The SWOT analysis about Ultra Tech cement and its position in the market.

The
company is one of the best in the cement industry, analysing it through the different
framework of analysis in order to judge the actual situational and industrial position
of the company in order to find out how actually is the company doing.

The company is facing a lot of problem regarding its promotion and marketing
techniques due to which it faces a short of awareness in the market due to which
people are not aware of the product but instead of all the problems it is quite stable
and maintain its position in the market. After performing Swot analysis of the
company by reviewing porter’s 5 forces and pestel analysis company’s strategic
standing and positioning have been analysed.

Currently the company is having a better standing as threat of entry is very low due
to high initial funds required to establish the factory setup.

Contents

INTRODUCTION:
Ultra Tech is India’s biggest exporter of cement clinker. The company’s production
plants have increase across eleven integrated area, 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 outcome ISO 27001 certification and four have received SA 8000 certification.
The process of certification is at present started for the left over 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 pressure area in the company’s
strategy for growth. World’s top 10 cement companies comprises of Ultra Tech
Cement Limited. The company has an annual capacity of 48.8 million tones, and
manufactures and markets ordinary There is blast furnace slag cement and There is
Pozzolana cement. The company’s subsidiaries are Dakshin Cements Limited, Harish
Cements Limited; there is Ceylinco (P) Limited and Ultra Tech Cement Middle East
Investments Limited. (Kalesh, 2009)

SWOT ANALYSIS:
STRENGTHS:
Cement demand has grown in tandem with strong economic growth derived from:

Growth in housing sector (over 30%) key demand driver.

Infrastructure projects like ports, airports, power projects, dam & irrigation Projects.

National Highway Development Programme.

Bharat Nirman Yojana for rural infrastructure and rise in industrial projects.

Production
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. High
quality cement production is increasing annually. Annual production capacity is
23.10 million tones.

Use of high-end equipment such as the Gamma Metrics Machine and the X-ray
Analyser ensures that each product passing out of company. There is manufacturing
facility adheres to global standards of quality and performance.

Logistics:
Ultra Tech Can directly deal with the limestone tenders and thus the middle man do
not affect its cost. Company use the local transporters which provide the efficient
transportation cost. Thereby reducing the extra expense and making cement more
economical for the local man to afford.

Plantation:
Ultra tech’s manufacturing plant uses ultra-modern technology and imported
machinery. Company’s Unit at Koala 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 the desalination plant. that makes the
product recyclable and environmental friendly thereby contributing to the
environment.

The Ultra Tech cement manufacturing the greenbelt at company’s Units is simply
awesome and is surrounded by trees all around. At some points, company is
advancing to achieve the skyline. Only the leaves and the flowers and hear the
cacophony of the birds.Â

Company’s CSR (corporate social responsibility) activities extend to 127 villages, in

proximity to its plants, across the country. (William B. Werther, David B. Chandler,
2010)

Brand Positioning:
In the world, Aditya Birla Group is the eighth largest cement player. Ultra Tech’s
products include Ordinary Portland cement, Portland Pozzolana cement and Portland
blast furnace slag cement. The company exports over 2.5 million tons per annum,
which is about 30 per cent to the country’s total exports. Ordinary There is cement is
the most commonly used cement for a wide range of process. Applications cover
dry-lean mixes, general-purpose ready-mixes, and even high strength pre-cast and
pre-stressed concrete.

OPC(ordinary Portland cement) is used for applications, such as commercial

buildings, industrial constructions, Multi storied complexes, cement concrete roads
and heavy duty floors. PPC ( Portland Pozzolana cement )cement is used for big
construction like dam and thermal power plant.

Distribution Channels:
Ultra Tech’s distribution network is very widely spread out in the country with over
5,500 dealers and 30,000 retailers with its strong distribution channels currently
Ultratech is starting to acquire a strong positioning in the market giving head on
competition to its rivals.

Quality:
All the plants of Ultra tech are ISO 14001 Environment Management System’s
certified sustain to OHSAS 18001 standards.

Clean technologies and processes that combine economic progress and sustainable
environment are adopted by the company for better performance. There is plants at
Awarpur and Ratnagiri in Maharashtra; There is Jafrabad and Magdalla in Gujarat;
Hirmi in Chhattisgarh; Arakkonam in Tamil Nadu; Tadipatri in Andhra Pradesh;
Jharsuguda in Orissa and Durgapur in West Bengal. They have won the Capexil
Certificate of Export Recognition – Top Exporter -Cement, Clinker, Asbestos and
Cement Products for the years 2000, 2002 and2003. Bhartiya Udyog Ratan Award
presented to Sh. KYP Kulkarni By Indian Economic Development & Research
Association (IEDRA) for good quality of cement to customer, New Delhi in 2004.
(Narayanan, 2007)

WEAKNESSESS:
Cement Industry is highly fragmented and it is also highly regionalized and Low
value commodity makes transportation over long distances uneconomical.

Not available in all the places: Ultra tech is not available at all the places as it is not
manufactured at all places and all plants are not available everywhere due to which
people cannot find it everywhere hence the profit margins are affected to a greater
extend.

Human Resource:
Due to openness in the Ultra tech’s work culture which is very informal that does not
suit for better management in corporate . The environment being very informal
affects the management a lot as being the management they have to maintain a
distance and discipline but due to the openness there is no such thing and they face
a lot difficulty to control. And Ultra tech has insufficient man power due to its easy
recruiting and selection method.

Marketing:
Lack of awareness program for consumers due to low promotion mix: the company
faces the problem of proper promotion due to which the customers doesn’t know
much about the product resulting into less sales of the product instead of being a
good product.

Lack of marketing mix: Â the company suffers with the problem of proper marketing
mix which in return results into the whole confusion state and the product does not
reach to the customers properly and in fact a lot of them don’t know about it also.

Delay in supply: the company being situated in the outer parts of the city and its
plant not being located in every city causes delay in the supply of the product.
(Porter, 1988)

Health:
Highly dusty environment at the time of dumping the cement is hazardous
for health.

It affects human’s respiratory system adversely. Ultra tech is therefore not

contributing to society as its corporate social responsibility remains unfulfilled due to
many hazards.

Others:
Cement industry is highly fragmented and regionalized as Low value commodity
makes. As transportation over long distances is uneconomical for value sector, so
cost of transporting cement is high and this keeps cement from being profitable over
long distances. In other talks, shipping cement costs more than the profit from
selling it.
PESTEL ANALYSIS:
Analysing the above through pestel framework Ultratech was highly affected by the
environmental factors. As cement plants are very harmful for the environment
causing a lot of pollution and is harmful for the health of human being hence
proving that the environmentally it is not good and hence its plants all are made to
be situated outside the city where the population rate is low or no population. So
Ultratech is bearing great difficulty in managing the environment along with the
health issues.

OPPORTUNITIES:
With the low per capita consumption of cement in India 102 kg compared to the
global average of 260 kg and the emphasis on infrastructure development, Ultra tech
has ample opportunity to ride the growth curve. Ultratech can develop new
marketing area. It can sign MOU’s (memorandum of understanding)
with government regarding supply of cement for government work. Ultratech can
also maintain the position of competition in the market. 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 good
future, so large use of cement is taking place, so government is spending heavily on
infrastructure project as Indian industry base is growing rapidly Thus, this is the right
time to fully invest in these market. There is regular demand of cement which in turn
will increase foreign investment in this sector. As roads transformation process is
going on through which the traditional method of road building will be convert by
modern concrete roads. Substantially lower per capita cement consumption as
compared to developing countries (1/3 rd of world average) Per capita cement
consumption in India is 82 kgs against a global average of 255 kgs and Asian average
of 200 kgs. For green field capacity 20 million tons per annum will be required to
match the demand in pipeline for other two years leading to favourable demand –
supply scenario. (verma, 2008)

THREATS:Â
As huge cement industry emerge there is more competition for ACC (Associated
Cement Companies) to carefully enhanced its price , product and at the same time
satisfy its dealers and customers. Cheap priced brand are capturing like a mushroom
to 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’
satisfy growth many new international cement companies are expected in coming
years which will bring enormous change and can start price war. Government
intervention to adjust cement prices Transportation cost is upgrading. Due
to loading restriction there is overloading industrialist shows increase in costs due
to the shortage in coal industry.

Many retailers are influence by better profit margin, and other Benefits because of
small industries increase competition among them, which in turn give heavy discount
to customer and start malpractices.

Timber is also being considered as one of the substitutes of cement, which is cheap
and long lasting. Due to continuous attack of earthquake, many countries like Japan,
Indonesia, Singapore etc are now using timber in construction since those areas are
high earthquake affected. (Kalesh, 2009)

PORTER’S 5-FORCE MODEL(THREAT) ANALYSIS:

Analysing the above through the five forces framework:

Threat of New Entrants: The high costs are major entry barrier for the entry of new
players. The high shipment costs make it difficult to import cement. Cement being a
high volume low value commodity results in high goods costs, which makes cement
imports economically unlikely. Domestic Cement industry is highly integrated from
global cement markets. Making cement duty free, as cement is being imported from
neighbouring countries. However, due to logistics issues and lack of port, handling
capabilities, imports of cement will remain negligible and do not pose a threat to
domestic industry of Ultratech.

Competitive rivalry between existing players: Previously the rivalry was strong among
the players, as the industry was not consolidated. During the last few years the
industry has become more consolidated with the Top 3 players Ultratech is having a
combined market share of 49 percent in 2005-06 as compared to 32 Percent in 1999-
2000. (Porter, 1988)

Its competitive analysis is as follows:

Domestic players competing Ultratech are:

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

Birla Corp
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 tones and produced 4.77 million metric tones 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. Going
forward, the company is setting up its captive Power plant to remain cost
competitive.

Madras Cements
Madras Cements Ltd is one of the oldest cement companies in the southern region
and is a part of the Armco group. The company is engaged in cement, clinker,
dolomite, dry mortar mix, limestone; ready mix cements (RMC) and units generated
from windmills.

Lafarge India
Lafarge India Pvt Ltd, a subsidiary of the Lafarge Group, has a total cement capacity
of 5 million tonne and a clinker capacity of 3 million tonne in the country. Lafarge
commenced operations in 1999 and currently has a market share of 3.4 per cent. It
exports clinker and cement to Bangladesh and Nepal. It produces Portland slag
cement, ordinary Portland cement and Portland Pozzolana cement.

Grasim-Ultra Tech Cemco

Grasim’s product profile includes viscose staple fiber (VSF), grey cement, white
cement, sponge iron, chemicals and textiles. With the acquisition of Ultra Tech, L
&T’s cement division in early 2004, Grasim has now become the world’s seventh
largest cement producer with a combined capacity of 31million tones. Grasim (with
Ultra Tech) held a market share of around 21 per cent in 2005-06.

Gujarat Ambuja Cements Ltd (GACL)

Gujarat Ambuja was set up in 1986 with the commencement of commercial
production at its 2 million tonne plant in Chandrapur, Maharashtra. The group has
clinker manufacturing facilities at Himachal Pradesh, Gujarat, Maharashtra,
Chattisgarh, 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 millionwith a capacity of 12.6 million tonne in 2003-04.
Gujarat Ambuja is one of India’s largest cement exporter and one of the most cost
efficient firms. It has also earmarked around US$ 195-220 million for acquisitions
Cements Ltd.
CONCLUSION:
As India is the second largest producer of cement in the worlds many big player
presents in the market after that Ultratech cement increases his market share due to
the high growth rate of real estate. Because of continuously growth of ultra tech
cement after little year company may occur top cement manufacturer in India. After
swot analysis of Ultra Tech I found that company has many strength, but few
weakness also present, there are various opportunities for company in India and
other Asian countries because the infrastructure is continuously developing.
Company has won the best Employer award in 2007, so young generation have
various career opportunities in it. Overall performance of company is increasing
continuously in each sector like as Production, HR, Marketing it is good for
company it is soon about to establish a strong brand name in the industry due to its
good quality and reputed image that is making it exclusive from its competitors.

How UltraTech Cement can become

market leader in north India
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June 25, 2018 17:07 IST

UltraTech currently has 19% market share with Shree Cement

commanding 22% of the market
The acquisition of Binani Cement, if approved, will make UltraTech Cement
the leader in the north Indian market, overtaking Shree Cement.

According to sector analysts, Shree Cement’s market share in the country’s

northern zone is around 22 per cent while UltraTech’s share is 19 per cent.
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If there is a takeover, UltraTech’s share will be around 26 per cent. In turn,

it will provide the Aditya Birla Group company more elbow room on
pricing.

“It makes sense for UltraTech to pursue with aggressiveness the acquisition
of Binani Cement because a successful takeover will make it the market
leader and help in further consolidation,” said R R Ravi, sector analyst with
Centrum Broking.
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However, in Rajasthan, Shree Cement will continue to lead the market with
a capacity of 18 million tonnes per annum (mtpa) while a successful
takeover will boost UltraTech’s capacity to just over 14 mtpa.

UltraTech’s capacity in the northern region is 17.6 mtpa.

According to an analyst with Motilal Oswal, the takeover will help

UltraTech to double Binani Cement’s current capacity of 6.25 mtpa.

This company, which is undergoing insolvency proceedings in the Kolkata

Bench of the National Company Law Tribunal, has “considerable limestone
reserves”, which can help the acquirer scale up operations.

“Given the huge limestone reserves of Binani Cement, which will be

transferred to the successful acquirer, there is a good chance of doubling
the capacity,” the analyst said.

The limestone reserves can feed UltraTech’s plants in Rajasthan.

The company has limestone reserves that can feed its existing capacity for
more than 35 years.

Sector analysts estimate that the acquisition cost of Binani’s assets, leaving
aside its China and UAE plants, will work out to $110-130 a tonne.
However, in case UltraTech is able to acquire Binani Cement, its margins
on return on the capital employed are likely to hover around 6 per cent for
the Binani plants as against its predominant margins of 10-11 per cent.

On the contrary, Shree Cement, backed by greenfield and brownfield

projects, is estimated to register a 20 per cent margin.

“However, it will be for a short term and eventually the margins may rise.
Even then, it makes sense to acquire Binani Cement,” the analyst said.

UltraTech, however, did not respond to queries.

According to analysts who track the cement sector, the acquisition is

strategic both for UltraTech and Dalmia Bharat.

In an earlier instance, while talking to Business Standard, Mahendra

Singhi, CEO at Dalmia Bharat, had stated that the acquisition would give it
an exposure to the north Indian market and will help the company emerge
as a pan-Indian cement manufacturer.

Currently, its consolidated production capacity stands at 27 mtpa, most of

which is centred around east and south India.

In contrast, UltraTech’s consolidated capacity currently stands at 92.5

mtpa, which will increase to 105.9 mtpa once it completes the takeover of
the 13.4 mtpa cement business of Century Textiles and Industries.

Binani Cement has two kilns and four grinding mills at Binanigram,
Pindwara, Sirohi and Sikar in Rajasthan.