swot analysis of ultratech cement limited

8/8/2019 swot analysis of ultratech cement limited

1/23

Pioneer Institute ofProfessional Studies

SWOT Analysis

OF

Ultratech Cement Ltd.

Submitter by:-

Tarun Nayak

MBA (3rd

SEM)Sec R


2/23

UltraTech Cement Ltd. SWOT Analysis Phase 1-2-3

INTRODUCTION:-

Ultratech is India's largest exporter of cement clinker. The company's production

facilities are spread across eleven integrated plants, one white cement plant, twelve

grinding units, and five terminals four in India and one in Sri Lanka. Most of the

plants have ISO 9001, ISO 14001 and OHSAS 18001 certification. In addition, two

plants have received ISO 27001 certification and four have received SA 8000

certification. The process is currently underway for the remaining plants. The company

exports over 2.5 million tons per annum, which is about 30 per cent of the country's total

exports. The export market comprises of countries around the Indian Ocean, Africa,

Europe and the Middle East. Export is a thrust area in the company's strategy for growth.

Ultratech Cement Limited is among the worlds top 10 cement companies. The company

has an annual capacity of 48.8 million tones, and manufactures and markets ordinary

Portland cement, Portland blast furnace slag cement and Portland pozzalana cement. It

also manufactures ready mix concrete.

The company has eleven integrated plants, one white cement plant, twelve grinding units

and five terminals four in India and one in Sri Lanka.

Ultratech Cement is the countrys largest exporter of cement clinker. The export markets

span countries around the Indian Ocean, Africa, Europe and the Middle East.

The company's subsidiaries are Dakshin Cements Limited, Harish Cements Limited,

Ultratech Ceylinco (P) Limited and UltraTech Cement Middle East Investments

Limited.For further information, go towww.ultratechcement.com


3/23


VISION: -To be a premium global conglomerate, with a clear focus on each business.

MISSION: - To deliver superior value to our customers, shareholders, employees andemployees and society at large

VALUES:-

y Integrity

y Commitment

y Passion

y Seamlessness

y Speed

PRODUCT MIX:-

Ultra Techs products include Ordinary Portland cement, Portland Pozzolana cement andPortland blast furnace slag cement.

Ordinary Portland cement

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.

Portland blast furnace slag cement

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 alumina

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 concreteworkability, easier finish ability, higher compressive and flexural strength, lower

permeability, improved resistance to aggressive chemicals and more consistent plastic

and hardened consistency.


4/23


Portland Pozzolana cement

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 and mortar

As part of the ninth biggest cement manufacturer in the world, UltraTech Cement has

eleven integrated plants, one white cement plant, twelve grinding units as well as five

terminals of its own (one overseas, in Colombo, Sri Lanka). These facilities gradually

came up over the years, as indicated below:


5/23


JOINT VENTURE:-

Company PartnerKey products /services

Birla Sun Life Insurance

Company Ltd.

Sun Life (Canada) life insurance

Tanfac Industries Ltd. TIDCO (Tamil Nadu Industrial DevelopmentCorporation)

fluorine chemicals

Aditya Birla Grasun Chemicals(Fangchenggang) Limited.

Fangchenggang Grasun Company Limitedof Guangxi Province (China)

food gradephosphoric acid

Thai Peroxide hydrogen peroxide

Hindalco-Almex AerospaceLimited

Almex USA, Inc. aerospace alloy

A.V.Group dissolving gradepulp (for VSF

manufacture)hardwooddissolving gradepulp (for VSFmanufacture)

Mahan Coal Limited Essar Power mining

Hydromine DUBAL bauxite / alumina


6/23


TOP MANAGEMENT:-

Board of Directors

Mr. Kumar Mangalam Birla, Chairman

Mrs. Rajashree Birla

Mr. R. C. Bhargava

Mr. G. M. Dave

Mr. N. J. Jhaveri

Mr. S. B. Mathur

Mr. V. T. Moorthy

Mr. S. Rajgopal

Mr. D. D. Rathi

Mr. O. P. Puranmalka, (Whole time Director)

Executive President & Chief Financial Officer

Mr. K. C. Birla

Chief Manufacturing Officer

Mr. R.K. Shah

Chief Marketing Officer

Mr. S.N.Jajoo

ChiefPeople Officer

Mr. C. B. Tiwari

Company Secretary

Mr. S. K. Chatterjee


7/23


LOCATION AND MANUFACTURING UNIT:-

Plant locations -

Awarpur

Awarpur Cement Works, P.O. Awarpur Cement Project, Taluka: Korpana, Dist.Chandrapur, Maharashtra 442 917Tel: 07173-266 323Fax: 07173-266 339

HirmiHirmi Cement Works, P.O. Hirmi, Taluka: Simga, Via: Neora, Dist. Raipur, Chhatisgarh493 195Tel: 07726-281 269Fax: 07726-281 268

AmreliGujarat Cement Works, Village: Kovaya, Taluka: Rajula City, Dist. Amreli, Gujarat 365541Tel: 02794-283 034Fax: 02794-283 036

ChukkalurA.P.Cement Works, Village: Bhogasamudram, Tadipatri, Anantapur District, AndhraPradesh 515 415.Tel: 08558-288 841,Fax: 08558-288 821 / 31

Jafrabad

Jafrabad Works (NCCL), Village: Babarkot, Taluka: Jafrabad, Dist. Amreli, Gujarat 365540Tel: 02794-245 103Fax: 02794-245 110

DurgapurWest Bengal Cement Works, Near EPIP plot, Muchipara, Post: Rajbandh, Durgapur 713212 (West Bengal)Tel: 0343-253 3030 / 253 4324 / 253 3361Fax: 0343-253 3358

MagdallaMagdalla Works (NCCL), Magdalla Port, Dumas Road, Surat, Gujarat 395 007Tel: 0261-272 5175Fax: 0261-272 6952


8/23


Ratnagiri

Ratnagiri Works (NCCL), MIDC Industrial Estste, Zadgaon Block, Ratnagiri,Maharashtra 415 639 Tel: 02352-223 679 Fax: 02352-221 807

Vellore

Arakkonam Cement Works, Chetteri Village,P.O. Arakkonam 631 003, Dist. Vellore (Tamil Nadu)Tel: 04177-293 291

Jharsuguda

Jharsuguda Cement Works, Near Dhutra railway station,P.O. Arda, Dist. Jharsuguda, Orissa 768 202Tel: 06645-283 161

Fax: 06645-283 108


9/23


PHASE II

CURRENT GOALS AND OBJECTIVES

y Our goal is to become a US$ 65 billion Group by 2015 from US$ 30 billiontoday. We expect your Company to contribute significantly to this growth and

earnings.

y UltraTech Cement is the countrys largest exporter of cement clinker. The export

markets span countries around the Indian Ocean, Africa, Europe and the Middle

East

y FINANCIAL ASPECT OF THE COMPANY

------------------- in Rs. Cr. -------------------

S.NO. RATIOS Mar '10 Mar '09 Mar '08 Mar '07 Mar '06

1 Operating margin

(%) 70.09 72.30 68.66 71.15 83.20

2 Gross profit margin

(%) 51.24 48.10 54.40 51.60 44.08

3 Net profit margin

(%) 15.50 15.50 18.20 15.90 6.9

4 EPS (Rs)87.82 78.48 80.94 62.84 18.46

5 Return on net worth

(%) 23.72 27.10 37.40 44.40 22.12

6 Dividend payout

ratio (%) 5.64 5 5.1 4 4.06

7 PBDIT 1706 1448 1589 1253 375

8 Depreciation 388 323 237 226 2169 PBIT 1706 1487 1589 1253 375

10 PBT 1588 1361 1507 1166 286

11 PAT 1093.24 977.02 1008.12 782.24 230.32

12 Net profit 1093.24 977.02 1008.12 782.24 230.32


10/23


1. Operating margin (%)

In the year 2006 OR margin is maximum because company spend lot in total cost, it

continuously fluctuate every year but it was less in year 2008. A high or increasingoperating margin is preferred because if the operating margin is increasing, thecompany is earning more per rupees of sales.

2. Gross profit margin (%)

Gross profit margin reflects the efficiency with which management produces eachunit of product. Ultratechit is as

51.24 48.10 54.40 51.60 44.08

Which indicates that companys spending on one unit reduced drastically in2006

3. Net profit margin (%)

Net profit margin ratio establishes a relationship between net profit and net sales andindicates management efficiency in manufacturing, administrating,

Ultratech net profit margin reduces due to higher expenditure on operations, companyalso provides a huge amount on interest in this year.

4. EP

S

EPS shows the profitability of firm on a per share it does not reflect how much is paidas dividend and how much is retained in the business

Company increases their reserves maximum in year 2007 due to this EPS wasminimum. Earlier in2010 it was highest.

5. Return on net worth

How well the firm has used the resources of owners the earning of a satisfactoryreturn is the most desirable objective of a business.From above table it shows that how well company invest their own capital , it wasmaximum in year2007 from the all.

15.50 15.50 18.20 15.90 6.9

87.82 78.48 80.94 62.84 18.46

23.72 27.10 37.40 44.40 22.12


11/23


6. Dividend Payout ratio

5.64 5 5.1 4 4.06

Company earning higher profit in year 2007 but they invest their profit in various

ventures and they also paid higher tax, their operating expenses were also high. Anddue to this they give less payout ratio. Payout ratios of company gradually decreasefrom last 3 years because company diversifies their business in various field.

7. PBDIT

8. Depreciation

Company purchased fixed assets in huge amount.

SHAREHOLDERS OF COMPANY

1706 1448 1589 1253 375

388 323 237 226 216


12/23


PHASE III

BENCH MARKING

PERFORMANCE BENCH MARKING

The last few years of this decade have been good for cement companies as prices have

remained high, and hence profits have been good. In the same period, Gujarat Ambuja

Cements and ACC have shown the same trends of increasing sales growth and capacity

utilization of Gujarat Ambuja Cements and ACC both are growing continuously because

of the increase in the demand of the cement in this scenario and they are very effective in

meeting the demand of the consumers by doing their best performance.

PROCESS BENCH MARKING

Due to similar raw material inputs and production processes, there is no significant

differentiation in the cement produced across firms and thus they follow the standardized

process of manufacturing. But it can follow the Manufacturing Process of its largest

competitor ACC, though ACC enjoys lower fuel cost. However, this is not sustainable

has already started switching to coal. Similarly it can have the advantage of coal fuel.

STRATEGIC BENCHMARKING

Can adopt the strategies of ACC cement i.e.,

Cost leadership: Striving to become a cost leader by means of setting up captive power

plants, and/or up-gradation of technology to enhance productivity, is increasingly

becoming critical for large cement players in this sector.

Rising Exports: Due to the increasing construction activity in the Middle-East, exports

will constitute a major sales driver. Hence, the coming years would see companies

scrambling for bases on the Western coast to minimize their export transportation costs.

Retail Stores: A unique concept, which ACC is experimenting with in recent times, and

one that is important for the future, is to continue setting up retail stores. Other

companies like Asian paints, and most recently Tata Steel have tried a similar concept.


13/23


Relationship Management: ACC focus on managing its relationships with importers,

exporters, distributors, warehouse providers, wholesalers, retailers and dealers for their

long-term profitability.

17. PRODUCT LIFE CYCLE


14/23


COMPANY LIFE CYCLE

INDUSTRY LIFE CYCLE


15/23


STRATEGIC MODELS

PORTERS FIVE FORCE MODEL


16/23


SWOT ANALYSISSTRENGTHS

Production

y The company's production facilities are spread across 11 integrated plants, one

white cement plant, 12 grinding units, and 5 terminals 4 in India and one in Sri

Lanka.

y High quality 17.64Mn.Ton cement production in 2009-10.production is increasing

annually.

y Annual production capacity of 23.10 million tones.

y Use of high-end equipment such as the Gamma Metrics Machine and the X-ray

Analyzer ensures that each product passing out of Ultraech manufacturing facility

adheres to global standards of quality and performance.

Logistics

y Can directly deals with the limestone tenders and thus the middle man do not

affect its cost.

y Use the local transporters which provide the efficient transportation cost.

Plantationy Ultratech manufacturing plant uses ultra-modern technology and imported

machinery.

y Companys Unit at Kovaya is the only Unit in this sector in India to have a

desalination plant. It is used for meeting the water needs of the plant and the

colony. The waste gases from the cooler are used in thedesalination plant.

y The Ultratech cement manufacturing The greenbelt at our Units is simply

awesome and is surrounded by trees all around. At some points, you cannot even

see the skyline. Only the leaves and the flowers and hear the cacophony of the

birds.

y Companys CSR (corporate social responsibility) activities extend to 127 villages,

in proximity to its plants, across the country.


17/23


Brand Positioning

y The Aditya Birla Group the eighth largest cement player in the world.

y UltraTech's products include Ordinary Portland cement, Portland Pozzolana

cement and Portland blast furnace slag cement.

y The company exports over 2.5 million tons per annum, which is about 30 per cent

of the country's total exports.

y 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.

y OPC is used for applications, such as commercial buildings, industrial constructions,

multi storied complexes, cement concrete roads and heavy duty floors.

y PPC cement is used for big construction like dam and thermal power plant,

Distribution Channels

y The Company has a network of cement

y UltraTech's distribution network is very widely spread out in the country with

over 5,500 dealers and 30,000 retailers

Human Resource

y Total number of employees in Company as on 31st March, 2010 was 4,481

employees.

y Ultratech has won the best employer award in 2007.

y Company continuously strives to foster a culture of high performance.

Management has infused a lot of rigor and intensity in its people development

processes and in honing skill sets.

y The Performance Management System at Ultratech Cement ensures that

performance and achievement do not go unnoticed.


18/23


y Ongoing learning, refreshing HR systems in line with global benchmarks,

aligning rewards an recognition with performance, have enabled Company sustain

its reputation of a meritocratic organization.

y Its HR processes are absolutely aligned to organizational goals

y It provides an opportunity to the employees to monitor their progress and develop

into complete professionals.

y The Groups Corporate Human Resources function has played and continues to

play an integral role in Companys Talent Management Processes.

y The cornerstone of our Performance Management System is the Appraisal

System. Individual performance targets in the form of Key Result Areas (KRAs)

are set at the beginning of the year through consultation with the reporting

managers.

y At the end of the year, each employees performance is assessed against the set

KRAs. Performance Management provides the employee an opportunity to

discuss his/her achievements during the given period and to focus on

improvement areas.

y Training & development-We lay a lot of emphasis on developing our employees

beyond their present boundaries, broadening their horizon, enabling them to think

the unthinkable and rise above the benchmarks they set for themselves.

Finance

y Production for the Aditya Birla Group company UltraTech Cement, for the

period April-September 2010, has moved up by 3.99% at 186.30 lakh mt as

against 179.16 lakh mt during April-September 2009.

y Consistent revenue growth.

y Gross sales increase from 7160 cr. to 7729 cr.(from year 2009 to 2010)

y EBIT increase from 1487 cr. to 1706 cr.(from year 2009 to 2010)

y PAT increase from 977 cr. to 1093 cr.(from year 2009 to 2010)


19/23


y EPS (Rs.) increase from 118.94 to 127.65 Rs/share (from year 2009 to 2010)

Quality

y All the plants of UltraTech are ISO 14001 Environment Management Systems

certified and adhere to OHSAS 18001 standards.

y Clean technologies and processes that combine economic progress and

sustainable environment have been adopted at Ultratech plants at Awarpur and

Ratnagiri in Maharashtra; Kovaya, Jafrabad and Magdalla in Gujarat; Hirmi in

Chhattisgarh; Arakkonam in Tamil Nadu; Tadipatri in Andhra Pradesh;

Jharsuguda in Orissa and Durgapur in West Bengal.

y Ultratech won the Capexil Certificate of Export Recognition - Top Exporter -

Cement, Clinker, Asbestos and Cement Products for the years 2000, 2002 and

2003

y Uniform cement quality to customer.

y Bhartiya Udyog Ratan Award presented to Sh.KYP Kulkarni By Indian Economic

Development & Research Association (IEDRA), New Delhi in 2004.

Projects

y Ultratech Cement, we see it in the Bandra-Worli Sea Link an eight lane bridge

that is going to make a difference to millions of commuters.officially named as

the Rajiv Gandhi Setu the bridge will provide an alternative route to south

Mumbai from the western suburbs.


20/23


WEAKNESSESS

Raw materials

y Not available in all the places.

y Losses of raw material.

Productsy High cost of branded products.

Operationsy High Power/ Fuel costs.

y Required efficient maintenance for the wastes.

y Raw material inventory required due to perishable of raw material.

y High inventory handling cost.

Human Resourcey Due to openness in the organization work culture is very informal that will not suit for

better management in corporate.

y Insufficient man power

Marketing

y Lack of awareness program for consumers due to low promotion mix.

y Lack of marketing mix.

y Delay in supply.

Health

y Highly dusty environment at the time of dumping the cement is hazardous forhealth.

y It affects humans respiratory system adversely.

Others

y Cement industry is highly fragmented

y Industry is also highly regionalized

y Low value commodity makes transportation over long distances uneconomical

y The cost of transporting cement is high and this keeps cement from being

profitable over long distances. In other words, shipping cement costs more than

the profit from selling it.


21/23


OPPURTUNITIES

y With the low per capita consumption of cement in India 102 kg compared to

the global average of 260 kg (China: 429 kg, Malaysia: 529 kg and South Korea:

951 kg) - and the emphasis on infrastructure development, Ultratech has ample

opportunity to ride the growth curve.

y It can develop new marketing area.

y It can sign MOUs with government regarding supply of cement for government

work.

y Maintain the position of competition in the market.

y Institutional market like corporate and offices, school society complexes are

growing in large scale, which will increase the requirement.y People are opting for more stable structures and intensive use of cement is taking

place, even government is spending heavily on infrastructure projects. Thus, this

is the right time to fully tap these markets.

y As Indian core industry is also growing at rate of nearly 10% per annum it is

having a good future.

y Foreign direct investment in infrastructure sector going to increase in coming

years, which will increase the demand of cement.

y Roads are undergoing through the transformation process through which the

traditional method of road building will be replaced by modern concrete roads.

y The cement industries have opportunities as well. One such opportunity is the

cement industry's efficiency. The cement industry has recently streamlined its

production efforts, using dry manufacturing instead of wet, which is heavier and

more time-consuming. The cement industry has also invested about $6 billion in

expansion efforts to meet unmet cement needs. Projections show that by 2012, the

cement industry will have 25 percent more production capabilities.


22/23


THREATS

y Large number of players in cement industry makes it more competitive for ACC

to carefully price its product and at the same time satisfy its dealers andcustomers.

y Cheep priced brand are grabbing rapidly a large chunk of lower income customer

base.

y Players such as Jaypee Cement, Prism Cement, and Birla cement.ACC cement are

eating up considerable market share.

y Due to Indias exponential growth many new international cement companies are

expected in coming years which will bring a tide of change and can start price

war.

y Government intervention to adjust cement prices

y Transportation cost is scaling high; bottleneck due to loading restriction.

y Coal prices climbing up industry players say current shortage of coal in the

country is estimated to be over 10 million tons.

y The emergence of small players in this market may increase the competition and

start the malpractices, and heavy discounts to retailers. They can also influence

many retailers by giving better profit margin, and other Benefits.

y Now-a-days Timber is also being considered as one of the substitutes of cement.

In many countries like Japan, Indonesia, Singapore etc are now using timber in

construction since those areas are high earthquake affected. They now prefer

timber which is cheap and long lasting for years


23/23

SUGGESTION

y Adopt new technology for the production like wet process of cement

manufacturing. it will reduce the cost of product that will increase the profit

margin and good for human health also.

y Proper use of waste material.

y They can increase the production plant because of high growth rate of

infrastructure.

y They can increase the production for global market.

23. CONCLUSION

As India is the second largest producer of cement in the worlds many big player

presents in the market after that ultra tech cement increases his market share due

to the high growth rate of real estate.

swot analysis of ultratech cement limited

Documents

Transcript of swot analysis of ultratech cement limited