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INDUSTRY PROFILE
1.1 INTRODUCTION CEMENT in its broadest term, may be stated as Substance which acts as a binding or bonding agent between two or more materials. The year 1817 is considered to be the starting point for the revival of the construction industry. It was early in the 1800s that Louis Vicat (1876 1861), a young, 22-year old civil engineer conducted work on the hydraulicity of the lime-volcanic ash mixture. This binder, which had been used since Roman times, remained the only material known to set in contact with water. In India, cement was first manufactured in 1904, near Madras (Chennai) by the South India Industrial Ltd. and in 1914 the same company has established cement plant in Porabandar (Gujarat) with a capacity of 1000 tons. By 1918, three factories were established, since then the industry has come a long way. During First Five Year Plan (1951-1957), cement production rose from 2.69 million tons to 4.6 million tons. By 1969, the total production was 13.2 million tons and occupied 9th place in the world. Since 1969, a good rate of growth has been achieved in the country. During 1977, there were 56 cement factories functioning with the production of 19 million tons. The Indian cement industry is 70 years old. It has been decontrolled from price and distribution on 1st March 1989 and delicensed on 25th July 1991. However, the The performance of the industry and prices of cement are monitored regularly.
constraints faced by the industry are reviewed in the Infrastructure Coordination Committee meetings held in the Cabinet Secretariat under the Chairmanship of Secretary (Coordination). The Cabinet Committee on Infrastructure also reviews its performance. Spread across the length and breadth of the country, there are about 120 large plants belonging to 56 companies besides some 300 mini plants with a total installed capacity of about 118 million tons and a production of 98 million tons realized in 1991. At 1
an expected 10% growth rate the production is likely to about 158.5 million tons at the end of 2006 2007. 1.2 Capacity and Production Cement production and consumption in the world is estimated at 1775 to 1800 million tones in 2004. In the last few years, cement consumption is reported to have been growing at about 2.5% according to different sources. The cement industry comprises of 125 large cement plants with an installed capacity of 148.28 million tonnes and more than 300 mini cement plants with an estimated capacity of 11.10 million tonnes per annum. The Cement Corporation of There are 10 large India, which is a Central Public Sector Undertaking, has 10 units. country as a whole is 159.38 million tonnes.
cement plants owned by various State Governments. The total installed capacity in the Actual cement production in 2002-03 was 116.35 million tonnes as against a production of 106.90 million tonnes in 2001-02, registering a growth rate of 8.84%. Keeping in view the trend of growth of the industry in previous years, a production target of 126 million tonnes has been fixed for the year 2003-04. period. 1.2.1 Exports During the period April-June 2003, a production (provisional) was 31.30 million tonnes. The industry has achieved a growth rate of 4.86 per cent during this
Apart from meeting the entire domestic demand, the industry is also exporting cement and clinker. 1.35 million tonnes. The export of cement during 2001-02 and 2003-04 was 5.14 Major exporters were Gujarat Ambuja Cements Ltd. and L&T Ltd. million tonnes and 6.92 million tonnes respectively. Export during April-May, 2003 was {Now L&T Ltd (cement division) is named as Ultra Tech Cement Ltd., which is undertaken by Grasim Industries Ltd. an ADITYA BIRLA GROUPS division} 1.2.2 Industry Inputs
Highly capital intensive industry. Nearly 55-60% of the inputs controlled by the government. Facing problems due to power shortage. Coal availability and quality affecting production. Mini plants realization of revenue lower than large plants, survival difficult.
1.3 Future
Demand drivers
Infrastructure & construction sector the major demand drivers. Some demand determinants: Economic growth. Industrial activity. Real estate business. Construction activity. Investments in the core sector.
Signs of a revival: Growth in the housing sector. Central road fund established for national highways and railway over bridges to provide the necessary impetus.
Demand - supply balance expected in the next 12 - 15 months. Higher capacity utilization likely in the future. Encouraging trend in demand due to pick-up in rural housing demand and industrial revival. Industry likely to grow at 8-10% in the next few years.
For the development of the cement industry Working Group on Cement Industry was constituted by the Planning Commission for the formulation of X Five Year Plan. The Working Group has projected a growth rate of 10% for the cement industry during the plan period and has projected creation of additional capacity of 40-62 million tonnes mainly through expansion of existing plants. The Working Group has identified following thrust areas for improving demand for cement; (i) Further push to housing development programs. (ii) Promotion of concrete Highways and roads. (iii) Use of ready-mix concrete in large infrastructure projects. Further, in order to improve global competitiveness of the Indian Cement Industry, the Department of Industrial Policy & Promotion commissioned a study on the global competitiveness of the Indian Industry through an organization of international repute, viz. KPMG Consultancy Pvt. Ltd. The report submitted by the organization has made several recommendations for making the Indian Cement Industry more competitive in the international market. The recommendations are under consideration.
1.5 Technological change Cement industry has made tremendous strides in technological upgradation and assimilation of latest technology. At present ninety three per cent of the total capacity in the industry is based on modern and environment-friendly dry process technology and only seven per cent of the capacity is based on old wet and semi-dry process technology. There is tremendous scope for waste heat recovery in cement plants and thereby reduction in emission level.
Example: One project for co-generation of power utilizing waste heat in an Indian cement plant is being implemented with Japanese assistance under Green Aid Plan. and fuel and to save materials substantially. The induction of advanced technology has helped the industry immensely to conserve energy
It is manufactured by grinding the raw materials such as limestone, silica, clay, alumina, and iron oxide etc., mixed in certain proportions and then crushing them in a kiln at a temperature of about 13000 C to 15000 C, the material sinters and partially fuses to form modular shaped thing called Clinker and then it is and ground to a fine powder with addition of gypsum. The product thus formed is called Cement. Depending up on the use of chemical composition, setting and hardening properties and use of raw materials, cement of different categories can be manufactured. They are broadly classified into two groups, namely: Portland cement This is most used and is named because of its properties with a well-known natural Stone Quarry at Portland (UK). Joseph Aspdin of England took the patent for producing Portland cement on 21stOctober 1824. Later in 1845 Issac Charles Johnson made better quality cement and established factories during. Ordinary Portland cement is the most commonly used cement for a wide range of applications. These applications cover dry-lean mixes, general-purpose ready-mixes, and even high strength pre-cast and pre-stressed concrete. Portland cement. Special cement.
Special cement These are generally manufactured by adding certain admixture to the cements during the mixing or grinding. The types of special cement are, 1. Portland Pozzolana Cement (PPC), 2. Portland Blast Furnace Slag Cement (PBFS) or (PSC), 3. Oil Well Cement, 4. Rapid Hardening Portland Cement, 5. Sulphate Resisting Portland Cement 6. White Cement etc. (PPC and PSC are considered as Blended cement). Production of these varieties of cement conforms to the Standard Specifications. It is worth mentioning that some cement plants have set up dedicated jetties for promoting bulk transportation and export.
RMC - ready to use concrete, a blend of cement, sand and aggregate and water mixed in convenient proportion. Launched first in Mumbai a few years ago is gaining ground in other metros in India. Typical cost of a plant - Rs. 7-8 crs (US $ 1.6 to 1.8 mn) to set up a 100 cubic meter (cum) plant with 4-5 transit mixers. Gestation period is around 3-4 months. Currently RMC is at a very nascent stage, accounts for 0.5% of the demand.
Priyadarshini Cements in Hyderabad. Saurashtra Cements in Navi Mumbai. Pioneer a world leader entering the market. Capacity additions expected in the next few years. ACC plans to triple its capacities. Grasim is setting up four more plants. L&T plans to add another eight more (now Ultra Tech is looking this business).
Company name
ACC RMC Readymix L&T (Ultra Tech Cement) Fletcher Challenge HCC Unitech Jog Construction Starmac Madras Cement Birla Cement
No. of plants
13 4 5 3 2 2 1 1 1 1
Capacity
712 440 330 320 240 150 120 120 56 30
800
ACC RMC Readymix L&T (Ultra Tech Cement) Fletcher Challenge HCC Unitech
700
600
500
Capacity
400
300 Jog Construction 200 Starmac 100 Madras Cement 0 Birla Cement
Companies Name
Installed capacity 114.8 million tonnes per annum (mntpa). Production around 87.8 mn tonnes
Companies: 59 Plants: 116 Typical installed capacity per plant: Above 1.5 mntpa
Nearly 300 plants Located in Gujarat, Rajasthan, MP, AP Typical capacity < 200 tpd Installed capacity around 9 mn. Tonnes Production around: 6.2 mn tonnes Excise: Rs. 200/ tonne Mini plants were meant to tap scattered limestone reserves. However most set up in AP
Total installed capacity: 105 mntpa Production 98-99: 81.6 mntpa Excise: Rs. 350/ tonne All India reach through multiple plants.
Export to Bangladesh, Nepal, Sri Lanka, UAE and Mauritius Strong marketing network, tie-ups with customers, contractors Widespread distribution network.
Most use vertical kiln technology Production cost / tonne - Rs. 1,000 to 1,400 Presence of these plants limited to the state
1. South 30 per cent (26 per cent), 2. East 17 per cent (17 per cent), 3. North 20 per cent (21 per cent), 4. Central 16 per cent (17 per cent), and 5. West 18 per cent (20 per cent). The figures for the current year are for April-November period while the figures in brackets represent full year for the year 2004-05. Also, there is an increase in the consumption of PPC cement from 48 per cent to 50 per cent. Today, cement from Andhra is going all over India, including Assam, Meghalaya, Jharkhand, Orissa, West Bengal, Chattisgarh, Gujarat and Maharastra. More cement is likely to flow into Tamil Nadu from the state in view of cut in sales tax. Any further increase in demand in the South India will benefit the cement industry here. Cement movement from Gujarat to Mumbai is also coming down due to exports while cement movement from Orissa into Andhra has stopped and, in fact, cement is flowing into Orissa as well.
CHAPTER-2
COMPANY PROFILE
Fact File (Grasim Industries Ltd. Cement Division)
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Cement business of Larsen & Toubro Limited demerged and vested in company in 2004. Grasim acquired management control in July 2004. Together with Grasim the largest cement producer in India. Name changed to UltraTech Cement Limited with effect from 14 October 2004. Narmada Cement Company Limited amalgamated with UltraTech in May 2006.
Services (Aditya Birla Group) The world no. 1 in viscose staple fiber. The world's largest single location palm oil producer. Asia's largest integrated aluminum producer. A globally competitive, fast-growing copper producer. The world's third largest producer of insulators. The fourth largest producer of carbon black. The world's eighth largest producer of cement, and the largest in a single
geography. India's premier branded garments player. Among India's most energy efficient private sector fertilizer plants. India's second largest producer of viscose filament yarn. The no. 2 private sector insurance company and the fourth largest asset
management company in India. The Group has also made successful forays into the IT and BPO sectors.
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Grasim ventured into cement production in the mid 1980s, setting up its first cement plant at Jawad in Madhya Pradesh. Since then, Grasim has grown to become cement major it is the 11th largest cement producer in the world and the seventh largest in Asia. Grasims cement operations today span the length and breadth of India, with five integrated gray cement plants, two split grinding units at Hotgi in Maharashtra and Bhatinda in Punjab, one bulk terminal at Bangalore, and six ready mix concrete plants. Leveraging the strong equity and goodwill of the house mark, the Company has a portfolio of national brands such as Birla Super, Birla Plus, Birla White and Birla Ready Mix, also nurturing regional brands such as Vikram Cement and Rajashree Cement. On 6th July 2004, Larsen & Toubro Limited (L&T) and Grasim announced completion of the implementation process of demerge of the cement division of L&T. On successful completion of its open offer, Grasim acquired controlling stake in the newly formed company, UltraTech Cement Limited (UltraTech), the demerged cement business of L&T. It manufactures and markets ordinary portland cement, portland blast furnace slag cement, portland pozzolana cement and grey portland cement. The Group's combined capacity stands raised to 31 million tpa, of which, 17 million tpa comes from UltraTech. Apart from the long-term strategic value, the acquisition will also bring significant synergy gains, to be realized in the coming years. Between Grasim and UltraTech, the Group has cement operations spanning the length and breadth of India, with 11 composite plants, seven split grinding units, four bulk terminals (including one in Sri Lanka) and seven ready-mix concrete plants. It gives the Group a strong national presence, with a leadership position in 18 states.
Mile Stones
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Grasim was incorporated on August 25, 1947; just 10 days after India became independent, manufacturing textiles made from imported raw materials. It is now a global leader in viscose staple fiber (VSF), the country's largest merchant producer of sponge iron and the second-largest caustic soda maker in India; and poised to be India's largest cement manufacturer. 1947: Grasim Industries Ltd is incorporated. 1950: Grasim launches production of fabrics at Gwalior using imported rayon a manmade cellulose fiber. 1954: Grasim begins rayon production at Nagda. 1962: Grasim starts an engineering division to provide plant and machinery for VSF production. 1963: Grasim sets up its first rayon grade pulp plant at Mavoor, Kerala; the first to make rayon grade pulp from bamboo and other hardwoods. Grasim purchases a composite textile mill at Bhiwani, Haryana. 1968: Rayon production commences at Mavoor, Kerala. 1972: A completely indigenous plant based on Grasim's own engineering and knowhow, begins production at Harihar, Karnataka. Grasim commences production of rayon grade caustic soda a major raw material for VSF production at Nagda; another step towards becoming selfreliant. 1977: Grasim's third rayon plant at Harihar, Karnataka goes into production. 1985: Vikram Cement Grasim's first cement plant goes on stream at Jawad, Madhya Pradesh.
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1987: Vikram Cement's second production line is commissioned. 1991: A third production line is added at Vikram Cement. 1992: Grasim sets up Birla International Marketing Corporation (BIMC), a merchant exporter. First GDR issue on December 2, 1992 for US$ 90 million. (Nos: 6,933,745) 1993: Vikram Ispat, India's third-largest gas-based sponge iron plant is commissioned. Birla Consultancy & Software Services is set up, to provide IT consulting services and for software development. 1994: Second issue of GDRs on June 15, 1994 for US $100 million. (Nos: 4,878,048) 1995: Grasim commissions two Greenfield cement plants Grasim Cement at Raipur (Madhya Pradesh) and Aditya Cement at Shambhupura (Rajasthan). Grasim sets up two new spinning units Elegant Spinners at Bhiwani (Haryana) and Vikram Woollens at Malanpur (Madhya Pradesh). 1998: Grasim's first major acquisition overseas the Atholville Pulp Mill in Canada. Grasim acquires Dharani Cements Ltd. Grasim acquires Shree Digvijay Cements Ltd. The cement business of Group Company, Indian Rayon and Industries Ltd (IRIL), is transferred to Grasim in a corporate restructuring exercise.
1999:
Grasim's viscose staple fiber (VSF) and rayon grade pulp units at Mavoor are closed down owing to lack of raw material.
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Third issue on September 16, 1999 to Indian Rayon's GDRs holders: Three GDRs in Grasim for every 10 GDRs in Indian Rayon, on demerge of its Cement business into Grasim. Nos: 1,624,336 2000: The Lawson Competency Center is set up as a division of Birla Consultancy & Software Services, the software arm of Grasim, following a tie up with Lawson Software (USA), among Fortune's top five private software companies. Consultancy and software services are spun off as a separate entity, called Birla Technologies Ltd. Merger of Dharani Cements into Grasim. 2001: Grasim acquires 10 per cent stake in L&T. Subsequently increases stake to 15.3 per cent by October 2002. Four ready-mix concrete plants commissioned, with an aggregate capacity of one million cubic meters per annum. Divests holding in Birla Technologies to PSI Data Systems. 2002: VSF Research & Application Centre set up at Karachi in Gujarat The Grasim Board approves an open offer for purchase of up to 20 per cent of the equity shares of Larsen & Toubro Ltd (L&T), in accordance with the provisions and guidelines issued by the Securities & Exchange Board of India (SEBI) Regulations, 1997. Grasim increases its stake in L&T to 14.15 per cent.
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2003:
Grasim's Chemical Division receives the SA 8000 (Social Accountability) and OHSAS 18001 certifications. The board of engineering major Larsen & Toubro Ltd (L&T) decides to demerge its cement business into a separate cement company (CemCo). Grasim will acquire an 8.5 per cent equity stake from L&T and then make an open offer for 30 per cent of the equity of CemCo, to acquire management control of the company.
2004:
Completion of the implementation process to demerge the cement business of L&T and completion of open offer by Grasim, with the latter acquiring controlling stake in the newly formed company UltraTech. Board reconstituted with Mr. Kumar Mangalam Birla taking over as Chairman. The Staple Fibre Division and Engineering & Development Division of Grasim, Nagda receives SA 8000:2001 certification from SAI in recognition of its social accountability initiatives.
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The Aditya Birla Group is India's first truly multinational corporation. Global in vision, rooted in Indian values, the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders. A US$ 7.59 billion conglomerate, with a market capitalization of US$ 7 billion, it is anchored by an extraordinary force of 72,000 employees belonging to over 20 different nationalities. Over 30 per cent of its revenues flow from its operations across the world. The Group's products and services offer distinctive customer solutions. Its 66 state-of-the-art manufacturing units and sect oral services span India, Thailand, Indonesia, Malaysia, Philippines, Egypt, Canada, Australia and China.
Vision To be a premium global conglomerate with a clear focus on each business. Mission To deliver superior value to our customers, shareholders, employees and society at large. "To actively contribute to the social and economic development of the communities in which we operate. In so doing, build a better, sustainable way of life for the weaker sections of society and raise the country's human development index". QUALITY POLICY By providing timely services, before and after sale Through internal customer focus By supplying cement of various grades with consistent quality as per By providing good quality cement to the customers.
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2.4 d. PRODUCT PROFILE (GREY CEMENT) With a total grey cement capacity of 13.12 million tonnes per annum (tpa), Grasim is among the largest producers of grey cement in India. All its plants are located close to sizeable limestone mines and are fully automated to ensure consistent quality. All the companys cement units are equipped with state-of-the-art equipment and are certified with ISO 9001 for quality systems, and ISO 14001 for environment management systems. Its national brands are Birla Plus, Birla Super and Birla Ready Mix concrete. Vikram Cement The first production line of this unit at Jawad (Madhya Pradesh) went on stream in 1985, with a capacity of 0.5 million tpa. Today, with a capacity of a 4.20 million tpa, Vikram Cement has emerged as a premium regional brand, well-reputed for its strength and consistently superior performance. The Vikram Cement unit is one of the few plants to have own its Central Research and Development Centre. The first ISO 9001 cement plant in the country, Vikram Cement has also taken the lead in innovative raw mix designs and process conditions. Vikram Cement has won several accolades at the national and international level for its quality, efficiency and environmental initiatives. These include: The first Indian unit to win the coveted TPM award from the Japan Institute of Plant Maintenance, Tokyo in 1995. The Ramakrishna Bajaj National Quality Award in 1998. The first cement unit in the world to receive IQRS - Level 6 rating from DNV, Netherlands. The first cement unit in India to receive ISO-14001 (EMS certification from DNV, Rotterdam, Netherlands) in 1997 and the Occupational Health and Safety Assessment series - 18001 (certification from DNV, Rotterdam, Netherlands) in 2001.
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Grasim Cement Grasim Cement was set up as a Greenfield cement plant at Raipur, Chattisgarh, in 1995. Based on the most advanced technologies, this plant has an annual installed capacity of 2.06 million tpa. The plants unique features include: Asias first gamma ray belt analyzer from Gamma Matrix (USA) ensuring the highest standards in online quality control. Indias first polycom (blast furnace slag grinder) with a dynamic air separator from Krupp Polysius Germany, which helps to generate the desired homogeneous particle size distribution. One of the few single kiln cement plants producing more than eight varieties of cement. Its captive power generation ensures a reliable power supply. The plant is also an ISO 14001, ISO 9001, and IQRS L-5 certified unit. Rajashree and Birla Super cement (Major Brands of the Company) Commissioned in 1984, Rajashree Cement has a capacity of 4.20 million tpa. The salient facts about Rajashree Cement are: Coal-based thermal power plant with a 38.5 MW capacity. Modern dry process technology from KhD, Germany, with a state-of-the-art process control system. The only cement plant in India with a captive coal washery. First in India to achieve Certification ISO 9001:2000 by DNV, Netherlands, 2001. Cement varieties catering to different segments: Rajashree Cement for residential and commercial construction; Birla Super Cement for multi-storied buildings, dams and bridges; Birla Plus for mass concrete laying and nonstructural applications, Birla Coastal for foundation work and for use in coastal areas as well as sugar and fertilizer plants, and OPC 53 - S (sleeper grade cement)
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Some of the awards won by this unit are Materials, for the year 2000-01. for Fair Business Practices in 1995. 1993. Grasim South Grasim acquired Dharani Cements (since merged with the company) in April 1998. The company has a cement plant at Ariyalur, Tamil Nadu. In April 2000, a stateof-the-art cement plant, among the most modern in Asia, was commissioned at Reddipalayam, Tamil Nadu. This unit now has a capacity of 1.16 million tpa. This is the only plant to be equipped with an auto/ robot lab system for consistent quality and optimizing cost. Apart from these, the auto/ robot lab assures: Quality cement of world class standard. Accuracy and consistency. Rajiv Gandhi National Quality Award in IMC Ramakrishna Bajaj National Quality Jamnalal Bajaj Uchit Vyavahar Puraskar Award (certificate of merit) in 1999. National Award for Quality Excellence in
the Indian Cement Industry by the National Council for Cement and Building
PRODUCT MIX IN GRASIM INDUSTRIES CEMENT DIVISION 1. Ordinary Portland cement (OPC)
53 Grade cement: Birla Super cement. 43 Grade cement: Rajashree cement.
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Aditya Cement
Commissioned in a record time of 22 months as a Greenfield 1.0 mtpa plant in 1995 in Shambupura, Rajasthan, and its current capacity is about 1.50 mtpa.
Kamal Cement
Acquired by Grasim in 1998, Shree Digvijay Cement Company Ltd (SDCC) is situated at Sikka (Gujarat). It has an annual capacity of about 1.08 million tpa. All of SDCCs products are marketed under the brand name 'Kamal'. The company has ISO 9002 certifications for its clinker and cement production and its oil well cement has been authorized for the use of the monogram of the American Petroleum Institute. The company has a captive jetty with a dry cargo capacity of 3 million tpa. This jetty is used to export cement and clinker and to import coal for captive use.
Rajashree Cement Vikram Cement Grasim Cement Aditya Cement Cement Division South
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Sikka, Gujarat
1.08 14.00
Grasim Industry is operating GLOBALLY and it is also the largest Indian MNC company, when it comes to cement division of the company operating at National Level only with dividing market into Regional or Zonal. Today company also plans to go globally. It is to prove that statement of the group (Aditya Birla Groups), i.e., TAKING INDIA TO THE GLOBE.
2.6 f. Ownership Pattern Grasim Industries Ltd. is well established and diversified company. This company is basically a PUBLIC LIMITED COMPANY. Share holders are the owners of the company.
PATTERN:
7. Share holders. 8. Financiers. 9. Financial institutions.
2.7 g. Competitors Information The competitive rivalry between the existing market players is very high. The cement division of Grasim Industries faces intense competition from its competitors like ACC and Gujarat Ambuja Cements. There is high competition between the competitors to gain market share and market growth rate. Due to very little differences between products and services offered by them.
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Major Cement companies market share in India. (2003 2004) In India we have many companies, who are involved in cement business. This active participation of Entrepreneurs made Indian Cement industry to stand in 2nd Rank in the world, after China and followed by US.
MARKET SHARE IN %
13 12 10 10 5 5 4 4 4 3 30
Over 370 companies in the organized sector. However, industry dominated by 20 companies who account for over 70% of the market.
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MARKET SHARE IN %
ACC Gujarat Ambuja Grasim Ind Ultra Tech India Cement Century Textiles Jaypee Birla Corp Lafarge Madras Cement Others
3% 4% 4% 4% 10% 5% 5%
10%
2.8 h. Infrastructural Facilities Grasim is providing nice, attractive and more comfortable infrastructure in its work place. Birla Super Bulk Terminal plant (Packing center) at Dodballapur, near Bangalore, this plant also well furnished with spaciously to get work fast in smooth manner. Every division of the company is computerized and also have its own power generators.
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2.9 i. Awards
Beyond Business
A value-based, caring corporate citizen, the Aditya Birla Group inherently believes in the trusteeship concept of management. Part of the Groups profits is ploughed back into meaningful welfare-driven initiatives that make a qualitative difference to the lives of marginalized people. These activities are carried out under the aegis of the Aditya Birla Centre for Community Initiatives and Rural Development, which is spearheaded by Mrs. Rajashree Birla.
1993
Rajiv Gandhi National Quality award.
1995
Jamnalal Bajaj Uchit Vyavahar Puraskar for fair business practices.
1999
Best productivity award by the National Productivity Council. IMC Ramakrishna Bajaj National Quality award (certificates of merit).
2000
National energy conservation award by Ministry of Power, Government of India. Best energy efficient unit award by CII. IQRS level 6 rating from DNV, The Netherlands.
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2001
National award for 'Quality excellence in the Indian Cement Industry' from the National Council for Cement and Building Materials. First in India to be certified ISO 9001:2000 by DNV, The Netherlands. TPM Excellence award, first category, by JIPM, Tokyo.
2003 2004
Bihar Caustic: Bihar Caustic and Chemicals Ltd., Rehla, Jharkhand has received the
FICCI Annual Award 2003-2004 in recognition of corporate initiative in family welfare.
Grasim, Nagda: Grasim, Nagda received the FICCI Annual Award 2003-2004 in
recognition of corporate initiative in rural development.
2004
Birla Super Cement received the Environment Excellence Award under the silver category by GreenTech Foundation. Birla Super Cement certified with the OHSAS 18001:1999 for their occupational health and safety management system by Det Norske Veritas (DNV). The 2004 Stockholm Industry Water Award. The Asian CSR Award 2005.
2006
Grasim Industries Limited, Staple Fibre Division, Nagda, has received the Indian Chemical Manufacturers Association (ICMA) award for Social Responsibility. At a
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function held in Mumbai on 27 April 2006, Mrs. Rajashree Birla received the award from Mr. Mukesh Ambani, Chairman, Reliance Industries Limited. 2.6 j. Work Flow Model (End to End)
Process of packaging:
There is a separate railway track inside to the BSBT. The loaded cement wagons come directly to the unloading section from Malkhed. Then the cement is unloaded and directly stored in two silos. These two silos having a capacity of 27
3500m.t each with a total capacity of 7000m.t. They had the machinery which automatically loads the fixed quantity of cement into the bags and the packed cement bags moves automatically in a trolley and falls into a truck with the help of Material handling system. The material handling systems are as follows 1. 2. Elevators. Conveyer belts. 3. Pay loaded. 4. Tipper.
Packing machine
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2.7 k. Future growth and prospectus Company is planning to go globally. Grasim wants to achieve 50,000 MT of production of cement by 2010. Wants to globally competent company, as it is a Premium Price Brand in India. Expansion of 8 Mn. TPA at two locations with capacity of 4 Mn. TPA each. Total capital outlay of Rs. 2,475 crores. Greenfield project at Kotputil (Rajasthan) with split grinding unit Capacity: 4 Mn TPA. Capital outlay: Rs. 1,275 crores. Implementation: 21 months.
Expansion at Shambhupura (Rajasthan) and additional split grinding unit Capacity: 4 Mn TPA. Capital outlay: Rs. 1,200 crores. Implementation: 21 months.
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CHAPTER-3
The 7-s model is a tool for managerial analysis an action that provides a structure to consider the company as a whole, so that the organization problem may be diagnosed and strategy may be developed and then implemented. The seven-s is a frame work for analyzing organization and there effectiveness. It looks at the seven key elements that make the organization successful, or not. Those elements are as follows: STRUCTURE. SKILLS. STYLE. STRATEGY. SYSTEMS. STAFF. SHARED VALUES.
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The model starts on the premise that an organization is not just Structure, but consists of seven elements:
Structure
Strategy
System
Shared Value
Skills
Style
Staff
Those seven elements are distinguished in so called hard Ss and soft Ss. The hard elements are feasible and easy to identify. They can be found in strategy statements, corporate plans, organizational charts and other documentation. The hard Ss of 7 S model is 3: The soft Ss of 7 S model is 4: Skill. Structure. Strategy. Systems.
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The four soft Ss however, are hardly feasible. They are difficult to describe since capabilities, values and elements of corporate culture are continuously developing and changing. They are highly determined by the people at work in the organization. The soft factors are below the surface, and then also they have a great impact on the hard Structures, Strategies and Systems of the organization.
The 7-s diagram illustrates the multiplicity interconnection of elements that defines as organization ability to change. The theory helped to change the managers thinking about how companies could be improved. It says that it is not just of devising a new strategy and following it through. Nor is it a matter of setting up new systems and letting them to generate improvements. To be effective, your organization must have a high degree of fit, or internal alignment among all 7-s. Each S must be consistent with and reinforce the other Ss. All Ss are interrelated, so a change in one has a ripple effect on all others. It is impossible to make a progress on one without a making progress on all. Thus to improve your organization you have to pay attention to all of the seven elements at the same time. There is no starting point or implied hierarchy-different factors may drive the business in any one organization.
Structure (virtual organization) Skills (competencies) Style (culture, leadership) Strategy (corporate, business, product\market) Systems (processes)
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3.1. STRUCTURE
Structure describes the hierarchy of authority and accountability in an organization these relationships are frequently diagrammed in organizational charts. Most organizations use some mix of structures- pyramidal, matrix or structured ones to accomplish their goals. A structure is the formalizing of relationships, roles and responsibilities in order to recognize and perform work. In simple terms, structure is a pattern in which various parts or components are inter-related and inter-connected. So organization structure is a pattern of relationships among various activities and positions. Because various people hold these positions, the structure defines the relationships among people in the organization. The structure provides the framework for relationship among different parts of the organization. The structure sets out formal reporting relationships, mode of communication among members their respective rules and regulations for carrying out different task.
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ORGANISATIONAL STRUCTURE
Chairman
Area Manger
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Sales Officer
Advertisement Media
In this competitive world without advertisements any company cannot sell their product in the market. Advertisement acts as an important tool, which attracts the consumers. BSBT made huge expenditure on wall painting in rural areas. Wherever you go you can see the ads of Birla cement in around the country. The major advertising Medias, which used for BSBT, are as follows:
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Medias
1. 2. 3. 4. 5. 6. WALL PAINTING. TELEVISION. NESPAPERS. WALLPAPERS. HOARDING. MOBILE ADVERTISEMNT. (ads on buses, vans, etc)
3.2 SKILLS
A skill is the ability, knowledge, understanding and judgment to accomplish a task, Skills may be defined as what the company does best; the distinctive capabilities and competencies that reside in the organization.
Company skills
Grasim has variety of skills in doing its business. The company analyses the potential market so that it can market its products in efficient manner. The company salesperson is trained and provided with skills to deal with customers personally to know their needs and wants. Company also strives in providing the better services. It has skilled staff which also provides market information regularly, which helps to study about competitors move. Grasim educated its customers. It also informs and makes customer aware of market conditions. Skills are parallel to core competencies and whenever there is a shift in the strategy, firm may have to acquire expertise in new skills and older skills.
3.3 STYLE
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Firm differs one another in their style of functioning. According to the 7-s framework, style becomes evident through the pattern of decisions and actions taken by management over a period of time. Subordinates do not do what you ask them to do; they do what they see doing. Thus, aspects of management give importance. Style, according to this framework, also includes the culture of organization.
Company style
The Grasim Company is having its own style of doing the business. All the employees of the company are influenced to use their skills, values, knowledge, judgment, attitudes and attributes to the fullest extent. The employees have the freedom to give suggestions to the top management. Every individual behaves as leader and expresses his/her character and attitude towards their work. The company also recognizes value, respect and celebrates the cultural difference and diversity of background and thought of its employees. It expects its suppliers to follow applicable laws and principles in the countries in which they operate.
3.4 STRATEGY
Strategy is plan an organization formulates to gain a substantial advantage over the competition. Strategy is the art of devising and employing a system of activities that mobilize all resources towards a valuable goal.
Company strategy
The Grasim Industries exists to benefit and refresh everyone it touches. It is mainly targeted to younger generation. The main company strategy is to use its significant resources and capabilities to provide active leadership on environmental issues. Grasim company is striving hard to the market leader in the carbonated cement industries. Every employee of the organization is expected to maintain higher standards
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of quality in product, process and relationship. This made them to be the Premium Price Brands in the market. It also has strategy of maintaining good industrial and customer relationship. Because of all these strategies Grasim Industries is successful in the market. The supplier guiding principles is based on the belief that good corporate citizenship and actions in the marketplace, the environment and the community.
Pricing strategy
Pricing of the cement are more fluctuating from time, it differs from place to place. Freight from place to place differs because it is charged on the basis of distance from this unit to the place of delivery that means longer the distance higher will be the freight and vice-versa.
3.5 SYSTEM SYSTEM refers to the process used to manage the organization. System includes
Management Information System Performance review technique Compensation system / Reward system Customer satisfaction monitoring system SAP module1 used in logistics in BSBT. Follows JIT system for inventory control in BSBT.
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Changes in the organization structure lead to changes in the system. Some times these are referred to as something dull, which hinders management functions, but it is well known that good system creates working environment in the enterprise. MIS is a system which provides information support for decision making in the organization. GRASIM Industries is using computerized processing system. As computer can store voluminous data, the data from different sources in the organization are collected and processed in the system so that information regarding any subject is available at hand. This system helps the Grasim Company to take corporate decision in its activities.
3.6 STAFF
Staffing has been described as the selection, placement, training and development of appropriately qualified employees. It refers to the way young recruits are introduced into the organization and the way they manage their career as they develop into future managers; it implies staffing included two distinct responsibilities. Selecting people for specific position in the organization Developing in them the skills to do those and subsequent jobs
effectively.
Company staff
The company compensates its employees fairly and competitively relative to their industry in full compliance with applicable local and national wage and hour laws. It also offers opportunities to employees to develop their skills, aptitude, capabilities and abilities, if the performance of the employee is good to the extent required by the company to operate its business. Each designation has their own duties and responsibilities to fulfill the visionary goals of the company. To carry out the company activities staff is classified into: Technical Staff Clerical Staff
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3.7SHARED VALUES According to this postulation, super ordinate goals refer to the set of values and aspirations, often unwritten that go beyond the normal objectives and goals. These are shared vision of the company and represent the fundamental purpose around which the whole business is built. These are the broad notions of future direction that top management infuses to managers at all levels. Super ordinate goals should be properly stated because they can impart a strong base of stability in rapidly changing environments. It provides a basic, although somewhat abstract meaning to individuals working in the organization.
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SEAMLESSNESS: Like Space, is borderless world of free flowing ideas and knowledge
SPEED: Like the Wind, is the absolute agility of response that keeps us moving ahead
SWOT ANALYSIS:
The SWOT Analysis is a conceptual framework for a systematic analysis that facilitates matching the external threats and opportunities with the internal weakness and strengths of the organization. It has been common to suggest that the companies identify their strengths and weakness, as well as the opportunities and threats in the external environment. But what is often overlooked is that combining these factors may require distinct strategic choices. To systematize these choices the concept of SWOT has been proposed; where
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STRENGTH
Good corporate values are adopted to reach objectives. Good support from Parental company, i.e.,
Team.
Recent acquisition of L&Ts cement renamed as
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WEAKNESS
High cost establishment of plants. Transportation cost is also high It has uniform distribution channels for rural markets. Poor advertisement and sales
OPPORTUNITY
unrepresentative areas
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To capture potentiality of ready-mix concrete Investments Current Assets, Loans and Advances : Sources of funds: Inventories Shareholders Funds Sundry Debtors Share Capital Cash and Bank Reserves and Surplus Loans: Balances Secured Other Current Assets Unsecured Loans and Advances
market. 5 0.53
6 Schedule 1 2 3
54.48
New innovative techniques to develop quick FY 2006 Rs/Crs. FY 2005 Rs/Crs. 330.12 175.14 156.52 38.34 38.34 Scope for rationalization on sales tax and 231.36 110.43 596.68 538.40
excise duty
369.00
381.00 348.75 0.21 0.02 195.06 184.39 146.46 750.00 543.81 1010.51 743.55 The major threat is cutthroat competition. 105.21 103.35 7
1233.90
Profit & Loss Account For the year ended 31st March 2006 Schedule Income Gross Sales FY 2006 Rs./Crs. 300.12 44 2656.81 FY 2005 Rs/Crs
Less : Excise Duty Other income Expenditure Manufacturing and Other Expenses (Increase)/Decrease in Work Process and finished goods Interest Profit before depreciation, tax & exceptional items Depreciation Transfer from revaluation reserve Profit before tax & exceptional items Provision for tax - current Deferred Fringe Benefit Tax Profit after tax before exceptional items Add : Exceptional items Deduct Appropriations : General Reserve Debenture Redemption Reserve Proposed Dividend Dividend tax Surplus carried to schedule 2 Basic & Diluted earnings per share (Face value of Rs.10/each) (Rs.)
376.60 8
431.32
9 10
11
50.56 173.36
42.94 141.70
72.94 (0.15)
72.79 100.57
56.94 (0.15)
56.79 84.91
12
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Before exceptional items After exceptional items Significant accounting policies and notes on accounts
18.88 20.39 13
17.64 17.64
Ratio analysis
Ratios 1 2 3 4 5 6 Current Ratio Quick Ratio Net working capital turnover ratio Fixed Asset to net worth ratio Gross profit ratio Net profit Ratio 2006 1.87 0.92 6.81 144.8% 3.8% 2.75% 2005 1.46 0.65 11.83 144.6% 3.8% 3.03%
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7 8 9 10 11 12 13 14 15
PBT to net worth ratio PBT to equity ratio C. Liability to net worth ratio Asset turnover ratio Fixed Asset turnover ratio Sales to net worth ratio Current Asset turnover ratio Proprietary ratio Absolute liquid ratio
15.86% 2.62 69.5% 1.76 times 2.85 times 4.14 times 3.17 times 0.025 061
14.72% 2.21 71% 1.81times 2.67 times 3.85 times 3.72 times 0.031 0.36
Interpretation:
Current Ration: The companys current ratio for 2005 and 2006 are 1.87 and 1.46 respectively. The standard norm is 1.33:1. In both the years the current ratio is above the standard norm. Hence we conclude that the company has got sufficient liquidity and there is enough waiting capital. Quick ratio: The quick ratio in the year 2005 and 2006 are below the standard norms 1:1. If the quick ratio is below the standard norms of 1:1 the conclusion is that the CO; is not liquid and sod it cannot pay off its short term liabilities out of its quick realizable assets. Net W.C. turnover ratio: There is no standard / ideal W.C turnover ratio. The net W.C. turnover ratio during the year 2005 & 2006 are 11.83 and 6.81 respectively. A high W.C. turnover ratio
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indicates the efficiency & a low W.C. ratio indicates inefficiency. The ratios reveal that efficiency of the company is decreasing. Fixed asset to new worth ratio: The fixed asset to new worth for 2005 and 2006 are 144.6% and 144.8% respectively. In 2006 the F.A to net worth ratio is very high due to the increase in fixed asset and net worth compare to previous year. Gross Profit ratio: As the gross profit is found by deducting cost of goods sold from the net sales, higher the gross better the result. There are no standard norms for gross profit ratio. It is calculated to know the trading profit for the year 2005 and 2006 are 3.8% and 3.8% respectively. Net profit ratio: The net profit ratio is calculated to know the actual profit of a concern during the year the net profit for 2005 and 2006 is 3.03% and 2.75% respectively. Usually while calculating the net profit the investment / capital of the firm is only is relation to sales. In 2005 the net profit is 3.03% which indicates a satisfactory level. In 2006 it has gone down to 2.75% which results in decrease of profitability of a concern. PBT to net worth ratio The standard ratio is above 13%. The profit before tax to new worth ratio for the year 2005 & 2006 are 14.72% and 15.86% respectively. Here the ratio is above the standard norm which indicates a high return on shareholders funds. PBT to equity ratio There is no standard net profit to equity ratio. The ratio is a measure of productivity & profitability of the enterprise form the pint of view of equity shareholders. In 2005 the ratio is 2.21 and in 2006 it is 2.62. By this we can conclude that the productivity & profitability is high. Current liability to net worth ratio The standard / ideal ratio of C.L to net worth ratio is 33% or 1/3, more than this there is no adequate cover for long term creditors. The C.L to net worth ratio in the year 2005 and 2006 are 71% and 69.5% respectively. By this we can come to conclusion that there is no adequate cover for long term creditors.
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Asset turnover ration There is no ideal / standard for asset turnover ratio. The asset turnover ratio for the year 2005 and 2006 are 1.81 times and 1.76 times respectively. We can conclude that the asset turnover ratio is decreased by 0.05 times when compared with 2005. Fixed asset turnover ratio The standard / ideal of fixed asset turnover ratio is 5 times. The fixed asset turnover ratio for the ear 2005 and 2006 are 2.67 and 2.85 times. By this we can conclude that the fixed asset turnover ratio is increasing but then also it is below the standard norm. Sales to net worth ratio There is no ideal / standard for the sales to net worth ratio. The sales to net worth ratio in the year 2005 and 2006 are 3.85 times and 4.14 times respectively when the sales are compared to the net worth it is lowest in the year 2005 and the ratio has increased in the year 2006. By this we can conclude that the sales to net worth has increase in the previous year. Current asset turnover ratio There is no standard or ideal for current asset turnover ratio. The C.A turnover ratio for the year 2005 and 2006 are 3.72 times and 3.17times respectively. In the year 2005 the C.A. turnover ratio is the highest and in the year 2006 it is the lowest. By this we can conclude that the C.A. turnover ration has decreased in the previous year. Proprietary Ratio: There is no standard or ideal proprietary ratio. The proprietary ratio for the year 2005 and 2006 are 0.031 and 0.025 respectively. By this we can conclude that the proprietary ratio has decreased in the previous year and the firm is planning to increase its proprietary ratio by increasing the total assets. Absolute liquid ratio The companys absolute liquid ratio for 2005 and 2006 are 0.61 and 0.36 respectively. The standard norm is 1:2. Here in both the years the absolute liquid ratio is below the standard norm but in 2006 is shows a little increase compare to previous year.
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As it was a very good learning experience were I came to know about each department were there are seven departments. These departments are divided into sub departments. Each department has to its own working style and system but under certain rules and regulations, all the departments are so interlinked that they work together so that there is no problem in the company, all the departments is being controlled by one and only the Chairman. The company is known for its best quality product in the global market it is due to the vision, mission and quality policy that as been followed and adopted for the product manufacturing and delivering the products. It is due to its skilled employees who are trained based on new technologies. The employees are given all recreational facilities and medical and so. They are also given the benefits as specified by the Factory act. Customer satisfaction is the main motto of the company and the service rendered by the company is according to the customer requirement. Continuous efforts to minimize the cost both in Grasim and Subsidiary to Optimizing efficiency, leverage in benefits that strength for logistics to setup Thermal plant at various locations. usage of alternative fuels and grated trust for value added product mix, which includes blended cement, will translate into higher earnings for companies cement. Cost optimizing, utilization of best assets, for right financial management Talented management is strengthening talent pool in building leadership and other it made became number one company in market. across the group.
Marketing Department
The Marketing force is divided on the basis of Geographical division. 51
Marketing VP is the head of entire division and each division is headed by DGM of concerned division. In each division market is segmented into Urban market and Rural market, product is pushed through 2 channels. They are Trade & Non-Trade segment. Company well knows for its Pricing Strategy, so this companys brand stand as Premium Price brand in the market. Company have very good Marketing network through out the country and globally also, this helps company to build very good brand image and goodwill in the market. After acquiring L&Ts Cement business, Grasim became Indias largest and number 1 company in Indian market.
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In order to maintain cordial environment in the company, they follow Top Down approach in work place of the company with participative style.
Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include global and Indian demand supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries with in which company conducts business and other factors such as litigation and labor negotiations.
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