A REPORT ON SWOT

ANALYSIS AND PEST

ANALYSIS OF BIRLA

GROUP

SWOT ANALYSIS

STRENGTHS

We are the only company in India, which manufacture eight types of cement

Low cost of production.

WEAKNESS

Effect of global recession on Real Estate and Infrastructure

Demand-Supply gap, Overcapacity

Increasing Cost of Production

High Interest rates.

OPPORTUNITIES

Strong growth of economy in the long run.

Increase in infrastructure projects

Growing middle class

Technological Changes

Increase in govt spending

We have big market in western India

Gujarat government has opened of blocks of lime stone for lease in Kutch district; we

have opportunity to install a 2 million tonne cement plant in this area.

THREATS

Excess over capacity can hurt margins as well as prices.

Expected competition new arrivals like Jaypee cement, Choromandal king Cement.

PEST ANALYSIS

In 2002 the world production of hydraulic cement was 1,800 million metric tons. The top three

producers were China with 704, India with 100, and the United States with 91 million metric

tons for a combined total of about half the world total by the world's three most populated states.

POLITICAL

The price of cement is primarily controlled by the coal rates, power tariffs, railway tariffs,

freight, royalty and cess on limestone. Interestingly, government controls all of these prices.

Government is also one of the biggest consumers of the cement in the country. Most state

governments, in order to attract investments in their respective states, offer fiscal incentives in

the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff for

5 years, while Gujarat offers exemption from electric duty.

ECONOMIC

Currently, the industry is on the boom, with a lot of government infrastructure and housing

projects under construction. In spite of seeing a fall during 2008-09, the export segment of the

industry is expected to grow again on account of various infrastructure projects that are being

taken up all over the world and numerous outstanding cement plants coming up in near future in

the country.

SOCIAL

Usually, the cement industry in India consists of both the organized sector and the unorganized

sector. Organized sector comprises of the well-known cement manufacturing companies while

the main players of the unorganized sector are the regional and local cement-producing units in

various states across the state. Indian consumers prefer buying branded cement like

ULTRATECH, JAYPEE CEMENT, LAFARGE CEMENT etc. It has been seen in the past, as

well, that mini cement plants with low brand value and image are not able to survive against the

cement giants. With a population of more than 100 billion people, it is expected that cement

industry will create another 25 lakhs jobs in the next 4-5 years.

TECHNOLOGY

From mining to production the entire process depends on technology. The Government of India

plans to study and possibly acquire new technologies from the cement industry of Japan. The

government is discussing technology transfer in the field of energy conservation and

environment protection to help improve efficiency of the Indian cement industry. Cement

industry has made tremendous strides in technological up-gradation and assimilation of latest

technology. At present 93% of the total capacity in the industry is based on modern and

environment-friendly dry process technology.

SUGGESTIONS

Company should raise funds through short term sources for short term requirement of

funds, which comparatively economical as compare to long term funds.

Company should improve their Inventory Turnover Ratio, by increasing inventory

turnover ratio they can increase their sales and cut down their cost of production.

The company has a Production Capacity installed 6071000 (in lacs) and they produce

only 5698004 (in lacs). So they should increase their production level.

Over all company has good liquidity position and sufficient funds to repayment of liabilities.

Company has accepted conservative financial policy and thus maintaining more current assets

balance.