APRESENTATION ON

SWOT ANALYSIS OF

“JK LAXMI CEMENT LTD.”

Presented byTarunendra AgnihotriMBA III SemSec R

JK Lakshmi Cement Ltd is a renowned and well-established name in the Indian Cement Industry.

It has completed more than 25 years of serving the nation and manufactures quality cement, a core ingredient for infrastructure development.

The Company, with a capacity of 5 million tones per annum, has its clinkerisation unit at Sirohi in Rajasthan in western India and grinding capacities in Sirohi as also in Kalol near Ahmedabad.

VISION OF COMPANY 12 Mil. By 2012(12x12).

MISSION OF COMPANYTo be recognised as an efficient ,competitive & premium cement

brand.

Cement 53 blended. 53 Grade OPC. 43 Grade OPC.

-Hari Shankar Singhania, Chairman

- Bharat Hari Singhania, Vice Chairman & Managing Director

- B.V. Bhargava, Director

- Nand Gopal Khaitan, Director

- Pradip Roy, Director (Nominee of IDBI)

- Pravinchandra V. Gandhi, Director

- Raghupati Singhania, Director

- P. Narasimharamulu, Director (Nominee of ICICI)

- V.K. Guruswamy, Director (Nominee of LIC)

- Vinita Singhania, Managing Director

- Shailendra Chouksey, Whole-time Director

- S.K. Wali, Whole-time Director

  The company is attempting to take advantage of the strong demand

conditions for cement in eastern region, with its plan to set up a greenfield project with a capacity of 2.7 MT in Chattisgarh at a cost of nearly Rs 1,200 crore. This facility is expected to be brought-on-stream during 2011-12.

JK Lakshmi is also expanding its clinker capacity by nearly 0.4 MT at a cost of almost Rs 145 crore and this facility is expected to be operational by January 2011, and this should help the company raise its capacity by 0.6 MT. This will result in its capacity reaching 5.3 MT by January 2011.

Apart from expanding cement capacity, the company is also setting up a waste heat recovery system, which will generate 12 MW of captive power that is expected to come on stream in March 2011. 

The company is also setting up a 18 MW thermal power plant at cost of nearly Rs 80 crore and this facility is likely to be operational in 2011. This will enable the company to save power cost, which is one of the key operational costs for cement makers.

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

1 Operating margin (%) 22.11 30.73 32.32 25.86 29.11

2 Gross profit margin (%)

18.77 26.45 27.91 24.16 27.57

3 Net profit margin (%) 9.52 21.11 20.19 14.58 16.17

4 EPS (Rs) 5.57 15.60 18.28 14.59 19.70

5 Return on net worth (%)

26.01 43.04 34.82 21.48 23.60

6 Dividend payout ratio (net profit) 0.00 6.41 13.68 27.42 12.69

7 PBDIT 128.81 259.29 357.97 316.70 433.92

8 Depreciation 53.07 44.33 58.54 69.11 80.03

9 PBIT 75.74 214.96 299.43 247.59 353.89

10 PBT 119.06 214.74 245.34 260.57 267.86

11 PAT 55.45 178.11 223.67 178.59 241.13

12 Net profit 55.45 178.11 223.67 178.59 241.13

  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, UltraTech and ACC have shown the same trends of increasing sales growth and capacity utilization of Ultra tech 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.

 

Due to similar raw material inputs and production processes, there is no significant differentiation in the cement produced across firms and thus they follows 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.

 

Can adopt the strategies of Ultra tech 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 Ultra Tech 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.

Relationship Management: UltraTech should focus on managing its relationships with importers, exporters, distributors, warehouse providers, wholesalers, retailers and dealers for their long-term profitability.

• Porter’s Five force Model

STRENGHTS  Production High quality 43 grade OPC,53 grade OPC,cement 53 blended. Annual production capacity of 3.5 million tonnes. Use of high-end equipment such as the Gamma Metrics Machine and the X-ray

Analyser ensures that each product passing out of JK Lakshmi's manufacturing facility adheres to global standards of quality and performance.

  Plantation JK Lakshmi's manufacturing plant uses ultra-modern technology and imported

machinery. The JK Lakshmi cement manufacturing facility is spread across an area of 

8 square kilometres among the lush green Arravali ranges at Jaykaypuram in Sirohi district of Rajasthan.

Jk laxmi cement has plantations in Rajasthan,Gujarat,. The plant is fully computerised and centrally controlled by programmable logic

controller with colour VDU Control Stations

Brand Positioning Cement 53 (blended) has a minimum guaranteed strength of 53

mega pascals (Mpa), and is used for applications, such as all types of Roller Compacted Concrete (R.C.C.) work, plastering, underground structures, dams, heavy machinery foundations, marine structures and hydropower stations.

Its 43 Grade OPC is used for applications, such as commercial buildings, industrial constructions, multi-storeyed complexes, cement concrete roads and heavy duty floors.

Distribution Channels The Company has a network of 70 cement dumps Over 2200 dealers spread across the states of Rajasthan, Gujarat,

Delhi, Haryana, Uttar Pradesh, Uttaranchal, Punjab, Jammu and Kashmir, Mumbai and Pune.

Logistics Can directly deals with the limestone tenders and thus the middle

man does not affects its cost. Use the local transporters which provide the efficient transportation

cost.

Human resource 1288 employees The Performance Management System at JK Lakshmi Cement ensures

that performance and achievement do not go unnoticed. It provides an opportunity to the employees to monitor their progress

and develop into complete professionals. 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.

At the end of the year, each employee’s 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.

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.

It take pride in the internal and external training programmes organized for our people. Here, the word internal also has a special significance because we train our own people to become Trainers for the rest of their team.

Finance Consistent revenue growth. Gross sales increase from 144.05 cr. to 1644.05 cr.(from year

2009 to 2010) EBIT increase from 247.59 cr. to 353.89 cr.(from year 2009 to

2010) PAT increase from 178.59 cr. to 241.13 cr.(from year 2009 to

2010) EPS (Rs.) increase from 14.59 to 19.70(from year 2009 to 2010)

Projects Major Projects like IGNP, Sardar Sarovar Dam, Golden

Quadrilateral major corporations like L&T, Reliance, NTPC, Essar and Airport

Authority of India, JK Lakshmi Cement has become the preferred choice among the customers because of its consistency, high level of quality and impeccable customer service. 

Quality It is also the first cement producer of Northern India to be awarded an ISO 9002

certificate and be accredited by NABL (Department of Science & Technology, Government of India) for its Lab Quality Management systems. 

JK Lakshmi Cement manufacturing facility has been rated amongst Greenest Cement Plant of India by CSE GRP 2005 thus highlighting our commitment to the environment even while ensuring the highest standards of quality for our products.

Jk laxmi cement also won the Productivity Excellence Award 2007-08, Energy Conservation Award 2008, NCB award 2007, Building Leadership Award 2007, National Award for Environmental Excellence & Energy Management 2007, Golden Peacock Award for Corporate Social Responsibility 2007, ICWAI National Award 2007 for Excellence in Cost Management, The Pinnacle Cement 2006 award by MTech Zee TV, Green Tech Safety Award and a place of pride amongst the top ten companies in India in HR practices. (as per the Business Today- TNS Mercer survey). 

Raw materials Not available in all the places. Losses of raw material .Products High cost of branded products. Lack of availability in the market.Operations. High Power/ Fuel costs. Required efficient maintaince for the wastes. Raw material inventory required due to perishable of raw

material. High inventory handling cost.

HealthHighly dusty environment is hazardous for health.It affect human’s respiratory system adversely.Production process Highly carefulness is required by the employee in the

production process. Complicated manufacturing process. Maintaining chemical composition of the product is

difficult. Cost of production is high due to safety gadgets.

Rapid growth is taking place in Bihar and Madhya Pradesh. Institutional market like corporate and offices ,school society complexes are

growing in large scale,which will increase the requirement. 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.

As Indian core industry is also growing at rate of nearly 10% per annum,it is having a good future.

Foreign direct investment in infrastructure sector going to increase in coming years, which will increase the demand of cement.

Roads are undergoing through the transformation process through which the traditional method of road building will be replaced by modern concrete roads.

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 and customers.

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

Players such as Jaypee Cement, Prism Cement, and Birla cement.ACC cement are eating up considerable market share.

Due to India’s exponential growth many new international cement companies are expected in coming years which will bring a tide of change and can start price war.

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.

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.

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.

Proper use of waste material. They can increase the production plant because of high

growth rate of infrastructure. They can increase the production for global market.

As India is the second largest producer of cement in the worlds many big player presents in the market after that jk laxmi cement increases his market share due to the high growth rate of real estate.