STM PROJECT

on

Submitted To:
Prof. Ashok Kumar Sar
Professor - Strategic Management &
PGP Chairperson
KIIT School of Management

Submitted By:
Group -4
Anisha Rani Nayak (21202018)
Biswajit Beura (21202034)
Debolina Sadhukhan (21202038)
Mahima Radha Jyoti Nayak (21202052)
Trushali Behera (21202072)
ACC Ltd
Company History

Acc Limited is an MNC company founded in the year 1936 as The Associated Cement Companies
Ltd. The company was formed by the merger of ten existing cement companies. The company
headquarter is in Mumbai, Maharashtra, India and is a leading company in the Indian building
materials space, with an operational and marketing presence in the pan-India. The firm is
recognized as an pioneer organization which has consistently set new benchmarks through
innovative research and product development. ACC has experience and expertise spanning over
eight decades and actively contributed to India’s progress. It is also among the first Indian
companies to include commitment to environmental protection as one of its core business
objectives. The company has rich experience in mining, being the largest user of limestone. and
also the biggest customers of the domestic coal industry, of Indian Railways, It has extensive reach
with over 10,000 retail outlets and penetration in the rural areas of India. ACC offers products in
several categories of cement like Portland cement, Premium cement, Ready Mixed Concrete and
bulk consumption cement. The company has five subsidiaries in the areas of bulk cement
distribution, gypsum and coal supplier and limestone.
Product & Services:
❖ ACC Gold Range
❖ ACC Silver Range
❖ Bulk Cement
Individual House Builder:
➢ ACC Leak Block
➢ ACC Leak Block Ready to use Plaster
➢ Tile Adhesives
Institutional Buyers:
➢ Tile Adhesives
➢ Ready to use Plaster
➢ Thin Bed Jointing Mortar
➢ Cementitious Mortar
 ❖ Bulk Cement
❖ Ready Mixed Concrete
❖ Ready Mixed Concrete Value-Added Products
❖ ACC ECOPact
❖ Digital and Customer Solutions: ACC Dream Home App, Construction Ka Doctor
Values:
The Company's value is based on integrity, respect for the law and strict compliance thereof,
emphasis on product quality and a caring spirit.
Mission:
To be a driving force in creating a confident future for our people, our customers, our shareholders
and our nation.
Vision:
To be one of the most respected companies in India; recognized for challenging conventions and
delivering on our promises.
Financial Performance:
Revenue:16,356.11 cr in the year 2021, 13,988.52 cr in 2020
Profit: 1820 cr in the year 2021, 1415 cr in 2020

Industry Analysis (Porter's 5 forces):

Entry and Exit - Barriers to entry are high owing to the following factors:
● Raw Materials - Due to the low value and high bulk of cement, outbound freight makes up
nearly one-fifth of the overall cost of production. Additionally, close to 1.7 tons of raw
materials are transported for every tons of cement produced.
● Location - The location of the cement plant becomes important in this circumstance. There is
a trade-off between proximity to raw material suppliers and proximity to markets when
determining where to locate the factory. The availability of limestone reserves, a crucial
component, also poses a sizable entry hurdle. To reduce the cost of assembling raw materials,
the facility must be situated close to mineral reserves. The factory should be situated near the
limestone reserves because each tons of clinker requires 1.4–1.5 tons of limestone.
● Competition - High degree of rivalry in the cement sector. On a national level, the Indian
cement business has weak oligopoly characteristics, with the top 6 companies out of more than
100 enterprises controlling 50% of the cement market. This nature has remained constant over
time.
● Cost (High capital costs and long gestation periods) - The smallest worth building, a new
cement plant that produces 1 million tons annually, costs about $200 million. An existing
business can expand for a lot less money.

The combined market share of top 4 players of the industry Ultra Tech (21%), Shree (7%), ACC
(6%), Ambuja (6.55%) and Dalmia Bharat (5.5%) is 46% that is a huge chunk of the market itself,
is indicative of high levels of barriers to entry.
Bargaining Power of Buyers (Low): This speaks to the influence that clients may have on a
specific sector. Because bulk purchases are the norm in the cement sector, buyers' bargaining
leverage is modest. For instance, large construction companies, businesses who want to create their
own offices, etc. With the cement businesses, these purchasers might haggle. Additionally, the fear
of importing cement could provide sellers leverage when negotiating with purchasers. However,
given that the cost of import will raise the project's overall cost, this threat is somewhat mitigated.
When there is only one buyer in the market, pure buyer power exists. Facts imply that this influence
is limited in the cement sector. Due to a lack of alternatives, the small number of cement
companies, and customer demand for the product, consumer power is constrained. Customers are
considered powerful if they are intensely focused and buy a lot of the product. The last
consequence is real, but because of the ongoing shortages in the cement market, it has little impact.

Bargaining Power of Suppliers (Moderate): The vendors in this sector hold a lot of sway.
This is true since the raw materials make up a significant portion of the cement manufacturing
process. A lack of raw materials might completely shut down a plant and cause enormous losses.
When suppliers make demands, talks must be concluded swiftly, and the outcome is generally in
their favor. For instance, if the coal suppliers cease supplying coal to the plant, it will be unable to
operate and output will halt. It is imperative that the coal supply begin as soon as possible. As a
result, the suppliers have a significant impact on the decisions made by the enterprises that
manufacture cement. However, because they are all-natural resources, the government has
jurisdiction over them. To build a cement plant, businesses must purchase government rights. The
providers' power is therefore moderate.

Competition (High): One of India's markets with the most intense competition is the cement
sector. There are a lot of big firms in this market who have spent a lot of money setting up their
production facilities. The barrier to leave for the companies is increased by this factor. As a result,
they continue in the field and engage in fierce competition. Additionally, there is little variation
among cement kinds, thus switching costs for customers are low. As a result, fierce competition
exists among businesses to capture market share. Additionally, the issue of overcapacity might
occasionally arise. The result is a price war and increased competition. The top 6 companies
presently hold a 50%% market share. It is predicted that these companies' combined market share
could fall to 34% if they do not raise it in the upcoming years. The market will continue to be
dominated by mid-large players (such as Shree Cement, Madras Cement, and India Cement), small
players (such as My Home Industries Ltd., Orient, and Binani), and new players (such as Reliance,
Murli Agro, and JSW Cement). Many small and medium-sized firms have been able to increase
their market share and solidify their positions in the sector over the past two years by focusing on
capacity addition. Competitors of ACC Cement:

● Ultra Tech Cement Ltd

● India Cement Ltd
● Shree Cement Limited
● Dalmia Bharat
● Birla Corporation Limited
● India Cement Limited
● The Ramco Cement Limited
● NU Vista Limited
● Raymond Cement Industries
● Heidelberg Cement Indian Limited
● Cement Corporation of India
● Aditya Cement
● Deccan Cement Limited
● J.K. Cement Limited
 ● Bangur Cement
● Others

Threat of Substitutes (low): The absence of alternatives, or other items that are not in the same
industry but can be used in their place, indicates that there is no real threat of competition for the
industry. This reflects the cement industry's reality. There is currently no product that can
successfully replace cement. Although construction companies can utilize other materials that have
some cementitious qualities instead of cement, the effect of this substitution on cement's market
price is minimal. Since cement consumers have relatively few options for either of them, there is
little risk of alternatives. Cement is the primary building material utilized in practically all
construction projects in India. Although bitumen is one of the cement alternatives, bitumen is now
even being replaced by cement. Engineering plastic is a different cement alternative. In many work
locations, this cannot also take the role of cement. As a result, there isn't much that can replace
cement.
Carbon emission is in excess in the process of cement production. With the world gearing for net
zero carbon emissions through SDG, it can happen in the future that sustainable substitutes of
cement can be created through technological research and development. Moreover, overpopulation
and urbanization leading to overconsumption of land cover may create opportunities for concepts
of capsules/pods whose walls are generally made of aluminum, metal or fiber glass that would be
substitutes of cement.

Industry Analysis:

• India is the second-largest cement producer in the world. More than 7% of the installed
capacity in the world is made up of it. It is projected that India's potential for growth in the
infrastructure and construction sectors will benefit the cement industry the most. Cement, one
of the cheapest materials to buy in terms of rupees per kilograms, has seen a surge in utilization
due to the demand for rural homes in India. The vigorous expansion of the industrial sector,
which has fully recovered from the COVID-19 pandemic shock, is one of the main drivers
boosting demand for cement. The long-term demand for the cement industry is therefore likely
to increase. The development of 98 smart cities is one new project that is expected to
 significantly enhance the sector. With the aid of sensible government foreign policies, a
number of foreign businesses, notably Lafarge-Holcim, Heidelberg Cement, and Vicat, have
lately invested in the country. One important feature that encourages the sector's rise is the
simple accessibility of the raw materials used to make cement, such as limestone and coal.
• Invest India reports that the National Infrastructure Pipeline (NIP) was enlarged. India
produced more than 7% of the world's installed capacity for cement production, placing it as
the second largest producer in the world. 98% of the total capacity is held by the private sector,
and the remaining 2% is held by the public sector. About 70% of India's total cement
production is accounted for by the top 20 companies. India has extensive limestone reserves
of excellent quality and quantity, which offers the cement sector tremendous expansion
potential.
• Cement output in India currently averages 298 MTPA with a 500 MTPA installed capacity.
• The government has recently made good investments in and supported the cement industry.
• Between April 2000 and March 2022, FDI inflows into the sector, which is involved in the
production of cement and gypsum products, totaled US$5.48 billion.
• In the first half of 2022, PE/VC investments in real estate totaled $3,442 million (January-June
2022).
• In the first half of 2022, PE/VC investments in infrastructure totaled $2,692 million (January-
June 2022).
• When compared to June 2021, India's cement production increased by 19.4% in June 2022.
A larger allocation for infrastructure in the Union Budget 2022–23 of US$26.74 billion for
roads and US$18.84 billion for railways is projected to increase demand for cement.
According to the Rs. 48,000 crores ($6.44 billion) (US$6.44 billion) set aside for the PM
Awas Yojana, 8 million families will be identified under the housing for all segment.
• Demand has been boosted by a number of governments programs, including MGNREGA, PM
Garib Kalyan Rozgar Abhiyan, and state-level programs like Matir Srisht (West Bengal) and
public work programs (Jharkhand).
• Prime Minister Mr. Narendra Modi unveiled the "PM Gati Shakti - National Master Plan
(NMP)" in October 2021 to promote multimodal connectivity. Gati Shakti will work in
harmony to build India a top-notch, seamless multimodal transport network. Future cement
demand will increase as a result.
• After the COVID-19 epidemic, the infrastructure and real estate sectors are projected to grow,
which will increase demand for cement in 2022. The sector is likely to increase cement
manufacturing capacity by 8 MTPA.
• In order to spur economic growth, the Indian government is firmly committed to infrastructure
development and has set a goal of creating 100 smart cities. In order to facilitate cement
delivery and lower transportation costs, the government also plans to increase the capacity of
the railways and the handling and storage facilities. These actions would raise construction
activity, which would increase cement consumption.
• With the epidemic easing out, the cement industry's future prospects appear to be on track.
India may overtake China as the world's top exporter of clinker and grey cement to the Middle
East, Africa, and other developing countries in the next ten years. Cement facilities close to ports,
like those in Gujarat and Visakhapatnam, will benefit from an export advantage and be logistically
well-prepared to compete with cement mills in the interior of the country. By 2025, 550 MT of
cement is anticipated to be produced in India. By FY 2027, it is predicted that India's cement
demand would reach 419.92 MT, driven by the rising demand from a variety of industries,
including housing, commercial development, and industrial construction.
• The government also plans to increase railway capacity as well as handling and storage
facilities to make cement transportation easier and less expensive. These steps would result in
more construction activity, which would raise cement consumption. For example, the Union
Budget gave Rs. 13,750 crores (US $1.88 billion) to the Urban Rejuvenation Mission: AMRUT
and Smart Cities Mission and Rs. 12,294 crores (US $1.68 billion) to the Swachh Bharat
Mission, respectively, and Rs. 27,500 crores (US$ 3.77 billion) to the Pradhan Mantri Awas
Yojana.
SWOT ANALYSIS:
Resources:

It significantly contributes to the country's landscape with 17 cement manufacturing facilities, 85

ready mix concrete factories (Productive Assets), a sizable distribution network of 56,000 dealers
& retailers, and a nationwide distribution of sales offices (Other Tangible Assets), over 6,600
talented employees (Human Resources).
Intangible Assets
● The #ChangeTheStory Campaign by Ambuja Cements and ACC won Silver at the Fulcrum
Awards 2022 for Best use of Integrated Communications.
● Ambuja Cements and ACC's "Change the Story" campaign won gold at the South Asia SABRE
Awards 2022 for its continuous emphasis on sustainability.
● "Change the Story" also received another honor when it won the gold prize in the environment
category of the renowned IMAGEXX Awards by Adgully.
● According to BW Business World, ACC was listed as the 16th most sustainable company in
India in 2021.
● Business Today named ACC as the second-best company to work for in the construction and
infrastructure sector.

Strengths and Capabilities of ACC Limited:

❖ CSR Activities: Covid 19 Reliefs (SANITISATION DRIVE, EXTENDING SUPPORT TO
MIGRANT WORKERS, PROTECTING FRONTLINE WORKERS, EDUCATING ABOUT
SOCIAL DISTANCING, SERVING FOOD, LOVE AND EMPATHY, SUPPORTING
VULNERABLE COMMUNITIES, SUPPORTING COMMUNITIES IN DISTRESS), ACC
is rebuilding lives in Kerala. Some of the major CSR Activities include providing high-quality
education to children of employees, encouraging women from SHGs in the communities
around its plant location, health and sanitization, improving livelihoods, and many more.
❖ Number of Plants: ACC Limited has 17 manufacturing plants as compared to Ultratech and
Ambuja cement.
❖ Reducing Carbon Footprints: ACC Limited was one of the first Indian firms to make
environmental protection a corporate goal. They’ve built this commitment into every aspect of
their value chain, from mining to sales to supporting the use of alternative fuels and resources,
resulting in one of the minimal carbon footprints in cement manufacturing.
❖ 50000+ Dealers: ACC Limited today boasts of 50,000+ dealers and retailers across India. This
far and wide distribution network ensures that ACC Limited reaches all corners of India.
❖ Awards: ACC Limited has won many awards like National Award for Excellence in Water
Management by CII, Indira Priyadarshini Vrikshamitra Award, Drona Trophy, Subh Karan
Sarawagi Environment Award, and many more.

Weaknesses of ACC Limited:

● Lack of Promotional Activities: Other cement manufacturing companies are taking away the
market with their ads. For example, Ultratech is taking away the market with its tagline
“Engineers Ki Pasand”. Overall, ACC Limited’s production strength is solid, but still, its
marketing and push strategy is mediocre.
● Only in India: ACC Limited’s footprint in India is limited, and as a result, it faces competition
from Aditya Birla’s Ultratech, which exports large quantities of cement. Ultratech is enhancing
its turnover by a significant percentage by exporting.
● High Transportation Cost: They have a huge transportation cost to transport cement to
different retail shops. Also, with the increasing fuel prices, it will further increase.
● Lack of Awareness Programs for customers.
● Losing Brand Equity.

Opportunities for ACC Cement:

• By FY 2027, the demand for cement in India is anticipated to reach 419.92 MT. India has
extensive limestone reserves of excellent quality and quantity, which offers the cement sector
tremendous expansion potential. The three states of Andhra Pradesh, Rajasthan, and Tamil
Nadu are home to 77 of the 210 big cement plants in India. South India accounts for over 33%
of India's cement manufacturing capacity, followed by North India (22%), Central and West
India (13%), and East India (19%). Between FY16 and FY22, India's cement production is
anticipated to rise at a CAGR of 5.65%, driven by demand from the construction of roads,
urban infrastructure, and commercial real estate. India's cement consumption is anticipated to
increase at a CAGR of 5.68% between FY16 and FY22. According to CRISIL Ratings, rising
investment on housing and infrastructure projects will likely cause the Indian cement sector to
build 80 million tons (MT) of capacity by FY24, the greatest amount in the previous ten years.

Between April 2000 and March 2022, FDI inflows into the sector, which is involved in the
production of cement and gypsum products, totaled US$5.48 billion.
According to DGCIS, India exported US$118.15 million worth of Portland cement, aluminous
cement, slag cement, super sulfate cement, and similar hydraulic cements in FY21.
Working remotely is becoming more popular in 2021, and in Tier 2 and 3 cities, demand for cheap
homes with ticket prices under Rs. 40-50 lakh (US$ 53,694-67,118) is anticipated to surge, driving
up cement demand.
● Global Expansion:
ACC Limited can make use of India’s market supremacy to expand to other regions of the world.
● Branding Activities:
It can initiate comprehensive branding in the country, which may help them enhance brand
memory and, as a result, help the brand expand as a whole. By investing in branding campaigns
for one or two years, ACC Limited may easily restore market share and brand equity, and become
India’s leading brand. The best and cost-effective way to do brand campaigns is social media
marketing. ACC Limited can create targeted organic & paid social media marketing campaigns to
boost brand awareness, acquire quality leads and get repeat sales.
Threats to ACC Limited:
● A Huge Number of Participants:
The cement industry’s high number of companies makes it difficult for ACC Limited to set a
competitive price for its product.
● Threat from Global Players:
It faces stiff competition in Indian markets from global players. Due to India’s rapid expansion,
many new multinational cement businesses are projected to emerge in the future years, ushering
in a wave of change and potentially igniting a price war.
● Price Competition:
When a business engages in price competition, its bottom line suffers. The threat to ACC Limited
is just the same. ACC Limited is obliged to compete on price due to the enormous number of
brands offered, which has a detrimental impact on its bottom line.
● Threat from Local Players:
The emergence of small players in this market may increase the competition and start malpractices,
and heavy discounts to retailers. One of the challenges to ACC Limited and the business is a slew
of local brands offering cheap products.

Macro Environment factors & the Central Problem

“The spiraling prices of fuel, along with the shortage in availability of the same, affected the
margins of the industry along with a decline in the share price of ACC. The environmental factors
are responsible for low performance of the overall industry impacting the performance of ACC
Cement as well. Covid 19 Pandemic and the Russia Ukraine war are the primary environmental
factors.

Political and Economic- The woes of the industry worsened further with the outbreak of
Russia's war with Ukraine resulting in sanctions being imposed on Russia and its exports, fueling
further shortage of coal and oil in the market.”

The combined cost of energy and shipping accounts for around 60% of cement manufacturers'
total costs. Prices for raw materials total roughly 13–15%. With a manufacturing capacity of
114.55 million tons per annum (mtpa), Ultratech is the largest cement manufacturer, and its energy
costs increased 39% year over year to Rs 1,327.
Cement and clinker sales have increased slightly to 7.2 mt from 7 mt. The fuel and power prices
at Ambuja's subsidiary ACC increased by 26% to Rs 1,165 per tons from October to December.
The cost of freight and forwarding has fallen by 1% to Rs 1,234 per tons. The suspension of trade
with India has dealt another blow to the cement sector, as cement exports to India had been halted
since the Pulwama attacks in February 2019. Moreover, Pakistan also suspended bilateral trade
with India in August 2019. Cement exports to India were suspended during this period, which also
contributed to the loss of the industry. Pakistan used to export an average of 75,000 tons of cement
to India every month. Meanwhile, construction activity following the China-Pakistan Economic
Corridor (CPEC) project has boosted the country's production capacity in anticipation of increased
demand. The production capacity of the cement industry has increased from 44 million tons in
2014 to 69 million tons today. However, due to the political instability in the country after the
Panama data breach, the CPEC project has slowed down, adversely affecting the country's
economic activity.

Environmental - Sustainability goals by 20230, 2050 and 2070 have influenced businesses to a
great extent. Cement production emits huge amounts of carbon contributing to global warming.
Sustainable substitutes of cement with low carbon emissions can affect the cement industry.

Legal - The cement industry pays the highest tax in the region, Rs 195 per bag, and a 50% increase
in transportation costs following the introduction of the axle load policy has caused huge losses to
the industry over the past nine months. The cement manufacturing sector has a loss following the
introduction of a new tax as the government raised tariffs on the sector, which he increased by
33% over his 2020 budget. With the implementation of the Rs 50 per bag axle weight policy
introduced in November 2019, the transportation cost will increase from Rs 50 per bag to Rs 75
per bag from the cement production unit to the end user.
3S Framework:
Strategy:
• Segmenting, Targeting & Positioning:
To comprehend the shifting demands of the industry and get rid of customers, ACC Cement
combines the geographical division of mind and concept. It employs varied targeting approaches
because its products are made for a number of uses in the meta market and are aimed at distinct
consumer segments. To enter the market and target various client segments, it combines product
categories, set up strategies, and customer-based benefit strategies.
• Distribution:
By collaborating with its subsidiaries, including ACC Mineral Resources Limited (AMRL), Bulk
Cement Corporation (India) Limited (BCCI), Lucky Minmat Limited, National Limestone
Company Private Limited, and Singhania Minerals Private Limited, ACC Cement connects
developers, governmental organizations, and works to reach every area of the country.
It has a network of more than 10,000 sales locations and 8000+ staff members to lead the industry
in the distribution of R Ready Mix Concrete and Bulk Cement.
Retailers, builders, wholesalers, and retail customers between the ages of 25 and 60 make up the
ACC instrument client base. Through a vast distribution network, ACC cement is particularly
significant in India's penetration of rural areas.

Competitive Positioning:
VIP Framework:
Value:
The firm has won the trust of the consumers over the years through its high value propositions as
trust is a very important factor when it comes to bulk purchases of cement.
Imitation:
The product sold by ACC ltd is homogenous in nature which means that the process of producing
it is almost same for all the players. The branding and advertising done by the firms is unique that
demarcates the boundaries of their value proposition. For instance, ACC Ltd promotes through its
amazing campaigns like Karein Kuch Kamaal, Cementing Relationships, etc.
Perimeter & Synergy:
ACC's parent company was Lafarge Holcim before Ambuja and Adani acquired it and Ambuja.
Adani's target is to become the largest and the most efficient cement manufacturer in India by
2030.According to data, China uses more cement than India does on a yearly basis. When these
elements are combined with the numerous adjacencies of their current businesses, which include
the ports and logistics business, the energy business, and the real estate business of the Adani
Group, Adani believes that it will be able to create a distinctively integrated and differentiating
business model and position for significant capacity expansion. Synergies with the integrated
Adani infrastructure platform will be advantageous for Ambuja and ACC, particularly in terms of
racial equity. Adani Group claims that agreement will enable higher profit margins and returns on
capital for the two companies.