SUMMER TRAINING PROJECT

REPORT

"ON THE TOPIC OF

CUSTOMER SATISFACTION OF JAYPEE CEMENT

IN ALLAHABAD REGION”

SUBMITTED IN THE PARTIAL FULFILLMENT

FOR THE AWARD OF THE DEGREE

OF

MASTER OF BUSINESS ADMISISTRATION

SUBMITTED BY: SUBMITTED TO:

Ankit Srivastava Mr. S.K.P.Gupta

Excel Business Academy (Senior GM-Marketing)

1

PREFACE

Summer training provides a feel of corporate environment to students. It is a

pre-requisite for the successful completion of MBA course. Students get a

chance to understand business organizations working style and they learn skills

to survive in this competitive corporate world. In summer training management

students perform tasks and duties allocated to them under the guidance of guide

from industry. Actually training is an opportunity to sharpen their skills and to

adjust them in highly competitive situations.

I got the opportunity to complete my summer training in JAIPRAKASH

ASSOCIATES LIMITED, regional marketing office (RMO), Allahabad. I was

instructed to do a marketing survey regarding “CUSTOMER

SATISFACTION IN ALLAHABAD DISTRICT”.

The study covers a brief introduction about cement market in main city, semi

urban areas and rural areas of Allahabad District. I covered mainly authorized

dealers of above mentioned area and collected sufficient information from them

to complete my project. My product was cement and Allahabad is big market of

cement. It is a highly competitive market and when I visited many dealers I

came to know about various facts and ground realities of cement market. In my

four week training , I got some experience about market conditions of cement

market. I enjoyed my training and learned some valuable things from my

marketing officers and other members of the organization.

2

ACKNOWLEDGEMENT

First of all I would like to express my deep gratitude to Shri. A.K.Nandi

(DGM-TTG) for providing me an opportunity to complete my summer

training at Regional marketing office, Allahabad. I would like to extend my

sincere thanks to Mr. S.K.P.Gupta (Senior GM-Marketing) for giving me an

approval to this project in this organization. I would also like to show my

warmest thanks to Mr.Rejwan Ali (Dy. Marketing Manager). Mr.Rejwan Ali

helped me since the beginning of this project and has been with me up to the

successful completion.

I feel highly obliged in expressing my sincere thanks to the management and all

the members of marketing department, RMO, Allahabad who gave me their

valuable time and support to complete my project successfully.

3

DECLARATION

I, hereby declare that I have read the project thoroughly and have understood it

also, made for partial fulfillment of the project. I, hereby declare that all the

information provided in the project report is true to the fullest of my knowledge

and it bears no resemblance to any other written material whatsoever. In the

event of any information provided in this project report being found incorrect or

misleading. I shall be liable to any outcome at any given day.

I further declare that all the facts and figures given in this project report are the

outcome of my own research and findings.

Ankit Srivastava

MBA 3rdSEMESTER

Excel Business Academy

Bangalore

INDEX

4

Sr. No Particulars Page No.

1. Introduction 7-8

1.1 Introduction to Project Topic 9

1.3 Objectives of study 10

1.4 Significance of the study 10

1.5 Limitation of the Study 11

2. Industry Profile 12-39

2.1 Global Cement Industry 12-15

2.2 Indian Cement Industry 15-39

3 Company Profile 40-49

4. Methodology Adopted 50-52

5. Data Analysis & Interpretation 52-61

6. Observation & Finding 62-63

7. Limitations 64

8. Recommendation 65

9. Conclusion 66

10. Bibliography 67

11. Annexure 68-72

List of tables, charts and graphs

5

Sr.

No

Particulars Page No.

1 HISTORICAL MILESTONE 40

2. General perception about jaypee 53

3. Highest selling cement at counter 53

4. Number of Jaypee customer 54

5. Basis for consumer purchase 55

6. Basis for selling Jaypee Cement 55

7. Satisfaction level with the availability of the product

56

8. Satisfaction level with the brand promotion of the company

57

9. Type of customer 58

10. Average monthly sale 59

11. Awareness about customer service help desk 59

12. Problem faced during consumption 60

13. Complaint settlement with satisfaction 61

14. Suggestions for improving marketing of product

61

Introduction

6

This is like a dream come true to work with one of the biggest companies of

India in cement division. I enjoyed working with brand Jaypee. At regional

marketing office, Allahabad. I got the opportunity to do a marketing survey and

to observe the cement market of Allahabad. Allahabad is a big market for

cement and cement consumption of this city is increasing day by day. It is a

rapidly growing city and a no. of offices, malls, shopping complexes, schools,

colleges are being constructed in this city. Cement is the basic necessity for

these constructions. All the cement companies are observing the market

potential of this city and they want to expand their business in this city.

Jaypee, Prism, ACC, Birla, Mycem, Maiher are the main competitors in this

market. Jaypee group is a major competitor in Uttar Pradesh. Jaypee group is

doing business in various sectors such as Civil engineering, Private hydropower,

Cement, Hospitality, Integrated Township, Information Technology, Thermal,

Transmission Line etc.The company realized that it was time to reinvent its

identity. In its new avtar, the company is now known as Jaiprakash Associates

Limited(JAL).

Jaypee group knows that to become market leader one should have close

observation over market. To assess exact situation of market a no. of surveys

are conducted by the group such as Dealer survey, Retailer survey,Market

potential survey,Engineers and Architects survey etc.

As a summer trainee at Jaiprakash Associates Limited(JAL) I did survey

regarding service level to dealers from the cement companies operating in

Allahabd district. I covered dealers of various cement companies and collected

information from them. I observed dealers are suffering with fluctuating cement

price and improper communication of prices and schemes. Improper and

7

delayed delivery is also a serious problem. Duplicate cement availability in the

market is also hampering the sale of dealers.

If Jaypee cements wants to lead in the market then it has to improve its service

level mainly in terms of communication of schemes. Jaypee has an edge over

other companies that its delivery is faster than others but in some regions its

delivery is poor. So Jaypee should improve its delivery in those regions.

About the study

8

I started my summer training at Jaiprakash Associates Limited, regional

marketing office, Allahabad. I got the opportunity to do a marketing survey and

my topic was “Assessment of customer satisfaction in Allahabad market”.

I started my survey from main city market. After covering city market I visited

Semi-urban and rural cement market also. I covered cement dealers of various

brands such as Jaypee, Prism, Birla, ACC, Mycem, and Maiher.

In order to come to a conclusion regarding service level to dealers random

sampling was done. I got a questionnaire from Jaypee office and I got this

questionnaire filled from each and every dealer. The questionnaire contains 19

questions regarding quantity of cement sold, time taken to execute orders by the

companies, price communication, scheme communication, frequency of receipt

of bills, frequency of receipt of account statement, promotional items provided

by the companies, technical support provided by the companies, frequency of

visit marketing officers, quality of cement bag and quality of cement redressal

of complaints.

After collecting data from respondents I started data analysis using Microsoft

excel. To show an effective analysis I used tables and graphs. I concluded the

result from analysis and wrote the results under conclusion section. During my

marketing survey I found a no. of information about cement market and wrote

them in observations and findings section. I observed the problems of dealers

and to solve these problems I gave some suggestions in my report.

Objective of the Study

9

The primary Objective of the project is:

TO ASSESS THE CUSTOMER SATISFACTION IN ALLAHABAD DISTRICT.

Secondary Objectives are:

1- What are the general problems of dealers?

2- How can dealers be served in a better way?

3- To find out which areas dealers are not getting proper support from the

company?

4- What other companies are doing to serve their dealers and where Jaypee

cement is lagging behind them?

5- What are the competitive advantages for Jaypee cements and What are the

areas of improvement?

6- What is the market position of Jaypee cement?

Significance:-

To reflect current satisfaction level

To know basis of consumer purchase

To know what is the customer perception about JAYPEE Cement

To know what problems dealers faces in JAYPEE Cements

Limitations of the study:-

10

Getting accourate responses from the respondents due to their inherent

problems were difficult. They were partial and not very cooperative.

Traffic and time was also a constraints for me

Survey was conducted in the month of January and February and Allahabad

was very cool nearly 5-10 degree Celsius temperature, it was very difficult to

visit dealers in the morning but I would have been able to cover more number

of dealers and then definitely my report would have been more prominent and

more aligned with exact market realities.

I got the dealer list from Jaypee cement’s dump but address of dealers was

not properly given in the list so it took too much time to find them.

Industry Profile

11

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 is crushed, and then heated at temperature in excess of 1000oC 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 plant in the world. Although the

industry has seen the emergence of strong global players such a Lafarge of

CEMEX, the share of the four largest firms account only for 23% of the overall

demand.(Globalization cement industry, Phillip Lasserre,2007)

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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.

Demand

World cement demand was 2,283 million tons in 2005, with China accounting

for 1,064 million ton (47% of total). The expected demand for 2012 is estimated

at 2836 million ton. China will increase its demand by 250 million tons during

the period, an increase higher than the total yearly European demand.

Demand for cement in Million Tons 2005-2012 Growth

rate:-Countries 2005 2012 GrowthNorth America 170 200 2.9%

Western Europe 208 208 2.2%

Asia/Pacific 1500 1900 5.2%

Other region 405 500 4.7%

13

World Cement Demand 2283 2836 4.7%

Main Global CompetitorsLafargeLafarge is a French industrial company specializing in four major products:

cement, construction aggregates, concrete and gypsum wallboard and it operates

in 76 countries. In 2010 the company was the world's second-largest cement

manufacturer by mass shipped behind Holcim. Over the past years it invested

heavily in emerging countries. Its recent association with the Chinese group

Shui on gave the group a 21 MT presence in this country.

HolcimHolcim is a Swiss based global company supplying cement and aggregates

(crushed stone, sand and gravel). The company also supplies ready-mix

concrete and asphalt including associated construction services. The Holcim

Group holds majority and minority interests in more than 70 countries on all

continents. The Group employs some 90,000 people. Holcim has a strong

presence in India.

CemexCEMEX is the world's largest building materials supplier and third largest

cement producer. Founded in Mexico in 1906.Orginated from Mexico by 2005

it had achieved an estimated production capacity of 94 million tons per year. It

was the number one producer of ready-mix with 76 million tons, one of the

largest aggregate producers with 175 million tons and one of the top cement

14

traders in the world, selling more than 17 million tons in 2005. It is present in

the America, Europe and Asia, although not in India nor China.

Heidelberg CementHeidelberg Cement is a German cement and building materials company. It is

currently (as of 2010) the world's third largest cement producer, the market

leader in aggregates and fourth in ready-mix concrete. In 2010 the company

produced around 78 million tons of cement. The company employs some

53,000 people at 2,500 locations in more than 40 countries with an annual

turnover of approximately EUR 11 billion.

Indian Cement IndustryThe cement industry is one of the main beneficiaries of the infrastructure boom.

With robust demand and adequate supply, the industry has bright future. The

Indian Cement Industry with total capacity of 165 million tons 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 16-18% (report on

cement industry in India, Shobhit Chandak, 2008)

India, world's second largest cement producer after China, right from laying

concrete bricks of economy to waving fly over’s 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

15

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’s forecasted to grow by over

22% by2009-2010 from 2007-2008. 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% during 2006-

07 over the previous fiscal’s total production of 147.8 million tons. Due to

rising demand of cement the sales volume of cement companies are also

increasing & companies higher 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 merger of 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 11 th

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

plan and cement production and capacity by the end of the 11 th Plan are

estimated to be 269 million tons and 298 million tons, respectively, with

capacity utilization of 90%.

Despite the growth of Indian cement industry lags behind the per capita

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

16

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% to nil etc. are all intended to cut costs and boost

availability of cement. Badly 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 country’s largest cement company that’s controlled by Swiss

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

sales. It is the biggest fall since Feb2007. 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

strategies 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 exchanging information. To fight with the high inflation,

government wants to import more cement from Pakistan. However cement

prices are not very much high as other items but still they are increasing. And

the reason of high price 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

17

how the government allocation of US$3.23billion for the National Highway

Development, Project will keep the demand for cement alive? And to what

extent the prices of cement should be increase so that consumer can’t affect.

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

gradation and assimilation of latest technology. Presently,93 percent 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

the industry in India are: Satna (Madhya Pradesh), Chandrapur

(Maharashtra),Gulbarga (Karnataka), Yerranguntla (Andhra Pradesh), Nalgonda

(Andhra Pradesh), Bilaspur (Chattisgarh), and Chandoria(Rajasthan).

Current Scenario

Indian cement industry is currently second largest producer in the world. The

origins of Indian cement industry can be traced back to 1914 when the first unit

was setup at Porbandar with a capacity of 1000 tones. Today cement industry

comprises of 130 large cement plants and more than 300 mini cement plants

that is again increasing on an everyday basis. The industry’s capacity at the end

of the year reached 188.97 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 April to March 2006-07. Dispatches were 167.67 million tons during

April to March2007-08 whereas 155.26 million tons during the same period.

18

During April-March2007-08, cement export was 3.65 million tons as compared

to 5.89 million tons during the same period. The cement industry in India has

gone over a consolidation phase. Some examples are Gujarat Ambuja taking a

stake of 14 per cent in ACC and taking over Rassi and Sri Vishnu Cement.

Grasim has also acquired the cement business of L&T, Indian Rayon’s cement

division and Sri Digvijay Cements. Foreign cement companies are also picking

up stake in large Indian cement companies. Swiss cement major Holcim has

picked up 14.8 per cent of promoter’s 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) of 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 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

19

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.

There are different varieties of cement based on different compositions

according to specific end uses, namely, Ordinary Portland Cement,

Portland Pozzolana Cement, White Cement, Portland Blast Furnace Slag

Cement and Specialized Cement. The basic difference lies in the percentage

of clinker used.

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 pozzolona 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

20

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:

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.

Manufacturing Process:

Mining Process

The main raw materials used in the cement manufacturing process are

limestone, sand, shale, clay and iron ore. The cement manufacturing process

starts from the mining of limestone, which is the main raw material for making

cement. Limestone is excavated from open cast mines after drilling and blasting

and loaded on to dumpers which transport the material and unload into hoppers

of the limestone crushers.  

Crushing Stacking & Reclaiming of Limestone

21

The LS Crushers crush the limestone to minus 80mm size and discharge the

material onto a belt conveyor which takes it to the stacker via the Bulk material

analyzer. The material is stacked in longitudinal stockpiles. Limestone is

extracted transversely from the stockpiles by the reclimers and conveyed to the

Raw Mill hoppers for grinding of raw meal.

Crushing Stacking & Reclaiming of Coal

The process of making cement clinker requires heat. Coal is used as the fuel for

providing heat. Raw Coal received from the collieries is stored in a coal yard.

Raw Coal is dropped on a belt conveyor from a hopper and

is taken to and crushed in a crusher. Crushed coal

discharged from the Coal Crusher is stored in a longitudinal

stockpile from where it is reclaimed by a reclaimer and

taken to the coal mill hoppers for grinding of fine coal.  

Raw Meal Drying / Grinding & Homogenisation

Reclaimed limestone along with some laterite stored in their

respective hoppers is fed to the Raw Mill for fine grinding.

The hot gasses coming from the clinkerisation section are

used in the raw mill for drying and transport of the ground raw meal to the

Electrostatic Precipitator/Bag House, where it is collected and then stored and

homogenized in the concrete silo. Raw Meal extracted from the silo (now called

Kiln feed) is fed to the top of the Preheater for Pyroprocessing.  

Clinkerisation

22

Cement Clinker is made by pyroprocessing of Kiln feed in

the preheater and the rotary kiln. Fine coal is fired as fuel to

provide the necessary heat in the kiln and the Precalciner

located at the bottom of the 5/6 stage preheater. Hot clinker discharged from the

Kiln drops on the grate cooler and gets cooled. The cooler discharges the clinker

onto the pan / bucket conveyor and it is transported to the clinker stockpiles /

silos. The clinker is taken from the stockpile / silo to the ball mill hoppers for

cement grinding.  

Cement Grinding & Storage

Clinker and Gypsum (for OPC) and also Pozzolana (for

PPC) are extracted from their respective hoppers and fed to

the Cement Mills. These Ball Mills grind the feed to a fine

powder and the Mill discharge is fed to an elevator, which takes the material to

a separator, which separates fine product and the coarse. The latter is sent to the

mill inlet for regrinding and the fine product is stored in concrete silos.  

PackingCement extracted from silos is conveyed to the automatic

electronic packers where it is packed in 50 Kg bags.

Polythene bags and distributed in trucks or rail. Bulk

cement can also be distributed in bulk by truck, rail, or water depending on the

customer’s needs.

Demand and 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

23

by 10 percent year-on-year propelled by the growth witnessed in end user

segments such as housing, infrastructure etc. CRISIL Research expects demand

to remain strong and grow by 12 per cent in the next 2 years.Cement demand is

expected to outstrip supply for the next year and 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, WestBengal, 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 movement form Gujarat to Mumbai is

also coming down due to exports while cement movement form 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 percent 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 percent 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. We expect the demand here to go

past the 17.5 million tons 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 rural areas 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

24

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 combined order book has virtually doubled over the last two years

from INR1,000bn(USD25bn) to INRI,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.

25

Capacity Utilization: Since the industry operates on fixed cost, higher the

capacity sold, the wider the cost distribute 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 companies 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. 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,effective capacity utilization results in higher operating

margins and therefore these factors should be looked into. Since cement is a

26

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(1940-1988)

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

under the Defence of India Rules and was brought under price and distribution

controls which resulted in sluggish growth. The installed capacity reached only

27.9MT by the year 1980-81.

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 in1980-81,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

27

and supply. In the next two years, the industry enjoyed a boom in sales and

profits. By 1992, the pace of overall economic 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. Interesting, all of these prices are

controlled by government.

REQUIREMENTS

Coal

Coal is the main fuel for manufacture of cement in India. The

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

clinker production.20 This means for per ton clinker produced 0.20-0.25 ton of

coal is consumed. The cement industry consumes about 10 million tonnes of

coal annually. Since coalfields like Bharat Coking Coal Limited

(BCCL), Central Coalfields Limited (CCL) supply poor quality of

coal, the industry has to blend high-grade coal with it. However, non-coking

coal and petroleum coke attracts a customs duty of 5%, which increases the

cost of production in the sector.

Electricity

Cement industry consumes about 5.5 billion units of electricity

annually with one tone of cement requiring approximately 120-130 units of

electricity. Since state governments supply electricity in India and

since different states have different tariff structure, the power tariffs vary

28

according to the location of the plant and on the production process. As a result,

cement plants in different states attract different power tariffs.

Another major hindrance to the industry is severe power cuts. Most of the

cement producing states such as Andhra Pradesh, Madhya Pradesh experience

power cuts to the tune of 25-30% every year causing substantial production

loss.

Infrastructure

To reduce uncertainity 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 tonne of cement, approximately 1.6 tonnes of limestone is

required. Since, the plants near limestone deposits pay less

transportation cost than others, the location of cement plant is determined by

the location of limestone mines. The total limestone deposit in the country is

estimated to be 90 billion tones, with Andhra Pradesh enjoying the

largest share of 34%, followed by Karnataka, Gujarat, Madhya

Pradesh and Rajasthan, with respective shares of 13%, 13%,

8%, and 6.5%. However, cement- manufacturing companies have

to shed large sums of money by way of royalty payment to the

central government and cess on royalties levied by the state government.

Transportation

29

Cement is mostly packed in paper bags now. It is then

transported either by rail or road. Road transportation beyond 200 kms is not

economical therefore about 55% cement is carried by the railways. There is also

the problem of inadequate availability of wagons especially on western

railways and southeastern railways.

Under this scenario, there is a need to encourage transportation

through sea, which is not only economical but also reduces 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, 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.

Incentives in States

30

Most state governments, in order to attract investments in their respective states,

offer fiscal 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 world’s 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 and risks:

The cement industry is going through a boom period with sustained capacity

utilization of over 90%. While the Indian economy has slowed down, there has

been no economic meltdown unlike in western countries, thanks to the inherent

strength of the Indian economy. The Government still expects GDP growth of

8-9% p.a., as per recent political pronouncements. Cement industry has not been

affected by the economic slowdown and is still registering 8-10% p.a. growth.

While large addition to capacities in the industry is on the anvil, the anticipated

boost to infrastructure development such as roads, ports, airports, power plants

and housing and with the global economy showing early signs of revival, the

demand-supply imbalance could get corrected in a short period. As per NCAER

study ,under high growth scenario, the demand for cement (including exports)is

expected to increase to 244.82million tons by 2010-11. As per the study,the

demand is expected to be much higher at 311.37 million tons in 2012, if the

31

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 heavy oreder 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 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

company’s 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 of such high cost of imported coal for the

plants located near the coal fields in India.

The Government’s continuing efforts to rein in cement prices by freeing imports

and banning exports could artificially disable the normal market price

mechanisms for determining the price.

The rise in the price of cement is because of the gap of demand and 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.

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Decreasing per capita consumption doesn’t 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 infrastructural as lots

of infrastructural development processes has already being taken up and due to

the increased price, housing segment started showing a showdown.

Main Companies in India

Associated 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

33

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 tons and produced 4.77 million metric

tons of cement in 2003-04. The company has two plants in Madhya Pradesh and

Rajasthan and one each in West Bengal and Uttar Pradesh and holds a market

share of 4.1 per cent. It manufactures Ordinary Portland Cement (OPC),

Portland Pozzolana Cement, fly ash-based 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 tons with a total

cement production of 5.43 million tons in 2003-04. CTIL has four plants that

manufacture cement, one in Chhattisgarh, 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

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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 tons.

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. It’s also

plans to focus on its international ventures, ramping up the capacity of

Alexandra Carbon Black in Egypt to 1,70,000 tone 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 tone 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 tons 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 northern and western markets. It has also earmarked around

US$ 195-220 million for acquisitions

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India Cements

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

capacity of 8.81 million tons 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 tons 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 plants located 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 tones 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

36

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 tons 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 cement (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 tons 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 tons to 3.4 million tons through an investment of US$ 9

million.

Foreign players

Holcim

37

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

141.9 million tones. 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.

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 tones and a clinker capacity of 3 million tons 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

38

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.

Company Profile

39

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, Founder Chairman 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 nation building, branched off on his own, to start

as a civil contractor in 1958, group is the 3rd largest cement producer in the

country. The groups cement facilities are located in the Satna Cluster (M.P.),

which has one of the highest cement production growth rates in India.

HISTORICAL MILESTONE:-

Year Events

1958 Completed first work as contractor in Kota(India).

1979 Jaiprakash Associates Pvt Ltd (JAPL) formed.

1980 Hotel Siddharth and Vasant Continental set up.

1983 Establishment of Jaypee Rewa Cement Plant(JRCL) with an

initial capacity of 1 million tones.

1986 Formation of Jaiprakash Industries Limited(JIL).

1992 Formation of Jaiprakash Hydro Power Ltd(JHPL) to operate

40

300 MW Baspa II HE Project

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

initial capacity of 1.9 million tones.

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

and JBCP.

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

merging JIL with JCL.

2005 Share of JHPL listed on BSE/NSE. First Hydropower

company to be publicly held and listed in the country.

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

neighbouring 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)

41

Fabrication and erection of penstock liners

Hydro-mechanical equipment procurement and erection

Steel Structures

Expressway Construction

Real Estate Development

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 installed

capacity of 26.20 MnTPA. 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 35.90 MnTPA by FY12 (expected) with

Captive Thermal Power plants totaling 672 MW.

Keeping pace with the advancements in the IT industry, all the 260 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 – the – truck” initiative and provide

seamless integration. This initiative is the 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.

42

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(JRL), 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 renowned Bureau Veritas

Certification. ISO-9001:2000 covers Quality Management System. ISO-

14001:2004 covers all Environment 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 whch 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(GOI) opened 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 mix of 40:60 to meet the peak

shortage demand.

Seeing the vast potential present in the hydropower generation, the house of

Jaypee 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 India’s Tenth Five Year Plan.

Hospitality

43

The Hotel division of Jaiprakash Associates Ltd. owns and operates four Five

Star Deluxe hotels 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.

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

44

Jaypee Greens, the real estate division of the Jaypee Group has been creating

lifestyle experiences from building premium golf-centric residences to building

mega townships and self sustained mega cities since its inception in the year

2000.

Jaypee Greens, Greater Noida is a maiden real estate project of the Jaypee

Group and it has undeniably established its position amongst the finest

developers in Asia with having been awarded the highest possible accolade in

the international property arena. It is a premium 452-acre golf-centric lifestyle

real estate development situated in Greater Noida integrating homes with golf

course, landscaped emerald spaces, resort living and commercial developments.

The project is created to offer a lifestyle at par with world-class residential

spaces.

India's first 'Wish Town' at Jaypee Greens, Noida has been developed as a

diverse, progressive, vital community spread over 1162 acres that combines

sophisticated living with pure natural surroundings. A picturesque community

with numerous golf facilities, mixed with world class residences, recreational

areas, commercial and institution spaces. It offers excellent education facilities,

international standard health care facilities, recreational and entertainment

centers, various art and cultural galleries, museums, spiritual centers, hotels,

multiple shopping complexes, corporate offices, IT parks and public services.

With Jaypee Greens Sports City, the company is working with a vision to create

one of the world's premier sports destinations, in sync with the vision to craft

India’s foremost sporting world with top of the line infrastructure.

Conceptualized as an integrated city, where one gets everything that he dreams

of in his neighborhood, it includes world-class sports venues with latest

facilities, a proposed calendar of international sporting events - providing a

platform. Built on 2,500 acres of land within the sports development zone,

45

Jaypee Sports City will feature a magnificent long motor racing track- first time

ever in the country, a of dedicated cricket stadium with 100,000-seat capacity

and other sports facilities.

Information Technology

We are living in an era of information driven enterprise. Focus is consistently

placed on automation techniques that increase the productivity and profitability

of the enterprise with reduced costs across various functional heads. IT is an

enabler in this context. The Group’s Infotech arm JIL Information Technology

Limited (JILIT) specializes in providing services in the area of:

IT Infrastructure Management

Software Development & Consultancy

Multimedia Services Content Management, Security & Delivery

Agricultural Content Development

Learning Solution

JILIT manages the entire IT Infrastructure of the various Group companies that

include over 10 construction sites in some of the remotest terrains of the country

including 200 cement locations in the interiors of India and 3 University

Campuses that house over 7000 computers and various servers.

The company has set up and operates the largest private network of VSAT’s in

Northern India that connect the Group’s various project sites, cement locations

and Hydropower stations. This facilitates seamless connectivity for video

conferencing of remote locations 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 provider for schools in India. A

pioneering initiative was taken in the year 2000 when JILIT conceptualized and

46

developed the first of its kind digital classroom teaching aid that serves to

assists in teaching, difficult to visualise 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 are trusting our educational content for adding

value to their classroom teaching process and inturn providing benefit to over

150000 students. Other innovative solution from JILIT include Campus

Connect (integrated resource planning solution for academic institutions),

Online testing tools and Bizconnect.

Expressway

India has the world’s second largest road network, aggregating over 3.34

million 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 expressway along the Yamuna river connecting

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

development along the expressway at 5 locations totaling 25 million square

meters for residential/industrial/institutional purposes and shall trigger

multidimensional, socio-economic development in Western U.P. besides

strengthening the Group’s presence in real estate segment in this decade.

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,

47

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

“An Impetus for the Industry, a Conscience for Society.”

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 minimise, 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.

48

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 it’s 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.

Research Methodology

RESEARCH OBJECTIVES

The primary Objective of the project is:

TO ASSESS THE CUSTOMER SATISFACTION IN ALLAHABAD DISTRICT

49

Secondary Objective is:

What are the general problems of dealers?

How can dealers be served in a better way?

To find out which areas dealers are not getting proper support from

the company?

What other companies are doing to serve their dealers and where

Jaypee cement is lagging behind them?

What are the competitive advantages for Jaypee cements and What

are the areas of improvement?

What is the market position of Jaypee cement?

RESEARCH METHODOLOGY

Data Sources

Both primary data and secondary data were used for the study.

Primary data were collected by survey method. Questionnaire was

administered by contacting each respondent personally.

Secondary data were collected form internet.

Geographical Scope

Various Cement industries dealers in ALLAHABAD market.

Research Design

This market research is both descriptive and exploratory in nature. This is

descriptive because this research enables to describe present picture of service

50

level to dealers from various cement companies. This is exploratory because

this research further suggests discovery of new insights and ideas.

Sampling Plan

Sample Size: A sample size of 120 respondents was taken for the study

Sampling Method: Non-probability/Convenience, Personal Interview The

sampling technique chosen for the study was Random Sampling Method. This is

the most common method of selecting the sample. This is because the dealers

are located in different areas of the city. It gives all dealers in a group an equal

chance of being selected for the purpose of the survey.

Sampling Unit

Dealers of various cement companies operating in Allahabad district.

Sampling Frame

All the exclusive and multibrand dealers in Allahabad district.

Data Analysis:-

I have covered dealers of various cement companies operating in Allahabad

district. Along with dealers to get exact idea of cement market some of non-

dealers have also been covered. I visited 120 dealers during my survey, some of

them were exclusive dealers and others were multibrand dealers.

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Ques-1:-General perception about jaypee cement

Number of dealers Percentage(%)

BEST 93 77.5GOOD 17 14.16OK 10 8.3

BEST GOOD OK

93

1710

77.5

14.168.3

General perception about Jaypee CementNumber of dealers Pecentage

This graph shows that most of the dealers that is 77% thinks that Jaypee is

the best cement brand in the market.

Ques-2:-Highest selling cement at counter?

Company Number of dealer Percentage(%)Jaypee 51 42.5

Prism 20 16.6

Birla 27 22.5

Mycem 8 6.6

ACC 10 8.3

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Maiher 4 3.3

Jaypee Prism Birla Mycem ACC Maiher

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20

27

8 104

42.5

16.622.5

6.6 8.33.3

Highest selling cement at counters Number of dealer Percentage

This graph shows that Jaypee is the highest selling cement in the Allahabad

market followed by Birla and Prism cement

Ques-3:-Number of Jaypee customer at your counter per day?

Customers/day Number of Dealers0 to 5 3005 to 10 3510 to 15 2215 to 20 2020 to 25 13

53

0 to 5 05 to 10 10 to 15 15 to 20 20 to 2505

10152025303540

Number of Jaypee customer/day

Number of Dealers

Customers /day

Num

ber o

f Dea

lers

This graph shows that Jaypee customers/day ranges between 5-10 in most of

dealers shop.

Ques-4:- Basis for consumer purchase?

Basis for purchase Number of Dealers Percentage(%)Price 7 5.8

Packaging 15 12.5

Brand 23 19.16

Quality 73 60.8

Any other 2 1.6

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Price Packaging Brand Quality Any other

7

15

23

73

25.8

12.519.16

60.8

1.6

Basis for Consumer purchase of Jaypee CementNumber of Dealers Percentage(%)

This Graph shows that customers are focusing on Quality of the cement then

any other aspects.

Ques-5:- Basis for selling Jaypee Cement?

Basis for selling Number of Dealers Percentage(%)Consumer Demand 95 79.16

Availability 3 2.5

Schemes 8 6.6

Credit Availability 7 5.8

Profitability 7 5.8

Consumer Demand Availability Schemes Credit Availability Profitability

95

3 8 7 7

79.16

2.5 6.6 5.8 5.8

Basis for selling Jaypee CementNumber of Dealers Percentage(%)

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Ques-6:- Are you satisfied with the availability of the product?

Yes NoNumber of dealer 107 13Percentage(%) 89.16 10.8

Yes No

107

13

89.16

10.8

Satisfaction level with the availability of the product

Number of dealer Percentage(%)

This graph shows most of the dealers that is 107 is satisfied with the availability

of the product.

Ques-7:- Are you satisfied with companies brand promotion?

Yes NoNumber of dealer 115 5Percentage(%) 95.8 4.16

Yes No

115

5

95.8

4.16

Satisfaction level with the brand promotion of the company

Number of dealer Percentage(%)

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This graph shows that the dealers are satisfied with the brand promotion of the

company. And the dealers who are not satisfied suggested to have more brand

promotions through advertising, using popular celebrity and spreading awarenss

and building personal relationship.

Ques-8:- Which type of customer come to you?

Type of customer Dealers Percentage(%)Consumer 46 38.6

Builder 40 33.3

Mason 18 15

Small contractors 16 13.3

Consumer Builder Mason Small contractors

46

40

1816

38.6

33.3

1513.3

Type of customerDealers Percentage(%)

From the above graph we can infer that mostly are the consumers and the

builders who consume the Jaypee cement.

Ques-9:- What is your average monthly sale?

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Monthly sale in MT Number of Dealers Percentage(%)0 to 10 8 6.610 to 20 20 20.820 to 30 30 2530 to 40 20 20.840 to 50 21 17.550 to 60 10 8.3More than 60 11 9.1

0 to 10 10 to 20 20 to 30 30 to 40 40 to 50 50 to 60 More than 60

0

5

10

15

20

25

30

35

Average monthly sale

Number of DealersPercentage(%)

Monthly sales in MT

Deal

ers

From the above graph we can infer that most of the dealers monthly sale lies

between 10 tons to 40 tons of cement.

Ques-10:- Are you aware about customer service help desk (Nirman-

Mitra)?

Yes NoNumber of dealer 78 42Percentage(%) 65 35

58

Yes No

78

42

65

35

Awareness about customer service help desk

Number of dealer Percentage(%)

From above graph we can infer that most of the dealer are aware of Nirman

mitra that is 65%.

Ques-11:- Are they facing problem while consuming the product?

Yes NoNumber of dealer 7 113Percentage(%) 5.8 94.16

Yes No

7

113

5.8

94.16

Problem faced during consumptionNumber of dealer Percentage(%)

From the above graph we can infer that the product is easily consumable and the

problem is negligible.

Ques-12:- Did you find your complaint settled satisfactorily?

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Yes No

Number of dealer 108 12Percentage(%) 90 10

Yes No

108

12

90

10

Complaint settlement with satisfactionNumber of dealer Percentage(%)

This graph shows that the complaint of the dealers are listened properly and are

settled satisfactorily.

Ques-13:-Any suggestion for improving marketing of product ?What are

the suggestion?

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Suggestions Number of dealers Percentage(%)Changing brand ambassdor 65 54.16More advertising 38 31.6Use of hoarding ,Poster and banners

17 14.16

Changing brand ambassdor More advertising Use of hoarding ,Poster and banners

65

38

17

54.16

31.6

14.16

Suggestions for improving marketing of product

Number of dealers Percentage(%)

From the graph we can infer that dealers basically want a change in the brand

ambassador for improving the marketing of product.

Findings & Observations

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Allahabad is a big market for cement. This city is developing rapidly that’s

why a no. of offices,shoppig complexes, parks, roads, over bridges are being

constructed and cement is basic requirement for these constructions.

Prism cement has larger sale in the main city but Jaypee has an edge over

other companies in outer areas.

Dealers want cement delivery on time and efficient promotional support from

the company.

Allahabad’s cement market is not very professional rather than it’s dependent

over personal relationship. A number of dealer said they are selling that

particular cement because they have close relation with sales promoter or

marketing officer and company persons are also more interested to serve those

dealers who are close to them.

Dealers are suffering with fluctuating price of cement. I started my market

survey from 28thJanuary and within 15 days cement prices changed from Rs

260 to 275 per bag. Dealers are in trouble because with this continuously

changing price small dealers are unable to retain their customer while big

dealers are not affected very much because they are completing target and

getting cash discount and quantity discount so they are able to sell at relatively

low prices without incurring loss.

Small dealers are also suffering with unclear schemes of cement companies.

Targets are very high so they are not benefitted with these schemes.

Duplicacy is another main factor that’s why dealers are suffering Duplicate

cement of each brand is available in the market non-dealers are selling

duplicate cement at relatively low prices and even some dealers are keeping

their prices low by stealing the cement from bags.

Dealers also face problems as according to them their consignees are not

properly benefitted by the schemes provided by the companies.

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Since January cement market is suffering from shortage except Jaypee other

company’s delivery has been affected. Jaypee has also effect but in small

extent.

The dealers are satisfied with the product and its brand promotion.

Exclusive dealers are served better than multibrand dealers from the

companies.

According to Mr.Rakesh Chandra Kesharwani owner of Rakesh

Enterprizez ,Dhoomanganj Jaypee’s gifts are costlier than other companies

and Jaypee is doing more promotional activities in Dhomanganj area.

Jaypee’s production capacity is larger than other companies.

Jaypee provides T-shirts and Caps to labors

Jaypee cement hired SACHIN TENDULKAR as brand ambassador of Jaypee

cement and this activity provided excellent brand recognition to Jaypee

cement.

Jaypee’s dealers whose sale is more than 500 MT are considered as a member

of ANMOL PARIVAR and they are served better than others.

Cement companies are supplying cement to government contractors for

government projects that’s why supply is getting affected.

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Limitations of the study

Though the present study aimed to achieve the objectives in full earnest and

accuracy. It was hampered due to certain limitations. Some of the limitations of

this study may be summarized as follows:-

Getting accourate responses from the respondents due to their inherent problems

were difficult. They were partial and not very cooperative.

I did sample survey not the census one so my findings may not be as muchin

tune with their ground realities as may be considered desirable..

I got the dealer list from Jaypee cement’s dump but address of dealers was not

properly given in the list so it took too much time to find them.

Transportation facility of this city is very poor and I haven’t my personal

vehicle, this is why I faced too much problems during my visit to dealers.

Most of the times I found dealer is not present at the shop only servants are

present so to meet with dealer I had to visit three to four times and it took too

much time.

Conclusions

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During Four weeks of my training I visited many of the dealers of various

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 the

service level of different companies operating in Allahabad district with respect

to their dealers. After collecting data and final analysis of collected data

following conclusions have been drawn:-

Definitely Jaypee cements has maximum numbers of dealers in Allahabad

district followed by Prism and Birla.

Jaypee cement has more no. of dealers in larger dealer segment. Birla has also

small dealers and Mycem ,ACC and Maiher have very few dealers in this

district.

Jaypee has definitely better delivery than others.

Jaypee;s delivery of bill is faster than others and delivery of account statement

of Jaypee is faster than Prism and Birla.

Technical support of Jaypee provide a competitive edge to Jaypee over others

Jaypee’s marketing officers visit the dealers frequently but they do not go to all

the dealers.

Target achievement, complaints and their resolutions, communication of

schemes are main topic of discussion when marketing officers visit the shops.

Dealers are almost satisfied with the brand and its quality .

Redressal of grievances of Jaypee is better than others.

Jaypee has the higher production capacity with its 24 plants all over the country.

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Recommendations

Jaypee’s main problem is two different colour cements from two plants.

Blackish colour of cement of Rewa plant is because of more use of fly ash.

Even it is true colour has no concern with quality but less educated dealers and

customers are not able to get this fact so Jaypee has to do more and more dealer

meet and Mistary meet and engineers has to communicate this message that

colour does not affect the quality by practical demonstrations.

At least at one site cement of one plant should be supplied.

Marketing officers should visit the dealers more frequently.

More no. of promotional items should be supplied.

In kauhambi district wall painting has not been done since last 1 year so

immediate wall painting is necessary in Manjhanpur and Sirathu market.

Price communication and scheme communication should be clearer especially

there should be some schemes for small dealers.

Price fluctuation should not be very frequent.

To avoid duplicacy there should be close observation on the market.

Consignees should be benefitted properly through consignee schemes.

Those regions where Prism has strong market, Jaypee should more promotional

activities and dealers should be served more seriously.

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References and Bibliography

CR Kothari (2008) Research Methodology methods and techniques, new

age international publishers, second edition,1,2,14-17.

Marketing Management (Millennium Edition) by Philip Kotler ; Prentice-

Hall India Publications; Tenth Edition; Pg 175.

Phillip Lasserre (2007) Globalization cement industry , global strategic

management,1-6.

Shobhit chandak (2006). Report on cement industry in India,1-19.

http://business.mapsofindia.com/cement/retrieved on 1.06.2009 .

http://www.economywatch.com/business_and_economy/

cement_industry.html/retrieved on 14.06.2009.

http://www.jalindia.com/retrieved on 11.06.2009 .

http://www.ibef.org/industry/cement.aspx/retrieved on 11.06.2009 .

Google.com

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