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Industry Profile


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Global Cement Industry

Cement is a basic ingredient for the construction industry. Cement is made out of

limestone, shell, clay mined out of a quarry close to the plant. The raw material iscrushed, and then heated at temperature in excess of 1000 C in rotating kiln to become

clinker. Clinker is then mixed with gypsum and ground to a fine powder to produce final

grade of cement. The technology is a continuous process and is highly energy intensive.

Cost of cement is 29% energy, 27% raw materials, 32% labor and 12% depreciation.

The weight/to price ratio make transportation cost very high. The competitive

radius of a typical cement plant for most common types of cement extends no more than

300 kilometers. However, cement can be shipped economically by sea and inland

waterway over great distances, extending greatly the competitive radius of cement plants

with access to waterborne shipping lanes. Thus, the location of a cement plant and the

cost to transport the cement it produces through its distribution terminals bear

significantly on the plants competitive position and the prices it may charge. The

minimum efficient size for a cement plant is around 1 million ton a year.

As a consequence of a relatively low minimum efficient plant and transportation

costs cement production is highly fragmented. It is estimated that there are around 1500

integrated cement production plants in the world. Although the industry has seen the

emergence of strong global players such a Lafarge or CEMEX, the share of the four

largest firms account only for 23% of the overall demand. (Globalization cement

industry, Phillip Lasserre, 2007)

Cement is distributed in bags or is delivered to construction sites through ready-

mix Lorries.

The major segments of the industries are:

Aggregates: quarries and crushing minerals to be mixed with cement to make concrete

Cement production

Ready Mix: distribution of ready to use concrete


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Indian cement industry

The cement industry is one of the main beneficiaries of the infrastructure boom.Withrobust demand and adequate supply, the industry has bright future. The Indian Cement

Industry with total capacity of 165 million tones is the second largest after China. Cement

industry is dominated by 20 companies who account for over 70% of the market.

Individually no company accounts for over 12% of the market. The major players like

L&T and ACC have been quiet successful in narrowing the gap between demand and

supply. Private housing sector is the major consumer of cement (53%) followed by the

government infrastructure sector. Similarly northern and southern region consume around

20%-30% cement while the central and western region are consuming only 18%-

16%.(report on cement industry in India, Shobhit Chandak,2008)

India is the 2nd largest cement producer in world after china .Right from laying concrete

bricks of economy to waving fly overs cement industry has shown and shows a great

future. The overall outlook for the industry shows significant growth on the back of

robust demand from housing construction, Phase-II of NHDP (National Highway

Development Project) and other infrastructure development projects. Domestic demand

for cement has been increasing at a fast pace in India. Cement consumption in India is

forecasted to grow by over 22% by 2009-10 from 2007- 08.Among the states,

Maharashtra has the highest share in consumption at 12.18%, followed by Uttar Pradesh,

In production terms, Andhra Pradesh is leading with 14.72% of total production followed

by Rajasthan. Cement production grew at the rate of 9.1 per cent during 2006-07 over the

previous fiscal's total production of 147.8 mt (million tons). Due to rising demand of

cement the sales volume of cement companies are also increasing & companies reportinghigher production, higher sales and higher profits. The net profit growth rate of cement

firms was 85%.

Cement industry has contributed around 8% to the economic development of India.

Outsiders (foreign players) eyeing India as a major market to invest in the form of either


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merger or FDI (Foreign Direct Investment). Cement industry has a long way to go as

Indian economy is poised to grow because of being on verge of development. The

company continues to emphasize on reduction of costs through enhanced productivity,

reduction in energy costs and logistics expenses. The cement sector is expected to witness

growth in line with the economic growth because of the strong co-relation with GDP.

Future drivers of cement demand growth in India would be the road and housing projects.

As per the Working Group report on Cement Industry for the formulation of the 11th

Plan, the cement demand is likely to grow at 11.5 percent per annum during the 11th Plan

and cement production and capacity by the end of the 11th Plan are estimated to be 269

million tones and 298 million tones, respectively, with capacity utilization of 90 per cent.

Despite the growth of Indian cement industry India lags behind the per capital

production. Supply for cement is expected to remain tight which, in turn, will push up

prices of cement by more than 50%. The most important factor for better prices is

consolidation of the industry. It has just begun and we will see more consolidation in the

coming years. Other budget measures such as cut in import duty from 12.5 per cent to nil

etc. are all intended to cut costs and boost availability of cement. Sadly the adverse

effects of global slowdown have not speared this industry too. Demand is sluggish, the

government is keeping an eagle eye on prizes, domestic coal and pet coke, prizes have

increased sharply and utilizations rates are down. The numbers coming out are a

reflection of grim times. ACC the countrys largest cement company thats controlled by

Swiss giant HOLCIM, registered 2% fall in august sales. It is the biggest fall since Feb

2007. Production fell by 5%.To stand against the problematic situation; government as

well as cement industry has taken some steps. Companies are focusing on cost of

transportation. One of the strategy is to decrease dependence on road & opt for sea

logistics as that can cut transportation cost by 30- 50 %. Some plants are adopting

futuristic plan such as setting up captive power plant, moving closer to the customers by

creating clicker, crushing, and capacity in key markets, to be more customer centric to

generate better revenue. India should push for stricter regulations of market place as to

control the prices of big companies and prevent them from forming cartels and


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exchanging information. To fight with the high inflation, government wants to import

more cement from Pakistan .However cement prizes are not very much high as other

items but still they are increasing. And the reason of high prize is surging cost of raw

material and transportation cost. Apart from this government also discussed with cement

industry not to have increase in prizes and keep consumer interest in mind.

Now the question arise in front of the government is whether the demand by the

government is possible to increase through expenditure on infrastructure or not according

to the current state of economy when so many crises are going on or how the government

allocation of US$ 3.23 billion for the National Highway Development, Project will keep

the demand for cement alive? And to what extent the prizes of cement should be increaseso that consumer cant affect.

Cement industry in India has also made tremendous strides in technological up gradation

and assimilation of latest technology. Presently, 93 per cent of the total capacity in the

industry is based on modern and environment-friendly dry process technology. The

induction of advanced technology has helped the industry immensely to conserve energy

and fuel and to save materials substantially. Indian cement industry has also acquired

technical capability to produce different types of cement like Ordinary Portland Cement

(OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS),

Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland

Cement, White Cement etc. Some of the major clusters of cement industry in India are:

Satna (Madhya Pradesh), Chandrapur (Maharashtra), Gulbarga (Karnataka), Yerranguntla

(Andhra Pradesh),Nalgonda (Andhra Pradesh), Bilaspur (Chattisgarh), and Chandoria

(Rajasthan).

CURRENT SCENARIO

The Indian cement industry is the second largest producer of quality cement, which meets

global standards. The cement industry comprises 130 large cement plants and more than

300 mini cement plants. The industry's capacity at the end of the year reached 188.97


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million tons which was 166.73 million tons at the end of the year 2006-07. Cement

production during April to March 2007-08 was 168.31 million tons as compared to

155.66 million tons during the same period for the year 2006-07. Dispatches were 167.67

million tons during April to March 2007- 08 whereas 155.26 during the same period.

During April-March 2007-08, cement export was 3.65 million tons as compared to 5.89

during the same period. Cement industry in India is currently going through a

consolidation phase. Some examples of consolidation in the Indian cement industry are:

Gujarat Ambuja taking a stake of 14 per cent in ACC, and taking over DLF Cements and

Modi Cement; ACC taking over IDCOL; India Cement taking over Raasi Cement and Sri

Vishnu Cement; and Grasim's acquisition of the cement business of L&T, Indian Rayon's

cement division, and Sri Digvijay Cements. Foreign cement companies are also pickingup stakes in large Indian cement companies. Swiss cement major Holcim has picked up

14.8 per cent of the promoters' stake in Gujarat Ambuja Cements (GACL). Holcim's

acquisition has led to the emergence of two major groups in the Indian cement industry,

the Holcim-ACC-Gujarat Ambuja Cements combine and the Aditya Birla group through

Grasim Industries and Ultratech Cement. Lafarge, the French cement major has acquired

the cement plants of Raymond and Tisco. Italy based Italcementi has acquired a stake in

the K.K. Birla promoted Zuari Industries' cement plant in Andhra Pradesh, and German

cement company Heidelberg Cement has entered into an equal joint-venture agreement

with S P Lohia Group controlled Indo-Rama Cement.

PROCESS TECHNOLOGY

While adding fresh capacities, the cement manufacturers are very conscious of the

technology used. In cement production, raw materials preparation involves primary and

secondary crushing of the quarried material, drying the material (for use in the dry

process) or undertaking a further raw grinding through either wet or dry processes, and

blending the materials. Clinker production is the most energy intensive step, accounting

for about 80% of the energy used in cement Production. Produced by burning a mixture

of materials, mainly limestone, silicon oxides, aluminum, and iron oxides, clinker is


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made by one of two production processes: wet or dry; these terms refer to the grinding

processes although other configurations and mixed forms (semi-wet, semi-dry) exist for

both types. In the dry process, the raw materials are ground, mixed, and fed into the kiln

in their dry state. In the wet process, the crushed and proportioned materials are ground

with water, mixed, and fed into the kiln in the form of slurry.

Different types of cement that are produced in India are:

Ordinary Portland cement (OPC):

OPC, popularly known as grey cement, has 95 per cent clinker and 5 per cent gypsum

and other materials. It accounts for 70 per cent of the total consumption.

Portland Pozzolana Cement (PPC):

PPC has 80 per cent clinker, 15 per cent pozzolana and 5 per cent gypsum and accounts

for 18 per cent of the total cement consumption. It is manufactured because it uses fly

ash/burnt clay/coal waste as the main ingredient.

White Cement:

White cement is basically OPC - clinker using fuel oil (instead of coal) with iron oxide

content below 0.4 per cent to ensure whiteness. A special cooling technique is used in its

production. It is used to enhance aesthetic value in tiles and flooring. White cement is

much more expensive than grey cement.

Portland Blast Furnace Slag Cement (PBFSC):

PBFSC consists of 45 per cent clinker, 50 per cent blast furnace slag and 5 per cent

gypsum and accounts for 10 per cent of the total cement consumed. It has a heat of

hydration even lower than PPC and is generally used in the construction of dams and

similar massive constructions.

Specialized Cement:


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Oil Well Cement is made from clinker with special additives to prevent any porosity.

Rapid Hardening Portland cement:

Rapid Hardening Portland Cement is similar to OPC, except that it is ground much finer,

so that on casting, the compressible strength increases rapidly.

Water Proof Cement:

Water Proof Cement is similar to OPC, with a small portion of calcium stearate or non-

saponifibale oil to impart waterproofing properties.

PROCEDURE

The main raw materials used in the cement manufacturing process are limestone, sand,

shale, clay, and iron ore. The main material, limestone, is usually mined on site while the

other minor materials may be mined either on site or in nearby quarries. Another source

of raw materials is industrial by-products. The use of byproduct materials to replace

natural raw materials is a key element in achieving sustainable development.

Raw Material Preparation

Mining of limestone requires the use of drilling and blasting techniques. The blasting

techniques use the latest technology to insure vibration, dust, and noise emissions are

kept at a minimum. Blasting produces materials in a wide range of sizes from

approximately 1.5 meters in diameter to small particles less than a few millimeters in

diameter. Material is loaded at the blasting face into trucks for transportation to the

crushing plant. Through a series of crushers and screens, the limestone is reduced to a

size less than 100 mm and stored until required. Depending on size, the minor materials

(sand, shale, clay, and iron ore) may or may not be crushed before being stored in

separate areas until required.

Raw Grinding


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In the wet process, each raw material is proportioned to meet a desired chemical

composition and fed to a rotating ball mill with water. The raw materials are ground to a

size where the majority of the materials are less than 75 microns. Materials exiting the

mill are called "slurry" and have flow ability characteristics. This slurry is pumped to

blending tanks and homogenized to insure the chemical composition of the slurry is

correct. Following the homogenization process, the slurry is stored in tanks until

required. In the dry process, each raw material is proportioned to meet a desired chemical

composition and fed to either a rotating ball mill or vertical roller mill. The raw materials

are dried with waste process gases and ground to a size where the majority of the

materials are less than 75 microns. The dry materials exiting either type of mill are called

"kiln feed". The kiln feed is pneumatically blended to insure the chemical composition ofthe kiln feed is well homogenized and then stored in silos until required.

Pyroprocessing

Whether the process is wet or dry, the same chemical reactions take place. Basic

chemical reactions are: evaporating all moisture, calcining the limestone to produce free

calcium oxide, and reacting the calcium oxide with the minor materials (sand, shale, clay,

and iron). This results in a final black, nodular product known as "clinker" which has the

desired hydraulic properties.

In the wet process, the slurry is fed to a rotary kiln, which can be from 3.0 m to 5.0 m in

diameter and from 120.0 m to 165.0 m in length. The rotary kiln is made of steel and

lined with special refractory materials to protect it from the high process temperatures.

Process temperatures can reach as high as 1450oC during the clinker making process.

In the dry process, kiln feed is fed to a preheater tower, which can be as high as 150.0

meters. Material from the preheater tower is discharged to a rotary kiln with can have the

same diameter as a wet process kiln but the length is much shorter at approximately 45.0m. The preheater tower and rotary kiln are made of steel and lined with special refractory

materials to protect it from the high process temperatures.

Regardless of the process, the rotary kiln is fired with an intense flame, produced by

burning coal, coke, oil, gas or waste fuels. Preheater towers can be equipped with firing

as well. The rotary kiln discharges the red-hot clinker under the intense flame into a


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clinker cooler. The clinker cooler recovers heat from the clinker and returns the heat to

the pyroprocessing system thus reducing fuel consumption and improving energy

efficiency. Clinker leaving the clinker cooler is at a temperature conducive to being

handled on standard conveying equipment.

Finish Grinding and Distribution

The black, nodular clinker is stored on site in silos or clinker domes until needed for

cement production. Clinker, gypsum, and other process additions are ground together in

ball mills to form the final cement products. Fineness of the final products, amount of

gypsum added, and the amount of process additions added are all varied to develop a

desired performance in each of the final cement products. Each cement product is stored

in an individual bulk silo until needed by the customer. Bulk cement can be distributed in

bulk by truck, rail, or water depending on the customer's needs. Cement can also be

packaged with or without color addition and distributed by truck or rail.

DEMAND & SUPPLY

The demand drivers for the cement sector continue to be housing, infrastructure and

commercial construction, etc. We expect the proportion of infrastructure in total demand

to improve further in future, as the thrust on infrastructure development is on the rise.

During April-November 2007, cement demand grew by 10 per cent year on year (y-o-y)

propelled by the growth witnessed in end user segments such as housing, infrastructure

etc. CRISIL Research expects demand to remain strong and grow by over 12 per cent in

the next 2 years. Cement demand is expected to outstrip supply for r

the next year and a half as no major capacities are coming on stream, thus providing

enough flexibility to cement manufacturers to further hike the prices.

Today, cement from Andhra is going all over India, including Assam, Meghalaya,

Jharkhand, Orissa, West Bengal, Chattisgarh, Gujarat and Maharashtra. More cement is

likely to flow into Tamil Nadu from the state in view of cut in sales tax. Any further

increase in demand in the South India will benefit the cement industry here. Cement


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movement from Gujarat to Mumbai is also coming down due to exports while cement

movement from Orissa into Andhra has stopped and, in fact, cement is flowing into

Orissa as well. Earlier in 2006-07, the housing sector alone consumed 65 per cent of the

total domestic consumption. With the launch of several infrastructure projects, the

housing consumption may come down to 55 per cent as the infrastructure and other

sectors are expected to move up to 45 per cent from the present 35 per cent. Still, the

main sector of consumption continues to be housing, including commercial space,

occupying more than 60 per cent. The current demand in the state for 2005-06 is expected

to cross 15 million tons (11.5 million tons). We expect the demand here to go past the

17.5-million mark in 2006-07 in view of irrigation and infrastructure projects being taken

up in the state. Weaker sections housing, construction of public toilets, schools in ruralareas apart from several private and public infrastructure projects will also give

tremendous boost to the cement consumption in the state. Most importantly, irrigation

projects, worth nearly Rs 1 lakh crore, will trigger unprecedented demand for the next 5-7

years.

DEMAND DRIVERS

Indian cement demand skewed towards housing

The demand from the housing sector is ~53% of the total Indian cement demand. There

are fears of a slowdown in the demand from the housing sector due to a drop in real estate

prices in the country. The worry is that builders may postpone construction of new

buildings if the property prices were to correct.

Infrastructure to give demand a big boost

Our analysis shows that Infrastructure should be the biggest growth driver for Cement

demand in the country. If we were to look only at order books of the top eight

construction and manufacturing equipment companies in India, we find that their


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combined order book has virtually doubled over the last two years from INR1,000bn

(USD25bn) to INR1,950bn (USD48.75bn) for completion over the next 24-30 months.

COST

Over the past five years, cost of cement production has grown at a CAGR of 8.4%. Also

the producers have been able to pass on the hike in cost to consumers on the back of

increased demand. Average realizations have increased from Rs. 1,880 per ton in FY 03

to Rs. 3,133 per tons in FY 07, at a CAGR of 13.6%, which has been reflected in higher

profit margins of the industry. To reduce the cost of production, the industry has focused

on captive power generation. Proportion of cement production through captive power

route has increased over the years. Also, cement movement by rail has increased over the

years. Freight and energy costs are also increasing; however, in the current market

scenario, manufacturers have the flexibility to pass on the increase in costs to end

consumers. Let us have a look at the cost factors affecting the cement industry.

CAPACITY UTILIZATION

Since the industry operates on fixed cost, higher the capacity sold, the wider the cost

distributed on the same base. But one should also keep in mind, that there have been

instances wherein despite a healthy capacity utilization, margins have fallen due to lower

realizations.

Power: The cement industry is energy intensive in nature and thus power costs form the

most critical cost component in cement manufacturing (about 30% to total expenses).

Most of the companies resort to captive power plants in order to reduce power costs, as

this source is cheaper and results in uninterrupted supply of power. Therefore, higher the

captive power consumption of the company, the better it is for the company.

Freight: Since cement is a bulk commodity, transporting is a costly affair (over 15%).

Companies, which have plants located closer to the markets as well as to the source of

raw materials have an advantage over their peers, as this leads to lower freight costs.


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Also, plants located in coastal belts find it much cheaper to transport cement by the sea

route in order to cater to the coastal markets such as Mumbai and the states of Gujarat

and Tamil Nadu.

On account of sufficient reserves of raw materials such as limestone and gypsum, the raw

material costs are generally lower than freight and power costs in the cement industry.

Excise duties imposed by the government and labor wages are among the other important

cost components involved in the manufacturing of cement.

Operating margins: The company should have a consistent record of outperforming its

peers on the operational performance front i.e. it should have higher operating margins

than its competitors in the industry. Factors such as captive power plants, effectivecapacity utilization results in higher operating margins and therefore these factors should

be looked into. Since cement is a regional play on account of its high freight costs, the

company should not have all its plants concentrated in one region. It should have a

geographical spread so that adverse market conditions in one region can be mitigated by

high growth in the other region.

GOVERNMENT POLICIES

Government policies have affected the growth of cement plants in India in various stages.

The control on cement for a long time and then partial decontrol and then total decontrol

has contributed to the gradual opening up of the market for cement producers. The stages

of growth of the cement industry can be best described in the following stages:

Price and Distribution Controls (1940-1981)

During the Second World War, cement was declared as an essential commodity under the

Defense of India Rules and was brought under price and distribution controls which

resulted in sluggish growth. The installed capacity reached only 27.9 MT by the year

1980-81.


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Partial Decontrol (1982-1988)

In February 1982, partial decontrol was announced. Under this scheme, levy cement

quota was fixed for the units and the balance could be sold in the open market. This

resulted in extensive modernization and expansion drive, which can be seen from the

increase in the installed capacity to 59MT in 1988-89 in comparison with the figure of a

mere 27.9MT in 1980-81, an increase of almost 111%.

Total Decontrol (1989)

In the year 1989, total decontrol of the cement industry was announced. By Decontrolling

the cement industry, the government relaxed the forces of demand and supply. In the next

two years, the industry enjoyed a boom in sales and profits. By 1992, the pace of overall

economic liberalization had peaked; ironically, however, the economy slipped into

recession taking the cement industry down with it. For 1992-93, the industry remained

stagnant with no addition to existing capacity.

Government Controls

The prices that primarily control the price of cement are coal, power tariffs, railway,

freight, royalty and cess on limestone. Interestingly, all of these prices are controlled by

government.


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REQUIREMENTS

Coal

The consumption of coal in a typically dry process system ranges from 20-25% of clinker

production. This means for per ton clinker produced 0.20-0.25 ton of coal is consumed.

This contributes 35-40% of the production cost. The cement industry consumes about

10mn tons of coal annually. Since coalfields like BCCL supply a poor quality of coal,

NCL and CCL the industry has to blend high-grade coal with it.

The Indian coal has a low calorific value (3,500-4,000 kcal/kg) with ash content as high

as 25-30% compared to imported coal of high calorific value (7,000-8,000 kcal/kg) with

low ash content 6-7%. Lignite is also used as a fuel by blending it with coal. Howeverthis process is not very common.

Electricity

Cement industry consumes about 5.5bn units of electricity annually while one ton of

cement approximately requires 120-130 units of electricity. Power tariffs vary according

to the location of the plant and on the production process. The state governments supply

this input and hence plants in different states shall have different power tariffs. Another

major hindrance to the industry is severe power cuts. Most of the cement producing states

like AP, MP experience power cuts to the tune of 25-30% every year causing substantial

production loss.

Infrastructure

To reduce uncertainty relating to power, most of the leading companies like ACC, Indian

Rayon, and Grasim rely on captive power plants. A few companies are also considering

power-generating windmills.

Limestone

This constitutes the largest bulk in terms of input to cement. For producing one ton of

cement, approximately 1.6 ton of limestone is required. Therefore, the cement plant

location is determined by the location of limestone mines. The major cash outflow takes


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place in way of royalty payment to the central government and cess on royalties levied by

the state government. The total limestone deposit in the country is estimated to be 90

billion tons. Andra Pradesh has the largest share -- 34%, Karnataka 13%, Gujarat 13%,

M.P 8%, and Rajasthan 6.5%. The plants near the limestone deposit pay less

transportation cost than others.

Transportation

Cement is mostly packed in paper bags now. It is then transported either by rail or road.

Road transportation beyond 200 kilometers is not economical therefore about 55%

cement is being moved by the railways. There is also the problem of inadequate

availability of wagons especially on western railways and southeastern railways. Under

this scenario, manufacturers are looking for sea routes, this being not only cheap but also

reducing the losses in transit. Today, 70% of the cement movement worldwide is by sea

compared to 1% in India. However, the scenario is changing with most of the big players

like L&T, ACC and Grasim having set up their bulk terminals.

Infrastructure for Future

The consumption of cement is determined by factors influencing the level of housing and

industrial construction, irrigation projects, and roads and laying of water supply and

drainage pipes etc. The level and growth of GDP and its sectoral composition, capital

formation, development expenditure, growth in population, level of urbanization, etc, in

turn, determine these factors. But the domestic demand for cement is mainly from the

housing activities and infrastructure development. The government paved the way for the

entry of the private sector in road projects. It has amended the National Highway Act to

allow private toll collection and identified projects, bridges, expressways and big passes

for private construction. The budget gave substantial incentives to private sector

construction companies. Ongoing liberalization will lead to an increase in industrial

activities and infrastructure development. So it is hoped that Indian cement industry shall

boom again in near future.


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Incentives in States

Most state governments, in order to attract investments in their respective states, offerfiscal incentives in the form of sales tax exemptions/deferrals. In some states, this applies

only to intrastate sales, like Madhya Pradesh and Rajasthan. States like Haryana offer a

freeze on power tariff for 5 years, while Gujarat offers exemption from electric duty.

Installed Capacity

India is the worlds second largest cement producing country after China. The industry is

characterized by a high degree of fragmentation that has created intense competitive

pressure on price realizations. Spread across the length and breadth of the country, there

are 120 large plants belonging to 56 companies with an installed capacity of around

135mn tons as on March 2002.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS

The cement industry is going through its boom period with full capacity utilization.

Powered by the GDP growth of 8-9%, the annual demand for cement in the country

continues to grow at 8- 10%. As per NCAER study, under high growth scenario, the

demand for cement (including exports) is expected to increase to 244.82 million tonnes

by 2010-11. As per the study, the demand is expected to be much higher at 311.37

million tonnes, if the optimistic projections of the road and the housing sectors are met.

The industry has responded to this with substantial new capacity announcements. The

materialization of these capacities, however, is likely to be delayed due to a number of

factors including timely delivery of equipment and construction of the plant due to the

heavy order book position of the suppliers. It is expected that demand growth will

outstrip supply till the materialization of such new capacities. However, the current high

level of international crude prices and its impact on the domestic prices of petroleum


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products is likely to make a dent in the profitability but its impact will have to be seen

depending upon the ability of the economy to pass on such cost increase to the consumer.

While the freight cost could be optimized on the imported coal through usage of

companys own ships for part of the quantity, the international prices of imported coal

and its volatility together with the strengthening of the dollar against rupee could derail

this. This could impact the delivery prices of imported coal and also the cost of

production. The Government has taken steps to increase the availability of indigenous

coal for its expanded capacity across various plants which can mitigate the impact of such

high cost of imported coal for the plants located near the coal fields in India.

The Governments continuing efforts to rein in cement prices by freeing imports and

banning exports could artificially disable the normal market price mechanisms fordetermining the price.

The rise in the price of cement is because of the gap of demand & supply in the market.

The demand for cement is much higher than its actual supply. But with the production

maximization, which can be encountered in next few years, this gap may narrow down,

that may ensure the market to be in equilibrium.

Decreasing per capita consumption doesnt affect the total consumption for the cement. It

means the infrastructure; contacted housing is using the bulk of the production. In spite of

High price of the product, the hick of demand because of the increasing rate of

infrastructural development.

Domestic price of cement is rising as well as the imported cement price is lowering. So,

altogether the supply of the cement, which is affordable, will increase. This may in

decrease the gap between supply and demand. Major Demand was from the housing

sector, which may shift to infrastructure as lots of infrastructural development processes

has already being taken up & due to the increased price, housing segment started showing

a slowdown.


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Main Companies in IndiaAssociated Cement Companies Ltd (ACCL)

Associated Cement Companies Ltd manufactures ordinary Portland cement, composite

cement and special cement and has begun offering its marketing expertise and

distribution facilities to other producers in cement and related areas. It has twelve

manufacturing plants located throughout the country with exports to SAARC nations.

The company plans capital expenditure through expansion of existing units and/or

through acquisitions. Non-core assets are to be divested to release locked up capital. It is

also expected to actively pursue overseas project engineering and consultancy services.

Birla Corporation Ltd.

Birla Corp's product portfolio includes acetylene gas, auto trim parts, casting, cement,

jute goods, yarn, calcium carbide etc. The cement division has an installed capacity of

4.78 million metric tonnes and produced 4.77 million metric tonnes of cement in 2003-

04. The company has two plants in Madhya Pradesh and Rajasthan and one each in WestBengal and Uttar Pradesh and holds a market share of 4.1 per cent. It manufactures

Ordinary Portland cement (OPC), Portland pozzolana cement, fly ashbased PPC, Low-

alkali Portland cement, Portland slag cement, low heat cement and sulphate resistant

cement. Large quantities of its cement are exported to Nepal and Bangladesh. Going

forward, the company is setting up its captive power plant to remain cost competitive.

Century Textiles and Industries Ltd (CTIL)

The product portfolio of CTIL includes textiles, rayon, cement, pulp & paper, shipping,

property & land development, builders and floriculture. Cement is the largest division of

CTIL and contributes to over 40 per cent of the company's revenues. The company has an

installed capacity of 4.7 million tonnes with a total cement production of 5.43 million

tonnes in 2003-04. CTIL has four plants that manufacture cement, one in Chhattisgarh,


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two in Madhya Pradesh and one in Maharashtra. Going forward, the company has

scripted a three-pronged strategy closing down its shipping business, continuing with its

chemicals and adhesive division, and focusing on cement, rayon and paper as its long

term business plan.

Grasim-UltraTech Cemco

Grasim's product profile includes viscose staple fibre (VSF), grey cement, white cement,

sponge iron, chemicals and textiles. With the acquisition of UltraTech, L&T's cement

division in early 2004, Grasim has now become the world's seventh largest cement

producer with a combined capacity of 31 million tonnes. Grasim (with UltraTech) held a

market share of around 21 per cent in 2003-04.It has plants in Madhya Pradesh,Chhattisgarh, Punjab, Rajasthan, Tamil Nadu and Gujarat among others. The company

plans to invest over US$ 9 million in the next two years to augment capacity of its

cement and fibre business. Its also plans to focus on its international ventures, ramping

up the capacity of Alexandra Carbon Black in Egypt to 1,70,000 tonne per annum (from

1, 20,000 tpa) and raising the capacity of the carbon black plant in China from 12,000 tpa

to 60,000 tpa.

Gujarat Ambuja Cements Ltd (GACL)

Gujarat Ambuja Cements Ltd was set up in 1986 with the commencement of commercial

production at its 2 million tonne plant in Chandrapur, Maharashtra. The group has clinker

manufacturing facilities at Himachal Pradesh, Gujarat, Maharashtra, Chhattisgarh, Punjab

and Rajasthan. The company has a market share of around 10 per cent, with a strong

foothold in the northern and western markets. Its total sales aggregated US$ 526 million

with a capacity of 12.6 million tonnes in 2003-04. Gujarat Ambuja is India's largest

cement exporter and one of the most cost efficient firms. GACL has a 14.45 per cent

stake in ACC, making it the second largest cement group in the country, after Grasim-

UltraTech Cemco. The company has free cash flows that it is likely to use to grow

inorganically. The company is scouting for a capacity of around two million tonne in the


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northern and western markets. It has also earmarked around US$ 195-220 million for

acquisitions.

India Cements

India Cements is the largest cement producer in southern India with a total capacity of

8.81 million tonnes and plants in Andhra Pradesh and Tamil Nadu. The company has a

market share of 5.4 per cent with a total cement production of 6.36 million tonnes in

2003-04.Its product portfolio includes ordinary Portland cement and blended cement. The

company has limited its business activity to cement, though it has a marginal exposure to

the shipping business. The company plans to reduce its manpower significantly and exit

non-core businesses to turnaround its fortune. It also expects the export market to open

up, with the Gulf emerging as a major importer.

Jaiprakash Associates Limited

Jaiprakash Industries, now known as Jaiprakash Associates Limited (JAL) is part of the

Jaypee group with businesses in civil engineering, hospitality, cement, hydropower,

design consultancy and IT. It has an annual capacity of 4.6 million tonnes with plantslocated in Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar Pradesh). The

company has a market share of 3.8 per cent with the cement division contributing US$

172 million to revenue in 2003-04. The company is upgrading its capacity to 6.5 million

tonnes through the modernizing of the existing units and the commissioning of a new

grinding unit at Tanda (Uttar Pradesh) with an investment of US$ 163 million. Jaiprakash

Associates has decided to concentrate on its core business of construction and

engineering and leave its cement plant to its subsidiary Jaypee Rewa Cement Ltd. The

company manufactures a wide range of world class cement of OPC grades 33, 43, 53,

IRST-40 and special blends of pozzolana cement.

JK Synthetics


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JK Synthetics, a Singhania Group company, started manufacturing nylon at Kota in 1962.

Subsequently, it diversified into PSY/PFY, nylon tyre-cord, cement (in 1975), acrylic and

white cement (in 1984). The company has a market share of 2.7 per cent. JK Synthetics

Limited is restructuring its business divisions into two separate entities- JK Cements and

JK Synthetics. After the restructuring, it will be left with a cement plant at Nimbahera in

Rajasthan, with a capacity of 3.26 million metric tonnes and manufacturing white

cement.

Madras Cements

Madras Cements Ltd is one of the oldest cement companies in the southern region and is

a part of the Ramco group. The company is engaged in cement, clinker, dolomite, dry

mortar mix, limestone; ready mix cements (RMC) and units generated from windmills.

The company has three plants in Tamil Nadu, one in Andhra Pradesh and a mini cement

plant in Karnataka. It has a total capacity of 5.47 million tonnes annually and holds a

market share of 3.1 per cent. Madras Cements plans to expand by putting up RMC plants.

As Karnataka is a promising market, the company is further expanding its capacity from

the present 1.5 million tonnes to 3.4 million tonnes through an investment of US$ 9

million.

Holcim

Holcim, earlier known as Holderbank, has a cement production capacity of 141.9 million

tonnes. It is a key player in aggregates, concrete and construction related services. It has a

strong market presence in over 70 countries and is a market leader in South America and

in a number of European and overseas markets. Holcim entered India by means of a long-

term strategic alliance with Gujarat Ambuja Cements Ltd (GACL). The alliance aims to

strengthen their clinker and cement trading activities in South Asia, the Middle East and

the region adjoining the Indian Ocean. Holcim also intends to use India as an additional

base for its IT operations, R&D projects as well as a procurement sourcing hub to

generate additional synergies and value for the group.


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Italcementi Group

The Italecementi group is one of the largest producers and distributors of cement with 60

cement plants, 547 concrete batching units and 155 quarries spread across 19 countries in

Europe, Asia, Africa and North America. Italcementi is present in the Indian markets

through a 50:50 joint venture company with Zuari Cements. All initiatives in southern

India are routed through the joint venture company, while Italcementi is free to buy deals

in its individual capacity in northern India. The joint venture company has a capacity of

3.4 million tonnes and a market share of 2.1 per cent.

Lafarge India

Lafarge India Pvt Ltd, a subsidiary of the Lafarge Group, has a total cement capacity of 5

million tonnes and a clinker capacity of 3 million tonnes in the country. Lafarge

commenced operations in 1999 and currently has a market share of 3.4 per cent. It

exports clinker and cement to Bangladesh and Nepal. It produces Portland slag cement,

ordinary Portland cement and Portland pozzolana cement. The Indian cement plants are

located in Chhattisgarh and Rajasthan. Lafarge Cement has become the largest cement

selling firm in the Indian markets of West Bengal, Bihar, Jharkhand and Chhattisgarh.


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Company Profile


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The Jaypee Group is a well diversified infrastructural industrial conglomerate in India.

Over the decades it has maintained its salience with leadership in its chosen line of

businesses - Engineering and Construction, Cement, Private Hydropower, Hospitality,

Real Estate Development, Expressways and Highways. The group has been discharging

its responsibilities to the satisfaction of all its shareholders and fellow Indians, summed

by its guiding philosophy of"Growth with a Human Face".

With a single minded focus in mind, to achieve pioneering myriads of feat in civil

engineering Shri. Jaiprakash Gaur, the founding father of Jaiprakash Associates Limited

after acquiring a Diploma in Civil Engineering in 1950 from the University of Roorkee,

had a stint with Govt. of U.P. and with steadfast determination to contribute in nationbuilding, branched off on his own, to start as a civil contractor in 1958.

Historical Milestones

Year 1957 Completed first work as contractor in Kota (India).

Year 1979 Jaiprakash Associates Private Ltd. ( JAPL)

Year 1983 Establishment of Jaypee Rewa Cement Plant (JRCL) with an initialcapacity of 1 million tones.

Year 1980 Hotels Siddharth and Vasant Continental set up.

Year 1986 Formation of Jaiprakash Industries Limited (JIL) by amalgamating

JAPL into JRCL.

Year 1992 Formation of Jaiprakash Hydro Power Ltd.(JHPL) and Jaiprakash

Power Venture Ltd. (JPVL)

Year 1996 Establishment of Jaypee Bela Cement Plant (JBCP) with an initial

capacity of 1.9 million tones.

Year 2000 Formation of Jaypee Cement Ltd. (JCL) by merging JRCL and JBCP.


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Year 2003 Formation of Jaiprakash Associates Ltd. (JAL) formed by merging JIL

with JCL.

Year 2005 Shares of JHPL listed on BSE/NSE. First Hydropower company to bepublicly held and listed in the country.

Year 2006 Merger of Jaypee Greens with Jaiprakash Associates Ltd.

( JAL)

Business of Jaypee Group

Civil Engineering

Initially, the Jaypee Group started as civil engineering contractors. Jaiprakash Associates

Ltd., the flagship company of the Group, is a leader in Construction of river valley and

hydropower projects on turnkey basis for more than 4 decades. The company is currently

executing various projects in hydropower / irrigation / other infrastructure fields and has

had the distinction of executing simultaneously 13 hydropower projects spread over 6

states and the neighboring country Bhutan for generating 10,290 MW of power. Jaypee

Group undertakes projects involving:-

-Large quantities of rock excavation (both surface and underground)

-Controlled earth/rock fill

-Concrete manufacture and placement (including chilling)

-Fabrication and erection of penstock liners

-Hydro-mechanical equipment procurement and erection

-Steel Structures

-Expressway Construction

-Real Estate Development


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Cement

Jaypee group is the 3rd largest cement producer in the country. The groups cement

facilities are located in the Satna Cluster (U.P), which has one of the highest cement

production growth rates in India.

The group produces special blend of Portland Pozzolana Cement under the brand name

Jaypee Cement (PPC). Its Cement Division currently operates modern, computerized

process control cement plants with an aggregate capacity of 13.5 MTPA. The company is

in the midst of capacity expansion of its cement business in Northern, Southern, Central,

Eastern and Western parts of the country and is slated to be a 24.30 MTPA cement

producer by the year 2010 and 26.80 MTPA by 2011 with Captive Thermal Power Plants

totaling 327MW.

Keeping pace with the advancements in the IT industry, all the 140 cement dumps are

networked using TDM/TDMA VSATs along with a dedicated hub to provide 24/7

connectivity between the plants and all the 120 points of cement distribution in order to

ensure track thetruck initiative and provide seamless integration. This initiative isthe first of its kind in the cement industry in India.

In the near future, the group plans to expand its cement capacities via acquisition and

Greenfield additions to maximize economies of scale and build on vision to focus on

large size plants from inception.

The Group is committed towards the safety and health of employees and the public. Our

motto is' Work For Safe, Healthy, Clean & Green Environment

Cement Division of Jaiprakash Associates Limited with its Plants at Jaypee Rewa Plant

(JRP), Jaypee Bela Plant (JBP), JAAGO & JCBU has been awarded the Integrated

Management System comprising of ISO-9001:2000, ISO-14001:2004 & OHSAS-

18001:1999 by the world renownedBureau Veritas Certification. ISO-9001:2000 covers
http://www.jilindia.com/cement.htm##http://www.jilindia.com/cement.htm##http://www.bureauveritas.com/http://www.bureauveritas.com/http://www.bureauveritas.com/http://www.bureauveritas.com/http://www.jilindia.com/cement.htm##


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Quality Management System. ISO-14001:2004 covers all Environmental Issues including

conservation of Natural Resources and Reduction of Emissions and Wastes. OHSAS-

18001:1999 covers Operational Safety and reduces Risk to People, Plant & Machinery.

Private Hydropower

Hydropower - a renewable source of energy on which the future of our country rests. It

conserves our nations fossil fuel reserves, is in abundant supply and simultaneously is

non-polluting in nature. Keeping all this in the backdrop of mind, Government of India

opened up the doors in 1991 to private companies for the setting up of private

hydropower projects. The GOI has an ambitious plan of providing power for all by the

year 2012. For this the government identified an optimal hydro thermal mix of 40:60, to

meet the peak shortage demand.

Seeing the vast potential present in the hydro power generation, the house of Jaypees

ventured into private power generation on Build Own Operate (BOO) basis. JAL has so

far the distinction of participating in 54 % of new hydropower projects under Indias

Tenth Five Year Plan.

Hospitality

The group owns and operates four Five Star Deluxe hotels through Jaypee Hotels

Limited, a subsidiary company and is a significant player in north of India. All the hotels

enjoy the patronage of most illustrious of the families, businessmen leaders and

dignitaries from around the world. This leading chain of deluxe hotels in India offers

luxurious accommodation, exquisite dining facilities, interesting leisure options and a

pleasant environment to provide a comfortable stay for our esteemed guests.

The first two five star hotels in the capital were set up in the back drop of the Asian

Games in 1980 - Hotel Siddharth and Hotel Vasant Continental. An ode to the

cosmopolitan culture of Delhi these two five star hotels unfold the finest lifestyle

experiences. An exquisite blend of business and pleasure makes them a perfect place to

confer, relax or pamper your senses.
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Pioneering the concept of deluxe hotels Hotel Jaypee Palace Agra, is a hotel and

convention centre. The hotel is a fine blend of the Mughal architectural brilliance and it

combines classic qualities, simultaneously blending luxury and exclusivity with modern

style, flair and sophistication.

Jaypee Residency Manor, Queen of hills, Mussoorie is a tribute to the majesty and

splendor of the Mussoorie hills. Built on an individual hilltop, the Hotel offers an

amazing 180 degrees of the most awe inspiring view of the hills.

Whether staying for business or for pleasure, whether running a conference or a meeting,

arranging receptions or any other special occasion, the Jaypee Hotels has it all to make

that affair a memorable one. Each visit is an experience of a lifetime.

Integrated Township

Jaypee Group embarks one to take a journey to a place where nature and its surroundings

transcend human soul to reach and ask for tranquility in its every form. The Jaypee group

has vested interest in the development of real estate but with a different kind of fervor.

The premier way of expression is its real estate development property in Greater Noida.

Jaypee Greenswith its inception in the real estate industry in the year 2002 brought about

a revolution in the concept of golf centric real estate development in India. With this

concept already very popular abroad, in countries like the U.S., Europe, Middle-East,

Australia etc, Jaypee Greens were the pioneers in conceptualizing the idea of golf homes

in India. The main idea was to give the residents a feel of resort living at the Jaypee

Greens residential community.

Despite being very new in the real estate industry Jaypee Greens successfully positioned

itself in the niche market as an aspirational product. It brought about a revolution in the

concept of urban living coupled with all luxuries that one can aspire for. After 4 years,

Jaypee Greens has now launched its second project in Noida which is 4 times as big as its

first project.
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and data connectivity for the ERP solutions of the E&C, Cement and Hydropower

divisions and Educational institutions.

JILIT is one of the leading education content providers for schools in India. A pioneering

initiative was taken in the year 2000 when JILIT conceptualized and developed the first

of its kind digital classroom teaching aid that serves to assists in teaching, difficult to

visualize topics and concepts in Science, Mathematics and Social Sciences. Today more

than 10000 teachers in 500 schools across 152 cities and a few other countries for

example Dubai, Kuwait, Oman, Bahrain and South Africa trust our educational content

for adding value to their classroom teaching process and in turn providing benefit to over

150000 students. Other innovative solution from JILIT includes Campus Connect

(integrated resource planning solution for academic institutions), online testing tools andBizconnect.

Expressway

India has the worlds second largest road network, aggregating over 3.34 mi llion

kilometers. As Indian Economy grew in the early part of this decade, challenges &opportunities across entire spectrum emerged and so was the case of large expressways

with unique model of ribbon development along it, which modeled as developed tracks of

New India.

The Group has entered into construction of expressways with the Yamuna Expressway

project a 165 km access controlled 6 lane super expressways between Greater Noida

and Agra on Build Own Transfer basis. The project envisages ribbon development

along the expressway at 5 locations totaling 25 million square feet for

residential/industrial/institutional purposes and shall trigger multidimensional, socio-

economic development in Western U.P. besides strengthening the Groups presence in

real estate segment in this decade.


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Recently, the Group successfully bid for and was awarded all packages (pkg. 1 to pkg.4)

of prestigious Ganga Expressway contract by the Government of Uttar Pradesh. This is

the largest private sector infrastructure project in India. The Company had emerged as the

lowest bidder, as it bid for the least land for development, which was the most important

criteria for bid evaluation. The 1047 km long 8 lane Ganga Expressway would be

developed on the left bank of River Ganga, covering the stretch from Greater Noida to

Ballia (Eastern Uttar Pradesh). The project will be built on Built-Own-Transfer basis. The

Group would also get the rights for development of an estimated 30,000 acres of land

along the expressway.

Environmental Policy

Jaypee group believes that harmony between the man and his environment is the prime

essence of healthy life and living. The sustenance of our ecological balance is therefore

of paramount importance. The Group recognizes its joint responsibility with the

Government and the Citizens to protect and preserve the environment.

The Group is thus, committed to making its operations environmentally acceptable, on a

scientifically established basis, while fulfilling customers requirements for excellent

quality, performance and safety.

As such, the group has evolved an Environmental Policy the aim of which is to do all that

is reasonably practicable to prevent or minimize, the risk of an adverse environmental

impact arising from our business operations while working with, in and around the

Nature.

The Environmental Policy reflects the continuing commitment of the Management and

Employees for sound Environment Management of its operations. The Policy applies to

bidding, sub-contracting, designing, planning, execution, testing, delivering service or a

product to the customer and handling complaints, if any. The Policy is thus applicable to

all the companies, subsidiaries, associates and affiliate companies of the Group.


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Social commitments

JAIPRAKASH SEWA SANSTHAN [JSS], a not-for-profit Trust promoted by Shri

Jaiprakash Gaur, the Founder Chairman of the Jaypee Group, has been established to

discharge its responsibility towards the society. The sansthan functions with a holistic

approach for overall socio-economic development. Set up in 1993 the trust aims to realize

the corporate philosophy of Growth with a Human Face and try to help reduce the pain

& agony in society.

JSS has translated its social responsibility into reality by building up schools and training

institutes that cater to the needs of providing quality education to the rural masses. Under

the Comprehensive Rural Development Programme (CRDP) adopted in villages

surrounding the cement plant free health care and animal care programmes have been

undertaken. The trust helps in times of natural catastrophe to reach the affected

communities in distress.


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SWOT ANALYSIS OF JAYPEE CEMENT

Strengths

Old entrant: Jaypee group is one of the oldest entrant in the Indian cement sector.It has established its first plant in year 1983 in Rewa, Madhya Pradesh.

International presence: Jaypee Cements has international presence in Nepal. It isthe highest exporter of cement to Nepal since last ten years.

Efficient power utilization: Jaypee cement is known for the efficient powerutilization in the industry and it has created industry benchmark standards in

power utilization. In year 2005, Jaypee Rewa cement complex was awarded with

most energy efficient plant of the nation by Ministry of Energy, India.

High quality cement: Jaypee Cement (PPC) surpasses the requirements laid downby Bureau of Indian Standards (BIS) for flyash based PPC cement in IS:1489 Part

(I):1991

Opportunities

Growing demand: Infrastructure is the biggest growth driver for Cement

demand in the country. The central government is also heavily spending on

the infrastructure projects which have helped in growing the demand of

cement. If we were to look only at order books of the top eight construction

and manufacturing equipment companies in India, we find that their

combined order book has virtually doubled over the last two years from

INR1,000bn (USD25bn) to INR1,950bn (USD48.75bn) for completion over

the next 24-30 months.


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Weakness

Lack of sea logistics: Sea logistics is very cheaper in comparison with road andrail transportation. At present, Freight accounts around 15% of the total cost of

production in Company. This can be sustainably reduced if company adopts sea

logistics where it is feasible.

Less market coverage: In comparison with ACC and Ultra-tech cements, Jaypeecement has less market coverage. Jaypee cement is available in only nine states in

India.

Threats

Entering of new companies: Foreign Cement giants are now eyeing on the Indiancement sector and they have made substantial entry in the Indian market in the

form of mergers and acquisitions, FDI investment, etc. Some of these companies

include Holocim, Lafarge, Heilderberg, etc.

Import Duty free: Due to huge scarcity of the cement in the market, thegovernment has relaxed all the customs and tariffs associated in the import of the

cement. So, there is strong chances of lower quality cement being imported in the

market and may be sold at the lower prices.

Increased production costs: Over the past five years, cost of cementproduction has grown at a CAGR of 8.4%. This has compelled the

company to hike its prices whereas mini small plants have been

providing lower quality cements at lower prices.


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The performance of the company on the basis of ratio analysis is as

follows:

Ratios March-07 March-08

Current Ratio 2.7 2.6

Return on equity 19.1 13.7

Earnings retention Ratio 78.85 77.90

Inventory turnover Ratio 2.83 6.83

Net profit margin 11.61 14.35


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ResearchMethodology


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INTRODUCTION TO THE TITLE

The topic of the project work carried out by me was: Implementation of retailer scheme

in the district of Allahabad. The project was carried in the Allahabad district of Uttar

Pradesh. The main task of this project work was to find out how effectively the Retailer

Scheme of the Company has been communicated and implemented in the district of

Allahabad and how effectively it is being monitored.

A retailer is someone who sells goods in small quantities to the end consumer, from his

own shop. Retailers are viewed as the end of the supply chain logistics. Most of the

company provides some kind of scheme to the retailers for sales promotion. These may

include cash discounts, Quantity Discounts, Bonus, gifts, Cash coupons, etc. During my

project work, I was assigned to assess how effectively the Quantity Discount Scheme of

Jaypee Cements was being communicated, and how it is being implemented by the

companys field force.

The Quantity Discount Scheme of Jaypee Cement is as follows: The Company has two

types of scheme. One scheme is for exclusive Retailers and another for Multi-brand

retailers. Exclusive retailers are those retailers who sell only Jaypee cement and Multi-

brand retailers are those retailers are those retailers who are selling different brands of

cement including Jaypee cement. The exclusive retailers are provided with the benefit of

Rs. 2.5/bag whereas multi-brand retailers are provided with the benefit of Rs. 1.5/bag

upon the completion of scheme. The terms and conditions for both the retailers are as

same. The retailers have to fulfill a quarterly target of at least 45 MT, yearly target of at

least 180 MT, and they have to work for at least 10 months to get the scheme.

The marketing representatives of the company are responsible for the communication of

the scheme in a proper way at an appropriative time. These marketing representatives

include Field Officer, Sales Promoter, Area manager, and Deputy Area Manager. Apart

from the above channel partners like sales promoters and wholesalers are also made

responsible for communication of scheme to retailers. My task in this project work was


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to see the role of various sales representatives of the company in the communication of

the scheme and how effectively they are discharging their duties and responsibilities.

For the monitoring of the scheme, The Company has used Retailer off-take card. This

card is popularly known as YELLOW CARD among the retailers because of its yellow

color. The card contains all the basic information of the retailer such as retailers name

and address, code , status of retailer, name of the wholesaler with whom the retailer is

attached and code number and a passport size photo for Owner identification. This card

also contains a number of columns in which the information about the cement purchased

by the retailer will be kept along with challan number and Quantity details.

My task in this project was to make the general observation of the yellow card and to see

whether it was properly filled or not.

OBJECTIVE OF THE PROJECT

The primary objective of the project is:

To find out how effectively the retailer scheme has been communicated andimplemented in the district of Allahabad.

To find out how effectively the scheme has been monitored.

The secondary objectives were:

To suggest different measures to make the scheme attractive and meaningful.

To analyze the frequency of scheme communication by marketing representatives ofcompany.


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SCOPE OF THE STUDY

A big boom has been witnessed in Cement Industry in recent times. A large number of

foreign players have entered the Indian market and are trying to gain market share in this

rapidly improving market. The study deals with the Retail scheme implementation of

Jaypee cements. This project is important in the sense that as competition has become

tougher with the entry of foreign companies, and national companies are also expanding

rapidly, all companies are introducing different schemes for retailers and trying to attract

retailers of other companies. In such situation, keeping retailers loyal to the brand is the

tough task for every company. For making strong relationship with retailers, companies

are introducing different attractive scheme for Retailers. This project aims to find out

how effectively the scheme of Jaypee Cements has been communicated and how

effectively it is being monitored. The study then goes on to evaluate and analyze the

findings so as to present a clear picture of trends in communication and monitoring of

Scheme.

SIGNIFICANCE OF THE STUDY

This is a limited study which takes into consideration the responses of 100 retailers. Out

of the 100 respondents, 50 are from inner Allah bad and 50 are from outer Allahabad.

Also, 50 of the retailers belong to Exclusive and remaining 50 retailers belongs to

Multibrand category. This data can be explorated to arrive at the trends of communication

and monitoring of scheme by the company. With the help of this project report, the

company can get information about how their scheme is being communicated and

monitored and the retailers feelings regarding the scheme provided by the company.

With the help of this project, the company can also get an overview of task done by

various marketing representatives of the company in their respective areas.


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RESEARCH DESIGN

The research is primarily both exploratory in nature. Descriptive research design is one

that simply describes something such as demographic characteristics of consumers whouse the products. The descriptive study is typically concerned with determining the

frequency with which something occurs.

A well-structured questionnaire was prepared and personal interviews were conducted to

collect the information about scheme from the market. Furthermore, Observations of the

Yellow Card was also made to get knowledge on how the scheme is being monitored.

METHODOLOGY

Sources: Both primary and secondary sources of data were utilized for the nstudy.

Primary data was collected by means of administering a questionnaire to retailers.

Secondary data has been collected from various publications, periodicals, journals, etc.

Sampling Technique: The sampling technique chosen for the study was simple random

sampling. This is one of the most common methods of selecting the sample because

everyone has probability of being selected. This is because the retailers are located in

different areas of the city. It gives all retailers in a group an equal chance of being

selected for the purpose of the survey.

Sampling Unit: The retailers who were asked to fill out questionnaires are the sampling

units.

Sample size: The sample size was 100. Out of the 100 sample size, 50 were multi-brand

retailers and 50 were Exclusive retailers. Also, the Sample was collected in equal

proportion i.e.50:50 from inner and outer Allahabad areas.


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Sampling Area: The area of the research was the district of Allahabad in Uttar Pradesh

State.

Statistical Tool Used: The tools that were used are bar diagrams, pie-chart, and Co-

relation test.


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DataPresentation,Analysis, and

Interpretation


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1. Are you aware of the Jaypees retailer scheme for Jan09-Dec09? Yes No

INTERPRETATION:-

Out of 100 retailers I have visited, 95% of the retailers have said that they were aware of

the scheme whereas rest of the retailers said that they were unaware of the scheme.

Response No. of Retailers

Yes 95

No 5


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2. Who communicated the scheme to you? FO SP SR Wholesaler

INTERPRETATION:-

This was a multiple choice question. It is the responsibility of all these to communicate

the scheme to the retailers. Out of 95 aware retailers, Field officer, Sales promoter,

Wholesaler, and Sales representative had communicated in 66, 57, 08, and 70 retail shops

respectively.

Representatives No. of Retailers

FO 66

SP 57

W 08

SR 70


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3. When was the scheme communicated to you?Jan09 Feb, 09 March09

Month No. of Retailers

Jan 89

Feb 4

March 2

INTERPRETATION:-

This was a multiple choice question. As the scheme was launched in the month of

January, it was better to be communicated in January. Out of 95 aware retailers, 89 were

informed in the January, 4 were informed in February, and 2 were informed in March.


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4. How were the targets for January-March and April-June communicated to you? writing orally telephonically

Medium No. of Retailers

Writing 37

Orally 14

Writing/Orally 44

Telephonically 0

INTERPRETATION:-

This was a multiple choice question. The retailers can be informed about scheme by any

media. As per my findings, 44 retailers were informed in both writing and orally. No

retailer was informed by telephone whereas 37 retailers were informed in writing and 14

retailers were informed orally.


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5. What amount of incentive is available under the scheme to a consignee if thetarget is achieved?


Correct 73

Wrong 22

INTERPRETATION:-

This was an open ended question. This question was asked to find out whether the retailer

has known the scheme amount clearly or not. Out of 95 aware retailers, 77% has

correctly responded the answer to the question where as rest has failed to sufficiently

answer the question.


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6. Under the scheme, a retailer shall be entitled to the incentive on material lifted through

The wholesaler he is attached with Any wholesaler

No idea By Company


Wholesaler attached 74

Any Wholesaler 0

No idea 13

By company 8

INTERPRETATION:-

This was a specific answer question. The answer to the question was Wholesaler

attached. Out of the 95 retailers who said they were aware of the scheme, only 78% i.e.

74 retailers has correctly answer the question whereas rest of the retailers has failed to

answer the question.


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7. You will be entitled to the incentive if you complete the target inAll qtrs. Even in 1 qtrs. At least 2 qtrs.

At least 3 qtrs. No idea


All quarters 71

Even in 1 quarter 3

At least 2 quarter 1

At least 3 quarter 7

No idea 13

INTERPRETATION:-

This was a specific answer question. The answer to this question was all quarters. Out of

95 firms that said they were aware of the scheme, only 75% i.e.71 firms has answered the

question correctly whereas rest of the retailers has failed to answer the question.


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10) Who have verified the yellow card from time to time?

FO AMO SR No one

Representatives No. of retailers

FO 38

AMO 5

SR 76

No one 2

INTERPRETATION:-

This was a multiple choice question. It is the responsibility of all sales representatives to

verify the yellow card. As per my observation, sales representative of the company has

verified most of the yellow cards.


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11) Was the status (exclusive/multi-brand) mentioned by the visitors while signing the

card?

Yes No Sometimes

Status No. of Retailers

Yes 60

No 2

Sometimes 22

INTERPRETATION:-Out of 84 yellow cards I had observed, 72% of the cards was filled with status, 26% was

sometimes filled with status whereas 2% was not filled with status.


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12) Status of the yellow card: Updating of Qty. till 1st

Quarter:

Updated Partially updated Not updated

Status No. of Retailers

Updated 79

Partially updated 3

Not updated 2

INTERPRETATION:-

Out of 84 yellow cards I have observed, 94% were fully updated, 4% were partially

updated, and 2% were not updated.


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Analysis of Sales Data of 84 Retailers

The following data has been collected from the 84 retailers who are selling Jaypee

cement by watching the retailer off-take card (Yellow card) they are possessing. The data

shows the sales of the retailers of the 4th

Quarter of year 07/08 and year 08/09.

S.N. Retailers Name Address Year'08MT Year'09MT Type

Scheme

Amt.

Year

08(bags)

Year

09(bags)

1 Munna hardware Shivkuti51 62

E Rs.3100 1020 12

2 Navdeep traders Katra42 49

M 1470 840 9

3 Prakash trading company Rasulabad41 52

E 1560 820 10

4 Jamuna ct agency Rajapur32 45

M 1350 640 9

5 Ms. Kashiram suraj prakash rajrooppur35 47

M 1410 700 9

6 Kesarwani cement agency Tagore town28 36

M 0 560 7

7 Ahmad trading company Teliarganj37 46.5

M 1395 740 9

8 Kesarwani ct. agency rajrooppur38 46

M 1380 760 9

9 Prabhu dayal & brothers mutthiganj49 51

M 1530 980 10

10 Jaiswal cements Rajapur52 54

M 1620 1040 10

11 Sandeep enterprizez mutthiganj57 61

M 1830 1140 12

12 Maa gayatri traders hanumanganj41 50

M 1500 820 10

13 Sweta enterprizez Katra38 47

E 2350 760 9

14 J.K. associates mutthiganj40 46

E 2300 800 9

15 Shukla marbles Naini33 43

M 0 660 8

16 Chawala brothers daraganj

37 48

E 2400 740 9

17 Bhola nath traders manjhanpur38 46

E 2300 760 9

18 Raj Hardware Bhirpur41 53

E 2650 820 10

19 Triveni ct. agency Allapur47 57

E 2850 940 11

20 Lallulal satish chandra Attarsuia49 56

E 2800 980 11

21 Anubhav hardware Bhirpur51 49

E 2450 1020 9

22 K.P. jaiswal ct. agency Allapur60 60

E 3000 1200 12

23 Chanchal ct. agency nehru nagar40

47.5 E 2375 800 9

24 Deepak enterprizez Katra39 45

E 2250 780 9

25 Rakesh enterprizez Dhoomanganj36 45

M 1350 720 9

26 Allahabad ct. crporation noorullah road42 51

M 1530 840 10

27 Adarsh ct. agency Sahson45 49.5

M 1485 900 9

28 Kesarwani stores Allapur51 57

E 2850 1020 11

29 Hamza traders Kareli48 55

M 1650 960 11

30 New raju hardwareNaharDadhauli

33 45E 2250 660 9

31 Vijaya loha bhandar Allapur38 45

M 1350 760 9

32 Satish chandra & sons Himmatganj30 41

M 0 600 8


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Scheme

Amt.(Rs)

Year

08(bags)

Year

09(bags)

33 Shivam kesarwani Soranv34 44

M 0 680 8

34 P.K. Jaiswal ct. agency Thornhill road

37 46

E 2300 740 9

35 Santosh & brothers Zhalwa41 50

E 2500 820 10

36 Jamuna enterprizez Salori36 45

E 2250 720 9

37 Grover tradersTransportnagar

46 53E 2650 920 10

38 Ms. Ashok traders Soranv50 54

E 2700 1000 10

39 Manish building Material Salori32 46

E 2300 640 9

40 Vijaya brothers Mundera38 47.5

E 2375 760 9

41 Thakur prasad & sons Chowk22 33

M 0 440 6

42 Ashok kumar & brothers Kydganj43 50

E 2500 860 10

43 Ms.Kashiram suraj prakash Rajrooppur37 49

E 2450 740 9

44 Saurabh ct. Agency Mutthiganj 41 48 E 2400 820 9

45 Kesarwani ct. agency Sahson38.5 45

E 2250 770 9

46 Manish building material Salori35 45

E 2250 700 9

47 Maa Gayatri traders Hanumanganj37

46 E 2300 740 9

48 MS. Kashiram suraj prakash Rajrooppur40 50

E 2500 800 10

49 Adarsh ct. Agency Sahson42 50

E 2500 840 10

50 Vijaya brothers Mundera45 53

E 2650 900 10

51 Deepak enterprizez Katra42 38

M 0 840 7

52 Grover traders mundera50 46

E 2300 1000 9

53 Anubhav hardware Bhirpur55 23

M 0 1100 4

54 Purushottam lal & kumar Rajapur 31 38 M 1140 620 7

55 Kesarwani ct. agency Tagore town34 45

E 2250 680 9

56 P.K. jaiswal ct. agency Thornhill road37 44

M 1320 740 8

57 Kesarwani ct. agency Thornhill road45 49

E 2450 900 9

58 Vijaya Loha bhandar Allapur47 54

E 2700 940 10

59 Rahmat ullah khan manjhanpur48 53

E 1590 960 10

60 Kesarvani marbles Allapur39 44

M 0 780 8

61 Lallu lal satish chandra Attarsuia41 45

E 2250 820 9

62 Kesarwani store Allapur33 43

M 0 660 8

63 Munna ct. agency Zhalwa35 47

E 2350 700 9

64 Rakesh enterprizez Dhoomanganj37 46

E 2300 740 9

65 Haq traders Karbala33 45

M 1350 660 9

66 K.P. Jaiswal ct. agency Allapur40 46

M 1380 800 9

67 Vinod paint house Lookarganj32 41

M 0 640 8

68 Triveny ct. Agency Allapur37 45

M 1350 740 9

69 Pooja paint house Himmat ganj39 48

M 1440 780 9

70 Chawla Brothers Daraganj35 39

M 0 700 7


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Scheme

Amt.

Year

08(bags)

Year

09(bags)

71 Kesarwani brothers Katra37 45

M 1350 740 9

72 Sweta Enterprizez Katra

41 50

E 1500 820 10

73 Prayag ct. agency Allapur46 50

E 2500 920 10

74 Laxmi Enterprizez Katra34 45

M 1350 680 9

75 Bandhu hardware Allapur57 54

E 2700 1140 10

76 Jaiswal cements RAjapur46 50

E 2500 920 10

77 Sri Sain Traders mutthiganj42 51

E 2250 840 10

78 Sanjay Traders Kaushmbi38 45

M 1350 760 9

79 A.K. enterprizez mutthiganj39 47

E 2350 780 9

80 Satyam cenents Katra49 55

E 2750 980 11

81 Pankaj Enterprizez mutthiganj52 54

E 2700 1040 10

82 Navdeep traders Jhalwa38 46

E 2300 760 9

83 Maharani ct. AgencyTransportnagar

40 49E 2450 800 9

84 Shiv traders Mutthiganj35 45

E 2250 700 9

TOTAL 3455.5 4052

While analyzing the above data collected, I have found that there has been increase in

sales of 79 firms, one firm has constant sales, and 4firms has decreased sales. There were

11 such firms which sales has been increased but failed to fulfill the target.50 firms were

such who has been selling below 45 MT but now after the implementation of the scheme

they are selling more than 45 MT. Also, there has been the increase in total sales of the

company by 17% in 4th Quarter of 07-08 as comparison to 4th Quarter of 08-09.


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On editing the above data on quantity intervals of 5 MT, we get the following data:

Quantity (MT) Year07/08 Year08/09

20-25 1 1

25-30 1 0

30-35 12 1

35-40 28 4

40-45 18 7

45-50 13 42

50-55 7 21

55-60 3 5

60-65 1 3

Total 84 84

The graphical presentation of the above data is as follows:


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FINDINGS

1.Though 95% retailers said that they were aware, but the real picture was not as they

had said.

Out of 95 retailers who told that they were aware of the scheme, I have found that only

73.15% of the retailers were aware of scheme amount, 74.10% retailers were aware about

from whom they will get their scheme, and only 67.45% retailers were aware about

quarterly fulfillment requirements of the scheme.


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2.The monitoring of the scheme was poor.

As per my findings, only 83.60% of the retailers are possessing yellow card. Out of those

yellow cards I have observed, 75.60% of the yellow cards are filled will all particulars

like name, address, code, etc. whereas 60.48% of the cards was filled with status of

retailer, and 78.96% of the cards was filled with quantity updation.


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CONCLUSION

During six weeks of my training, I visited many of the retailers of Jaypee cement

companies and got appropriate information to fulfill the requirement of my project.

Actually market surveys help the companies to assess the situation of the market and their

strengths and weaknesses. I did the survey to assess information on communication of

retailers scheme of Jaypee cement in Allahabad district and to find out the impact of

scheme on sales. After collecting data and final analysis of collected data, I have come

with following conclusion.

Though the companys marketing representative had worked hard to communicate the

retailers scheme, there needs more deliberate and conscious efforts to make this scheme

more meaningful for both company and retailers. The retail scheme communication and

monitoring process in middle path. It can neither call a success nor a failure. Its because

majority of the retailers know that Jaypee cement has lunched scheme but they dont

know terms and conditions. Also the implementation of yellow card has not been done

properly. Most of the yellow cards are not filled with company and wholesaler challan

number. Furthermore, it has been seen that the parties involved in communicating the

scheme has not proper coordination.

Though the sale of the company has been increasing, in my view market factor has

played a greater role for

kafle report 1

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