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8/8/2019 swot analysis of ultratech cement limited
1/23
Pioneer Institute ofProfessional Studies
SWOT Analysis
OF
Ultratech Cement Ltd.
Submitter by:-
Tarun Nayak
MBA (3rd
SEM)Sec R
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
INTRODUCTION:-
Ultratech is India's largest exporter of cement clinker. The company's production
facilities are spread across eleven integrated plants, one white cement plant, twelve
grinding units, and five terminals four in India and one in Sri Lanka. Most of the
plants have ISO 9001, ISO 14001 and OHSAS 18001 certification. In addition, two
plants have received ISO 27001 certification and four have received SA 8000
certification. The process is currently underway for the remaining plants. The company
exports over 2.5 million tons per annum, which is about 30 per cent of the country's total
exports. The export market comprises of countries around the Indian Ocean, Africa,
Europe and the Middle East. Export is a thrust area in the company's strategy for growth.
Ultratech Cement Limited is among the worlds top 10 cement companies. The company
has an annual capacity of 48.8 million tones, and manufactures and markets ordinary
Portland cement, Portland blast furnace slag cement and Portland pozzalana cement. It
also manufactures ready mix concrete.
The company has eleven integrated plants, one white cement plant, twelve grinding units
and five terminals four in India and one in Sri Lanka.
Ultratech Cement is the countrys largest exporter of cement clinker. The export markets
span countries around the Indian Ocean, Africa, Europe and the Middle East.
The company's subsidiaries are Dakshin Cements Limited, Harish Cements Limited,
Ultratech Ceylinco (P) Limited and UltraTech Cement Middle East Investments
Limited.For further information, go towww.ultratechcement.com
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
VISION: -To be a premium global conglomerate, with a clear focus on each business.
MISSION: - To deliver superior value to our customers, shareholders, employees andemployees and society at large
VALUES:-
y Integrity
y Commitment
y Passion
y Seamlessness
y Speed
PRODUCT MIX:-
Ultra Techs products include Ordinary Portland cement, Portland Pozzolana cement andPortland blast furnace slag cement.
Ordinary Portland cement
Ordinary Portland cement is the most commonly used cement for a wide range of
applications. These applications cover dry-lean mixes, general-purpose ready-mixes,and
even high strength pre-cast and pre-stressed concrete.
Portland blast furnace slag cement
Portland blast-furnace slag cement contains up to 70 per cent of finely ground, granulated
blast-furnace slag, a nonmetallic product consisting essentially of silicates and alumina
silicates of calcium. Slag brings with it the advantage of the energy invested in the slag
making. Grinding slag for cement replacement takes only 25 per cent of the energy
needed to manufacture Portland cement. Using slag cement to replace a portion of
Portland cement in a concrete mixture is a useful method to make concrete better and
more consistent. Portland blast-furnace slag cement has a lighter colour, better concreteworkability, easier finish ability, higher compressive and flexural strength, lower
permeability, improved resistance to aggressive chemicals and more consistent plastic
and hardened consistency.
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
Portland Pozzolana cement
Portland Pozzolana cement is ordinary Portland cement blended with Pozzolanic
materials (power-station fly ash, burnt clays, ash from burnt plant material or Siliceous
earths), either together or separately. Portland clinker is ground with gypsum and
Pozzolanic materials which, though they do not have cementing properties in themselves,
combine chemically with Portland cement in the presence of water to form extra strong
cementing material which resists wet cracking, thermal cracking and has a high degree of
cohesion and workability in concrete and mortar
As part of the ninth biggest cement manufacturer in the world, UltraTech Cement has
eleven integrated plants, one white cement plant, twelve grinding units as well as five
terminals of its own (one overseas, in Colombo, Sri Lanka). These facilities gradually
came up over the years, as indicated below:
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
JOINT VENTURE:-
Company PartnerKey products /services
Birla Sun Life Insurance
Company Ltd.
Sun Life (Canada) life insurance
Tanfac Industries Ltd. TIDCO (Tamil Nadu Industrial DevelopmentCorporation)
fluorine chemicals
Aditya Birla Grasun Chemicals(Fangchenggang) Limited.
Fangchenggang Grasun Company Limitedof Guangxi Province (China)
food gradephosphoric acid
Thai Peroxide hydrogen peroxide
Hindalco-Almex AerospaceLimited
Almex USA, Inc. aerospace alloy
A.V.Group dissolving gradepulp (for VSF
manufacture)hardwooddissolving gradepulp (for VSFmanufacture)
Mahan Coal Limited Essar Power mining
Hydromine DUBAL bauxite / alumina
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
TOP MANAGEMENT:-
Board of Directors
Mr. Kumar Mangalam Birla, Chairman
Mrs. Rajashree Birla
Mr. R. C. Bhargava
Mr. G. M. Dave
Mr. N. J. Jhaveri
Mr. S. B. Mathur
Mr. V. T. Moorthy
Mr. S. Rajgopal
Mr. D. D. Rathi
Mr. O. P. Puranmalka, (Whole time Director)
Executive President & Chief Financial Officer
Mr. K. C. Birla
Chief Manufacturing Officer
Mr. R.K. Shah
Chief Marketing Officer
Mr. S.N.Jajoo
ChiefPeople Officer
Mr. C. B. Tiwari
Company Secretary
Mr. S. K. Chatterjee
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
LOCATION AND MANUFACTURING UNIT:-
Plant locations -
Awarpur
Awarpur Cement Works, P.O. Awarpur Cement Project, Taluka: Korpana, Dist.Chandrapur, Maharashtra 442 917Tel: 07173-266 323Fax: 07173-266 339
HirmiHirmi Cement Works, P.O. Hirmi, Taluka: Simga, Via: Neora, Dist. Raipur, Chhatisgarh493 195Tel: 07726-281 269Fax: 07726-281 268
AmreliGujarat Cement Works, Village: Kovaya, Taluka: Rajula City, Dist. Amreli, Gujarat 365541Tel: 02794-283 034Fax: 02794-283 036
ChukkalurA.P.Cement Works, Village: Bhogasamudram, Tadipatri, Anantapur District, AndhraPradesh 515 415.Tel: 08558-288 841,Fax: 08558-288 821 / 31
Jafrabad
Jafrabad Works (NCCL), Village: Babarkot, Taluka: Jafrabad, Dist. Amreli, Gujarat 365540Tel: 02794-245 103Fax: 02794-245 110
DurgapurWest Bengal Cement Works, Near EPIP plot, Muchipara, Post: Rajbandh, Durgapur 713212 (West Bengal)Tel: 0343-253 3030 / 253 4324 / 253 3361Fax: 0343-253 3358
MagdallaMagdalla Works (NCCL), Magdalla Port, Dumas Road, Surat, Gujarat 395 007Tel: 0261-272 5175Fax: 0261-272 6952
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
Ratnagiri
Ratnagiri Works (NCCL), MIDC Industrial Estste, Zadgaon Block, Ratnagiri,Maharashtra 415 639 Tel: 02352-223 679 Fax: 02352-221 807
Vellore
Arakkonam Cement Works, Chetteri Village,P.O. Arakkonam 631 003, Dist. Vellore (Tamil Nadu)Tel: 04177-293 291
Jharsuguda
Jharsuguda Cement Works, Near Dhutra railway station,P.O. Arda, Dist. Jharsuguda, Orissa 768 202Tel: 06645-283 161
Fax: 06645-283 108
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
PHASE II
CURRENT GOALS AND OBJECTIVES
y Our goal is to become a US$ 65 billion Group by 2015 from US$ 30 billiontoday. We expect your Company to contribute significantly to this growth and
earnings.
y UltraTech Cement is the countrys largest exporter of cement clinker. The export
markets span countries around the Indian Ocean, Africa, Europe and the Middle
East
y FINANCIAL ASPECT OF THE COMPANY
------------------- in Rs. Cr. -------------------
S.NO. RATIOS Mar '10 Mar '09 Mar '08 Mar '07 Mar '06
1 Operating margin
(%) 70.09 72.30 68.66 71.15 83.20
2 Gross profit margin
(%) 51.24 48.10 54.40 51.60 44.08
3 Net profit margin
(%) 15.50 15.50 18.20 15.90 6.9
4 EPS (Rs)87.82 78.48 80.94 62.84 18.46
5 Return on net worth
(%) 23.72 27.10 37.40 44.40 22.12
6 Dividend payout
ratio (%) 5.64 5 5.1 4 4.06
7 PBDIT 1706 1448 1589 1253 375
8 Depreciation 388 323 237 226 2169 PBIT 1706 1487 1589 1253 375
10 PBT 1588 1361 1507 1166 286
11 PAT 1093.24 977.02 1008.12 782.24 230.32
12 Net profit 1093.24 977.02 1008.12 782.24 230.32
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
1. Operating margin (%)
In the year 2006 OR margin is maximum because company spend lot in total cost, it
continuously fluctuate every year but it was less in year 2008. A high or increasingoperating margin is preferred because if the operating margin is increasing, thecompany is earning more per rupees of sales.
2. Gross profit margin (%)
Gross profit margin reflects the efficiency with which management produces eachunit of product. Ultratechit is as
51.24 48.10 54.40 51.60 44.08
Which indicates that companys spending on one unit reduced drastically in2006
3. Net profit margin (%)
Net profit margin ratio establishes a relationship between net profit and net sales andindicates management efficiency in manufacturing, administrating,
Ultratech net profit margin reduces due to higher expenditure on operations, companyalso provides a huge amount on interest in this year.
4. EP
S
EPS shows the profitability of firm on a per share it does not reflect how much is paidas dividend and how much is retained in the business
Company increases their reserves maximum in year 2007 due to this EPS wasminimum. Earlier in2010 it was highest.
5. Return on net worth
How well the firm has used the resources of owners the earning of a satisfactoryreturn is the most desirable objective of a business.From above table it shows that how well company invest their own capital , it wasmaximum in year2007 from the all.
15.50 15.50 18.20 15.90 6.9
87.82 78.48 80.94 62.84 18.46
23.72 27.10 37.40 44.40 22.12
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
6. Dividend Payout ratio
5.64 5 5.1 4 4.06
Company earning higher profit in year 2007 but they invest their profit in various
ventures and they also paid higher tax, their operating expenses were also high. Anddue to this they give less payout ratio. Payout ratios of company gradually decreasefrom last 3 years because company diversifies their business in various field.
7. PBDIT
8. Depreciation
Company purchased fixed assets in huge amount.
SHAREHOLDERS OF COMPANY
1706 1448 1589 1253 375
388 323 237 226 216
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
PHASE III
BENCH MARKING
PERFORMANCE BENCH MARKING
The last few years of this decade have been good for cement companies as prices have
remained high, and hence profits have been good. In the same period, Gujarat Ambuja
Cements and ACC have shown the same trends of increasing sales growth and capacity
utilization of Gujarat Ambuja Cements and ACC both are growing continuously because
of the increase in the demand of the cement in this scenario and they are very effective in
meeting the demand of the consumers by doing their best performance.
PROCESS BENCH MARKING
Due to similar raw material inputs and production processes, there is no significant
differentiation in the cement produced across firms and thus they follow the standardized
process of manufacturing. But it can follow the Manufacturing Process of its largest
competitor ACC, though ACC enjoys lower fuel cost. However, this is not sustainable
has already started switching to coal. Similarly it can have the advantage of coal fuel.
STRATEGIC BENCHMARKING
Can adopt the strategies of ACC cement i.e.,
Cost leadership: Striving to become a cost leader by means of setting up captive power
plants, and/or up-gradation of technology to enhance productivity, is increasingly
becoming critical for large cement players in this sector.
Rising Exports: Due to the increasing construction activity in the Middle-East, exports
will constitute a major sales driver. Hence, the coming years would see companies
scrambling for bases on the Western coast to minimize their export transportation costs.
Retail Stores: A unique concept, which ACC is experimenting with in recent times, and
one that is important for the future, is to continue setting up retail stores. Other
companies like Asian paints, and most recently Tata Steel have tried a similar concept.
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
Relationship Management: ACC focus on managing its relationships with importers,
exporters, distributors, warehouse providers, wholesalers, retailers and dealers for their
long-term profitability.
17. PRODUCT LIFE CYCLE
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
COMPANY LIFE CYCLE
INDUSTRY LIFE CYCLE
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
STRATEGIC MODELS
PORTERS FIVE FORCE MODEL
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
SWOT ANALYSISSTRENGTHS
Production
y The company's production facilities are spread across 11 integrated plants, one
white cement plant, 12 grinding units, and 5 terminals 4 in India and one in Sri
Lanka.
y High quality 17.64Mn.Ton cement production in 2009-10.production is increasing
annually.
y Annual production capacity of 23.10 million tones.
y Use of high-end equipment such as the Gamma Metrics Machine and the X-ray
Analyzer ensures that each product passing out of Ultraech manufacturing facility
adheres to global standards of quality and performance.
Logistics
y Can directly deals with the limestone tenders and thus the middle man do not
affect its cost.
y Use the local transporters which provide the efficient transportation cost.
Plantationy Ultratech manufacturing plant uses ultra-modern technology and imported
machinery.
y Companys Unit at Kovaya is the only Unit in this sector in India to have a
desalination plant. It is used for meeting the water needs of the plant and the
colony. The waste gases from the cooler are used in thedesalination plant.
y The Ultratech cement manufacturing The greenbelt at our Units is simply
awesome and is surrounded by trees all around. At some points, you cannot even
see the skyline. Only the leaves and the flowers and hear the cacophony of the
birds.
y Companys CSR (corporate social responsibility) activities extend to 127 villages,
in proximity to its plants, across the country.
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
Brand Positioning
y The Aditya Birla Group the eighth largest cement player in the world.
y UltraTech's products include Ordinary Portland cement, Portland Pozzolana
cement and Portland blast furnace slag cement.
y The company exports over 2.5 million tons per annum, which is about 30 per cent
of the country's total exports.
y Ordinary portland cement is the most commonly used cement for a wide range of
applications. These applications cover dry-lean mixes, general-purpose ready-
mixes, and even high strength pre-cast and pre-stressed concrete.
y OPC is used for applications, such as commercial buildings, industrial constructions,
multi storied complexes, cement concrete roads and heavy duty floors.
y PPC cement is used for big construction like dam and thermal power plant,
Distribution Channels
y The Company has a network of cement
y UltraTech's distribution network is very widely spread out in the country with
over 5,500 dealers and 30,000 retailers
Human Resource
y Total number of employees in Company as on 31st March, 2010 was 4,481
employees.
y Ultratech has won the best employer award in 2007.
y Company continuously strives to foster a culture of high performance.
Management has infused a lot of rigor and intensity in its people development
processes and in honing skill sets.
y The Performance Management System at Ultratech Cement ensures that
performance and achievement do not go unnoticed.
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
y Ongoing learning, refreshing HR systems in line with global benchmarks,
aligning rewards an recognition with performance, have enabled Company sustain
its reputation of a meritocratic organization.
y Its HR processes are absolutely aligned to organizational goals
y It provides an opportunity to the employees to monitor their progress and develop
into complete professionals.
y The Groups Corporate Human Resources function has played and continues to
play an integral role in Companys Talent Management Processes.
y The cornerstone of our Performance Management System is the Appraisal
System. Individual performance targets in the form of Key Result Areas (KRAs)
are set at the beginning of the year through consultation with the reporting
managers.
y At the end of the year, each employees performance is assessed against the set
KRAs. Performance Management provides the employee an opportunity to
discuss his/her achievements during the given period and to focus on
improvement areas.
y Training & development-We lay a lot of emphasis on developing our employees
beyond their present boundaries, broadening their horizon, enabling them to think
the unthinkable and rise above the benchmarks they set for themselves.
Finance
y Production for the Aditya Birla Group company UltraTech Cement, for the
period April-September 2010, has moved up by 3.99% at 186.30 lakh mt as
against 179.16 lakh mt during April-September 2009.
y Consistent revenue growth.
y Gross sales increase from 7160 cr. to 7729 cr.(from year 2009 to 2010)
y EBIT increase from 1487 cr. to 1706 cr.(from year 2009 to 2010)
y PAT increase from 977 cr. to 1093 cr.(from year 2009 to 2010)
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
y EPS (Rs.) increase from 118.94 to 127.65 Rs/share (from year 2009 to 2010)
Quality
y All the plants of UltraTech are ISO 14001 Environment Management Systems
certified and adhere to OHSAS 18001 standards.
y Clean technologies and processes that combine economic progress and
sustainable environment have been adopted at Ultratech plants at Awarpur and
Ratnagiri in Maharashtra; Kovaya, Jafrabad and Magdalla in Gujarat; Hirmi in
Chhattisgarh; Arakkonam in Tamil Nadu; Tadipatri in Andhra Pradesh;
Jharsuguda in Orissa and Durgapur in West Bengal.
y Ultratech won the Capexil Certificate of Export Recognition - Top Exporter -
Cement, Clinker, Asbestos and Cement Products for the years 2000, 2002 and
2003
y Uniform cement quality to customer.
y Bhartiya Udyog Ratan Award presented to Sh.KYP Kulkarni By Indian Economic
Development & Research Association (IEDRA), New Delhi in 2004.
Projects
y Ultratech Cement, we see it in the Bandra-Worli Sea Link an eight lane bridge
that is going to make a difference to millions of commuters.officially named as
the Rajiv Gandhi Setu the bridge will provide an alternative route to south
Mumbai from the western suburbs.
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
WEAKNESSESS
Raw materials
y Not available in all the places.
y Losses of raw material.
Productsy High cost of branded products.
Operationsy High Power/ Fuel costs.
y Required efficient maintenance for the wastes.
y Raw material inventory required due to perishable of raw material.
y High inventory handling cost.
Human Resourcey Due to openness in the organization work culture is very informal that will not suit for
better management in corporate.
y Insufficient man power
Marketing
y Lack of awareness program for consumers due to low promotion mix.
y Lack of marketing mix.
y Delay in supply.
Health
y Highly dusty environment at the time of dumping the cement is hazardous forhealth.
y It affects humans respiratory system adversely.
Others
y Cement industry is highly fragmented
y Industry is also highly regionalized
y Low value commodity makes transportation over long distances uneconomical
y The cost of transporting cement is high and this keeps cement from being
profitable over long distances. In other words, shipping cement costs more than
the profit from selling it.
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
OPPURTUNITIES
y With the low per capita consumption of cement in India 102 kg compared to
the global average of 260 kg (China: 429 kg, Malaysia: 529 kg and South Korea:
951 kg) - and the emphasis on infrastructure development, Ultratech has ample
opportunity to ride the growth curve.
y It can develop new marketing area.
y It can sign MOUs with government regarding supply of cement for government
work.
y Maintain the position of competition in the market.
y Institutional market like corporate and offices, school society complexes are
growing in large scale, which will increase the requirement.y People are opting for more stable structures and intensive use of cement is taking
place, even government is spending heavily on infrastructure projects. Thus, this
is the right time to fully tap these markets.
y As Indian core industry is also growing at rate of nearly 10% per annum it is
having a good future.
y Foreign direct investment in infrastructure sector going to increase in coming
years, which will increase the demand of cement.
y Roads are undergoing through the transformation process through which the
traditional method of road building will be replaced by modern concrete roads.
y The cement industries have opportunities as well. One such opportunity is the
cement industry's efficiency. The cement industry has recently streamlined its
production efforts, using dry manufacturing instead of wet, which is heavier and
more time-consuming. The cement industry has also invested about $6 billion in
expansion efforts to meet unmet cement needs. Projections show that by 2012, the
cement industry will have 25 percent more production capabilities.
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UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3
THREATS
y Large number of players in cement industry makes it more competitive for ACC
to carefully price its product and at the same time satisfy its dealers andcustomers.
y Cheep priced brand are grabbing rapidly a large chunk of lower income customer
base.
y Players such as Jaypee Cement, Prism Cement, and Birla cement.ACC cement are
eating up considerable market share.
y Due to Indias exponential growth many new international cement companies are
expected in coming years which will bring a tide of change and can start price
war.
y Government intervention to adjust cement prices
y Transportation cost is scaling high; bottleneck due to loading restriction.
y Coal prices climbing up industry players say current shortage of coal in the
country is estimated to be over 10 million tons.
y The emergence of small players in this market may increase the competition and
start the malpractices, and heavy discounts to retailers. They can also influence
many retailers by giving better profit margin, and other Benefits.
y Now-a-days Timber is also being considered as one of the substitutes of cement.
In many countries like Japan, Indonesia, Singapore etc are now using timber in
construction since those areas are high earthquake affected. They now prefer
timber which is cheap and long lasting for years
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SUGGESTION
y Adopt new technology for the production like wet process of cement
manufacturing. it will reduce the cost of product that will increase the profit
margin and good for human health also.
y Proper use of waste material.
y They can increase the production plant because of high growth rate of
infrastructure.
y They can increase the production for global market.
23. CONCLUSION
As India is the second largest producer of cement in the worlds many big player
presents in the market after that ultra tech cement increases his market share due
to the high growth rate of real estate.