Indian Cement Industry
1. Indian cement industry dates back to 1914 - first unit was set-up at Porbandar, with a
capacity of 1000 tonnes.
2. Currently India is ranked second in the world with an installed capacity of 114.2 Million
tonnes. Industry estimated at around Rs. 18,000 crores (US $ 4185 mn).
3. Current per capita consumption - 85 kgs, as against world standard of 256 kgs.
4. Cement grade limestone in the country reported to be 89 bt. A large proportion however is
5. 55 - 60% of the cost of production are government controlled
6. Cement sales primarily through a distribution channel. Bulk sales account for < 1% of the
total cement produced.
7. Ready mix concrete a relatively nascent market in India.
The Indian cement industry is the second largest producer of quality cement, which meets
global standards. The cement industry comprises 130 large cement plants with an installed
capacity of 160.24 million tonnes and more than 365 mini cement plants with an estimated
capacity of 11.10 million tonnes making a total installed capacity of 171.34 million tonnes.
What is cement?
Cement is a mixture of limestone, Clay, Silica and Gypsum. It is a fine powder which when
mixed with water sets to a hard mass as a result of hydration of the constituent compounds. It
is the most commonly used construction material. Cement is manufactured by burning a
mixture of limestone and Clay at high temperatures in a kiln, and then finely grinding the
resulting clinker along with Gypsum. The end product thus obtained is called Ordinary
Portland Cement (OPC).
Different Types of Cement
There are different varieties of cement based on different compositions according to specific
end uses, namely Ordinary Portland Cement, Portland Pozolona Cement, Portland Blast
Furnace Slag Cement, White Cement and Specialized Cement. The basic difference lies in
the percentage of clinker used.
1. Ordinary Portland cement (OPC):
OPC, popularly known as grey cement, has 95% clinker and 5% of Gypsum and other
materials. It accounts for 70% of the total consumption. White cement is a variation of OPC
and is used for decorative purposes like rendering of walls, flooring etc. It contains a very
low proportion of iron oxide. Ordinary Portland cement is the most commonly used cement
for a wide range of applications. These applications cover dry-lean mixes, general-purpose
ready-mixes, and even high strength pre-cast and pre-stressed concrete.
2. Portland Pozolona Cement (PPC):
Portland pozzolana cement is Ordinary Portland Cement blended with pozzolanic materials
(power-station fly ash, burnt clays, ash from burnt plant material or Siliceous earths), either
together or separately. Portland clinker is ground with Gypsum and Pozzolanic materials
which, though they do not have cementing properties in themselves, combine chemically with
Portland cement in the presence of water to form extra strong cementing material which
resists wet cracking, thermal cracking and has a high degree of cohesion and workability in
concrete. PPC has 80% clinker, 15% pozolona and 5% gypsum and accounts for 18% of the
total cement consumption. It is cheaply manufactured because it uses fly ash/burnt clay/coal
waste as the main ingredient. It has a lower heat of hydration, which helps in preventing
cracks where large volumes are being cast.
3. Portland Blast Furnace Slag Cement (PBFSC):
PBFSC consists of 45% clinker, 50% blast furnace slag and 5% Gypsum and accounts for
10% of the total cement consumed. It has a heat of hydration even lower than PPC and is
generally used in construction of dams and similar massive constructions. Portland blast-
furnace slag cement contains up to 70 per cent of finely ground, granulated blast-furnace slag,
a nonmetallic product consisting essentially of Silicates and Aluminum-silicates of Calcium.
Slag brings with it the advantage of the energy invested in the slag making. Grinding slag for
cement replacement takes only 25 per cent of the energy needed to manufacture Portland
cement. Using slag cement to replace a portion of Portland cement in a concrete mixture is a
useful method to make concrete better and more consistent. Portland blast-furnace slag
cement has a lighter colour, better concrete workability, easier finish ability, higher
compressive and flexural strength, lower permeability, improved resistance to aggressive
chemicals and more consistent plastic and hardened consistency.
4. White Cement:
White Portland cement has essentially the same properties as gray cement, except for color,
which is a very important quality control issue in the industry. It is manufactured using fuel
oil (instead of coal) and with iron oxide content below 0.4% to ensure whiteness. Special
cooling technique is used. It is used to enhance aesthetic value, in tiles and for flooring.
White cement is much more expensive than grey cement.
5. Specialized Cement:
Oil Well Cement: is made from clinker with special additives to prevent any
Rapid Hardening Portland cement: It is similar to OPC, except that it is ground much
finer, so that on casting, the compressible strength increases rapidly.
Water Proof Cement: OPC, with small portion of calcium stearate or non-saponifibale
oil to impart waterproofing properties.
Capacity and Production
The cement industry comprises of 125 large cement plants with an installed capacity
of 148.28 million tonnes and more than 300 mini cement plants with an estimated capacity of
11.10 million tonnes per annum. The Cement Corporation of India, which is a Central Public
Sector Undertaking, has 10 units. There are 10 large cement plants owned by various State
Governments. The total installed capacity in the country as a whole is 159.38 million tonnes.
Actual cement production in 2008-09 was 116.35 million tonnes as against a production of
106.90 million tonnes in 2007-08, registering a growth rate of 8.84%.
Keeping in view the trend of growth of the industry in previous years, a production
target of 126 million tonnes has been fixed for the year 2009-10. During the period April-
June 2009, a production (provisional) was 31.30 million tonnes. The industry has achieved a
growth rate of 4.86 per cent during this period. The graph above shows the consumption of
cement in different areas of housing, infrastructure and industries.
Apart from meeting the entire domestic demand, the industry is also exporting cement
and clinker. The export of cement during 2007-08 and 2008-09 was 5.14 million tonnes and
6.92 million tonnes respectively. Export during April-May, 2009 was 1.35 million tonnes.
Major exporters were Gujarat Ambuja Cements Ltd. and L&T Ltd.
Recommendations on Cement Industry
For the development of the cement industry „Working Group on Cement Industry‟
was constituted by the Planning Commission for the formulation of X Five Year Plan. The
Working Group has projected a growth rate of 10% for the cement industry during the plan
period and has projected creation of additional capacity of 40-62 million tonnes mainly
through expansion of existing plants. The Working Group has identified following thrust
areas for improving demand for cement;
(i) Further push to housing development programs;
(ii) Promotion of concrete Highways and roads; and
(iii) Use of ready-mix concrete in large infrastructure projects.
Further, in order to improve global competitiveness of the Indian Cement Industry,
the Department of Industrial Policy & Promotion commissioned a study on the global
competitiveness of the Indian Industry through an organization of international repute, viz.
KPMG Consultancy Pvt. Ltd. The report submitted by the organization has made several
recommendations for making the Indian Cement Industry more competitive in the
international market. The recommendations are under consideration.
Cement industry in India is currently going through a technological change as a lot of
upgradation and assimilation is taking place. Currently, almost 93% of the total capacity is
based entirely on the modern dry process, which is considered as more environment-friendly.
Only the rest 7% uses old wet and semi-dry process technology.
Cement industry in India has successfully maintained almost total capacity utilization levels,
which resulted in maintaining a 10% growth rate. In 2006-07, the total despatch was 155 MT,
which rose up to 170 MT in 2007-08. The month of October 2009 saw a cement despatch of
12.22 MT, which was almost 9% higher than the total cement despatch of 11.21 MT in the
same month in the previous year.
2008-09 (Apr-Oct) (in MT) 2007-08 (Apr-Oct) in MT
Production 101.04 95.05
Dispatches (Excluding Export) 100.24 94.33
Export 1.46 2.16
Capacity Utilization (%) 85 93
Major Players in Indian Cement Industry
There are a number of players prevailing in the cement industry in India. However, there are
around 20 big names that account for more than 70% of the total cement production in India.
The total installed capacity is distributed over around 129 plants, owned by 54 major
companies across the nation.
Following are some of the major names in the Indian cement industry:
Company Production Installed Capacity
ACC 17,902 18,640
Gujarat Ambuja 15,094 14,860
Ultratech 13,707 17,000
Grasim 14,649 14,115
India Cements 8,434 8,810
JK Group 6,174 6,680
Jaypee Group 6,316 6,531
Century 6,636 6,300
Madras Cements 4,550 5,470
Birla Corp. 5,150 5,113
Mergers and Acquisitions in Cement Industry in India
UltraTech Cement is going to absorb its sister concern Samruddhi Cement to become
biggest cement company in India.
World's leading foreign funds like HSBC, ABN Amro, Fidelity, Emerging Market
Fund and Asset Management Fund have together bought 7.5% of India Cements
(ICL) at a cost of US$ 124.91 million.
Cimpor, a Cement company of Portugal, has bought 53.63% stake that Grasim
Industries had in Shree Digvijay Cement.
French cement company Vicat SA bought 6.67% share of Sagar Cement at a cost of
US$ 14.35 million.
Holcim now holds 56% stake of Ambuja Cement. Previously it held 22% of stake.
The company utilized various open market transactions to increase its stakes. It
invested US$ 1.8 billion for that.
Recent Investments in the Indian Cement Industry
In a recent announcement, the second largest cement company in South India, Dalmia
Cement declared that it's going to invest more than US$ 652.6 million in the next 2-3
years to add 10 MT capacity.
Anil Ambani-led Reliance Infrastructure is going to build up cement plants with a
total capacity of yearly 20 MT in the next 5 years. For this, the company will invest
US$ 2.1 billion.
India Cements is going to set up 2 thermal power plants in Andhra Pradesh and Tamil
Nadu at a cost of US$ 104 billion.
Anil Ambani-led Reliance Cementation is also going to set up a 5 MT integrated
cement plant in Maharashtra. It will invest US$ 463.2 million for that.
Jaiprakash Associates Ltd has signed a MoU with Assam Mineral Development
Corporation Limited to set up a 2 MT cement plant. The estimated project cost is US$
State wise Capacity
As cement is a low value commodity, freight costs assume a significant proportion of
the final cost. Transporting costs render the prices of cement in distant destinations
uncompetitive. For instance, it is financially infeasible to transport cement by road over 250
kms. Railways are mostly used to transport cement over longer distances. However, its bulky
nature and infrastructure bottlenecks render even rail transport unviable over very long
distances (that is why Madras Cements or India Cements, located in the south, can hardly
make a difference to the fortunes of west-based companies like Gujarat Ambuja). Therefore,
manufacturers tend to sell cement at the nearest market first and sell in distant markets only if
additional realization is greater than freight costs incurred. This is the reason for showing
regional demand rather than state demand in case of cement.
Region wise Capacity
The Indian cement industry has to be viewed in terms of five regions:-
North (Punjab, Delhi, Haryana, Himachal Pradesh, Rajasthan, Chandigarh, J&K and
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).
Himachal Pradesh 4060.00
Tamil Nadu 12913.18
Andra Pradesh 19831.02
West Bengal 2291.66
Assam Meghalaya 400.00
South accounts for 33.03% of cement production capacity of the country, with Andra
Pradesh accounting for 15.27% of the total production capacity of India. It has an installed
capacity of around 20mn tons of cement and ranks first in the country, followed by Tamil
Nadu with 9.94% of the total production capacity. North accounts for 18.02% of the total
production capacity, with Rajasthan at 12.55% of the total production capacity of the country.
West accounts for 16.85% of the total production capacity. Maharashtra and Gujarat have
production capacity of 6.89% and 9.96% respectively. East and Central Regions account for
16.33% and 15.77% of the total production capacity of the country respectively.
Trade between these regions is on a very low scale mainly because of the
transportation bottlenecks and uncompetitive cost of transportation. The Southern region
dominated the cement consumption at 44.5 million tonnes in FY 08-09, accounting for about
30% of total domestic cement consumption. During FY 08-09, Southern region has witnessed
highest CAGR of cement demand growth at 10.4% followed by Northern and Eastern regions
at 8.9% and 9%, respectively
Mechanics of Distribution Channels of Sector
Companies invariably hire agents or transport cements to own or government
warehouses either via roadway or railways. Incase of exports, cement reaches the nearest port
via roadways or railways and is then transferred to the importing country. Domestically, from
agents or warehouses the cement is transported to the dealers/distributors and in turn to sub
dealers who finally sell it to the end users. There may or may not be physical ownership of
goods. In the second case, dealers and sub dealers take order from buyers and place it to the
companies, co ordinate and monitor the timely dispatch of said orders,
Energy and Transport Requirements
The cement industry is dependent on three major infrastructural sectors of the
economy: coal, power and transport. The inputs from these three sectors account for roughly
50% of the cost of cement. Both the availability and the cost of these inputs have a vital
bearing on the fortunes of the cement players. All these sectors are largely in the State sector,
and, historically cement companies have had virtually no control on the cost or availability of
these inputs. Hence, the industry response has largely been in the form of achieving
efficiency gains and finding alternatives (captive power, use of waterways). One additional
external influencer of the cement industry performance is the taxes and levies imposed by the
Central and State Governments. This together account for around 30% of the selling price of
cement in the Indian context.
The shortage in domestic coal production coupled with the poor quality has resulted
in cement companies resorting to importing coal, or going in for open market purchase of
coal, or using alternative fuel such as lignite or pet coke.
Use of imported coal has become an essential feature of the Indian cement industry
and has shown a rising trend during the last few years.
Power and Fuel cost form the largest proportion of the cost structure. This reflects the
effects of the trend in rising global oil and fuel prices. On the other hand Employee costs
form the smallest proportion of over all cost. This is essentially because cement industry is a
very capital intensive industry. This also accounts for the huge depreciation and interest costs
which accrue on the plant and machinery. Moreover, the labour employed is essentially semi-
skilled excluding the top management which brings down labour costs.
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-
The regional variation in the Indian market has resulted in the cement prices across
regions witnessing movement within a band, with no appreciable increase in any region.
Differences in regional demand supply situation have translated into price differences across
regions. Prices are lower in Southern regions where there is normally a supply surplus.
However, prices are higher in Eastern and Western regions where shortages exist. The
surplus position had resulted in significant pressure on price realizations in recent years.
The cyclical trough in the late-1990s had a severe impact on the industry financials.
However, cement prices have firmed up during the last few years due to improvement in
demand-supply position and increasing consolidation in the industry. The Wholesale Price
Index (WPI) for cement increased 3.9% during FY2007-08, as compared with a growth of
1.2% during FY2006-07. The WPI for March 2008-09 was 11% higher than the WPI for
Cement prices have firmed up during the last few years due to improvement in
demand-supply position and increasing consolidation in the industry. The trend in gross sales
realization is similar for the cement companies in our sample (comprising pure cement
companies accounting for around two-thirds of industry production and sales).
The operating profits and margins for cement companies are most sensitive to cement
sales realizations. During FY2008-09, riding on high average sales realizations, the cement
companies posted increased operating profits and margins. This reversed the decline in
operating profits and margins during FY2007-08. This was mainly because of excess capacity
and the consequent low price realizations. While sales volume of the sample companies
improved 7%, operating income (OI) increased 24.2% to Rs. 183.45 billion
The key driver of profitability is cement prices, which fluctuate depending on outlook
on demand-supply gaps. The fluctuating fortunes of the Indian cement industry are very
typical of a commodity industry. The companies make bumper returns during the boom years
(FY1994-96, and FY2005-08) while the performance goes down drastically during the lean
years (FY1997-2001 and FY 2009-na). The returns have improved significantly since
FY2003 because of higher capacity utilizations, operational efficiency and cost control
measures supplemented with higher sales realizations. But at the present scenario have
reduced during the first quarter of FY 2009 and is still going to continue for few more years.
The Indian cement industry has undergone vital changes through technological
changes in the pursuit of cost efficiency and drive for consolidations. Most of the companies
are making profits.
Market Cap EV/EBIDTA ROE ROCE D/E
Company (TTM) (TTM)
(Rs. in Cr.) (x) (%) (%) (x)
Ambuja Cem. 16,446.59 12.35 2.54 7.11 20.0 23.9 0.04
ACC 15,243.55 9.49 2.53 5.90 29.4 40.0 0.10
Samruddhi Cem. 12,111.86 19.82 2.64 0.00 23.3 24.7 0.55
UltraTech Cem. 10,447.20 9.68 2.27 7.60 26.6 28.5 0.46
Shree Cement 6,549.75 9.03 3.57 3.44 61.4 34.0 1.50
Birla Corpn. 2,773.13 5.28 1.56 4.07 36.4 38.9 0.32
Prism Cement 2,675.36 10.94 2.29 7.16 27.4 31.2 0.44
Binani Cement 1,642.06 6.00 2.43 3.87 49.0 32.8 1.58
J K Cements 1,241.96 5.67 1.14 4.70 22.6 21.0 0.82
Heidelberg Cem. 1,091.18 8.16 1.55 2.57 19.0 24.2 0.01
JK Lakshmi Cem. 847.34 3.66 0.86 3.40 27.2 22.7 0.92
OCL India 706.98 4.32 0.89 3.13 19.1 17.8 1.00
Sanghi Inds. 522.45 19.47 0.77 6.52 8.4 8.2 1.39
Mangalam Cement 469.22 4.07 1.23 2.00 35.4 53.4 0.04
Sh. Digvijay Cem 225.49 4.33 2.61 5.36 29.6 16.9 0.33
Export of cement from India
The Indian cement industry exported around 6 mt of cement during FY2008-09,
accounting for around 4% of the total production. There has been a significant year on year
variation in the export trend, implying that Companies rely on cement exports to balance out
the domestic demand supply situation. As seen from above there is excess production, so the
difference in supply and demand is met by exporting. The export of Indian cement has
increased over the years, giving a boost to the Indian cement industry.
The demand for cement in the foreign countries is a derived demand, for it depends on
industrial activity, real estate, and construction activity. Since growth is taking place all over
the world in these sectors, Indian export of cement is also increasing.
The cement industry in India has around 300 mini cement plants and 130 large cement
plants. The total production capacity of these plants is around 167.36 million tons. The India
cement industry is technologically very advanced, as a result of which the quality of Indian
cement is now considered the second best in the world. This has given a major boost to the
Indian export of cement. The production of cement in India is not only able to meet the
domestic demand, but large amounts are also exported. A fair amount of clinker and cement
by-products are also exported by India. As the quality of Indian cement is very good, its
demand in the international market is always high.
The graph shows that the production of cement in India is at 2nd place after China, this
higher production is a good reason for exporting cement.
In 2008-2009, 3.38 million tons of cement was exported from India. That figure stood at 3.47
million tons in 2006-07, and 3.36 million tons in 2007-08. In 2006-2007, 1.76 million tons of
clinker was exported from India. In 2007- 2008 clinker exports amounted to 3.45 million
tons, and in 2008- 2009 the figure stood at 5.64 million tons. This shows that the export of
Indian cement has been increasing at a steady pace over the years.
Indian Technology Advantage
The manufacturing process of cement consists of the mixing, drying and grinding of
limestone, clay and silica into a composite mass. The mixture is then heated and burnt in a
pre-heater and kiln to be cooled in an air cooling system to form clinker, which is the Semi-
finished form. This clinker is cooled by air and subsequently ground with gypsum to form
of coal and
110 kWh of power to manufacture one tonne of cement, whereas the dry process requires
only 0.18 tonnes of coal and 100 kWh of power. Coal and power costs account for 35 per
cent of the total cement production costs. With 95 per cent of the total capacity based on the
modern dry process technology, the Indian cement industry has become more cost efficient.
Top companies in the cement industry match quite well with world standards in terms of
energy (thermal energy Kcal/kg of clinker - India 665 against 690 of Japan) and pollution
norms (SPM of 40 in India against 20 in Japan).
Birla Corporation Limited is the flagship Company of the M.P. Birla Group.
Incorporated as Birla Jute Manufacturing Company
Limited in 1919, it was Late Mr. Madhav Prasad
Birla who gave shape to it. As Chairman of the
Company, Mr. Madhav Prasad Birla transformed it
from a manufacturer of jute goods to a leading multi-
product corporation with widespread activities. Under the Chairmanship of Mrs. Priyamvada
Birla, the Company crossed the Rs. 1300 - crore turnover mark and the name was changed to
Birla Corporation Limited in 1998.
After the demise of Mrs. Priyamvada Birla, the Company
continued to consolidate in terms of profitability, competitiveness and
growth under the leadership of Mr. Rajendra S. Lodha, late Chairman of
the M.P. Birla Group. Under his leadership, the Company posted its
best ever results in the years ended 31.3.2006, 31.3.2007 and 31.3.2008.
The Company continued to record impressive growth in 2008-09 and 2009-10. Mr H
V Lodha is now Chairman of the Company.
Birla Corporation Limited has products ranging from cement to jute goods, PVC floor
covering, as well as auto trims (jute felt-based car interiors).
Birla Jute Supply Company Limited
Talavadi Cements Limited
Lok Cements Limited
Budge Budge Floorcoverings Limited
Thiruvaiyaru Industries Limited
Birla Cement (Assam) Limited
Birla North East Cement Limited
New-Age Cement Limited
M.P. Birla Group Services Private Limited
Product Mix of Birla cement:
The company manufactures a wide range of premium brands of cement, catering to
different needs of customers.
Sulphate Resistant Cement IS 12330
Railway Sleeper Grade Cement IRS T-40 (OPC 53S)
Low Heat Cement IS 12600
Birla cement production units:
Cement is the flag ship division of Birla corporation limited. Nearly 89% of BCL‟S
turnover comes from cement division, which has six plants with an installed capacity of 47.80
lakh tons. Of the sis plants, two each are located at Satna(M.P) and chanderia( Rajasthan)
while there‟s one at Durgapur(WB) and other at Raebareli(UP).
The plants have access to latest technology and infrastructure and rate amongst the
most advanced in the country.
All the plants have received ISO:9001-2000 quality management system (QMS) for
manufacture and supply of cement &clinker from TUV- Germnay.
It has also received ISO: 14001 environment management system(EMS) from bureau of
Indian standard(BIS) New Delhi.
The Product and Brand names are as follows
Units Products BIS Specifications Brand names
Birla Cement Portland Pozzolana IS 1489 (Part - I) Birla Cement
Works Cement (PPC) 43 Gr - IS 8043 Samrat
Chanderia Ordinary Portland 53 Gr - IS 12269 Birla Cement
Cement Works Cement (OPC) - Chetak
43 Gr, 53 Gr
Satna Cement PPC IS 1489 (Part - I) Birla Cement
Works OPC (43 Gr.) IS 8043 Samrat
Birla Vikas Birla Cement
Raebareli PPC IS 1489 (Part - I) Birla Cement
Cement Works Samrat
Durgapur Portland Slag IS 455 Birla Cement
Cement Works Cement (PSC) Birla Premium
Durga Hitech PPC IS 1489 (Part - I) Birla Cement
Brands of cement
Birla cement samrat (special features)
Higher finesse for improved workability
Resistance to alkali-aggregate reaction
Low heat of hydration resulting in reduction in cracking.
Improved resistance to sulphate attack
Higher long-term strength over OPC.
Birla cement samrat PREMIUM (special features)
High compressive strength up to 57 Mpa
Superfine cement for improved workability
Excellent finish of mortar and concrete surface
Compatible with Indian climatic conditions.
Improved resistance to sulphate attack
Birla cement khajuraho\chetak -43 grade
Brick and tone masonry
Plastering and flooring
For ready-mix concrete
Plain and reinforced cement concrete
Pre-cast and pre-stressed concrete
Birla cement khajuraho\chetak-53 grade
Pre-stressed girders and electric poles
M 25 and concrete
Roads, runways, industrial buildings, RCC bridges
All types of general construction
The Various Units located across the country:
State Town Units Capacity
Madhya Satna Satna Cement Works / Birla Vikas 1.55
Rajasthan Chanderia Birla Cement Works / Chanderia Cement 2.29
West Durgapur Durgapur Cement Works / Durga Hitech 1.60
Uttar Raebareli Raebareli Cement Works 0.63
All the seven cement manufacturing Units, spread over West Bengal, Madhya Pradesh, Uttar
Pradesh and Rajasthan have performed satisfactorily in spite of stoppages related to
expansion and modernization activities. The level of production was maintained by procuring
clinker from domestic and foreign sources.
During the year 2009-10, the Company achieved its highest ever production of cement at5.70
Sales (Rs. in crores)
2005 2006 2007 2008 2009 2010
COMPANY’S VISION & MISSION
Birla Cement Vision
Birla Cement Mission:
To become the best cement unit in the country through human and technical
To foster the culture of involvement, participation, team work and innovation.
To achieve excellence in all effort and activities by each one of us.
To produce a premium quality cement and extend best service to its customers.
To establish a neat clean and pollution free environment.
Community should perceive us a progressive well professional organization. \
We define integrity as honesty in every action. We shall act and take decisions in a
manner that these are fair, honest and follow the highest standards of professionalism.
Integrity shall be the cornerstone for all our dealings, be it with our customers, our
employees, suppliers, our partners, shareholders, the communities we serve or the
On the foundation of integrity, we see commitment as doing whatever it takes to
deliver as promised. Each one of us shall take ownership for our own work, teams and the
part of the organization we responsible for. Through this value, we shall build an even
sharper results-oriented culture that is high on reliability accountability. Our commitment is
likely to make us a formidable leader and competitor in every market that we are in.
We define passion as a missionary zeal arising out of an omotional engagement with
work, which inspires each one to give his or her best.All
We define passion as a missionary zeal arising out of an emotional engagement with work,
which inspires each one to give his or her best. All of us are expected to be enthusiastic in the
pursuit of our goals and objectives. We shall recruit and actively encourage employees with a
„fire in belly‟. With this value, we hope to build a culture of innovation and breakthrough
thinking, leading to superior customer satisfaction and value creation.
PORTER’S 5-FORCE MODEL FOR CEMENT INDUSTRY
THREAT FOR ENTRANTS:
The high capital costs acts as a major entry barrier for the entry of new players. The
high freight costs make it difficult to import cement. Cement being a high volume low value
commodity results in high freight costs, which makes cement imports economically
unfeasible. Domestic Cement industry is highly insulated from global cement markets. With
GoI intervention, making cement duty free, cement is being imported from neighboring
countries. However, due to logistics issues and lack of port handling capabilities, imports of
cement will remain negligible and do not pose a threat to domestic industry.
BARGAINING POWER OF SUPPLIERS:
The major inputs are coal and power. The Prices of both coal and power are
determined by the government. To mitigate the high costs of power the cement players have
set up captive power plants.
COMPETITIVE RIVALRY BETWEEN EXISTING PLAYERS:
Previously the rivalry was strong among the players, as the industry was not
consolidated. During the last few years the industry has become more consolidated with the
Top 3 players having a combined market share of 49 percent in 2008-09 as compared to 32
percent in 2007-2008.
BARGAINING POWER OF BUYERS:
Retail sales constitute about 80 percent of the total sales and the rest is institutional
sales. The retail buyers don‟t have any bargaining power while the institutional buyers get a
discount of 5 to 10 percent as they buy cement in bulk.
THREAT OF SUBSTITUTES:
There are no good substitutes for cement.
The Board of Directors
The Birla Corporation Private Limited is the Group's apex decision making body and
provides strategic direction to Group companies. Its Board of Directors comprises:
Mr. Harsh V. Lodha chairman
Mr. N. K. Kejriwal
Mr. Pracheta Majumdar
Mr. Vikram Swarup
Mr. Anand Bordia
Mr. B B Tandon
Mr. D N Ghosh
Mr Deepak Nayyar
Mr M K Sharma
Mr. B R Nahar
ORGANIZATION’S DIFFERENT FUNCTIONAL DEPARTMENTS
Finance is backbone of any organization without which no organization can undertake
any activities concerning the organization. It is a fascinating subject that deals with end result and
these end results are measurable in terms of money. It is dynamic and changing. It deals with all
the facts of Business-production, sales, purchasing, personnel etc. This has to be managed actually
to yield long term results. Finance necessary is accumulated for the starting of company and then
they are at a later stage allocated to all the facts of business as mentioned above as per
requirements specified in the financial policy.
The Company has raised funds through issue of Secured Redeemable Non-
Convertible Debentures aggregating to Rs.370 crores on private placement basis. The funds have
been utilized for general corporate purposes.
The Company has paid an interim dividend of Rs.2.50 per share (i.e. 25%) on ordinary shares
during the year. Your Directors are pleased to recommend a final dividend ofRs.3.50 per
share (i.e. 35%) on ordinary shares for the year ended 31st March, 2010. Thusthe aggregate
dividend for the year ended 31st March, 2010 works out to Rs.6.00 per share(60%)
aggregating to Rs.53.95 crores including Corporate Dividend Tax of Rs.7.75 crores as
compared to Rs.40.54 crores (including Corporate Dividend Tax of Rs.5.89 crores) in the
MARKETING MANAGEMENT PROCESS ADOPTED BY BIRLA CORPORATION
In the field of marketing management process, it basically consists of four steps:
1. Analyzing marketing opportunities
2. Selecting target markets
3. Developing the marketing mix
4.Managing the marketing effort
MARKETING RESEARCH AT BIRLA CEMENT
Marketing research is a systematic gathering recording and analysis of data about the
problems relating to the marketers of goods and services. Thus it includes investigation of
market, segments, and products. The market research answers the questions in respect of
different markets. The areas of market research are:
• Determining the size of both current and also potential market.
• Assessing the market brands.
• Ascertaining the strength and weakness of competitors.
• The current contemplated legislations of the government towards the particular product,
including taxation policy
• Demand and sales forecast
Human Resource Department
Human Resource Management is a process of creating and providing opportunities to
the members of a company for developing and optimally utilizing their potentials in various
productive works. It is also the management of human resources in an organization and is
concerned with the creation of harmonious working relationship and bringing about their
utmost individual development. The main objectives of personnel function are to create
attitude that motivates a group to achieve its goal economically and speedily.
The Company had 9954 employees on its rolls as at the close of business hours on
31stMarch, 2010. Relations with the employees were cordial at all the Units barring
suspensionof operations since 29th March, 2004 at Soorah Jute Mills and a strike for 62 days
from14.12.2009 to 13.02.2010 by the workers of Birla Jute Mills in response to the strike call
given by the Central Trade Unions and the Federation of Trade Unions operating in the jute
mills in West Bengal.
Research & Development Department
Research & Development Department is the back-bone of an organization. It helps the
organizations in developing new products and means to meet the need of customers in an effective
way. It also shows how open is an organization towards the change. In Birla following functions are
done by the R & D department:
Able to meet customers enhanced requirements above R & D
Able to meet shorter turnaround times demanded by customer
Automated tools helped to meet extra volume of production and new customer
Maintaining leadership as a technologically advanced supplier
Customized Production & Project Management tools development for customers
Able to acquire new projects which involves project management
Providing value added services to the customers and bringing-in additional projects.
Introducing new workflow and systems as per customer‟s requirements
Supply Chain Department
The team orders and maintains the inventory of stock keeping units so that unit does not
run out of critical supplies at any point.
The team also ensures that all stock keeping units of items used in the unit are
received at stores from vendors and distributed to the different outlets on time. Other functions
Distribution Function Configuration: Number, location and network missions of suppliers,
production facilities, distribution centers, warehouses, cross-docks and customers.
Distribution Strategy: Includes functions of operating control (centralized, decentralized or
shared), delivery scheme (e.g., direct shipment, pool point shipping, Cross Docking, DSD (direct
Information: Integration of and other processes through the supply chain to share valuable
information, including demand signals, forecasts, inventory, transportation, and potential
Inventory Management: Quantity and location of inventory including raw materials, work-in-
process and finished goods
Cement demand has grown in tandem with strong economic growth; derived from:
-Growth in housing sector (over 30%) key demand driver;
-Infrastructure projects like ports, airports, power projects, dam and irrigation projects
-National Highway Development Program
-Bharat Nirman Yojana for rural infrastructure
-Rise in industrial projects
-Export potential also demand driver
Capacity utilization over 90%
Cement Industry is highly fragmented
Industry is also highly regionalized
Low – value commodity makes transportation over long distances un-economical
With the boost given by the Central Government and the private sector to various
infrastructure projects, road network, housing facilities and Mega Power Projects, growth in
the cement consumption is anticipated to continue in the coming years.
Government intervention to adjust cement prices
Possibility of over bunching of capacities in the long term as some of the players have
already announced new capacities
Transportation cost is scaling high; bottleneck due to loading restrictions
Coal prices climbing up; industry players say current shortage of coal in the country is
estimated to be over 10 million tones.
AWARDS FOR BIRLA CORPORATION
The Company has been included in the prestigious "Best under a Billion" list by Forbes and
is one of the 20 Indian companies featured this year. Birla Corporation Limited has been
selected by the editors of Forbes as one of the best companies with revenues of less than $ 1
billion based on its track record of consistent profitability, growth and best corporate
practices over a three-year period. The fifth annual "Best under a Billion" list comprises the
top 200 companies, picked up from more than25,326 publicly-listed firms with sales of less
than $ 1 billion in the Asia-Pacific region. The recognition came at a very opportune time for
Birla Corporation Limited since it is one of the oldest cement manufacturing companies in
India and is currently celebrating 50 years in the cement business.
AWARD EARNED BY SCW AND BVC
S. NO. AWARDS AWARDED BY YEAR UNIT
1. Best Energy Performance NCB, New Delhi and 1986-87 BVC
Award Ministry of Power Govt. 1993-94 SCW
of India 1994-95 SCW
2. Fuller Energy Conservation M.P. Chamber of Cement 1997-98 SCW
Award Manufactures Association. 1998-99 SCW
3. Best Productivity Award National Productivity 1987-88 BVC
Council, New Delhi
4. Export Award CAPEXIL, Kolkata 1990-91 BVC
1993-94 SCW &
S. NO. AWARDS AWARDED BY YEAR UNIT
5. National Safety Award Ministry Of Labour, Govt 1994 BVC
6. ISO-9001 for quality RWTUV, Germany Since SCW &
Management July BVC
7. IS / ISO-14001 for BIS, New Delhi Since SCW &
Environment Management Sept. BVC
8. Sagmania Mines Safety DGMS 1997-98
9. Mines Environment & ISM, Dhanbad 1997-98
Mineral conservation 2002-03
10. Best Energy Conservation Rajiv Gandhi Memorial Oct 2004 SCW
Implementation Gold National Award
Promotion is one of the four elements of marketing mix (product, price, promotion,
distribution). It is the communication link between sellers and buyers for the purpose of
influencing, informing, or persuading a potential buyer's purchasing decision.
There are seven main aspects of a promotional mix these are:
Advertising - Any paid presentation and promotion of ideas, goods, or services by an
identified sponsor. Examples: Print ads, radio, television, billboard, direct mail,
brochures and catalogs, signs, in-store displays, posters, motion pictures, Web pages,
banner ads, and emails.
Personal Selling - A process of helping and persuading one or more prospects to
purchase a good or service or to act on any idea through the use of an oral
presentation. Examples: Sales presentations, sales meetings, sales training and
incentive programs for intermediary salespeople, samples, and telemarketing. Can be
face-to-face or via telephone.
Sales promotion - Media and non-media marketing communication are employed for
a pre-determined, limited time to increase consumer demand, stimulate market
demand or improve product availability. Examples: Coupons, sweepstakes, contests,
product samples, rebates, tie-ins, self-liquidating premiums, trade shows, trade-ins,
Public relations - Paid intimate stimulation of supply for a product, service, or
business unit by planting significant news about it or a favorable presentation of it in
the media. Examples: Newspaper and magazine articles/reports, TVs and radio
presentations, charitable contributions, speeches, issue advertising, and seminars.
Corporate image - The Image of an organization is a crucial point in marketing. If the
reputation of a company is bad, consumers are less willing to buy a product from this
company as they would have been, if the company had a good image.
Direct Marketing is often listed as a the fifth part of the marketing mix
Exhibitions - are try-outs. You make your product, and let potential buyers try the
product, this way, you know directly what people see in your product. The downside,
your competitor can see exactly what you are doing.
4 P‟s of marketing mix comprises of:
How to Establish a Promotional Mix
You drive sales by promoting the benefits of your company's goods or services to pools
of potential buyers. The ways you promote your organization will largely determine whether
you successfully plant the right messages in the minds of your target audience. This module
explains how you can establish a promotional mix best suited to your company's needs and
Determine Your Target Market
Determine Your Objectives
Design Your Message
Select Your Promotional Channels
Determine Your Budget
Determine Your Promotional Mix
Measure the Results and Adjust
Elements of promotion mix
A promotional mix is an allocation of resources among five primary elements:
2. Public relations or publicity
3. Sales promotion
4. Direct marketing
5. Personal selling
Strategies of promotion mix
Push & Pull Strategies -
Communication by the
manufacturer is not only
directed towards consumers to
create demand. A push
strategy is where the
some of their marketing effort
on promoting their product to retailers to convince them
to stock the product. A combination of promotional mix strategies are used at this stage
aimed at the retailer including personal selling, and direct mail. The product is pushed onto
the retailer, hence the name. A pull strategy is based around the manufacturer promoting their
product amongst the target market to create demand. Consumers pull the product through the
distribution channel forcing the wholesaler and retailer to stock it, hence the name pull
strategy. Organisations tend to use both push and pull strategies to create demand from
retailers and consumers.
Communication Model – AIDA
AIDA is a communication model which can be used by firms to aid them in selling
their product or services. AIDA is an Acronym for Attention, Interest, Desire, Action.. When
a product is launched the first goal is to grab attention. Think, how can an organization use
it skills to do this? Use well-known personalities to sell products? Once you grab attention
how can you hold Interest, through promoting features, clearly stating the benefit the
product has to offer? The third stage is desire, how can you make the product desirable to
the consumer? By demonstrating it? The final stage is the purchase action; if the company
has been successful with its strategy then the target customer should purchase the product.
Promotion through the Product life cycle. -
As products move through the four stages of the product lifecycle different promotional
strategies should be employed at these stages to ensure the healthy success and life of the
Stages and promotion strategies employed.
When a product is new the organisations objective will be to inform the target audience of its
entry. Television, radio, magazine, coupons etc may be used to push the product through the
introduction stage of the lifecycle. Push and Pull Strategies will be used at this crucial stage.
As the product becomes accepted by the target market the organisation at this stage of the
lifecycle the organisation works on the strategy of further increasing brand awareness to
At this stage with increased competition the organisation take persuasive tactics to encourage
the consumers to purchase their product over their rivals. Any differential advantage will be
clearly communicated to the target audience to inform of their benefit over their competitors.
As the product reaches the decline stage the organisation will use the strategy of reminding
people of the product to slow the inevitable
STATEMENT OF THE PROBLEM
“Analysis of promotional strategies in Birla cement factory”
To analyze market share of Birla cement with its competitors at Satna region.
Whether there is relation between advertising and sale of cement.
To determine methods to generate brand loyalty.
To determine the promotional tools applied by Birla cement.
To determine the impact of advertising in sale of Birla cement.
“Success of Birla cement is directly related to its promotional strategy.”
Sample universe – Satna
Sampling unit- customers
Sample size- 14 customers
Sampling technique- convenience technique
(a) General Methodology:
The methodology adopted for this project was completely base on primary
information. The first stage included gathering information about the general cement market
of the two regions. That was, to find out which are major players, what is general promotion
pattern, what type of incentive schemes the different brands are using.
The second stage comprised determining the objective of the study and drafting the
questionnaire. The questionnaire was designed keeping in mind the objective of the study. It
was designed with due guidance of the company guide. It was assured that the questionnaire
didn‟t exceed more than 10 questions.
b) Data Sources:
The research called for gathering primary data only. Hence, primary sources were
considered for the collection of data.
The primary data is gathered for specific purpose and is collected by the researcher
himself. It includes direct communication and feedback from the customers. For the purpose
of collecting information from customers a structured questionnaire was formulated and is
The research conducted was exploratory in nature and the goal was to gather
preliminary data to shed light on the real nature of problems and to suggest possible
solutions. For the purpose of this project, we went for a questionnaire- based survey of
customers. A pilot test of this questionnaire was done for the preparation of final
questionnaire. It involved, applying the draft questionnaire to a sample of 5 people. This was
done to ascertain which questions are ambiguous, wrongly worded or in any way
1. Personally administered questionnaire
2. Structured interview
3. Unstructured interview
For the purpose of this project, a questionnaire was designed to collect data that consisted of
close ended questions & open ended questions. A survey technique was used to collect the
data. During the project a survey of customers was done at random
The data, which was collected, was summarized and tabulated on MS-excel for further
analysis. The analysis performed was mainly comparative analysis using statistical analytical
tools. The tools that have been used are as follows:
Secondary data was collected through close observation, company manuals, Journals,
Magazines, Documents and Websites.
DATA ANALYSIS & FINDINGS
Comparative Market share capital of top 7 Cement companies in India
Market Cap (Rs. in Cr.)
Birla Corpn. Prism Cement
The graph clearly shows that the Ambhuja Cement has largest market share, followed
by ACC. Cement. The main reason behind this excess market share goes to the higher
number of dealers of Ambhuja cement than other brands. Ultratech Cement on the other hand
is having a good market share due to a nicely balanced supply chain of dealers along with
many retailers. All the other brands like Birla , Prism and Shree are struggling to find market
Comparative sales of Top 3 Cement companies in Satna region
Market Cap (Rs. in Cr.)
The graph shows that the Prism is again surpassing JP & Birla cement in
Satna(Central region). It has a scorching 44% share. The credit for Prism success goes to the
no. of dealers it has in Satna(central region). Its success lies in promotional strategies adopted
Are you brand conscious?
This graph clearly shows that people are now much more brand conscious and very few like to
shift to other brands.
As a buyer, which promotional tool
do you think is most important?
Advertising Sales Promotion Personal selling Publicity
This graph clearly shows that most of the buyers prefer advertising followed by sales
If you think Birla Cement Co needs
improvement in what respect should the
All of the above
This graph clearly shows that Birla needs improvement and it should improve on its
promotion strategy at Satna region to gain maximum share at Satna Birla should improve its
Do you think that a brand ambassador
would influence your buying decision in
favour of a particular brand of cement?
This chart shows that brand ambassador plays important role in buying particular cement as JP
has Sachin Tendulkar as brand ambassador Birla should also think in this respect.
LIMITATIONS OF THE STUDY
1. The major problem of the survey was that most of the respondents being very loyal to
their brands didn‟t give exact answers. Like they didn‟t talk much about what
problems they are facing, what are the different marketing schemes of the brand in
which they deal etc?
2. Once we got the questionnaire filled, we need to restart the conversation in a much
generalized way and talk about the local market conditions. Like who is the main
dealer, which cement is mostly sold in that area etc.so this survey demands a good
piece of time while talking to the respondent.
3. Some of the respondents may have told they prefer promotion and were much
conscious for their brands.
4. Many of the dealers/customers refused to answer any question at all. So the actual
figures can be somewhat different from the one that we have found out.
5. Being a very big region, it is quite possible that I was unable to explore some of the
Based upon the time spent by me in the market, useful suggestions of the dealers
&customers and the findings from the survey, following recommendations can be suggested
for increasing sales and effectiveness of MP Birla Cement:
What matters for most of the cement buyers is the price of the cement and then the
quality as well as promotion. While visiting to market buyers not only look price also
their personal touch matters a lot and Birla need to improve because most of
respondents tells Birla does not care in maintain relations with customers so it should
improve their customer relationship management.
The second thing is that particular at Satna region Birla is after Prism and JP and it
does not try to capture its market share at Satna due to its poor promotional strategy.
The number of retailers and sub dealers for Birla cement is equal to the main
competitor‟s Prism, JP. Etc. So Birla needs to be oriented in this direction. They need
to increase the no. of retailers as much as possible.
Many of the Birla dealers used to shop other type of building materials along with
cement, in the same shop. This should not be permitted by Birla .Because selling of
these building materials is more profitable than cement, so the cement selling
becomes less important for these dealers. They don‟t give proper attention to the
company officials and also to the various schemes of increasing sales. This in turn
brings reduced sales to the company.
Birla Cement has market image of modern cement with very good quality. It should
try to encase this image. It‟s mainly the younger section of people who care about
quality first and then the price. So Ultra Tech needs to give proper attention to the
youngsters. May be, they are not the cement buyers at present but future possibility
lies with them.
Some of the customers complained that they are not paying attention in personal
selling and main competitor of Birla is Prism as Prism is much more into maintaining
relations with its customers.
Birla should also improve working conditions for their factory workers as they are not
satisfied with their working condition so they in turn do negative publicity.
POSSIBLE ADVERTISEMENT METHODS
All of the cement brands use the similar methods of advertising like- painting walls, use
banners, giving free gifts to the dealers and masons etc.There are still many possible methods
of advertisement and creating brand awareness, which are untouched. Some of these methods
are as below:
Local cable T.V. can be used for advertising as well as to give details about the major
dealer/dealers in the city. Details like address, contact no. of the dealer, different
schemes, current market price etc can be shown.
Banners, paintings are used mainly on the tractor trolleys, dealer‟s shop and on walls
only. We can think about using banners on rickshaws and autos also.
Different type of incentive schemes, free gifts are mainly for dealers and sometimes
for the masons. As a change, we can also try to attract the customers directly. For ex-
discount coupons, small free gifts, scratch cards etc can be made available for the
A number of meetings are organized by all the cement companies with the local
masons. Most of the masons are very less educated. They attend many meetings. So it
may become difficult for them to recognize a particular cement brand. What we can
do in this case is to take help of Handvertising i.e. we need to put the Birla cement
logo on the hands of these masons. So that next time they saw this logo, they found
themselves be familiar with the company.
The „masons meet‟ are organized by the company regularly. This needs some
improvements. We need to decrease the frequency of these meets. What we can do is
that organize a big meet with a no. of people, higher company officials, entertainment,
and snacks for all. The presence of company officials in the meeting is not alone
sufficient. We need to call some big personalities from that city only. The people like
these masons are more impressed by the presence of Govt.officials.
A mobile service provider can be undertaken in a contract and a buzz about the
company and its awareness can be made by sending regular message to their
Birla cement has two major competitors-PRISM CEMENT and JP CEMENT.
The company can face a lot of competition in near future due to introduction of many
BIRLA CEMENT is well established in the markets as far as quality is concerned.
Introduction of new attractive incentive schemes can bring new dealers and retailers
for BIRLA cement.
Price &promotion are the major factors that matters for a customer while purchasing
Market share increases with the increase in no. of dealers.
Brand ambassador has also influence in sale of cement for ex sachin tendulkar of JP
Birla cement follows exclusivity policy thus giving them a very narrow number of
I, Jaya Janwani of M. P. Birla Institute of Management, am undertaking a Research Study on
“Analysis of the Promotional strategies in MP Birla cement” and would therefore require
your help in filling this questionnaire (?). All Information collected will be used for academic
1. Which company‟s cement do you buy most?
o Birla cement
o ACC cement
o JP cement
o Prism cement
o Others (Please state the name of the company)
2. Are you brand conscious?
3. What attributes of the product / company motivates you to buy the above brand of
o All of the above
4. How much are you satisfied with the above brand of cement?
o Highly satisfied
o Moderately Satisfied
o Highly dissatisfied
5. What is your annual consumption of cement?
o 10 bags
o 20 bags
o 30 bas
o More than that
6. How often do you buy cement?
7. In a scale of 1 to 5, rate the following aspects of the product as per their relative
importance to your company (5 for max importance)
8. As a buyer, which promotional tool do you think is most important?
o Sales Promotion
o Personal selling
9. Do you think that a brand ambassador would influence your buying decision in
favour of a particular brand of cement?
10. How is Birla Cement‟s customer relationship management?
11. If you think Birla Cement Co needs improvement in what respect should the
o Any other
o All of the above
Elements of Marketing - Philip Kotler
Marketing Management – K Ramachandra
Research Methodology – Krishnaswamy
Marketing Management - Philip Kotler
Research Methodology And Techniques - C.R.Kothari
www. Birla corporation. com