with Gujarat Ambuja Cements Ltd (GACL). The alliance aims to

strengthen their clinker and cement trading activities in South Asia, the Middle East and

the region adjoining the Indian Ocean. Holcim also intends to use India as an additional

base for its IT operations, R&D projects as well as a procurement sourcing hub to generate

additional synergies and value for the group.

1.8.11 LAFARGE

The beginning (1833 to 1914): In 1833, Léon Pavin, launched an industrial lime

production operation, having taken over a business acquired by his family in 1749 with the

purchase of the Lafarge domain in south-eastern France, an area known for generations for

the quality of its limestone deposits. The company signed its first major international

contract in 1864, delivering 110,000 tonnes of lime for the construction of the Suez Canal.

Lafarge opened its first central research laboratory in 1887, the Le Teil Laboratory, with

which highly reputed scientists collaborated. In 1908, the Central Laboratory filed a patent

for Cement Fondue calcium aluminates, obtained by fusing a mixture of bauxite and

limestone. This new high alumina binder gradually established a reputation as a rapid-

hardening cement resistant to both high temperatures and corrosion. In the years until

1914, favoring a strategy of horizontal integration, the company – now the "Société des

Chauxet des Ciments de Lafarge du Teil" – set about acquiring lime and cement companies

in all parts of France.

In 2004, the Group:

• Acquired in Ecuador Cementos Selva Alegre.

• Acquired The Concrete Company of Columbus, Georgia, United States with operations

in both cement and concrete.

• Acquired Hupfer Holdings with operations in France and Switzerland in aggregates

activities.

• Acquired an additional 10.2% stake in Lafarge Halla Cement, in South Korea.

• Acquired an additional 14% stake in our gypsum operations in Lafarge Gypsum in Asia,

in a joint venture with Boral.

1.9 FORGEIN DIRECT INVESTMENTS

The cement sector has been gradually liberalized. 100 per cent FDI is permitted in the

cement industry.

1.9.1 Future Outlook

Growth in domestic cement demand is expected to remain strong, given the revival in the

housing markets, continued Government spending on the rural sector, and the gradual

increase in the number of infrastructure projects being executed by the private sector.

Thus, the trend in demand growth seen during the last five years is expected to continue

over the medium term. Also, with Government targeting an over 8% GDP growth rate,

cement demand should grow at 8-10% over the next few years.

The industry may be expected to add another 130-135 million tonnes of cement capacity in

phases during the period 2009-10 to 2012-13.

1.9.2 Strong consumption growth driven by secular growth across sector.

The Indian cement industry reported a strong CAGR of 9.3% during the period 2004-05 to

2008-09. Even during the economic slowdown in 2008-09, growth in cement demand

remained at a healthy 8.4%. In the current fiscal (2009-10) cement consumption has shot

up, reporting, on an average, 12.5% growth in consumption during the first eight months

with the growth being aided by strong infrastructure spending, especially from the govt

sector. The trends in all-India consumption and the growth in consumption in the major

cement-consuming States over the last five years are presented in Table 1.1 and Chart 1.1.

In million tonnes

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

Apr-Nov 09

Domestic Consumption

99 108 114 123 136 149 164 178 100*

Year-on-Year Growth (%)

9.7 8.7 5.8 8.1 10.1 9.9 10.1 8.4 12.5*

Table 1.1: Growth in Cement Demand (All-India)

*Excluding ACC and Ambuja Cement

Source: Cement Manufacturers Association (CMA), ICRA Research

Chart 1.1: Growth in Cement Consumption in Major States (CAGR between 2005 and

2009)

All India


The increase in cement demand over the last few years has been driven by a buoyant real

estate market (the dip in 2008-09 notwithstanding) and an increase in infrastructure

spending.

Further, various governmental programmes like National Rural Employment Guarantee

and low-cost housing in urban and rural areas under schemes like Jawaharlal Nehru

National Urban Renewal Mission (JNNURM) and Indira Aawas Yojana have also

provided a fillip to rural demand for housing. Within the country, the top five States in

terms of cement consumption, viz. Maharashtra, Andhra Pradesh (AP), Uttar Pradesh (UP),

Tamil Nadu (TN) and Gujarat, accounted for almost 50% of the total domestic

consumption of cement during 2008-09. This is largely a factor of the population levels in

these States as well as the development activities being undertaken there. Within these high

consuming States, AP and TN reported very high growth rates during the last five years,

mainly because of the real estate buoyancy and increased Government spending on

infrastructure. Haryana, the 11th largest cement consuming State in the country (according

to 2008-09 consumption), posted a high consumption growth rate of more than 14% over

the last five years, largely on the strength of the upturn in real estate. Going forward, ICRA

expects growth in domestic cement demand to remain strong, given the revival in the

housing markets, continued Government spending on the rural sector, and the gradual

increase in the number of infrastructure projects being executed by the private sector.

Thus, the trend in demand growth seen during the last five years is expected to continue

over the medium term.

Andra

Harya

naTN

Rajasta

n

Bihar

Orissa

Gujarat

MP

Mah

aras

tra

Delhi

Karnat

aka

Kerala UP

WB

Punjab0

2

4

6

8

10

12

14

16

18

1.9.3 Capacity additions to impact utilisation levels over the medium term

The period 2002-03 to 2006-07 saw strong demand growth along with very slow

capacity addition, the latter being an outcome of the weak financial position that

cement companies had got into because of the significant surpluses in the system

during 2000-01 to 2003-04. With capacity addition being limited and demand

continuing to grow, capacity utilisation levels in the cement industry touched almost

100% in 2006-07 and supply constraints surfaced. To improve domestic supply,

Government resorted to an export ban in April 2008 and also allowed duty-free

imports of cement. With supply constraints cropping up, the pricing power and

profitability of cement companies improved significantly during 2006-09.

Table 1.2: Cement Demand Supply Indicators (All-India)In million tonnes

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

Apr-Nov 09


99 108 114 123 136 149 164 178 100*


9.7 8.7 5.8 8.1 10.1 9.9 10.1 8.4 12.5*

Export 5 7 9 10 9 9 5 3 3*

Capacity for the Year

130 137 144 154 153 158 176 201 125*


14 5 6 6 0 3 11 15 16.5*

Surplus/(Deficit)

26 22 22 20 9 0 7 20 22

Capacity utilisation (%)

80 84 85 87 94 100 96 90 83

*Excluding ACC and Ambuja CementSource: Cement Manufacturers Association (CMA), ICRA Research

Chart-1.2: Trend in Cement Capacity Utilisation (All India)


Almost all the major players in the Indian cement industry announced capacity expansion

programmes 2005-06 onwards, being encouraged by the improving economic outlook,

buoyant demand conditions, strong industry profitability, and anticipated supply

constraints. Such announcements continued all the way till mid-2008-09 when the

economic conditions started deteriorating. The expansion projects have now started

coming on stream (the gestation period being of 24-36 months), and as in March 2009, the

country had an installed capacity of around 209 million tonnes, of which around 43 million

tonnes were added during the last two years alone. A part of the capacity addition over the

last two years also came from debottlenecking of existing capacities and increase in the

share of blended cement. According to ICRA’s estimates, the industry may be expected to

add another 130-135 million tonnes of cement capacity in phases over the next four years,

that is, during the period 2009-10 to 2012-13. Of the announced capacity additions, region-

wise, SR is expected to account for almost 42% (highest share) of the additions proposed,

followed by NR (around 29%). Capacity addition in WR and ER, which is expected to be

17% and 12% of the total announced additions respectively, has been constrained primarily

by the lack of availability of limestone reserves in these regions. Of the total capacities

announced, almost 63% are scheduled for commissioning in 2009-10 and 2010-11, which

means capacity additions, would get bunched up during this period. Going forward, ICRA

expects the pace of capacity addition to slow down in 2011-12, which should stabilise

capacity utilisation levels that year onwards. However, should cement manufacturers

continue with capacity additions, recovery in utilisation may get delayed. Charts 3 to 6

bring out the distribution of the scheduled capacity additions over various time periods and

regions, taking into account the announcements made by the various industry players so

far.

Chart-1.3: All India Quarterly capacity Addition Chart-1.4: Region-wise capacity distribution

Chart-1.5: All India yearly capacity Addition Chart-1.6: All India Effective capacity Addition

As Charts 5 and 6 show, a significant part of the announced capacities is scheduled for

completion in 2009-10 and 2010-11. The impact of the resulting increase in supply has

already started showing up in the capacity utilisation levels, which declined to around 80%

in November 2009 (83% for April-November 2009) from around 90% during 2008-09 and

96% during 2007-08. The inventory in the system (cement plus clinker) has also seen a

build-up (Chart 8), rising to 74% of monthly dispatches in November 2009 from 36% in

March 2009.

Chart-1.7: Monthly Capacity Utilisation Trend Chart-1.8: Inventory levels as % of Monthly Dispatch

Source: CMA, ICRA Research, (the above data is excluding ACC and Ambuja Cement data)

1.9.4 With capacity utilisation declining, prices start softening since Q3, 2009-10

Cement prices showed a steady hardening trend from 2003-04 up to H1 2009-10

with the supply-demand scenario remaining tight (refer Annexure I for the region-

wise price trends). Although capacity substantially outstripped demand by 2008-09

them, this was not reflected in the prices during 2008-09 and H1, 2009-10 because

much of these capacities were still in the stabilisation phase with the result that the

effective capacity was substantially lower and the capacity utilisation level higher

than what the figures in Table 2 indicate. However with many of these capacities

being fully operational now, pricing pressures have started building since Q3, 2009-

10. The decline in prices has been the most severe in SR, especially AP (chart 20,

annexure I).

1.9.5 Significant oversupplies seen in the medium term, but supply-demand balance

likely to show considerable variations across regions

ICRA has projected the cement supply-demand scenario for 2009-13 on the basis of

company announcements for capacity additions, using two different assumptions on annual

demand growth: 8% and 10%. The region-wise projections have been presented in

Annexure I. Table 3 presents the overall demand-supply balance for the country as a whole,

using the estimates of supply and demand growth that ICRA has worked out.

Table1.3: Cement Demand-Supply Indicators (All-India), Actual and Estimated (E)In million tonnes 2004-

052005-06

2006-07

2007-08

2008-09

2009-10E

2010-11E

2011-12E

2012-13E


154 153 158 176 201 250 291 317 342


6 0 3 11 15 24 17 9 8

Export 10 9 9 5 3 5 5 5 5

Surplus@8% Growth (%)

20 9 0 7 20 53 79 89 96

Utlisation@8% Growth (%)

87 94 100 96 90 79 73 72 72

Surplus@10% Growth

20 9 0 7 20 49 71 76 77

utilisation@10% Growth (%)

87 94 100 96 90 80 76 76 78


Chart-1.9: Overall Demand-Supply Balance at 10% Demand-Growth


Chart-1.10: Overall Demand-Supply Balance at 8% Demand-Growth


While ICRA expects the overall capacity utilisation level to fall below 80% even under

optimistic assumptions on demand growth (Chart 9), the actual capacity utilisation, price

corrections, and the impact of the same on profitability would also be influenced by

regional supply-demand balances (refer Annexure I for details). Also, any delay, deferment

or phasing out of capacities, were that to happen, would lower the supply-side pressures as

envisaged in Chart 9. Another variable that could impact the demand-supply scenario is

the shift in the industry’s product mix. Over the last few years, the Indian cement industry

has successfully shifted its product mix towards Pozzalana Portland Cement (PPC), with

the result that the share of OPC has shrunk, declining from 63% in 2000-01 to 25% in

2008-09 (Chart 11). The shift in product mix has also been necessitated by the tight

supply-demand scenario (implying limitations in clinker availability). Greater production

of PPC provides for optimisation of capacity utilisation, as clinker capacity is often the

primary constraint in cement production. Thus the shift towards PPC led to high capacity

utilisation for the industry during the period 2005-06 to 2007-08 as compared with the 80%

or so seen during much of the late 1990s and early 2000s. The manufacturing cost of OPC

is generally higher by Rs. 200-300/tonne than that of PPC because PPC consumes blending

material, which is usually cheaper than clinker. Further, as fly ash is finely ground, the

grinding cost (mainly the cost of power) is lower for PPC than for OPC. However, while

the cost of manufacturing OPC tends to be higher versus PPC, an analysis of past cement

prices by ICRA shows that OPC prices also tend to be higher than PPC prices, thereby

largely offsetting the higher manufacturing cost of OPC.

ICRA has witnessed a slight reversal of this long term trend during the past few months,

whereby the share of OPC in the industry’s product mix has increased from 24% in April

2008 to 31% in November 2009 (refer Chart 12).

Chart-1.11: Share of OPC in Product Mix (All-India, 2001-09)

Chart-1.11: Share of OPC in Product Mix (All-India, 2008-Oct 09)


The change in the long-term trend can be is attributable to the industry’s strategic shift to

OPC, which is aimed at curtailing supply-side pressures. Further, as OPC tends to set faster

thereby expediting construction, the higher cost of OPC may be acceptable to most buyers.

In ICRA’s view, while the trend of shifting to OPC may raise the cost of production and

lower capacity utilisation for the industry, it may also help in reducing supply-side

pressures, which in turn could protect prices. A shift in product mix, along with a

significant correction in prices, may however have an adverse effect on profitability, as it

will not only raise the cost of production, but also pull down capacity utilisation.

Given that competition is largely regional in the cement market, regional demand-supply

dynamics play a crucial role in determining price trends. Additionally, since large inter-

regional transfers of cement take place between NR and ER and between SR and WR,

ICRA also takes into account the demand-supply dynamics prevailing in these regions

combined to ascertain the projected level of capacity utilisation. The following details are

presented in Annexure I.

1.9.6 Summarised Regional Demand Supply Balance

For the purpose of regional demand-supply balances, ICRA divides the country into four

regions: NR, ER, WR and SR. Uttar Pradesh and Madhya Pradesh, which are classified

under the central region by CMA, are considered to a part of the Northern region, whereas

Goa, which is considered a part of the Sothern region by CMA, is considered a part of the

Western region by ICRA.

1.10 ANNEXURE I: REGIONAL DEMEND AND SUPPLY BALANCE

1.10.1 Northern Region

States included in NR: Uttarakhand, Haryana, Punjab, Rajasthan, Himachal Pradesh,

Chandigarh, Delhi, Jammu and Kashmir, UP, MP, and Chhattisgarh. NR is the largest

cement consuming region in the country and accounted for almost 37% of the all-India

consumption and 42% of the available capacity during 2008-09. Within NR, UP,

Rajasthan, MP and Haryana are the largest cement consuming States, and accounted for

75% of the regional consumption in 2008-09. Over the last five years, cement demand in

NR reported a CAGR of 8.7%, as against the all-India average of 9.3%. Within NR,

demand was driven by Rajasthan and Haryana, which reported CAGRs of 10.7% and

14.3%, respectively. Cement demand in NR is being driven by the Commonwealth Games

in Delhi, the Delhi Metro Rail project, construction of roads, airports, and hydro-power

plants, and the real estate boom. The major players in NR include ACC + Ambuja Cement

(Part of the Holcim Group), Gasim + Ultratech (part of the A V Birla Group), Jaypee

Cement, Shree Cement, the J K Group, Binani Cement, Century Textiles, and Birla

Corporation. Within the region, the top five players/groups accounted for around 70% of

the total operating capacity during 2008-09.

In million Tonnes 2008-09

2008-09

2012-13E

2012-13E

ACC + Ambuja (Holcim Group) 20.39 24% ACC + Ambuja (Holcim Group)

25.89 21%

Grasim + Ultratech (A V Birla Group)

13.55 16% Grasim + Ultratech (A V Birla Group)

22.45 18%

Jaypee Cement 9.93 12% Jaypee Cement 17.73 14%Shree Cement 9.10 11% Shree Cement 11.60 9%J K Group 7.77 9% J K Group 10.47 9%Total for top 5 players 60.74 71% Total for top 5 players 88.14 72%

Table 1.4: Share of capacity of top 5 cement players in Northern RegionSource: Cement Manufacturers Association (CMA), ICRA Research

Table 1.5: Demand-Supply Indicators for Northern Region, Actual and Estimated (E)In million tonnes 2004-05 2005-

062006-07

2007-08

2008-09

2009-10E

2010-11E

2011-12E

2012-13E

Consumption 47 51 56 61 66 72 79 87 96


63 65 63 74 85 96 111 120 123

Surplus/ (Deficit) 17 14 8 12 19 24 32 32 27

Capacity Utilisation (%)

74 78 88 83 77 75 71 73 78


Chart-1.13: Price Trend in Key Northern Markets Chart-1.14: Capacity Utilisation in

Northern Region, Actual and Estimated

Source: Centre for Monitoring Indian Economy CMIE, ICRA Research

As against an available capacity of 85 MTPA during 2008-09, the capacity addition

expected in NR over the next four years is around 38 MTPA, which would increase the

total availability in the region to 123 MTPA by the end of 2012-13. Assuming an

optimistic growth rate of 10%, capacity utilisation in NR is expected to decline marginally

from 77% in 2008-09 to around 71% in 2010-11, but recovers thereafter, provided no fresh

capacity addition is done by the industry.

While cement prices in some markets of NR such as Chandigarh and Delhi have witnessed

a correction of Rs. 10-15/bag over the past few months, large corrections are not envisaged

in the future and price volatility is also likely to be lower. This pricing is also expected to

be aided by the stable shares of the capacities attributable to top five players in the region.

The top five players in NR are expected to continue dominating the market with a

cumulative market share of around 70% in the medium term. However, pricing pressures

may arise in future in case the currently strong demand growth is not sustained and ER

reports lower deficits than anticipated.

1.10.2 Eastern Region

States included in ER: Assam, Meghalaya, Bihar, Jharkhand, Orissa, West Bengal (WB),

Tripura, Manipur, Nagaland, Arunachal Pradesh, and Mizoram. ER is the least cement

consuming region in the country and accounted for about 14% of the all-India consumption

and only 9% of the available capacity during 2008-09. In the absence of adequate

limestone reserves in most eastern States, the region has remained a net importer of

cement, relying most on NR, especially Chhattisgarh, for cement imports. Within ER, WB,

Bihar and Orissa are the largest cement consuming States and accounted for 76% of the

total regional consumption in 2008-09. Over the last five years, cement demand in ER

reported a CAGR of 8.4% as against the all-India average of 9.3%. Within ER, the demand

was driven by Bihar and Orissa, which reported CAGRs of 10.3% and 10.1%, respectively.

Demand in ER has been driven largely by industrial activity, given the abundance of

natural resources in the region, as well as by the increase in governmental focus on further

development of the North-Eastern States. The major players in the region include ACC +

Ambuja Cement (Part of Holcim Group), Lafrage, OCL India, Gasim + Ultratech (part of

A V Birla Group) and Birla Corporation. Within the region, the top five players/groups

accounted for around 84% of the total operating capacity during 2008-09.

In million Tonnes 2008-09 2008-09 2012-13E 2012-13E

ACC + Ambuja (Holcim Group)

5.27 30% ACC + Ambuja (Holcim Group)

6.57 19%

Lafarge 3.00 17% Lafarge 6.00 18%OCL India 2.63 15% Jaypee Cement 4.20 12%Grasim + Ultratech (A V Birla Group)

2.20 13% OCL India 3.80 11%

Birla Group 1.60 9% Cement Manufacturing Corp.

3.20 9%

Total for top 5 players 14.69 84% Total for top 5 players 23.77 71%Table 1.6: Share of Capacity of top 5 cement Players in the Eastern Region

Table 1.7: Demand-Supply Indicators for Eastern Region, Actual and Estimated (E)In million tonnes 2004-05 2005-

062006-07

2007-08

2008-09

2009-10E

2010-11E

2011-12E

2012-13E

Consumption 18 20 20 22 24 26 29 32 35


12 12 14 16 17 22 27 33 34

Surplus/ (Deficit) -6 -8 -6 -5 -7 -5 -2 1 -2


151 168 141 133 138 121 108 97 104


Chart-1.15: price Trend in Key Eastern Mar Chart-1.16: Capacity Utilisation in Eastern Region, Actual and Estimated


As against an available capacity of around 17.5 MTPA during 2008-09, the capacity

addition expected in ER over the next four years is around 16 MTPA, which would

increase the total availability in the region to around 34 MTPA by the end of 2012-13.

Since the region has remained a net importer of cement from NR, such a significant

increase in supply would reduce ER’s import dependence over the medium term and lower

its deficit levels significantly.

Despite a deficit situation in ER, cement prices have seen a decline of around Rs. 10/bag in

the Kolkata market over the last few months, as pricing in the region is also influenced by

the demand-supply balance in NR. While ER is expected to remain a cement-deficit region

in the long run, the extent of consolidation here is expected to weaken as new players enter

the industry. This is expected to lead to a decline in the capacity share of the five leading

players in ER from around 84% in 2008-09 to 71% in 2012-13. A decline in the extent of

consolidation and an overall increase in surplus in NR may cause pricing pressures to arise

in ER, although the same is not likely to be significant. Further, players in ER would

continue to benefit from the region’s freight cost advantage as compared with players in

NR for exporting cement to the region. As a result, players in ER are expected to continue

benefiting from the region’s cement-deficit status.

1.10.3 Northern plus Eastern Region

With NR historically being a cement-surplus region and ER traditionally a cement-deficit

one, the extent of inter-regional cement transfer from NR to ER is considerable. A

significant quantity of cement is exported from States such as Chhattisgarh and MP

(eastern part) to parts of Orissa, West Bengal and even some North-Eastern States. As a

result, the overall supply-demand balance of NR + ER as a whole impact prices in these

two regions. Any significant surplus in NR would lead to pricing pressures in ER, while

any reduction in deficits in ER would create pricing pressures in NR as well as ER.

According to ICRA’s estimates, the overall capacity utilisation levels for NR and ER as a

whole are not expected to decline below 80% or so in the near to medium term from the

87% levels reported in 2008-09.

Further, the extent of consolidation in the industry for NR plus ER is not likely to

deteriorate significantly, as the top five players here are expected to hold over 70% of the

available capacity in the region post-completion of the announced expansions.

Table 1.8: Demand-Supply Indicators for Northern plus Eastern Region, Actual and Estimated (E)In million tonnes 2004-

052005-

062006-

072007-08 2008-09 2009-10E 2010-

11E2011-12E 2012-13E

Consumption 65 70 76 83 90 99 108 119 131


76 76 78 90 102 118 138 153 157

Surplus/ (Deficit) 11 6 2 7 13 19 30 33 26


86 92 98 92 87 84 78 78 84


Chart-1.17: capacity Utilisation in Northern plus Eastern Region, Actual and Estimated

Table 1.9: Demand-Supply Indicators for Northern plus Eastern Region, Actual and Estimated (E)

FY 09 FY 13ENorth 71% 72%East 84% 71%

North + East 74% 71%Source: Cement Manufacturers Association (CMA), ICRA Research

. 1.10.4 Western Region

States included in WR: Gujarat, Maharashtra, and Goa.

WR accounted for almost 19% of the total domestic consumption of cement and 15% of

the available cement capacity in the country during 2008-09. The largest cement consumer

within WR, Maharashtra, which alone was responsible for almost 60% of the regional

consumption in 2008-09, is also the largest cement consuming State in the country, and

accounted for 12.3% of the total domestic cement consumption in 2008-09. However,

Maharashtra lacks significant limestone deposits, and the demand is largely met by the

only limestone cluster in the State, that is, the Chandrapur cluster, as well as by imports

from States in SR, viz. North AP and North Karnataka. The state of Gujarat in WR is

largely self sufficient for its cement requirements and moreover, given its advantage of

having cement plants located near the sea, it is also able to export the surplus to other

countries in the Middle East region. Over the last five years, cement demand in WR

reported a CAGR of 8.4% as against the national average of 9.3%. Within WR,

Maharashtra posted a CAGR of 8.3% in cement consumption, while Gujarat came up with

9.1%. Given the significant levels of industrialisation in these States, the demand for

cement here is being driven mostly by industrial activities. Besides, cities like Mumbai,

Pune and Nagpur, which are also areas of increasing focus for service sector entities, have

contributed significantly to the pickup in demand. Further, the real estate boom in Mumbai,

Pune, Nagpur and Ahmadabad has led to the proliferation of shopping malls, commercial

complexes and housing projects, all of them reinforcing the demand trend. The major

players in the region include ACC + Ambuja Cement (Part of Holcim Group) and Gasim +

Ultratech (part of A V Birla Group), which together held almost 70% of the available

capacity in WR in 2008-09. The top five players/groups accounted for around 92% of the

total available capacity in the region in 2008-09, highlighting the fact that the level of

consolidation is the highest in WR among all regions.

As against an available capacity of around 31 MTPA in 2008-09, the capacity addition

expected in WR over the next four years is around 23 MTPA, which would increase the

total availability in the region to 56 MTPA by the end of 2012-13. With capacity addition

during the last five years having been limited (around 2 MTPA), WR turned into a cement-

deficit region during 2007-09. Going forward, given the significant capacity planned,

cement availability is expected to improve within WR, which however could bring down

the capacity utilisation levels to around 90% in the medium term.

In million Tonnes 2008-09 2008-09 2012-13E 2012-13E



12.80 23%

ACC + Ambuja (Holcim Group)

8.90 29% ACC + Ambuja (Holcim Group)

11.90 21%

Sanghi Industries 2.60 8% Sanghi Industries 7.60 14%Mehta Group 2.36 8% Jaypee Group 5.40 10%

Century Textiles 1.90 6% Binnani Cement 2.50 4%Total for top 5 players 28.56 92% Total for top 5 players 40.22 72%

Table1.10: Share of Capacity of top 5 cement Players in the Western Region

Despite capacity utilisation levels remaining close to 100% in WR during 2009-10 so far

(104% during April-November 2009), cement prices in one of the key markets of the

region, Mumbai, have declined by almost Rs. 20/bag over the past few months. The reason

for this is the sharp decline in cement prices in SR during this period. Since SR has

historically been a cement-surplus region (because of its large limestone clusters), it

exports its surplus to WR, with the result that cement prices in WR are influenced

significantly by the demand-supply balance in SR. Over the past few months, some of the

key markets in SR have reported a significant drop of Rs. 50-60/bag in cement prices and

this has led to pricing pressures in WR. Following completion of the announced

expansions in WR, the level of consolidation in this region is likely to moderate with the

top five players accounting for around 70% of the available capacities as against 92% now.

Decline in consolidation levels along with the likely decline in capacity utilisation levels in

WR and the expected surplus in SR could lead to cement prices coming under pressure in

WR over the near to medium term.

Table 1.11: Demand-Supply Indicators for Western Region, Actual and Estimated (E)In million tonnes 2004-

052005-

062006-

072007-

082008-09 2009-

10E2010-11E 2011-

12E2012-13E

Consumption 25 26 29 33 34 38 42 46 50


29 29 29 29 31 37 47 50 56

Surplus/ (Deficit) 4 3 0 -3 -4 0 5 4 6


86 90 100 112 112 101 90 92 90


Chart-1.18: Price Trend in Key Western market

Chart-1.19: Capacity Utilisation in Western Region, Actual and Estimated

1.10.5 Southern Region

States included in SR: Andhra Pradesh (AP), Tamil Nadu (TN), Karnataka, Kerala,

Pondicherry, and Andaman & Nicobar. SR accounted for 30% of the total domestic

consumption of cement in 2008-09. It is the second largest cement consuming region in the

country after by NR. Holding 34% of the domestic available capacity during 2008-09, SR

is also the second largest production base for cement in India after NR. Within SR, AP

reported the highest CAGR of 17.5% in cement consumption over the last five years with

the State Government stepping up infrastructure spending, mainly on irrigation projects.

The figure is the highest among all States in the country for the period concerned. With

cement consumption growing at a brisk pace in AP and TN (the largest consuming state in

SR) reporting an 11.8% CAGR in consumption over the last five years, SR posted a CAGR

of 11.3% over the same period, which is not only higher than the national average but also

the highest among all regions in the country. SR is also among the most fragmented

regions in terms of capacity concentration in India. The top five players in SR held around

55% of the available capacity in the region during 2008-09, which is the lowest among all

regions in the country. The largest player, India Cement, held 15% of the available

capacity, which again is the lowest for the largest player in any region. The other major

players in SR include Grasim + Ultratech (part of A V Birla Group), Madras Cement, ACC

+ Ambuja Cement (Part of Holcim Group), and Kesoram Industries.

In million Tonnes 2008-09 2008-

09

2012-13E 2012-13E

India Cement 10.37 15% Dalmia Cement 14.17 11%



13.36 10%

Madras cement 7.09 10% India Cement 12.97 10%ACC + Ambuja (Holcim

Group)6.15 9% Madras cement 8.92 7%

Kesoram Industries 5.43 8% ACC + Ambuja (Holcim Group)

9.15 7%

Total for top 5 players 37.49 55% Total for top 5 players 58.57 45%Table 1.12: Share of Capacity of top 5 cement Players in the Southern Region


In million tonnes 2004-05

2005-06

2006-07

2007-08

2008-09

2009-10E

2010-11E

2011-12E

2012-13E

Consumption 33 39 44 49 54 59 65 72 79


49 48 51 57 68 95 107 116 130

Surplus/ (Deficit) 16 9 7 8 15 35 42 44 51


67 81 86 86 79 63 61 62 61

Table 1.13: Demand-Supply Indicators for Southern Region, Actual and Estimated (E)Source: Cement Manufacturers Association (CMA), ICRA Research

Given the abundant limestone reserves in SR (of the seven major limestone clusters in

India, four are in SR), the region has historically been cement-surplus and an exporter to

WR. With demand growing at 11.3% during the last five years, capacity utilisation in SR

improved from around 67% in 2004-05 to almost 80% in 2008-09. Encouraged by the

buoyancy in demand, cement companies in the region have drawn up significant expansion

plans and of the total expected addition of 133 MTPA (all-India) over the next four years,

almost 42% is expected to come up in SR. As against an available capacity of 54 MTPA in

2008-09, the capacity addition expected in SR over the next four years is 56 MTPA. With

that, the utilisation levels may be expected to decline to around 60% in the medium term.

Further, the level of fragmentation in SR is also expected to increase further, with the

capacity concentration (top five players) likely to decline to around 45% in 2012-13 from

55% in 2008-09. Low capacity utilisation along with greater fragmentation may be

expected to lead to severe price pressures in SR in the medium term.

Pricing pressures have already come into play in SR as is evident from the price trends in a

few key markets in the region; the reason for this is the decline in capacity utilisation levels

(63% during April-November 2009). Cement prices in Hyderabad markets declined to

almost Rs. 145/bag in November 2009 from the peak of Rs. 225/bag in July 2009.

Similarly, in Chennai markets cement prices declined by almost Rs. 45/bag to Rs. 230/bag

in last few months from the peak witnessed in June 2009. Going forward, with new

capacities being commissioned, capacity utilisation levels as well as cement prices in SR

may be expected to remain under pressure and impact prices and capacity use in WR as

well.

1.10.6 Southern plus Western Region

Chart-1.20: Price Trend in Key Southern Markets Chart-1.12: Capacity utilisation in

Southern Region, Actual and EstimatedSource: Cement Manufacturers Association (CMA), ICRA Research

Given the significant inter-regional transfer of cement from SR (especially North AP and

North Karnataka) to the deficit areas in WR (especially Maharashtra), cement prices in

these two regions are influenced by the demand-supply balance in SR + WR as a whole. A

deficit in WR generally leads to improved prices and capacity utilisation in SR, while a

surplus in SR adversely impacts prices in WR. In ICRA’s assessment, the capacity

utilisation level in SR + WR combined could decline significantly to around 70% in the

near to medium term from the 89% level reported in 2008-09. During April-November

2009, capacity utilisation in SR + WR as a whole stood at 73%. The level of consolidation

is also likely to weaken in both SR and WR, which along with the expected decline in

capacity utilisation could increase the intensity of competition and pricing pressures

further.

In million tonnes 2004-05

2005-06

2006-07

2007-08

2008-09

2009-10E

2010-11E

2011-12E

2012-13E

Consumption 58 65 73 81 88 97 107 117 129


78 77 80 86 99 132 153 165 186

Surplus/ (Deficit) 20 12 7 5 11 35 46 48 56


74 85 91 95 89 74 70 71 70

Table 1.14: Demand-Supply Indicators for Southern + Western Region, Actual and

Estimated (E)


1.11 ANNEXURE-IITable 1.16: List of Cement Companies with ICRA-Assigned Ratings Outstanding (on Jan 7, 2010)

Long Term Medium Term Short Term

Bhavya Cement Limited LBB+ - -

Bheema Cement Limited LBB+ - A4+Calcom Cement India Limited

LBB+ - -

Cement manufacturing Company Limited

LBBB+ - A2+

Dalmia Cement Limited LAA+ MAA- A1+Deccan Cement Limited LBBB+ - A2+Jaiprakash Associates Limited

LA - A1

Madras Cement Limited LA+ - A1+

NCL Cement Limited LBBB- - A3OCL India Limited LAA- - A1+

Orient Paper & Industries Limited

- - A1+

Parasakthi Cement Industries Limited

LBBB- - A3

Prism Cement Limited LAA-@ - A1+@

Vinay cement Limited LBB+ - -


1.12 DIFFERENT TYPES OF CEMENT PRODUCED IN INDIA

• Ordinary Portland cement (OPC):

OPC, popularly known as grey cement, has 95 per cent clinker and 5 per cent Gypsum

and other materials. It accounts for 70 per cent of the total consumption.

• Portland Pozzolana Cement (PPC):

PPC has 80 per cent clinker, 15 per cent pozzolana and 5 per cent gypsum and

Accounts for 18 per cent of the total cement consumption. It is manufactured because

it uses fly ash/burnt clay/coal waste as the main ingredient.

• White Cement:

White cement is basically OPC - clinker using fuel oil (instead of coal) with iron oxide

content below 0.4 per cent to ensure whiteness. A special cooling technique is used in

its production. It is used to enhance aesthetic value in tiles and flooring. White

cement is much more expensive than grey cement.

• Portland Blast Furnace Slag Cement (PBFSC):

PBFSC consists of 45 per cent clinker, 50 per cent blast furnace slag and 5 per cent

gypsum and accounts for 10 per cent of the total cement consumed. It has a heat of

hydrations even lower than PPC and is generally used in the construction of dams and

similar massive constructions.

• Rapid Hardening Portland cement:

Rapid Hardening Portland Cement is similar to OPC, except that it is ground much

finer, so that on casting, the compressible strength increases rapidly.

• Water Proof Cement:

Water Proof Cement is similar to OPC, with a small portion of calcium stearate or non-

sponifibale oil to impart waterproofing properties.

Raw material required for Cement –

Limestone - extracted from own mines

Laterite - readily available from nearby mines

Gypsum - purchased from Bikanar & Nagore

Period Policy Specifics Notes1951-1982 Price and distribution

Control- -

April 1975 - 14% tax return on capital employed

Did not show any noticeable impact on

industry

1977 - 12% post tax return on net worth

Showed effect on output

Until 1978 - Uniform retention price -

May 1979 - Three tier price system (different retention prices for low, medium, and high

cost plants)

-

Feb 1982 Partial Decontrol Levy Obligation, uniform Retention Price

Retention price slightly lower for PPC than OPC,

specific mini units exempted from price

and distribution control.

1982-1988 - Progressive decrease in levy and increase in

retention price.

-

Since 1986 - Rebate in excise duty for new plants.

-

March 1989 Withdrawal of all price and distribution

controls

- -

Until 1989 Freight Pooling - No freight pooling for non levy cement since

1982

Until 1991 Industrial licensing - -

Pet Coke - imported from foreign countries

Fly Ash - brought from Kota Thermal Power Plant

Table-1.17: Overview of Policies regarding the cement industry

CHAPTER-2

COMPANY &

PRODUCT PROFILE

2.1 HISTORY OF OCL

OCL is the flag ship company of ‘Dalmia Group’ of companies, set up and operating from

eastern India. The emergence of ‘Dalmia’ group on the industrial scene of India can be

traced back to pre-independence era. Prominent among the early entrepreneurs who laid

the industrial foundation of India was Dalmia family. Established in 1932 with a sugar

factory, the Dalmia group gradually diversified into a broad spectrum of activities and

were involved in many pioneering ventures. For reasons of operational efficiency, during

fifties the Group split into separate entities.

The origin of OCL was seeded in the time that signalled India's independence. A dream

unleashed. A blue print of growth was drawn. Endeavours to reconstruct economy set in.

Indian industry woke up to the key challenge of self- reliance. Agriculture took a turn to

modernity with construction of dams across the country. Against such a bubbling

background Sjt. Jaidayalji Dalmia, an industrialist of farsighted vision set up a cement

plant at Rajgangpur during 1950 - 51 at the request of government of Odisha to

manufacture super grade cement for use in the construction of Hirakud dam. The plant that

went on steam as Orissa cement limited during 1952 transformed itself into OCL India

Limited during 1996 to better reflect its multifarious activities.

OCL commissioned its Refractory plant in the year 1954, which today has grown into one

of the largest composite refractory plants in the country. It manufactures Silica, Basic

Burnt Magnesia Carbon, Fireclay & High Alumina Bricks, Continuous Casting, Slide Gate

Refractory’s, Castables and Precast blocks Basic, Silica high alumina Ramming

Mases/Mortars. OCL's Refractory division is the first Indian refractory manufacturer to

have secured the coveted ISO 9001 certification for all its refractory products. Globally

OCL is amongst the few select producers of coke oven silica bricks. Over years OCL has

collaborated with other world leaders in the respective fields and secured a place of pride

for itself.

The company changed its name from Orissa Cement Ltd to OCL India Limited w.e.f.

15.01.1996 to reflect its multifarious activities. During the year 2002 OCL set up its

Sponge Iron unit at Rajgangpur State of Odisha, with an installed capacity of 1, 20,000 MT

P.A and later on developed Steel making facility by installing 3 sets of Induction Furnaces

each of 250 MT/ day capacity and Steel Billet Casting Machine as a forward integration

activity for the Sponge Iron plant & Pig Iron plant.

In the year 2007 the Hon’ble High Courts of Odisha and Guahati have approved the

Scheme of Arrangement involving demerger of Steel Undertaking of the Company with

OCL Iron and Steel Limited and Real Estate Undertaking of the Company with Landmark

Property Development Company Limited (formerly “Konark Minerals Limited) and

merger with Dalmia Cement (Meghalaya) Limited.

OCL's Cement Plant is one of the most modern dry process cement plants in India.

‘Konark’ brand cement manufactured by OCL is the market leader in the State of Odisha

and has emerged as a brand synonym of premium quality cement. Presently its installed

capacity for the factories located at Rajgangpur Cement Works & Kapilas Cement Works

is 5.35 Million Tonne per annum.

OCL’s Refractory plant is situated at Rajgangpur with a total installed capacity of 106400

MT per annum to produce the various types of refractoriness. Presently the equity shares

of the Company having face value of Rs.2/-each are listed on National Stock Exchange

Limited and Bombay Stock Exchange Limited.

OCL Refractoriness have world wide acceptance with exports to Americas as well as many

Euro-Africa- Asian Nations. A wide range of products manufactured at Rajgangpur and its

associate company in China has given it the unique opportunity of perpetual customer base

in Iron, Steel, and Copper, Precious Metal extraction, Aluminium and many more

refractory consuming processes.

Presently the Group's activities include Cement, Refractory, Industrial Machines,

Computer Software, Travel and Investments, with OCL India Ltd heading the list a the

Group's flagship company. While thus contributing its mite in helping India build and

strengthen infrastructure facilities and make advances in other related fields, the OCL

Group has been consistently building for itself an enviable reputation worldwide for the

quality of its products and services. OCL is today a company of Indian roots with Global

reputation.

2.2 MISSION & VISION

Mission:

OCL is in the business of Cement and Refractoriness. These will continue to be our

prime business focus areas

We shall strive to improve our image in the eyes of all stakeholders - present and

potential

We shall endeavour to build a vibrant and responsive organization with a team of

motivated people driving for excellence, achievement and high performance

We will create conditions and climate for empowerment through enhancement of

Knowledge, Attitudes and Skills with emphasis on multiskilling.

Vision:

Grow profitably with commitment to customer satisfaction

Strive for excellence

Be # 1 in chosen areas

Continuously develop a committed team of people

Build good corporate image & high customer esteem

Endeavour to serve society.

2.3 AWARDS & RECOGNITION:

National award for energy efficiency in Indian Cement Industry.

OCL Refractory Division has once again bagged the prestigious CAPAXIL-

Ministry of Commerce, Government of India higher category “Special Export

Award” for the 4th consecutive year for 2008-09.

During the celebration of 47th Annual Mines Safety Week, our Lanjiberna Mines

have been awarded with the following prizes amongst Limestone & Dolomite

Group.

Ministry of Commerce & Industry issued STAR EXPORT HOUSE Certificate

against our export performance during 2006-07, 07-08, 08-09 & 09-10.

15th All Orissa Quality Circle Convention organized by NALCO at Bhubaneswar

Quality circle “BASUNDHARA” from Concast finishing section of our Refractory

division bagged Runners up Trophy (Silver Plaque). This is the first ever

distinction for the team on its maiden external presentation.

Quality Circle “GABESHANA” from Laboratory and “UTPADAN” from

Production made excellent performance in the above forum.

Quality circle “ANWESHAN” from Kiln & Utility department, refractory division

bagged Silver award.

Sri J N Tiwari, ED/R OCL’s refractory Chief and Executive Director, Sri J N

Tiwari is felicitated with the coveted award by IRMA in a gala function held in

Hotel Taj Bengal, Kolkata on 19th August 2010 for his devoted service in the

development and application of refractories.

2.4 CORPORATE SOCIAL RESPONSIBILITY:

In its 60 years of untiring service to Nation, OCL has always given priority to community

development. In its endeavour to uplift the conditions of poor and hapless tribal’s of this

locality, OCL has undertaken various developmental activities in peripheral areas of its

plant at Rajgangpur and Captive Mines at Lanjiberna.

2.4.1 Health

Our aim is to provide free health care services to poor tribal people of this locality and

create awareness among them about health and hygiene. In this direction we are:

Providing free treatment and medicine to villagers in our dispensary at Lanjiberna.

Operating a Mobile Medical Unit for providing health care services to people at

their door step in Rajgangpur and Lanjiberna. A similar unit is also functioning in

Kapilas Cement Works.

Operating a charitable allopathic dispensary in village Sonakhan through Bharatiya

Jana Seva Sansthan, New Delhi.

Organising General Health Check-up Camps, Eye Camp, E & T Camp, Dental

Camp etc in Rajgangpur and Lanjiberna every year.

Renovated the hospital building of Govt. Hospital, Rajgangpur and improved

infrastructure facilities like supply of water, construction of additional toilets,

rooms etc.

Organising awareness program on General Health and Hygiene, Malaria, Dengu,

Chikungunia etc every year and distributing mosquito nets free of cost.

2.4.2 Education

Our aim is to improve standard of education, infrastructure facilities and other basic needs

of children in schools. In this direction we are:

Constructing/ renovating buildings play grounds etc in schools.

Arranging drinking water facilities by sinking bore well, laying pipe, installing

pump etc.

Providing furniture like bench, desk, table, chair etc and other study materials.

Reimbursing salaries of teachers in some schools.

Operating thirty “One Teacher Schools” called “EKALA VIDAYALAYA” in villages in

collaboration with “Friends of Tribal Society”.

2.4.3 Drinking Water

Water supply facility in Rajgangpur and Lanjiberna area is extremely poor. The problem

becomes more acute during summer. To address this problem we have:

Sunk 118 Tube Wells in Rajgangpur & Lanjiberna in last 5 Years.

Repaired 58 Tube wells & made them functional in last 5 Years.

Dug/renovated Ponds, Ring Wells, constructed platform etc.

Facilitated in implementing “Sajal Dhara Scheme” village Khatang and Dharuda.

Made arrangement for supply of drinking water by sinking deep bore well, laying

pipe etc in Ghoghar Temple and Sub Jail, Rajgangpur.

Providing mines water for irrigation to four villages.

2.4.4 Community Development

We aim at creating/improving/maintaining infrastructure facilities in the area for uplifting

the quality of life of people. We have:

Constructed a 900 meter long concrete road in Rajgangpur.

Constructed a three storied building, kitchen, Namasankirtan Mandap, toilet etc for

the inmates of ‘Kalpataru Ashram’, Lamloi, where poor orphan children are

residing.

Renovated and maintaining ‘Theme Park’ at Sundargarh. The park depicts rich

cultural heritage of local tribals and is one of the best of its type in Odisha.

Constructed thirteen Community Centres in villages. Also supplied furniture,

utensils etc to these centres where villagers conduct community meetings and

social/cultural functions.

Provided electricity in four villages.

Supplied street lights in Rajgangpur Municipality area.

Constructing Community Bath Rooms for ladies with water supply facility in

villages.

Constructed a “Cause Way” over Naktinalla in Babudhi village.

Donated Rs. 23 Lakh in last 5 years to Sundargarh District Peripheral Development

Committee for undertaking various development work in the district. Also granted

a financial assistance of Rs. 66 Lakh to the committee for constructing bridges in

village Malidhi and Jhagarpur in 2009-10.

Donated Rs. 31 Lakh for construction of a “Community Kalyan Mandap” in

Rajgangpur.

Donated Rs 4.5 Lakh to “HOPE” for construction of a school building for mentally

retarded children in Rajgangpur. Donating Rs. 5000/- every month for

remuneration of a teacher in the said school.

Donated Rs. 3.5 Lakh to “Vedvyas Gosala” for proper upkeep of old cows. Also

donated Rs. 1.5 Lakh to Sree Vir Pratap Gosala, Rajgangpur for sinking a deep

bore well.

2.5 BOARD OF DIRECTORS

• Shri Pradip Kumar Khaitan – Chairman

• Shri Gaurav Dalmia- Managing Director

• Shri Damodar Das Atal - Whole Time Director

• Shri Puneet Yadu Dalmia

• Shri Ved Prakash Sood

• Dr. Sheo Raj Jain - Independent Director

• Shri Dharmendra Nath Davar - Independent Director

• Dr. Ramesh Chandra Vaish- Independent Director

2.6 RESEARCH & DEVELOPMENT

Up gradation of the quality of chemical gypsum for use as set controller.

Development of ternary and quaternary blended cement for improved quality and

performance.

Development of X-Ray Diffraction method for real time estimation of Slag/Flyash

content in blended cement.

Development of high strength hollow Fly ash blocks using wastes from our captive

mines, cement & refractory units.

Use of industrial waste as alternate raw material and fuel.

Use of waste wood chips, bags, waste paper, waste oil as alternate fuel

2.7 QUALITY POLICY & ESH POLICY

OCL, believe and aim at total quality in our products and services to satisfy our Customers,

and are committed to

Adhere strictly to quality parameters at all stages to provide products / services

conforming to customers’ requirements

Meet requirements of quality management system and strive to continually

improve its effectiveness

Develop competent human resource through planned training

Establish quality objectives and review periodically to achieve continual

improvement

2.8 ENVIRONMENT, OCCPUTATIONAL HEALTH & SAFETY POLICY

We, at OCL India Limited (Cement Division), Rajgangpur, Odisha engaged in captive

Mining of Limestone and Manufacturing of Cement are committed to continually improve

Performance of our Environment and Occupational Health and Safety Management System

for sustainable development.

Integrating EHS criteria in all our planning & operational activities

Prevention, Minimization and Control of Workplace Injury, Ill health and Pollution

Complying with legislation & other requirement applicable to us and to which we

subscribe

Communication of EHS policy to all our Employees and other Interested party

Strengthening competence & EHS awareness of employees and business associates

through continuous training

Optimization of resources, particularly Raw materials, Water, Fuel & Power

Reclamation & Rehabilitation of mined out areas by utilization of solid waste and

develop green belt in the area

Promote safe behaviour and practices to nurture and sustain safe and healthy work

environment

Establish the EHS objectives and review periodically to achieve continual

improvement

2.9 PRODUCT PORTFOLIO

At Rajgangpur cement works we manufacture eight varities of cement viz OPC 53 grade,

OPC 53-S grade, OPC 43 Grade, PSC, PPC (Flyash Based), SRPC, OWC Class G Type

HSR and Masonry Cement. At Kapilash Cement works we manufacture PSC at present.

2.9.1 OPC 33 grade

This cement is used for general civil construction work under normal environmental

conditions. The compressive strength of cement after 28 days test as per BIS specification

is 33 MPa. Due to low compressive strength, this cement is normally not used where high

grade of concrete viz, M-20 and above is required. The availability of higher grades of

OPC in the market impacts the usage of 33 grades OPC as these days 43 grade OPC is

normally used for general construction work. This grade of cement is more useful for mass

concreting and plain cement concreting and can also be used for plastering and single

storied individual houses.

2.9.2 53 & 53-S -grade OPC (IS: 12269-1987):

53-grade OPC is high strength cement. According to the BIS requirements, 53-grade OPC

must have a 28-day compressive strength of no less than 53 MPa For certain specialized

products, such as pre-stressed concrete and certain pre-cast concrete items requiring high

strength, 53-grade OPC is considered useful as it can produce high- grade concrete at

lower cement content levels. We produce 53-grade OPC by exposing the clinker to the

grinding process for longer period of time, which results in a higher density and stronger

cement.

53-grade OPC is a high strength OPC, and can be used for the following applications:

Pre-cast concrete items such as paving blocks, tiles and building

blocks

Pre-stressed concrete components; and Runways, concrete roads

and bridges

High-rise buildings, Flyovers and Concrete structures where high

grade concrete is normally required.

53-S grade OPC can be used for the following application:

Manufacturing of Railway sleeper

2.9.3 43-grade OPC (IS-8112:1989):

According to the BIS requirements, 43-grade OPC must have a 28-day compressive

strength of no less than 43 MPa.

43-grade OPC is commonly used in the following applications:

General civil engineering construction work including

residential, commercial & Industrial buildings

Roads, Bridges, Flyovers and Irrigation projects

Pre-cast items such as blocks, tiles and pipes

Asbestos products such as sheets and pipes; and

Non-structural works such as plastering and flooring

2.9.4 Portland Slag Cement (IS-455:1989) :

Portland slag cement is manufactured by intergrinding Portland cement clinker, gypsum

and Blust furnace granulated slag. It is also manufactured by blending OPC with ground

Granulated Blast furnace slag through mechanical blending.

Portland Slag Cement is commonly used for the following applications

General civil engineering construction works but mainly preferred for construction of

marine structures and in coastal areas where excessive amount of chloride and sulphate are

present. It can also be used for mass concrete works.

Features of Konark PSC:

It has high ultimate strength with higher rate of gain of strength than normal OPC

available in market.

Lower water demand

Lower Shrinkage

With high compressive strength Konark PSC ensures substantial savings in cement

consumption.

2.9.5 Portland Pozzolana Cement-Fly ash based (IS: 1489 Part-1 – 1991):

Portland Pozzolana cement is manufactured by intergrinding Portland cement clinker,

gypsum and fly ash a by-product of thermal power plants.

Portland Pozzolana Cement is normally used for the following applications:

Useful for general construction works and especially suitable for works in

aggressive environmental conditions, employed for water retaining structures,

marine works, mass concreting such as dams, retaining walls and sewage pipes.

Features of Konark PPC:

It is manufactured with carefully selected particle sizes of pozzolana (Flyash) ideal

for denser and more durable concrete.

It is having low heat of hydration and corresponding resistance to exposure in

various environmental chemicals such as salt water. It is particularly suitable for

marine and hydraulic construction and other mass concrete structures. This cement

has durability that is equivalent to OPC and can be used most of the applications

where OPC is used.

\

2.9.6 Sulphate Resisting Portland cement (IS-12330:1988):

Sulphate resisting portland cement is produced by inter-grinding

special quality of cement clinker and gypsum.

Sulphate Resisting Portland cement is normally used for the

following applications:

Used for underground structures in sulphate-salts rich environment, effluent

treatment plants, sugar and other chemical industries where civil works are likely to

be subjected to sulphate attack which induces stresses in concrete, leading to cracks

and disruption. Being specially formulated cement with lower C3A content SRPC

is free from these sulphate attacks.

Features of Konark SRPC

Konark SRPC with low C3A content and higher strength is ideal cement for laying

foundation of a building in any aggressive environment containing sulphate.

2.9.7 Oil Well Cement Class G Type HSR (IS-8229-1986):

Oil well cement is produced by inter-grinding special quality of cement clinker with very

low C3A prepared in a rotary cement kiln and gypsum. Class G Oil Well Cement is

intended for use as basic well cement for surface 2440m (8000ft.) depth as Manufactured

or can be used with accelerators and retarders to cover a wide range of well depths and

temperature.

Oil Well Cement is used for the following application:

This product is used by the petroleum industry for cementing the steel casing to the walls

of the Oil Wells. The temperature of the wells range from 180º C to 250º C while the

pressure varies from 1300 to 2000 kg/cm2. This cement is specially formulated so that its

slurry remains pump able at this high temperature and pressure for a required length of

time and then hardens rapidly.

2.9.8 Masonry Cement (IS-3466-1988):

Masonry cement is produced by intimately grinding a mixture of Portland cement clinker

with pozzolanic materials or inert materials, and gypsum. It is special cement for exclusive

use in plastering and brick work.

Konark brand masonry cement gives:

Very smooth and super surface finish of the plasters

More plastic mortar mix

Minimum fall of mortar while plastering walls or ceiling

Least wastage of mortar mix hence cost saving

Ease of work (towelling and finishing)

Leak proof plaster

Less water consumption for making mix

More coverage while plastering.

2.10 CUSTOMER SERVICES & SUPPORT

OCL provides SMS service for every transaction made by the Customers, Dealers

SMS in Vogue: OCL provides SMS service for every transaction made by the Customers,

Dealers, with an auto generated SMS sent to their registered mobiles, intimating the

transaction value, Outstanding Balance and Lorry number with time of despatch. Apart

from this Dealers also get direct information about New Offers and Schemes, including

other information related to Target etc.

Unique Dedicated fleet arrangement: To provide assured & timely delivery to esteemed

customers and dealers OCL has made State-of-the-art Dedicated Fleet arrangement, unique

in India and first in Eastern Region. Available in different capacities these fleet of trucks

are centrally tracked with modern Vehicle Tracking Systems (GPS based) to keep track of

the consignment and ensure delivery to desired locations.

Tankers for Cement: To facilitate fast & efficient usage of cement in upcoming Projects

sites, Industries and users of Bulk cement, OCL has supported consumers by chartering

BULK tankers to their services.

OCL Customers’ Web Portal: For entertaining & serving the Net savvy Customers, OCL

provides them the opportunity of ordering cement from the comforts of their homes

through their latest Web-Ordering Portal http://konarkcement.ocl.in

ORGANIZATION CHART

Chart-2.1-organization chart

PRESIDENT

WTD

ED(PRODUCTI

ON)

ED(HR)

ED(MARKETIN

G)

ED(PUBLIC RELATIONS)

ED(FINANCE)

ED(COMMERCIA

L)

SALESHEAD

STATEHEAD

UNIT HEAD

STRATEGIC PLANNER & TRAINNING

BRANDING & ADVERTISEMENT

LOGISTICS

CHAPTER-3

REVIEW OF LITERATURE

REVIEW OF LITERATURE

Marketing is “The management process which identifies anticipates and supplies customer

requirements efficiently and profitably”.

“Marketing is a total system of interesting business activities defined to Plan, piece,

promote and distribution want satisfying products & services to present and potential

consumers”

“Marketing is the performance of business activities that direct the follow of goods and

services from the producer to the consumer or user”

3.1 Achieving high satisfaction in Supplier-dealer working relationships ( Patrik

Jonsson, Mosad Zineldin (2003))

The level of perceived satisfaction is an important measure of an inter-organizational

relationship. Evaluating existing supplier relationships and determining the major factors

that affect satisfaction could lead a manufacturer or dealer to question and change the

method of working with suppliers, resulting in an increase in relationship satisfaction in the

long term. Previous researchers have shown that there is a positive relationship between

cooperation and satisfaction. The cooperative efforts of channel member should result in

greater trust, commitment, channel efficiency and achievement of goals, thus leading to

higher levels of satisfaction. However, situations may exist where the supplier or customer

is forced to cooperate with the other party, despite a lack of trust and commitment.

Gronhaug and Gilly (1991), for example, argue that dissatisfied customers may remain

loyal due to high switching costs. The switching costs could lead to dissatisfaction, but if

the outcomes of the relationship are good, the relationship.

In general, partnerships, alliances, Collaboration, and buyer/supplier relationships have

received much attention during the 1990s. Industry reports of shorter cycle times, fewer

quality defects, reduced costs, and streamlined processes resulting from closer working

relationships with suppliers have suggested a clearer understanding of the major factors

affecting buyer/supplier relationship. Establishing, developing and maintaining long-term

business relationships is usually a very complex process. To establish effective

relationships with suppliers, organizations may use supplier selection criteria (i.e. product

quality, product availability, delivery reliability, and product performance) supplier

involvement in product development activities and mutual continuous improvement effort.

The vital point is that the outcome of a working relationship is a function of a number of

factors or elements. These are:

Communication

Adaptation

Reputation

Coercive power

Non-coercive power

Cooperation

Relationship bonds

Dependency

Relationship benefits

3.2 Attributes of Overall Satisfaction (Alexander Staus, Tilman Becker (2012)):

Research on satisfaction, especially customer satisfaction, is a large field within market

research. Studies have shown that satisfaction might lead to increased loyalty, reduced

price.

Elasticity’s, increased cross-buying, and positive word-of-mouth (Matzler et al., 2004).

Customer satisfaction can be generally defined by the difference between a customer's

expectations and a customer's perceptions. Job satisfaction is similarly defined by Locke

(1976) as a target/actual comparison of expectations and experiences on the job. This

comparison can be a dynamic process, allowing expectations to change. A very famous

satisfaction model is the two-factor model of Herzberg et al. (1959), which was developed

as part of research on job satisfaction. The model distinguishes between the two factors,

satisfiers and dissatisfiers. Dissatisfiers, also called basic factors, hygiene factors or must-

be’s, are minimum requirements, which do not increase satisfaction if fulfilled or exceeded

but do decrease satisfaction if they are not fulfilled. These factors are taken for granted

(e.g., safety of a plane). Satisfiers, also called excitement factors or motivators, increase

satisfaction if they exist or are available, but they do not decrease satisfaction if they are

missing (e.g., added service in a plane or design of the plane). The body of theoretical and

empirical research on customer satisfaction and job satisfaction is very large; Locke (1976)

estimates there to have been around 3,350 articles based on job satisfaction as of 1976.

Some of these studies have established a positive relationship between customer and job

satisfaction.

On the other hand, dealer satisfaction is a relatively new research area.

Dealers are the link between producers and customers and, thus, might play an important

role in the success of producers. On one side, dealers are in direct contact with customers

and are better aware of their needs than the producer. On the other side, dealers are experts

in their supplied products and, thus, have a better knowledge of the quality of the products.

Dealer satisfaction is based on the research on customer and job satisfaction, and it is used

e.g. in the computer and the automobile industry (Decker, 2000; Meinig, 1995). Measuring

the (overall) satisfaction of dealers and detecting the variables (dimensions) that influence

this satisfaction is the main focus of research on dealer satisfaction (Decker, 2000). Several

factors have been detected, depending on the industry, which affect the overall satisfaction

of dealers: Cooperation (Whipple & Gentry, 2000), communication, familiarization,

innovation and quality (Jonsson & Zineldin, 2003; Zineldin, 1998), or relation, service,

accessory and spares (Decker, 2000; Meinig, 1995). For the agricultural machinery

industry, the following five characteristics are important for the purchasing decision of

agricultural machinery in Britain from the customers' perspective (Walley et al., 2007):

brand, price, dealer’s proximity, quality of dealer service and the experience of the buyer

with the dealer.

In three out of these five characteristics, dealers play an important role for the customer.

Also, in Germany, dealers are more important than the brand or the price according to

customers buying agricultural machinery (Top Agrar, 2005, 2008); satisfied dealers may

lead to satisfied customers, and unsatisfied dealers may negatively affect customers'

satisfaction.

3.3 Dealer satisfaction and its significance (Wolfgang Meinig(1998)):

Considering the fact that the way in which a dealer is treated by its manufacturer has

decisive influence on the dealer's commitment to the brand as well as on the dealer's

business success, an examination of dealer satisfaction or dissatisfaction has become

strikingly important during the last few years. For this purpose a questionnaire has been

developed by the Forschungsstelle Automobilwirtschaft (FAW), Bamberg with the aim to

assess the Dealer Satisfaction Index (OSI). The main objective of this questionnaire is to

evaluate the significance of various factors with regard to business success for all brands

and dealerships, and to provide a profound result concerning satisfaction or dissatisfaction

of all dealers with their brand. Since its start in 1995, the OSI has gained increasing

importance throughout both trade and industry. With regard to the development the dealer

satisfaction has undergone since 1995, it is highly remarkable that the dissatisfaction still

persisting in 1996 did not continue in 1997. The overall satisfaction has increased

markedly.

A social and managerial process, by which individuals and groups obtain what they need

and want, through creating and exchanging product and value with others.

Customer satisfaction begins with a difficult faith; it starts with a commitment to deliver

the result for each customer which is also a concern of the dealers. Hence for a

manufacturing company, in order to satisfy its customers, it is highly important to satisfy

its dealers, as they are the direct customers to them. Establishing satisfaction as the

ultimate goal is like the other ultimate goals of business pursuit of higher profits or

shareholders wealth. Perfect dealer service or satisfaction is one that meets the combined

need satisfaction is a systemized service that involves the entire organization.

But many organizations have yet to develop this kind of awareness of dealer satisfaction

strategy.

Dealer is a person or firm engaged in commercial purchase and sale. Dealer may signify

firms that buy or resell products at retail or wholesale basis. A producer cannot sell all his

products directly to consumer; he has to depend upon intermediaries to push, off, his

products. A dealer is an intermediary who helps to market a product. A dealer is one who

purchase and sells products. A dealer may be a wholesaler or a retailer or a distributor or

any agents.

The volume of sales depends on the efficiency of a dealer who assesses the psychology of

consumers and takes appropriate steps to sell a product. It is the dealer who suggests to the

manufacturers the suitable media of advertisement and other promotional tools. Dealers are

searching for new marketing strategies to attract and hold customers. Dealers include all

activities involved in selling goods and services to those buying for resale or business use.

Dealers buy mostly producers and sell mostly to retailers or industrial consumers.

3.4 DEALER SATISFACTION

Dealer Satisfaction begins with the following specific assumptions about company’s

relationship with the customers.

1. The dealer service activities focus mainly on existing dealers.

2. Some dealers are more important than others

3. They are the assets.

4. The dealer is always specific.

The dealer needs and value should influence every aspect of the organization strategy,

employee safety and performance, product and organization strategy, employee safety and

performance, product and service development, sales and marketing programs, operational

procedures and information and measurement system.

Understanding the dealer is critical to the success of any customer focus initiative, the first

step in understanding the dealers is to listen to them.

A company needs to hear what its dealers are saying about its people, product service and

vision. Their information helps to develop meaningful product and service.

Organizations need to listen to their dealer satisfied, dissatisfied neutral and prospective.

As one company executive said, “talking to a satisfied customer is talking to me”. In the

past, dealer satisfaction and service was the responsibility of a separate organization that

supported the dealer primarily after the sale.

Today, service is also likely to be interested with the every product accompany offers.

High dealer satisfaction comes from providing effective services. But giving that service is

a continuous activity. It means being efficient, reliable, courteous, curing and professional

every time.

Marketing is a communication process that has the purpose of individuals or

groups - that are directly or indirectly able to purchase - aware of products and services

that may satisfy their existing or newly-identified needs and wants.

The Chartered Institute of Marketing, which is the world's largest marketing body,

defines marketing as "The management process responsible for identifying,

anticipating and satisfying customer requirements profitably."

3.4.1 Dealer

Any person who carries on business in purchasing, selling, supplying or

distributing goods and also includes works contractor, company, Co-operative Society,

Broker, Commission Agent, Auctioneer or any other mercantile Agent for the

consideration of cash, commission and deferred payment.

There are two types of dealer such as:

1) Registered dealer.

2) Casual dealer

Dealer wants high marginal gain from manufacturers. The main objective of dealership is

earning profits. Dealership business is different from other business. The peculiar feature

of a dealer is dealing with one or more similar products. Dealers earn profit for goods sold

from the manufacturers. The profit depends upon the value of sales both cash and credit.

Now a days the demand for cement increases every year.

The manufacturers are not able to cover all the consumers directly. With the help of dealers

only they can reach the consumers. Dealer accepts income from business because there is

some guarantee of getting more profit from this business. Dealers demand more

commission from the manufactures; they cover the entire market within their locality. They

also sell cement in credit to regular customer.

3.4.2 PROMPT DELIVERY

For every business competition is inevitable, Knowledge, about the direct, reasonable

price, prompt delivery etc., are the only ways in which one can attract more consumers.

Delivery of every goods to the place of consumers will attract every consumer. When there

is a delay a small delay of one or two days or even hours may cause a great set back in

consumer satisfaction. There are various ways we can satisfy the consumers. One among

them is a regular supply and prompts delivery of goods to customers. Even though quality

is excellent and the price is reasonable we cannot satisfy the consumers, unless there is

prompt delivery of goods.

3.4.3 IMMEDIATE REALIZATION OF PROFIT AFTER SALES

Dealers will get their profit after sales. There are many promotional schemes offered by the

company to motivate the dealers to increase the sales volume by giving gifts like, gold

coins, tours, annual incentive, award programs etc. This type of motivation helps company

to increase their sales volume.

3.4.4 CRM ACTIVITIES FROM THE COMPANY

Under CRM activities company use to organise different type of programmes to create

goodwill in mind of customers by organising Manson meetings, P.O.P items, and gift

coupons etc. So that they can realize that they are valuable customers for the company.

3.4.5 GIFTS FROM THE COMPANY

Some reputed companies will provide a number of gifts to its dealers and

distributors. Their gifts are allowed to improved sales in all areas. Dealers will be

much motivated when gifts are offered by manufactures. Gifts are a special kind of

incentives, which will pursue the dealers to increase their sales.

The main objectives of offering gifts to dealer and distributors are to enhance or

improve sales to the maximum level. The competition can be easily managed when

gifts are offered to dealer; the number of types of gifts is as follows.

Value of sales in Rupees.

Value of sales in units

Seasonal gifts.

3.5 Brand

A brand is a name or trademark connected with a product or producer. Brands have

become increasingly important components of culture and the economy, now being

described as "cultural accessories and personal philosophies

3.5.1 Brand identity

A product identity, or brand image are typically the attributes one associates with a

brand, how the brand owner wants the consumer to perceive the brand - and by extension

the branded company, organization, product or service. The brand owner will seek to

bridge the gap between the brand image and the brand identity. Effective brand names

build a connection between the brand personalities as it is perceived by the target audience

and the actual product/service. The brand name should be conceptually on target with the

product/service (what the company stands for). Furthermore, the brand name should be on

target with the brand demographic. Typically, sustainable brand names are easy to

remember, transcend trends and have positive connotations. Brand identity is fundamental

to consumer recognition and symbolizes the brand's differentiation from competitors.

Brand identity is what the owner wants to communicate to its potential consumers.

However, over time, a products brand identity may acquire (evolve), gaining new attributes

from consumer perspective but not necessarily from the marketing communications an

owner percolates to targeted consumers. Therefore, brand associations become handy to

check the consumer's perception of the brand.

3.5.2 Brand Image

Brand Image is not something you have or you don't! A brand is unlikely to have

one brand image, but several, though one or two may predominate. The key in brand image

research is to identify or develop the most powerful images and reinforce them through

subsequent brand communications. The term "brand image" gained popularity as evidence

began to grow that the feelings and images associated with a brand were powerful purchase

influencers, though brand recognition, recall and brand identity. It is based on the

proposition that consumers buy not only a product (commodity), but also the image

associations of the product, such as power, wealth, sophistication, and most importantly

identification and association with other users of the brand. In a consumer led world,

people tend to define themselves and their Jungian "persona" by their possessions.

According to Sigmund Freud, the ego and superego control to a large extent the image and

personality that people would like others to have of them.Good brand images are instantly

evoked, are positive, and are almost always unique among competitive brands.

Brand image can be reinforced by brand communications such as packaging, advertising,

promotion, customer service, word-of-mouth and other aspects of the brand experience.

Brand images are usually evoked by asking consumers the first words/images that come to

their mind when a certain brand is mentioned (sometimes called "top of mind"). When

responses are highly variable, non-forthcoming, or refer to non-image attributes such as

cost, it is an indicator of a weak brand image.

CHAPTER-4

OBJECTIVESAND

SCOPE OF THE PROJECT

4.1 NEED OF STUDY:

To study the level of dealer’s satisfaction towards OCL cements regarding

promotional activities, Supply, quality and quantity of cement and to know

demand level of OCL cements in the market by the Dealers & consumers.

4.2 OBJECTIVE OF THE STUDY

To study the level of dealer’s satisfaction on OCL Cement under Bhubneshwar

Region.

To assess the effectiveness of promotional tools to improve the sales.

To analyze the factors that affects the dealer’s preference in dealing with cement.

To understand the strength and weakness of OCL Cement distribution.

Objective-1- level of dealer’s satisfaction on OCL Cement

This objective helps to understand up to what extend dealers are satisfied and what is the

factors affecting them for their satisfaction and dissatisfaction. This is taken into

consideration because OCL cement had made a survey for their dealer’s satisfaction and

result was dealers are not satisfied with OCL cement. So for further implication I have

taken objective that what are the factors which satisfies the dealers most and made a

comparison that was provided by the OCL cement to their dealer’s and also with their

competitors.

Objective-2- Effectiveness of promotional tools to improve the sales

This objective helps to understand the promotional tool used by the company and up to

what extend it is benefiting to the company or any new strategy had to be used to make

promotion more effective and to measure the depth of promotion so to decide what next

can improve the sales of the company. By which promotional tool dealers can be satisfied

and attract more number of market shares to stay ahead from the competitors.

Objective-3- Factors that affects the dealer’s preference in dealing with cement.

This objective helps to understand what are the different factors affects to the dealers for

dealing with the product and what make them more satisfied on dealer and suppliers side.

Objective-4- SWOT Analysis

A SWOT analysis is an analysis of the strengths and weaknesses of your business, the

opportunities and threats it faces and how these factors influence your business.

4.3 SCOPE OF THE STUDY:

The study is confined on the selected dealers in Bhubneshwar region.

To know the dealer’s satisfactory levels with quality, supply, packing, service of

OCL Cements and promotional activities by the company.

The study enables to know the expectation of the dealers and consequently the

customers.

The project highlights the scope for future improvements on the basis of present

scale.

The study can help in analyzing certain weak point, improving on which a company

can overcome the low sales of its cement but only in Bhubaneshwar region

CHAPTER-5

RESEARCH METHODOLOGY

5.1 RESEARCH METHODOLOGY

Project Research Type Descriptive Research

Data Sources Primary Data , Secondary Data

Research Approach Survey Method

Research Instrument Questionnaire

Data Analysis Logical analysis

Sampling Procedure Random Sampling

Sample Size 150 Respondents

Geographical Coverage Bhubneshwar

Duration of the Survey 60 days

5.1.1 DATA COLLECTION:

The descriptive nature of research necessitates collection of primary data from Dealers

through market survey, personal interview technique was used and interview was

conducted through structured questionnaire the question was asked in prearranged

manner. The market research was conducted over a period of 30 days. Data was

tabulated, analyzed and suggestion and recommendation were given.

5.1.2 DESCRIPTIVE RESEARCH:

Descriptive studies, as their name implies, are designed to describe something, for

example, the characteristics of users of a given product; the degree to which product use

varies with income, age or other characteristics: or the number who saw a specific

television commercial. A majority of marketing research studies are of this type.

5.1.3 RESEARCH INSTRUMENTS:

The Research instrument chosen for conducting the survey was structured questionnaire

was prepared as show as in the annexure. The questionnaire includes open ended as well as

close ended question, few open ended question were included to obtain the perception of

the Dealers. The questionnaire designed and a pilot survey was made with the

questionnaire and then changes were made accordingly with the questionnaire.

5.1.4 SAMPLE PLAN:

A sampling technique was chosen for the study was Random Sampling Technique. This is

the most common method of selecting the sample. This is because the Dealers are localized

in different part of the marker a group of Dealers are chosen randomly from large group. It

gives all Dealers in a group and equal chance of being selected for the purpose of the

survey.

5.1.5 SAMPLE SIZE:

Out of nearly 200 Dealers and sub-dealers in cement market of Bhubaneshwar and its

region around randomly 75% of total population was considered as the sample size.

5.1.6 CONTACT METHOD:

Both personal interview methods were used for conducting the market survey. Personal

interview had the benefit one to one communication between the researcher and the

respondent. If the respondent is having any doubt or queries in their mind, they can get

their doubts clarified from the researcher on the spot and so superior of data was collected

from the survey was collected from the survey.

5.2 ANALYSIS AND INFORMATION:

Detailed information was collected for the project marker survey for marketing and sales

promotion activities of Konark Cement for the area of Bhubaneshawar market. The

information was collected by visiting the retailers of cement present in Bhubaneshawar

market. The interview of retailer taken in a friendly atmosphere so as to encourage them to

give right information, without any hesitation.

5.2.1 ANALYSIS:

The analysis of the collection information was made in scientific manner. Different manner

rank was given to each alternative of particular questions, in the questionnaire. A particular

rank was given in the following manner,

Rank- 1(5 points): for the most favourable alternative

Rank- 2(4 points): for the moderately favourable alternative

Rank- 3(3 points): for unfavourable alternative

Rank- 4(2 points): for most unfavourable alternative

Rank- 5(1 point): Unfavourable

To come at the conclusion, total of each alternative of all the sample size Dealers was

made. Thus the “sum of an alternative” having least score considered to be most

favourable. In this manner, result is prepared for various important parameters of the

survey. With the help of results so obtained, the findings are recorded in the form of

graphs. The market of cement Changes as the area changes. The demand for particular

cement for particular cement is much less. This is because of the crazier Trend of particular

market. Thus the demand for the cement is not that price sensitive. Price is not the criterion

for selection of rejection of particular brand is adapted on the type of application of cement

and the brand name in market. Thus the awareness among the customers about the

particular cement plays a vital role. The major types of customers are the builders and

masons. The individual customers are there, but their demand is not more. The customers

are ready to give slightly high price, but he wants quality cement. The customer perceives

quality of cement as good quality because of effective marketing. So effective marketing is

necessary.

The Dealer in the marker plays an important role in the sale of the cement. They have some

expectation from the cement companies; they expected credit facility, good sales

promotion schemes, and timely delivery of cement, etc among the plastic bag and paper

bag of cement, Customer prefer bag. This is because the paper bag prevents it from

moisture and quantity remains intact. In brief cement market is sensitive to marketing. The

better & more the marketing the more is possibility of sales. The observations and findings

of the market survey about market share and sales promotion activities are given at the

next stage, in the report.

5.3 STATISTICAL TOOLS

Percentage

Weighted average

There are briefly explained, in following

5.3.1 PERCENTAGE

Percentage refers to special kind of ratio percentage are used in marketing Comparison

between two more series of data. Percentage is used to describe relationship. Since the

percentage reduce everything to a common base & these by allow meaningful comparison

to be made.

5.3.2 WEIGHTED AVERAGE

If something is distribution is more important than order, then their point must be born in

mind, in order that average completed is representatives of the distribution. In such case

proper weight age is to be given to various items the weight attached to each item being

professional to the importance of the item to be the distribution.

Formula

Average weight = Total weight ×100

Total no. Of respondents

5.4 LIMITATIONS

Lack of cooperation from the dealers and sub-dealers in regard to giving interview.

As they dosen’t understands the importance of survey.

It was found in some cases dealers showed inclination towards certain brands

which gave them more margins when compared to others.

As the sub-dealers and dealers thought that it was unwise for that to give their

details of business as they feared competitors would take advantage.

CHAPTER-6

ANALYSIS & INTERPRETATION

6.1 Nature of shop.

Interpretation:This show that wholesale is less and retail is more from dealers counter also.

6.2. Quantity of cement sold by the dealers per month.

Interpretation:This shows that maximum dealer’s sales are more than 200 tons per month.

6.3. Number of years in this business.

Experience No. Of dealers

>5yrs 18

6-15yrs 90

<15yrs 42

Total 150

TABLE-6.1

TABLE-6.2

TABLE-6.3

CHART-6.1

CHART-6.2

CHART-6.3

12%

60%

28%

>5yrs 6-15yrs <15 yrs

>50 tons8%

50-100 tons26%

100-200 tons16%

200-400tons50%

retail82%

whole sale18%

Nature No. of dealers

Retail 123

Wholesale 27

Total 150

Quantity No. of dealers

>50tons 12

50-100tons 39

100-200tons 24

200-400tons 75

Total 150

6.4. Highest selling brand from counter (customer pull)?

Interpretation:This analysis shows that konark & Lafarge cements are the most preferable brand among

the customers .Maha & Ramco are the brands selected by the customers & dealers because

of its low price and more profit.

Factors LAFARGE KONARK AMBUJA BIRLA ACC ULTRATECH

RAMCO JYPEE

RASI MAHA

Quality 75 79 25 0 20 25 5 10 4Price 65 78 23 0 20 22 5 10 4Brand Image

73 79 24 0 20 24 5 10 3

Margin 61 71 21 0 18 22 5 8 5Customer Demand

75 80 21 0 19 24 5 10 4

6.5. Rank the factors affecting the highest selling brand (Dealers perception)

CHART-6.4

TABLE-6.5

LAFARGE26%

KONARK28%

AMBUJA4%

BIRLA1%

ACC11%

ULTRATECH18%

RAMCO4%

JYPEE2%

RASI1%

MAHA6%

Brands Tonnes/month

LAFARGE 6400

KONARK 7625

AMBUJA 2470BIRLA 790ACC 4420ULTRATECH 6280RAMCO 2540JAYPEE 2220RASI 180MAHA 2740

TABLE-6.4

CHART-6.5LAFARGE

31%

KONARK33%

AMBUJA10%

ACC8%

ULTRATECH10%

RAMCO2%

JYPEE4%

MAHA2%

Quality Perception

CHART-6.6 CHART-6.7

LAFARGE32%

KONARK34%

AMBUJA9%

ACC8%

ULTRATECH10%

RAMCO2%

JYPEE4% MAHA

2%

Customer Demand perception

LAFARGE32%

KONARK28%

AMBUJA10%

ACC8%

ULTRATECH14%

RAMCO2%

JYPEE4%

MAHA2%

Margin perception

LAFARGE29%

KONARK34%

AMBUJA10%

ACC9%

ULTRATECH10%

RAMCO2%

JYPEE4% MAHA

2%

Price perception

LAFARGE31%

KONARK33%

AMBUJA10%

ACC8%

ULTRATECH10%

RAMCO2%

JYPEE4%

MAHA1%

Brand Image perception

Interpretation:

This analysis shows that Konark cement is highest selling brand in terms of Quality, price

which increased its brand image and customer demand but profit margin is less as compare

to Lafarge.

CHART-6.8 CHART-6.9

6.6. Recommendations made by the dealers.

Interpretation:

In this analysis konark cement is most preferable brand among dealers .About 30% of

dealers prefer konark cement due to its Quality, packaging and customer demand.

6.7. The frequency of personal visits by sales officer for inspiration and support?

Interpretation:

This analysis shows that personal visits by marketing people is most on konark cement for

support and the new brands like Maha, Rasi, Ramco are now capturing market by

increasing support to the dealers and also providing different types of schemes.

CHART-6.10

CHART-6.11

LAFARGE20%

KONARK28%

AMBUJA3%

ACC10%

ULTRATECH20%

RAMCO4%

JYPEE6%

RASI1% MAHA

7%

LAFARGE25%

KONARK30%

AMBUJA4%

BIRLA0%

ACC8%

ULTRATECH22%

RAMCO3%

JYPEE3%

RASI0%

MAHA5%Brands Preferen

ce LAFARGE 30

KONARK 36

AMBUJA 3BIRLA 0ACC 9ULTRATECH 24RAMCO 3JAYPEE 3RASI 0MAHA 6

TABLE-6.6

Brands Support LAFARGE 24

KONARK 36

AMBUJA 3BIRLA 0ACC 12

ULTRATECH 24

RAMCO 6

JAYPEE 6RASI 3MAHA 9

TABLE-6.7

6.8. The credit (in days) enjoyed by the bands.

Interpretation:In this analysis no company is providing credit days rather than they provide credit limit. And the dealers use pay and take relationship with cement companies.

6.9. The Profit margin got by selling the brands (Cash)?

Interpretation:

The analysis shows that all low price brands like, Maha,Rasi,Ramco give more profit

margin as compare to big brands like, Konark,Lafarge,Ultratech,Acc. The profit margin

given by big brands vary between Rs 8-13.Maha is giving margin about Rs 16 and some

hidden gifts are also there.

6.10. On the basis of their availability throughout the year mainly on seasons.

CHART-6.12

LAFARGE25%

KONARK33%

AMBUJA3%

BIRLA0%

ACC6%

ULTRATECH18%

RAMCO2%

JYPEE3% MAHA

10%

LAFARGE9%

KONARK9%

AMBUJA10%

BIRLA8%

ACC10%

ULTRATECH8%

RAMCO12%

JYPEE10%

RASI11%

MAHA13%

Brands Profit margin(Rs.)

LAFARGE 10

KONARK 11

AMBUJA 12

BIRLA 10

ACC 12

ULTRATECH 10

RAMCO 15

JAYPEE 12

RASI 14

MAHA 16

TABLE-6.8

Brands Availability

LAFARGE 27

KONARK 39

AMBUJA 3

BIRLA 0

ACC 6

ULTRATECH 21

RAMCO 3

JAYPEE 3

RASI 0

MAHA 12

TABLE-6.9

Interpretation:

This analysis shows that konark and Lafarge is mostly available on sessions. It’s because

as per necessary the trucks are easily diverted from depot and also the factories are nearer

to bhubneshwar.

6.11. Most effective advertisement activities done by which brand (rank them).

Interpretation:The analysis show that 34% of dealers say that konark cement is having effective promotional activities and then Lafarge, ultratech, Acc but Maha is also now coming up with better promotional activities.

6.12. Brand wise ranking for all activity (Appreciation by Dealer)?

sales promotion

LAFARGE KONARK AMBUJA BIRLA ACC ULTRATECH RAMCO JYPEE

RASI MAHA

Dealer meet 12 13 6 1 8 10 1 7 2Tour 15 13 4 8 12 1 5 2

Get together 16 15 3 7 9 4

Special schemes

15 16 4 7 10 1 3 4

Award programs

11 12 3 10 9 4 1

Advertisement 10 14 4 7 9 1 2 3

Incentive Schemes

13 14 5 7 7 3 5

CHART-6.13

CHART-6.14

LAFARGE22%

KONARK34%

AMBUJA4%

ACC10%

ULTRATECH21%

RAMCO1%

JYPEE3% MAHA

4%

Brands Preference

LAFARGE 24

KONARK 39

AMBUJA 6

BIRLA 0

ACC 12

ULTRATECH 24

RAMCO 0

JAYPEE 3

RASI 0

MAHA 3

TABLE-6.10

CRM Activities 16 13 4 8 13 3 1

TABLE-6.11

CHART-6.15CHART-6.16

CHART-6.17 CHART-6.18

LAFARGE30%

KONARK28%

AMBUJA6%

ACC13%

ULTRATECH17%

JYPEE7%

Get together

LAFARGE25%

KONARK27%

AMBUJA7%

ACC12%

ULTRATECH17%

RAMCO2%

JYPEE5% MAHA

7%

Special schemes

Appreciation by dealers

LAFARGE21%

KONARK22%

AMBUJA10%

BIRLA2%

ACC14%

ULTRATECH17%

RAMCO2% JYPEE

9%

MAHA3%

Dealer meet

LAFARGE25%

KONARK22%

AMBUJA7%

ACC13%

ULTRATECH20%

RAMCO2%

JYPEE8%

MAHA3%

Tour

Interpretation:

The analysis shows that konark cement is good in all but

some of the activities like, tour, get together and CRM

activities are good on Lafarge cement.

6.13. Packaging Quality of brands compared based on HDPE bags (customer preference)?

CHART-6.20

LAFARGE28%

KONARK22%

AMBUJA7%

ACC14%

ULTRATECH22%

JYPEE5%

MAHA2%

CRM Activities

LAFARGE24%

KONARK26%

AMBUJA9%

ACC13%

ULTRATECH13%

JYPEE6%

MAHA9%

Incentive Schemes

CHART-6.19

LAFARGE22%

KONARK24%

AMBUJA6%

ACC20%

ULTRATECH18%

JYPEE8%

MAHA2%

Award programs

LAFARGE20%

KONARK28%

AMBUJA8%

ACC14%

ULTRATECH18%

RAMCO2%

JYPEE4%MAHA

6%

Advertisement

Brands QualityLAFARGE 24

KONARK 39

AMBUJA 6

BIRLA 0

ACC 12

ULTRATECH 21

RAMCO 3

JAYPEE 3

RASI 0

MAHA 6

TABLE-6.12

Interpretation:

This analysis shows that konark is having the highest percentage in terms of packaging

quality about 35% and next good packaging brands are Lafarge and Ultratech which is

having 22% and 18%. But in case of LP packing’s ACC F2R is on top most followed by

Lafarge concerto.

LAFARGE22%

KONARK35%

AMBUJA5%

ACC10%

ULTRATECH18%

RAMCO2%

JYPEE3%

RASI0%

MAHA4%

CHART-6.23

6.14. Quick delivery system?

Interpretation:

This analysis shows that konark is delivering faster and then Lafarge because there

stockyard is nearer than any other brand on market.

6.15. Rank the brands which satisfy most on damage claim settlement?

Interpretation:

This analysis shows that Lafarge and Ultratech give damage claim settlement faster than

other brands which is about 14%.

6.16. Small quantity supply directly to customer’s faster (100 bags)?

LAFARGE29%

KONARK24%

AMBUJA5%

ACC9%

ULTRATECH19%

RAMCO2%

JYPEE3%

RASI1%

MAHA8%

LAFARGE26%

KONARK30%

AMBUJA3%

ACC7%

ULTRATECH21%

RAMCO2%

JYPEE2%

RASI1%

MAHA7%

CHART-6.24

Brands Preference

LAFARGE 33

KONARK 36

AMBUJA 3

BIRLA 0

ACC 9

ULTRATECH 24

RAMCO 3

JAYPEE 3

RASI 3

MAHA 9

TABLE-6.13

Brands Preference

LAFARGE 36

KONARK 27

AMBUJA 6

BIRLA 0

ACC 12

ULTRATECH 21

RAMCO 3

JAYPEE 3

RASI 3

MAHA 9

TABLE-6.14

Interpretation:

This analysis shows nearly about all big brands give faster delivery service to customers.

After placing order with in 36hrs the order is delivered to customer. Konark is faster

because factory is nearby bhubneshwar if less amount of cement is available on depot then

they arrange it from factory. Ultratech sometimes gives slower service because on seasons

the stock is less on depot.

6.17. The incentive schemes which satisfy dealer most eg: gold, tour etc.?

Interpretation:

CHART-6.27

LAFARGE26%

KONARK27%

AMBUJA5%

BIRLA1%

ACC10%

ULTRATECH22%

RAMCO2%

JYPEE2%

MAHA6%

LAFARGE21%

KONARK24%

AMBUJA6%

ACC9%

ULTRATECH17%

RAMCO6%

JYPEE2%

RASI1%

MAHA15%

Brands Preference

LAFARGE 30

KONARK 30

AMBUJA 6

BIRLA 3

ACC 12

ULTRATECH 24

RAMCO 3

JAYPEE 3

RASI 0

MAHA 6

TABLE-6.15

Brands Incentive

LAFARGE 24

KONARK 27

AMBUJA 6

BIRLA 0

ACC 9

ULTRATECH 18

RAMCO 6

JAYPEE 1

RASI 0

MAHA 18

TABLE-6.16

This analysis shows that konark give good incentive schemes to dealers. Where new

entrants maha, rasi and ramco are giving very lucrative incentive schemes to capture the

market and increase their sales volume.

6.18. Timely distribution of informative test certificates and brochures for customers given by which brand (rank them).

Interpretation:This analysis shows that konark, Lafarge & Ultratech give periodic information to the customers and dealers.

6.19. The effective technical services team relating IHB visit, brand conversation ability and under win-win situation (rank them)?

Interpretation:

LAFARGE27%

KONARK19%

AMBUJA6%

ACC11%

ULTRATECH32%

JYPEE2% MAHA

3%

CHART-6.29

LAFARGE26%

KONARK26%

AMBUJA6%

ACC8%

ULTRATECH25%

RAMCO1%

JYPEE4%

MAHA6%Brands Preferen

ce LAFARGE 30

KONARK 30

AMBUJA 6

BIRLA 0

ACC 9

ULTRATECH 27

RAMCO 0

JAYPEE 3

RASI 0

MAHA 6

TABLE-6.17

Brands Preference

LAFARGE 27

KONARK 18

AMBUJA 6

BIRLA 0

ACC 12

ULTRATECH 33

RAMCO 0

JAYPEE 3

RASI 0

MAHA 3

TABLE-6.18

Lafarge and Ultratech is having effective technical services team about 32% & 27% of

customer and dealers use the benefit of technical services provided by the brands. Ultratech

and Lafarge also provide mobile van for assistance of technical services.

6.20. Quarry handling service provided by the company to the customer that satisfies most

(Rank them).

Interpretation:

After Quarry handling services provided by Lafarge is very good. Ultratech and konark

also handle quarry better and help the dealers and customers to clarify their problem.

TABLE-6.19

LAFARGE28%

KONARK23%

AMBUJA5%

ACC10%

ULTRATECH23%

RAMCO2%

JYPEE3%

MAHA5%

CHART-6.30

Brands After sales

LAFARGE 33

KONARK 27

AMBUJA 6

BIRLA 0

ACC 12

ULTRATECH 27

RAMCO 3

JAYPEE 3

RASI 0

MAHA 6

CHAPTER-7

PROJECT FINDINGS

7.1 SWOT Analysis

STRENGTH

Bargaining power of the supplier is high because of few best sellers like: Lafarge,

Acc ,Ultratech.

Good brand image.

Best quality product.

On time delivery.

Value for money.

Regular visit by sales officer.

WEAKNESS

High dependence on imported coal.

Need to better sales promotion.

Lack on technical services.

Lack on handling customer complaint.

Lack on handling damage claim settlement.

The major concern for the industry are :

Continuous increase in labour cost.

Shortage of skilled labourers.

Royalty for limestone mines is limited.

OPPORTUNITIES

Cement demand increases as the economy grows.

Increase on infrastructure development by the Indian government ex. BDA.

Increase in demand for housing development like housing development.

Despite slightly lower economic growth, the construction and infrastructure sector

is expected to record healthy growth, which augurs well for cement industry.

The modernization and productivity improvement leads to growth on cement

industry.

THREATS

Regulatory tightening for quarrying of limestone over environment issues.

From the new entrant cement companies Like: Maha, Ramco, Rasi who offers low

price and high margin.

Production may be lower due to increase in price, freight, coal, and diesel.

7.2 FINDINGS

It can be concluded from the study that konark Cement has a good brand image in the

dealers mind in Bhubneshwar. The company lack on technical services which can be

improved by increasing efficiency level of technical team.

82% of dealers use to retailer.

50% of respondent’s monthly sales turnover is more than 200 tonnes.

60% of respondents having experience between 6-15 years.

Konark Cement is the highest selling brand from counter and dealers also

recommend konark cement to the customer.

Personal visits by the sales officer of the company to support the dealers is very

good but in some sub-dealers counters less frequency of visits made by sales

officer.

Earlier company was not doing any promotion activity but after doing the

promotions the brands image is increasing in front of dealer and customer which is

strengthening the companies brand image.

Quality and packaging is very good but some of the dealers want the packaging

should by LP packaging which will be ecofriendly and good packaging looks

attractive to the customers.

The company is providing on time damage claim settlement though in some cases

company is slow on damage claim settlement.

Incentive schemes of the company is good but schemes should me more due to cut

trough competition in the market by the new entrants like, maha, rasi, & ramco.

The technical service team is good but the team should be more efficient for better

market hold on future.

At par with Lafarge on quarry handling services should be more efficient.

7.3 SUGGESTION AND RECOMMENDATIONS

I would humbly suggest the company that to improve the quality of cement on

Kapilash Cement Works division as suggested by dealers. By increasing more

advertisement, regular contact, marketing experts dealing with dealers in all rural

and urban areas. The company can improve their market shares, brand loyalty and

promote their sales easily.

For customer care Services and technical services Company should start its

concrete mobile van facilities.

Non-Trade entry is growing rapidly so company should improve supply to capture

maximum market share.

Company should start its internal call centre for its valuable customers by which

they can directly interact with company experts.

Company can increase society welfare programs in rural area. By this company can

enhance goodwill among people for future.

By giving some gifts and best wishes cards to the customer that your buying

decision is very good. Company can show that they are important to company.

Company should organize seminars, conferences, contractors meetings time to

time.

7.4 SUGGESTION FROM DEALERS

A Price fluctuation creates problems for dealers and sub-dealers as they cannot

keep the commitments of price to customers.

On interviewing Dealers/sub-dealers the most important thing they said was about

the price flexibility, they want that the company should give them the price

flexibility to play in the market.

The packaging should be LP bags which give the product more safety and

The profit margin should be increased so that they can get more profit on selling

the items.

7.5 FURTHER SCOPE AND LIMITATIONS

7.5.1 SCOPE OF THE STUDY

Other than the objectives of the study some of the related factors were also covered in

which some of them are.

Fast moving brand of cement

Dealers opinion on price fluctuation

Opinion about promotional support

Technical Support

Customer survey.

Branding of cement.

These factors are given more importance while analyzing the market. Since the future

phase was to be adopted after finding out the important factors relating to this market,

sincere attempt is made to elicit the above information’s.

7.5.2 LIMITATIONS OF THE STUDY

The study was carried out in Bhubneshwar only, owing to time and cost limitations.

Simple size which limited to 50 due to time and cost constrains it can be increased.

This research was conducted among dealers and sub-dealers only for obtaining

consumer response and dealer response; further survey among users of cement is

suggested.

CHAPTER-8

CONCLUSION

CONCLUSION

To attain the objective of the project detailed information was collected from the market of

Bhubaneshwar. The market research has revealed many facts and figures about the current

scenario in the market prevailing.

In the market, Konark cement is well known brand of cement. This is the result of the good

quality of the Konark cement along with their effective marketing efforts, which covers the

whole market. Customers of Lafarge cement are highly satisfied with the Quality,

packaging, services, promotion etc. as they do not face any problem after using it. There

are ten major players in the market but the major completion is between the three brands of

cement konark, Lafarge, Ultratech. Were Ultratech is also providing good quality of

cement and services to the dealers and customers. Because of good marketing efforts,

Konark cement is able to grasp some share of various other brands also.

The market survey undertaken shows that effective marketing efforts play a vital role in

creating the goodwill for the brand. The distribution channel of cement industry must be

well designed and made effective this ensures timely availability of cement to customers.

Good marketing creates good image i.e. brand building. From the study it can be

concluded that the overall satisfaction for Konark cement in good .Konark cement stands

best a quality. Dealers are satisfied as per quality, channel of distribution, dealer sales

support etc. But dealers are not satisfied on profit margin given by the company and also

by the incentive schemes and technical support provided by the company.

BIBLOGRAPHY

Kotler, Philip “Marketing Management” published by Vikas publishing house Pvt.

ltd. New Delhi.

Kothari, C. R. “Research Methodology” (third edition 2007) published by new age

international (P) ltd.

“CMA Magazine (Cement Manufacturers Association)”.

Aaker, D.A. and Shansby, J. (1982) “Positioning your Product,” Business Horizons,

25, (May/June), 56-62.

Alden, D. L., Steenkamp, J. B. E. M. and Batra, R. (1999) “Brand Positioning

through Advertising in Asia, North America, and Europe: The Role of Global

Consumer Culture,” Journal of Marketing, 63 (January), 75-87.

Best, R.J. (2004) Market-Based Management: Strategies for Growing Customer

Value and Profitability, 3rd Edition, Upper Saddle River, NJ, Prentice-Hall, 246-

267.

Bhat, S. and Reddy, S. K. (1998) “Symbolic and Functional Positioning of

Brands,”Journal of Consumer Marketing 15, (1), 32-43.

Blankson, C. and Kalafatis, S. P. (2001) “The Development of a

Consumer/Customer- Derived Generic Typology of Positioning Strategies,”

Journal of Marketing Theory and Practice, 9 (2), (Spring), 35-53.

Crawford, C. M. (1985) “A New Positioning Typology,” Journal of Product

Innovation Management, 4 243-253.

News Papers

Times of India

Hindustan Times

Economic Times

Web Based References

http://www.oclindia.com

http://www.cma.com

http://www.scribd.com

http://www.amzon.com

http://www.wikipedia.com

http://www.wikipedia.com/

http://www.amzon.com/

http://www.scribd.com/

http://www.cma.com/

http://www.oclindia.com/

ANNEXURES-4

QUESTIONNAIRE

“DEALER SATISFACTION ON CEMENT INDUSTRY UNDER BHUBANESWAR REGION”

Personal data:

Dealer Name:

Place of Business:

Address:

Age <35yrs 35-45yrs > 45yrs

Educational Level Below Pre degree UG PG

Mobile No.:

Part A------------------------------------------------------------------------------------------------1. What is the nature of your shop?

a. Retail(>60%)b. Whole Sale(>40%)

2. How much quantity of cement you sell per month?Less than 50 tons

50-100 tons

100-200 tons

200-400 tons

3. Since how many years you are in this business?a. Less than 5 yearsb. 6 – 15 yearsc. More than 15 years

Factors 5 4 3 2 1QualityPriceBrand Image MarginCustomer Demand

4. Which brand is highest sold form your counter (customer pull)?Brands Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi MahaRanks

5. Rank the factor affecting the highest selling brand?

Part B (Rank 1-10) ----------------------------------------------------------------------------------------------Rank the following brand:-

1. Which brand do you (dealer) prefer the most?Brands Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi MahaRanks

2. Ranking of the frequency of making personal visits SO for inspiration and support?

Brands Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi MahaRanks

3. How much credit (in days) do you enjoy from the stockiest of following brands?

Brands Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha days

4 .What is the Profit margin you get by selling the brands (Inclusive annually cash benefit)?

Brands Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi MahaRs.

5. Rank the brands on the basis of their availability throughout the year mainly on seasons?


6. Rank the various brands on the basis of their effective promotional activities?


7. According to you which brand have most effective method of sales promotion?

Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi Maha

Dealer meet and TrainingTour

Get together

Special Schemes

Award ProgramsAdvertisement

Incentive SchemesCRM Activities


8. Please rate in terms of Quality and packaging of brands customer prefer?

9. Rank on the basis of quick delivery system (100 bags)?Brands Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi MahaRanks

10. Rank the brands which satisfy most on damage claim settlement?Brands Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi MahaRanks


11. Rank the brands which supports on small quantity supply directly to customers faster?Brands Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi MahaRanks


12. Rank on the basis of the brands incentive schemes which satisfy you most?Brands Lafarge Konark Ambuja Birla Acc Ultratech Ramco Jypee Rasi MahaRanks


13. Rank the brands which give Test certificates and vouchers for customers about different grades and quality standards periodically?

14. On the basis of the effective technical services team of IHB visit, brand conversation ability or redressal of customer complaints?

15. Rank the brands after sale service satisfy you most?

16. Any suggestion you would like to make for the brands?

Brands Suggestion

Lafarge

Konark

Ambuja

Birla

Acc

Ultratech

Ramco

Jaypee

Rasi

Maha

Documents

College Intern Project