Amity Business School

UltraTechCement

SUBMITTED BY:Mohit Sahni Lohit Sharma Bhavik Sarin Shailendra Singh Anupreet Kharb Vaibhav Dhir

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Industry Overview
Cement Industry is estimated at around Rs. 18,000 crores. Currently India is ranked second in the world with an installed capacity of 114.2 Million tonnes. The cement Industry in India comprise of 130 large cement plant more than 365 small cement plants The industry is expected to grow at a rate of 11%. No. of people employed 1,20,000.

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The industry is divided into five regions: North (Punjab, Delhi, Haryana, Himachal Pradesh, Rajasthan, Chandigarh, J&K and Uttranchal); West (Maharashtra and Gujarat); South (Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, Pondicherry, Andaman & Nicobar and Goa); East (Bihar, Orissa, West Bengal, Assam, Meghalaya, Jharkhand and Chhattisgarh Central (Uttar Pradesh and Madhya Pradesh).

Trade between these regions is on a very low scale mainly because of the transportation bottlenecks and uncompetitive cost of transportation.

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Growth Trends
Current production capacity 300MT Next year target 320 MT Vision 2020 550 MT The reasons for the growth can be attributed to the growth in real estate sector, infrastructure projects like dams, airports, irrigation projects and national highway development programs.

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Major Players in the Market

Market Share

18

23

6 7 20 9 17

UltraTech Cement ACC Cement Ambuja Cement Jaypee Cement JK Cement India Cement Others

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PEST Analysis

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Political:
The price of cement is depend on coal rates, power tariffs, railway tariffs, freight, royalty & cess on limestone. In the Union budget 2011-12 govt. introduce of tax free bonds, formation of infrastructure debt funds.

Economical:
The infrastructure industry is on boom because of housing development programmes, promotion of concrete highway & roads which improve the demand of cement. In the recent years, Indian cement industry attracted a huge FDI. International players like Holcim has 24 plants in the country & planning to invest US$ 2.5 billion .

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Social:
They provide cement bags on discounted price to rural areas so that they can renovate the rural areas. They do complete and time to time monitoring of their plant to stop emission of dust and CO2 from plant.

Technology:
Presently 93% of the total capacity in the industry is based on modern and environment friendly dry process technology. Under the Green Aid plan one of the project for co-generation of power utilizing waste heat in an Indian cement plant is being implemented with Japanese assistance.

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Company Overview
Aditya Birla Group is among the top 10 cement producers globally. Incorporated on 24 August 2000 as L&T Cement Limited. Cement business of Larsen & Toubro Limited demerged and vested in company in 2004. Grasim acquired management control in July 2004. Name changed to UltraTech Cement Limited with effect from 14 October 2004.

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UltraTech Cement Limited has an annual capacity of 52 million tonnes. The company has 11 integrated plants, one white cement plant, one clinkerisation plant in UAE. UltraTech Cement is the countrys largest exporter of cement clinker. The export markets span countries around the Indian Ocean, Africa, Europe and the Middle East. UltraTech Cement Middle East Investments Limited, a wholly owned subsidiary of the Company has acquired management control of ETA Star Cement together with its operations in the UAE, Bahrain and Bangladesh in September, 2010

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Distribution Channel
Cement in India is primarily sold through a distributor-dealer network. The main sales is done through Dealer network (80%) Bulk sale to institutional customers (20%) Managing the distribution network and strong working relationships with distributors, contractors etc., is critical.

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Transportation Routes
For domestic Market:
Company

Distributor

Retailer

Customer

For Export: Cement is transported via roads/railways to the nearest port

and then transferred to the importing country.

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For Institutional Sales

COMPANY

AGENTS

ORGANIZATION

GOVERNMENT

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Total margin for the distribution channel 17-18%. Distributions margin Rs. 6-7 per bag Retailers margin Rs. 2-3 per bag Around 25% of the total cost goes in transportation.

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Marketing Activities
Aditya Birla Group has been the pioneer in promotional activities when it comes to cement industry and has taken several innovative marketing initiatives. Cricket has a strong following in our country, so UltraTech cement started with in-stand branding, then moved on to be cosponsors to the Indo-Pak series held in Pakistan. To further strengthen the bonding with the channel partners, over 400 of them were taken to witness the match.

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UltraTech Cement and IPL

After the 2008 Indian premier League, UltraTech has become official sponsor for the Jaipur based IPL team. The coming together of the two brands, is the bringing together of two champions. Both UltraTech and Rajasthan Royals are champions in their domain.

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Contd.
Chak De India Campaign The in-film branding opportunity was used by UltraTech for the first time ever in the cement industry. UltraTech was the sponsor of womens hockey team. UltraTech branding was all over, throughout the movie.

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A lot of ground events are also taken up by way of road shows to create awareness about the product among the customers and trade partners. Technical meets are organized for dealers, stockists, retailers, individual house builders, engineers, architects and contractors.

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Innovative Marketing
UltraTech has brought in a new concept in cement marketing UltraTech Building Solutions. It is a one stop shop for all construction needs. It offers a wide spectrum of end-to-end home building solution. Every customer who walks into UltraTech Building Solutions outlet recieves guidance on construction related issues as well as value added services like Vastu, usage of budget software to estimate cost involved for contruction, paper clearance procedure etc. After the success in Rajkot, the company is planning to comeup with more such outlets in other parts of the country.

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B2B Sales
Data Collection
The company gets the list of registered builders and contractors from the concerned government offices. They are then divided on the basis of districts and then the list is provided to the Area Sales Manager.

A meeting is organized The company representatives provides product information to the clients, their offerings and how their product is better than their competitors. Gifts and mementos are provided to the people attending the meeting.

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Company has a 100% cash payment policy at the time of order placement. But this may vary depending upon the relation with the client. Market price of a UltraTech cement bag Rs. 235 In B2B channel Rs.220-225. The discount given to the client also depends upon the time taken by the him to make the full payment.

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B2B For Govt. Contractor

Govt. Contractor has to approach to the Ultra Tech distributor for the cement requirement. The contractor has to send the copy of work order and the requirement of the cement which is to be attested by the PWD engineer of concerned office . The distributor forward the requirement to the Ultra Tech regional office and the company directly send the cement to the contractor. The mode of payment is generally Demand Draft which is made in the favor of Ultra Tech not in the name of distributor. The amount of margin that a distributor gets here is quite less as compared to normal order.