Micro Economics

Term Paper PPT Presentation Group - 12

Date of presentation - 10/08/2021

Firms Choosen- Ultra Tech Cements and Andhra Cements

Group members:
Sneka | Hareesh Kumar | Sidharth T | Jayashee A | Arvind Ram | Sai Dharshini | Jerin Mathew |
Sarvesh R | Aadhavan
Question 01
ULTRATECH
Delay in supply: The Company being situated in the outer
parts of the city and its plant not being located in every city
causes delay in the supply of the product. Transportation over
long distances is uneconomical for value sector, so cost of
transporting cement is high and this keeps cement from being
profitable over long distances.
Sol: They can increase the production plant because of high
growth rate of infrastructure. Also, increasing the plant could
help in availability of goods at most places reducing
transportation cost and easier mobility of the supplies.
Human resource problems: Due to openness in the Ultra
tech’s work culture which is very informal, it does not suit for
a better management in corporate. So, they face a lot
difficulty to control. And Ultra tech has insufficient man power
due to its easy recruiting and selection method.
Sol: It should improve its game in recruiting process, to get
sufficient and skilled man power in the production process. It
should also turn its work culture a little formal to maintain a
distance and discipline.
Health hazards: Highly dusty environment at the
time of dumping the cement is hazardous
for health. It affects human’s respiratory system
adversely. Ultra tech is therefore not contributing to
society as its corporate social responsibility remains
unfulfilled due to many hazards.
Sol: It should take necessary precautions and
provides sufficient safety suits for its employees. It
should also concentrate on social responsibility,
and, ensure safer production and disposal of waste.
It should situate its plants outside the city where
population will be less, since cement factories
generally cause a lot of pollution.
Lack of marketing mix: The Company suffers with
the problem of proper marketing mix which in
return results into the whole confusion state and
the product does not reach to the customers
SNEKA
properly.
Sol: They can have a healthy interaction with their
costumers, understand the actual needs of their
target audience and make things convenient &
attractive for them. Also, they should choose the
right distribution channel ensuring fast delivery of
products
ANDHRA CEMENT
Available only in few states: Andhra Cements Ltd has its
mother plant in Guntur District (AP). About 70% of the
quantities are sold within the state of AP and Telangana and
the balance quantity goes to the neighbouring states of
Tamilnadu and Karnataka. So, it is widely available in the
southern parts only and not in other areas.
Sol: It can open factories at other states to increase the
availability of goods in other parts of the country. Also, this
could increase their scale of production and profit.
Increase in the cost of raw materials, power and Transport:
The diesel prices have increased abnormally, due to which
the cost of raw materials and distribution of cement has
increased. The Company has taken steps to manage the
increasing cost by using low cost fuels.
Sol: When the cost of any input is higher, compromise is
made on the quality. But cement being an important supply
in construction, people mostly prefer good quality than
cheaper price. So, the price can be fixed higher along with
the best quality.
Reduction in sales and profit: Increase in Debtor Turnover
Ratio is on account of reduction in Sales. Reduction in
Interest Coverage Ratio is due to reduction in Sales and
Profit. Current Ratio is reduced as current liability has
increased due to reduction in Sales and Profit.
Sol: Having a strong unique selling proposition (USP) is an
important element to increase sales and profit. The more
people you can get to promote the product, the more
sales and revenues the company will have. Also, they can
adopt good marketing techniques to stand high among
competitors.
Lack of proper marketing: Andhra cement has to
concentrate a lot on marketing. They cannot afford to
spend much on advertising and proper distribution of
goods.
Sol: Marketing is a costly and complex process. Small
companies like Andhra Cement, can use social media at
initial stage to promote their product. Simultaneously they
can allocate a specific amount to marketing.
Question 02 A) TAXES: GST(GOODS AND SERVICES ACT):
Cement has been taxed at 28% under the GST as compared to 30 to 31% in the previous system of taxation.
ULTRA TECH CEMENTS ANDHRA CEMENTS LTD
Extended benefits of tax reduction of price . Reduction of Improved logistics and services.Reduction of
Price of the product by 2-3%, extending benefit of tax Manufacturing cost (As price of coal was capped to 5%
reduction under gst regime. which was reduced from the earlier rate of 11.69%)

B) LESS CONTEMPLATION ON INVESTMENT POLICIES:

Increase in Government spending on health and pubic welfare due to COVID-19.
• The growth in construction activity in the country has been slow over the last two years due to national wide lockdown, impacting the cement
demand.
UltraTech witnessed a decline of 8% in growth ANDHRA CEMENTS witnessed a decline of 4.7 %
in FY20 when compared to increase of around in growth in FY20 when compared to increase of
13%in FY19, it exhibited a overall decline of 5% in around 8.3% in FY19, it exhibited a overall decline
growth when comparing between last two years. of 3%.

HAREESH
c) INFRASTRUCTURE POLICIES:
• The National Infrastructure Pipeline program that the Government had announced in December 2019
• Modified Industrial Infrastructure Upgradation Scheme (MIIUS)
Due to Infrastructural Policies both the companies witnessed a higher demand of cement
Overall effect of Government Policies
ULTRA TECH CEMENTS ANDHRA CEMENTS LTD
Cement production in FY2020 was at 76.57 Its cement production in 2020 was at 15 million
million tonnes, lower by 2 per cent as tonnes, lower by 11 per cent as compared to 22
compared to 77.87 million tonnes in the million tonnes in 2019.
previous year.
Question 03

ULTRATECH CEMENT
●Ultratech is the largest manufacturer of cement in India and ranks among the world’s leading cement makers.
●It has over 130 ready mix concrete plants in 50 cities across India.
●It has a market reach of more than eighty percent across India.
●The company aims at the social and economic development of communities in India and they succeeded in it.
●The company with support of Indian government introduced many projects for poor people. They have provided
educational institutions, healthcare centers and many other contributions for the social well-being.
●Health facilities are being provided to over 70,000 people in rural areas.
●They have given schools necessary infrastructure and fulfilled other requirements like text books, digital
classrooms and drinking water facilities. Around 14,000 students have been covered under their project.
ANDHRA CEMENT
●The company products have always been perceived to possess superior quality standards in market and the
company is enjoying a high-level customer satisfaction index.

SIDHART
●Andhra cement is a diversified company with an annual turnover of 20,000 crores.
●It is one of the leading cement companies in south India and they contributed towards country’s expressways and
highways, hospitals, schools and others.
●The company has a reasonable share in India’s GDP.
●The company has its base in Telangana, Andhra Pradesh, Tamilnadu and Karnataka. Around 70% of quantities are
sold within these states.
●The Covid 19 pandemic has reduced the supply and production rates in south India and company profit was low.
Question 04
Andhra cement :
Ultratech cement: A. Culture:

A. SURVEY - A FEEDBACK MECHANISM: B. Health Care:

B. PARTICIPATORY MECHANISMS: C. Life at Project Sites:

JAYASHREE
C. CHANGE MANAGEMENT INITIATIVES: D. Safety of Workers & Employees:

D. CROSS FUNCTIONAL PERSPECTIVE: E. Training and development:

E. HARMONIOUS WORK CULTURE: F. Various training programs are undertaken:

• Structure training plan:
• TRAINING SETUP • Future managerial cadre program:
• Computer literacy campaign:
• EMPLOYMENT AVENUE • External training programs for senior executive:
Question 05

Green technology of Ultratech cement

Using waste material effectively as a raw material; fly ash/ slag
and micro silica. More than 50% of raw material from rejected or
unused concrete is recycled for making fresh concrete and used
back in the process, as our commitment to sustainability. Self-
energized electro chemical auto lubrication system.
Andhra cement

ARVIND
Plastic waste is easily recycled, and can easily replace up to 20%
traditional aggregate material. Although concrete produced using
plastic waste provides strength within a specific limit, it is
unarguably an eco-friendly alternative to traditional concrete.
Question 06
We need government regulation to regulate business activities because they look into the
safety of the public and the environment.
Some of the environmental regulations of cement industry:
• WATER (Prevention and Control of Pollution) ACT: The water (prevention and control of pollution) act
(referred to as the water act) was enacted in 1974 and amended in 1988. Every cement plant has to obtain the consent to
establish from the respective SPCB (state pollution board) at the commissioning stage and during subsequent years of production

SAI DHARSHINI
for its plant and mine operators under section 25 and 26 of the Water Act of 1974.
• The Air (Prevention and Control of Pollution) Act: The Air (Prevention and Control of Pollution) Act
(referred to as the Air Act) was enacted in 1981 and amended in 1987 to provide for the prevention, control and abatement of air
pollution in India.
• The Forest (Conservation) Act: The Forest (Conservation) Act, 1980, amended in 1988, was enacted to restrict the
indiscriminate diversion of forest land to non-forest purposes.
• The Environment (Protection) Act: The Environment (Protection) Act was enacted in 1986 with the objective of
providing for the protection and improvement of the environment
• Hazardous Waste (Management, Handling and Transboundary Movement) Rules:
Hazardous Waste (Management, Handling and Transboundary Movement) Rules – 2008 (referred to as HW (MHTM) rules), under
the Environment (Protection) Act, 1986, superseded the Hazardous Wastes (Management & Handling) Rules, 1989 and its
subsequent amendments
Hence, these government regulations are required for the protection of environment and for the proper
maintenance of the industry. These regulations must be followed by the cement industry for the safety of the public
Question 07
The Indian cement industry is weakly oligopolistic in nature on a national level with top 11 to 12 firms among more than 100 firms capturing
70% of the cement market.
Some Features of the Cement Industry which help us in identifying it to be oligopolistic.
1.At least some firms have large market shares and thus can influence the price of the product.
The industry has seen a process of growing consolidation of capacity in a few hands as a result of a spate of mega-mergers and
acquisitions. Leading the movement has been international cement major Lafarge of France that has acquired the cement businesses of
Raymond and Tata Steel and is reportedly gearing to acquire Jayaprakash Cement. But there have been others in the game as well. All
this is occurring in an industry where already capacity with the top six players accounts for more than 60 per cent of total production. Such a
high concentration index is a factor that strongly indicates an oligopolistic market structure.
2. There is an indeterminateness of the demand curve facing oligopolist firms
Demand or consumption of cement has been analysed across the five respective regions. Results for the central and northern zones are
summarized in Figure. From the graph, it is evident that March 06 and Sep 06 witnessed sudden surge in demand after the previous months
have faced demand shocks. Another apparent feature is that demand for cement is highly volatile across all zones. Shocks in demand are
followed by sudden surges. Such high demand variability is a characteristic of oligopoly markets.
3. Firms in an Oligopoly market exhibit increasing sales but decreasing expense to sales ratio.
The expense (or cost to sales) ratio per annum of the cement companies has decreased over the years as indicated in the figure. Though the
total sales have picked up, the cost of producing cement has not increased at the same pace. The sharp increase in sales without a
corresponding increase in cost does indicate possibility of cartel behaviour which is a characteristic of oligopoly markets.

JERIN
PROS: CONS:
1. It simplifies the market for consumers. 1. Fewer choices isn’t always a good thing.
2. It creates higher profits. 2. Trickle-down economics requires perfect ethics..
3. It puts resources into refinement. 3. Innovation becomes non-existent.
4. It can still offer competitive pricing. 4. Price fixing is common.
THANK
YOU