PIONEE

Diligence & Excellence

Since 1996

SWOT ANALYSIS REPORT

OF
JK LAXMI CEMENT LTD.

Submitted by
Tarunendra Agnihotri
MBA III Sem
(Production +Marketing)
S. No. TOPIC NAME PAGE No.
1 DEFINE THE BUSINESS AND COMPANY 3
2 VISION OF COMPANY 4
3 MISSION OF COMPANY 4
4 PROMOTERS 5
5 PRODUCT MIX 6
6 TOP MANAGEMENT 6
7 LOCATION 7
8 CURRENT GOALS AND OBJECTIVES 8
9 FINANCIAL ASPECTS OF THE COMPANY 8
10 STAKEHOLDERS OF COMPANY 10
11 BENCHMARKING 12
12 PRODUCT LIFE CYCLE 13
13 COMPANY LIFE CYCLE 13
14 INDUSTRY LIFE CYCLE 14
15 STRATEGIC MODELS 15
16 SWOT ANALYSIS 16
17 SUGGESTION 22
18 CONCLUSION 22
PHASE-1

JK LAXMI CEMENT LTD.

DEFINE THE BUSINESS AND COMPANY:
INTRODUCTION:
The most important use of cement is the production of mortar and concrete the bond
ing of
natural or artificial aggregates to form a strong building material that is dura
ble in the face of
normal environmental effects.
In the most general sense of the word, a cement is a binder, a substance that se
ts and hardens
independently, and can bind other materials together. The word "cement" traces t
o
the Romans, who used the term opus caementicium to describe masonry resembling m
odern
concrete that was made from crushed rock with burnt lime as binder. The volcanic
ash and
pulverized brick additives that were added to the burnt lime to obtain a hydraul
ic binder were
later referred to as cementum, cimentum, cäment and cement.
Cement used in construction is characterized as hydraulic or non-hydraulic. Hydr
aulic
cements (e.g. Portland cement) harden because of hydration chemical reactions th
at occur
independently of the mixture's water content; they can harden even underwater or
when
constantly exposed to wet weather. The chemical reaction that results when the a
nhydrous
cement powder is mixed with water produces hydrates that are not water-soluble.
Non-
hydraulic cements (e.g. lime and gypsum plaster) must be kept dry in order to re
tain its
strength.
ABOUT COMPANY:
JK Lakshmi Cement Ltd is a renowned and well-established name in the Indian Ceme
nt
Industry. It has completed more than 25 years of serving the nation and manufact
ures quality
cement, a core ingredient for infrastructure development. The Company, with a ca
pacity of 5
million tones per annum, has its clinkerisation unit at Sirohi in Rajasthan in w
estern India and
grinding capacities in Sirohi as also in Kalol near Ahmedabad. Majority of the C
ompany s
power requirements is met by its 36MW Captive Thermal Power plant.
The Company provides "just-in-time" service to its customers through a network o
f over 1600
dealers, which in turn are served by nearly 60 of the Company's cement dumps loc
ated
strategically in its marketing areas."JK Lakshmi Cement" brand enjoys a premium
position in its
markets and is recognized for its high quality and superior services.
JK Lakshmi Cement has been growing faster than the Indian Cement industry in the
recent
years. The operating efficiencies are in the league of the most efficient cement
plants of the
country. JK Lakshmi Cement has received the highest recognition in Cement Sector
for
National Energy Conservation in 2008 by the Bureau of Energy Efficiency.
With an eye on the futuristic trends in the Indian construction industry, JK Lak
shmi Cement
has made a foray and is aggressively pursuing Ready Mix Concrete (RMC) business.
The
Company already operates 10 RMC plants with plans to add more.
'Caring for our employees' has been the main tenet of the JK Organisation's core
values. With
this philosophy in mind the Company lays considerable emphasis in the areas of H
uman
Resource Development. Its policies focus on the Competency Development with Inno
vative
Interventions in the areas of Motivation, Talent Management and Performance Eval
uation.
The Company has received due recognition for its efforts by way of various award
s such as
CEO with HR Orientation awarded by Asia-Pacific HR Congress, the National Award
for
Excellence in Cost Management by Institute of Cost and Works Accountants of Indi
a
(ICWAI), etc.
India is moving towards a rapid economic growth and infrastructure development.
This is
generating new opportunities for the cement industry. JK Lakshmi Cement's future
plans
include enhancing its capacities further to meet the emergent opportunities.
VISION:
12 Mil. By 2012(12x12).
MISSION :
To be recognised as an efficient ,competitive & premium cement brand.
PRODUCT MIX:
CEMENT 53 BLENDED:
JK Lakshmi Cement 53 (blended) has a minimum guaranteed strength of 53 MPa, and
is used
for critical applications that require the maximum level of strength and durabil
ity.
A few applications of JK Lakshmi Cement 53 (blended) are:
· All Types of R.C.C. Work
· Plastering
· Underground structures
· Dams
· Heavy machinery foundations
· Marine structures
· Hydropower stations
53 GRADE OPC:
JK Lakshmi's 53 Grade O.P.C. with superior compressive strength is ideal for:
· High-rise buildings
· All types of R.C.C. works
· Industrial works
· Pre-stressed concrete work like bridges, silos, etc
· Pre-cast elements such as Railway sleepers and concrete poles
43 GRADE OPC:
Some applications of JK Lakshmi's 43 Grade O.P.C. are:
· Commercial Buildings
· Industrial Constructions
· Multi-storeyed complexes
· Cement concrete roads
· Heavy Duty Floors
PROMOTERS:
· Fenner (India) Ltd.
Bengal & Assam
Hidrive Finance Ltd.
Hansdeep Investment Ltd.
Panchanan Investment Ltd.
Radial Finance Ltd.
CURRENT TOP MANAGEMENT:
BOARD OF DIRECTORS:
-Hari Shankar Singhania, Chairman
- Bharat Hari Singhania, Vice Chairman & Managing Director
- B.V. Bhargava, Director
- Nand Gopal Khaitan, Director
- Pradip Roy, Director (Nominee of IDBI)
- Pravinchandra V. Gandhi, Director
- Raghupati Singhania, Director
- P. Narasimharamulu, Director (Nominee of ICICI)
- V.K. Guruswamy, Director (Nominee of LIC)
- Vinita Singhania, Managing Director
- Shailendra Chouksey, Whole-time Director
-S.K. Wali, Whole-time Director
Company secretary:
B.K.Daga
Chief Financial Officer:
Sudhir A Bidakr
LOCATION AND MANUFACTURING UNIT:

JK Lakshmi Cement
Jaykaypuram-307 019,
Basantgarh,
District Sirohi
(Rajasthan).

JK Lakshmi Cement
Village Motibhoyan,
Taluka Kalol (N.G.),
Distt. Gandhi Nagar-382 721,
Gujarat
PHASE -2

CURRENT GOALS & OBJECTIVES:

1.
The company is attempting to take advantage of the strong demand conditions for
cement in eastern region, with its plan to set up a greenfield project with a ca
pacity of
2.7 MT in Chattisgarh at a cost of nearly Rs 1,200 crore. This facility is expec
ted to
be brought-on-stream during 2011-12.
2.
JK Lakshmi is also expanding its clinker capacity by nearly 0.4 MT at a cost of
almost Rs 145 crore and this facility is expected to be operational by January 2
011,
and this should help the company raise its capacity by 0.6 MT. This will result
in its
capacity reaching 5.3 MT by January 2011.
3.
Apart from expanding cement capacity, the company is also setting up a waste hea
t
recovery system, which will generate 12 MW of captive power that is expected to
come on stream in March 2011.
4.
The company is also setting up a 18 MW thermal power plant at cost of nearly Rs
80
crore and this facility is likely to be operational in 2011. This will enable th
e company
to save power cost, which is one of the key operational costs for cement makers.
FINANCIAL ASPECT OF THE COMPANY:
S.NO
.
RATIOS Mar
'06 Mar '07 Mar '08 Mar '09 Mar '10
1 Operating
margin (%) 22.11 30.73 32.32 25.86 29.11
2 Gross profit
margin (%) 18.77 26.45 27.91 24.16 27.57
3 Net profit margin
(%) 9.52 21.11 20.19 14.58 16.17
4 EPS (Rs) 5.57 15.60 18.28 14.59 19.70
5 Return on net
worth (%) 26.01 43.04 34.82 21.48 23.60
6 Dividend payout
ratio (net profit) 0.00 6.41 13.68 27.42 12.69
7 PBDIT 128.8
1 259.29 357.97 316.70 433.92
8 Depreciation 53.07 44.33 58.54 69.11 80.03
9 PBIT 75.74 214.96 299.43 247.59 353.89
10 PBT 119.0
6 214.74 245.34 260.57 267.86
11 PAT 55.45 178.11 223.67 178.59 241.13
12 Net profit 55.45 178.11 223.67 178.59 241.13
1. Operating margin (%)
Operating margin is used to measure company's pricing strategy and operating eff
iciency.
It gives an idea of how much a company makes (before interest and taxes) on each
rupees
of sales. Operating margin ratio shows whether the fixed costs are too high for
the
production or sales volume. As Jk LAXMI have the highest operating margin on
year 2008 it means it have better position during that period.
The higher the Operating Profit Margin, the better. This is because a higher
Operating Profit Margin shows the company can keep its costs under control
(successful cost accounting).
2. Gross profit margin (%)
The gross margin is not an exact estimate of the company's pricing strategy but
it does
give a good indication of financial health. Without an adequate gross margin, a
company
will be unable to pay its operating and other expenses and build for the future.
. JK LAXMI
GPM fluctuating from one period to another it means undergoing drastic
changes which will affect the costs of goods sold or pricing policies.
Firms that have a high gross profit margin are more liquid and thus have
more cash flow to spend on research & development expenses, marketing or
investing.
3. Net profit margin (%)
Net Profit Margin tells you exactly how the managers and operations of a busines
s are
performing. Net Profit Margin compares the net income of a firm with total
sales achieved. As the JK LAXMI have a higher Gross profit margin than the Net
profit margin it tells us that the marketing/administration costs of company is
huge! However, this also tells us that operating costs and cost of goods sold
of company is relatively low.
4. EPS (Rs)
The portion of a company's profit allocated to each outstanding share of
common stock. Earnings per share serve as an indicator of a company's
profitability.
In order to make earnings comparisons more useful across companies,
fundamental analysts instead look at a company's earnings per share (EPS).
EPS can be calculated for the previous year ("trailing EPS"), for
the current year ("current EPS"), or for the coming year ("forward
EPS"). Last year's EPS would be actual, while current year and forward year
EPS would be estimates. As JK LAXMI EPS is increasing it means the earning
available to equity share holders is increasing.
5. Return on net worth (%)
The amount of net income returned as a percentage of shareholders equity. Return
on
equity measures a corporation's profitability by revealing how much profit a com
pany
generates with the money shareholders have invested. The decreased RONW of JK
LAXMI shows the increase in the PAT or decrease in the share holder
funds.The ROE is useful for comparing the profitability of a company to that of
other firms in the same industry.
6. Dividend payout ratio (net profit)
The dividend payout ratio shows what percentage of a company's earnings it is pa
ying
out to investors in the form of dividends. . In the year 2009 the JK LAXMI paido
ut 27.48% of its earnings in dividends maximum among the 5 years ofperiod. The h
igher the payout ratio, the less confidence the company hasthat it would've been
able to find better uses for the money it earned.
7.PBDIT
The PBDIT is frequently increasing through out the period this shows theincrease
in the total sales of the JK LAXMI
8 .DepreciationA noncash expense that reduces the value of an asset as a result
of wear and
tear, age, or obsolescence. The frequently increase in depreciation shows
the reduction in the value of the assets. It also shows that company is
frequently buying the new assets.
9.PBIT
The PBIT increasing throughout the respective years shows increasing in
interest and taxes due to increase in the loans and taxes.
10.PBT
The PBT increasing throughout the respective years shows increasing in
taxes.
11.PAT
It the net profit earned by the company after deducting all expenses like
interest, depreciation and tax. It can be fully retained by a company to be
used in the business.
12. Net profitNet profit is the money left over after paying all the expenses of
an endeavor.
STAKEHOLDERS OF COMPANY:
Shareholding pattern
Holder's Name No of Shares % Share Holding
Promoters 54072353 44.19%
General Public 28279494 23.11%
Financial Institutions 13357268 10.92%
Other Companies 12539021 10.25%
Foreign Institutions 5833693 4.77%
N Banks MutualFunds 4234437 3.46%
Foreign NRI 2988374 2.44%
Others 748054 0.61%
Central Govt 306230 0.25%
Promoter and Promoter Group

NAME OF SHAREHOLDER NO OF SHARES

(% of Total No. Of
Shares)
1. JK Agri Genetics Limited 11.15
2. Juggilal Kamlapat Udyog Ltd. 0.12
3. Bengal & Assam Company Ltd. 22.25
4. BMF Investments Ltd 1.18
5. Nav Bharat Vanijya Ltd. 0.07
6. J.K. Paper Limited 0.18
7. Fenner (India ) Ltd 8.38
8. Pranav Investment (MP) Co. Ltd. 0.04
9. Shri Hari Shankar Singhania 0.14
10.Dr. Raghupati Singhania 0.15
11.Shri Bharat Hari Singhania 0.08
12.Shri Anshuman Singhania 0.12
13.Sidhi Vinayak Investment Ltd. 0.07
14.Mayfair Finance Ltd. 0.07
15.Smt. Swati Singhania 0.02
16.Shri Vikram Pati Singhania 0.05
PHASE III

15. 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, UltraTech a
nd ACC
have shown the same trends of increasing sales growth and capacity utilization o
f Ultra tech
and ACC both are growing continuously because of the increase in the demand of t
he cement
in this scenario and they are very effective in meeting the demand of the consum
ers by doing
their best performance.
PROCESS BENCH MARKING
Due to similar raw material inputs and production processes, there is no signifi
cant
differentiation in the cement produced across firms and thus they follows the st
andarized
process of manufacturing. But it can follow the Manufacturing Process of its lar
gest
competitor ACC, though ACC enjoys lower fuel cost. However, this is not sustaina
ble has
already started switching to coal. Similarly it can have the advantage of coal f
uel.
STRATEGIC BENCHMARKING
Can adopt the strategies of Ultra tech 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 increasing
ly
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 companie
s
scrambling for bases on the Western coast to minimize their export transportatio
n costs.
Retail Stores: A unique concept, which Ultra Tech is experimenting with in recen
t times,
and one that is important for the future, is to continue setting up retail store
s. Other
companies like Asian paints, and most recently Tata Steel have tried a similar c
oncept.
Relationship Management: UltraTech should focus on managing its relationships wi
th
importers, exporters, distributors, warehouse providers, wholesalers, retailers
and dealers
for their long-term profitability.
17. PRODUCT LIFE CYCLE
18. COMPANY LIFE CYCLE
19. INDUSTRY LIFE CYCLE
20. STRATEGIC MODELS
PORTER S FIVE FORCE MODEL
BCG MATRIX
21. SWOT ANALYSIS
STRENGTHS
Production

High quality 43 grade OPC,53 grade OPC,cement 53 blended.

Annual production capacity of 3.5 million tonnes.
Use of high-end equipment such as the Gamma Metrics Machine and the X-ray
Analyser ensures that each product passing out of JK Lakshmi's manufacturing
facility adheres to global standards of quality and performance.
Logistics

Can directly deals with the limestone tenders and thus the middle man does not
affects its cost.
Use the local transporters which provide the efficient transportation cost.
Plantation

JK Lakshmi's manufacturing plant uses ultra-modern technology and imported

machinery.
The JK Lakshmi cement manufacturing facility is spread across an area of
8 square kilometres among the lush green Arravali ranges at Jaykaypuram in Siroh
i
district of Rajasthan.
Jk laxmi cement has plantations in Rajasthan,Gujarat,.
The plant is fully computerised and centrally controlled by programmable logic
controller with colour VDU Control Stations
Brand Positioning
Cement 53 (blended) has a minimum guaranteed strength of 53 mega pascals (Mpa),
and is used for applications, such as all types of Roller Compacted Concrete (R.
C.C.)
work, plastering, underground structures, dams, heavy machinery foundations,
marine structures and hydropower stations.
Its 43 Grade OPC is used for applications, such as commercial buildings, industr
ial
constructions, multi-storeyed complexes, cement concrete roads and heavy duty fl
oors.
Distribution Channels

The Company has a network of 70 cement dumps

Over 2200 dealers spread across the states of Rajasthan, Gujarat, Delhi, Haryana
,
Uttar Pradesh, Uttaranchal, Punjab, Jammu and Kashmir, Mumbai and Pune.
Human Resource

1288 employees
The Performance Management System at JK Lakshmi Cement ensures that
performance and achievement do not go unnoticed.
It provides an opportunity to the employees to monitor their progress and develo
p into
complete professionals.
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.
At the end of the year, each employee s 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.
Training & development-We lay a lot of emphasis on developing our employees
beyond their present boundaries, broadening their horizon, enabling them to thin
k the
unthinkable and rise above the benchmarks they set for themselves.
It take pride in the internal and external training programmes organized for our
people. Here, the word internal also has a special significance because we train
our
own people to become Trainers for the rest of their team.
Power & Fuel

Power consumption decreases from 80kwh/mt to 79 kwh/mt (from year 2009 to

2010).
· Fuel consumption decreases from 89kg/mt to 85 kg/mt (from year 2009 to 2010)
Finance

Consistent revenue growth.

Gross sales increase from 144.05 cr. to 1644.05 cr.(from year 2009 to 2010)
EBIT increase from 247.59 cr. to 353.89 cr.(from year 2009 to 2010)
PAT increase from 178.59 cr. to 241.13 cr.(from year 2009 to 2010)
EPS (Rs.) increase from 14.59 to 19.70(from year 2009 to 2010)
Quality

It is also the first cement producer of Northern India to be awarded an ISO 9002
certificate and be accredited by NABL (Department of Science & Technology,
Government of India) for its Lab Quality Management systems.
JK Lakshmi Cement manufacturing facility has been rated amongst Greenest Cement
Plant of India by CSE GRP 2005 thus highlighting our commitment to the
environment even while ensuring the highest standards of quality for our product
s.
Jk laxmi cement also won the Productivity Excellence Award 2007-08, Energy
Conservation Award 2008, NCB award 2007, Building Leadership Award 2007,
National Award for Environmental Excellence & Energy Management 2007, Golden
Peacock Award for Corporate Social Responsibility 2007, ICWAI National Award
2007 for Excellence in Cost Management, The Pinnacle Cement 2006 award by
MTech Zee TV, Green Tech Safety Award and a place of pride amongst the top ten
companies in India in HR practices. (as per the Business Today-TNS Mercer
survey).
Projects

Major Projects like IGNP, Sardar Sarovar Dam, Golden Quadrilateral

major corporations like L&T, Reliance, NTPC, Essar and Airport Authority of Indi
a,
JK Lakshmi Cement has become the preferred choice among the customers because
of its consistency, high level of quality and impeccable customer service.
WEAKNESSESS
Raw materials

Not available in all the places.

Losses of raw material .
Products
.
High cost of branded products.
.
Lack of availability in the market.

Operations.
.
High Power/ Fuel costs.
.
Required efficient maintaince for the wastes.
.
Raw material inventory required due to perishable of raw material.
.
High inventory handling cost.

Human Resorce

Due to openess in the organization work culture is very informal that wil not su
it for
better management in corporate.
Marketing

Lack of awareness program for consumers due to low promotion mix.

Lack of marketing mix.
Health
.
Highly dusty environment is hazardous for health.
.
It affect human s respiratory system adversely.

OPPURTUNITIES

Rapid growth is taking place in Bihar and Madhya Pradesh.

Institutional market like corporate and offices ,school society complexes are gr
owing
in large scale,which will increase the requirement.
People are opting for more stable structures and intensive use of cement is taki
ng
place, even government is spending heavily on infrastructure projects. Thus, thi
s is
the right time to fully tap these markets.
As Indian core industry is also growing at rate of nearly 10% per annum,it is ha
ving a
good future.
Foreign direct investment in infrastructure sector going to increase in coming y
ears,
which will increase the demand of cement.
Roads are undergoing through the transformation process through which the
traditional method of road building will be replaced by modern concrete roads.
THREATS
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 and custome
rs.
Cheep priced brand are grabbing rapidly a large chunk of lower income customer
base.
Players such as Jaypee Cement, Prism Cement, and Birla cement.ACC cement are
eating up considerable market share.
Due to India s exponential growth many new international cement companies are
expected in coming years which will bring a tide of change and can start price w
ar.
The emergence of small players in this market may increase the competition and s
tart
the malpractices, and heavy discounts to retailers. They can also influence many
retailers by giving better profit margin, and other Benefits.
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 tim
ber
which is cheap and long lasting for years.
22. SUGGESTION
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.
Proper use of waste material.
They can increase the production plant because of high growth rate of infrastruc
ture.
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 jk laxmi cement increases his market share due
to the
high growth rate of real estate.