7/31/2019 Ambuja+Roll+No+01 10 (1)

1/16

AMBUJA CEMENT

By-

Sapana Agarwal

Shweta KaranRishal Bhide

7/31/2019 Ambuja+Roll+No+01 10 (1)

2/16

Cement Industry

7/31/2019 Ambuja+Roll+No+01 10 (1)

3/16

Cement Industry An Overview

India is the worlds second largest producer of cement after China

with industry capacity of over 200 million tonnes (MT).

Growth by 9 to 10% for the current financial year.

Indias cement consumption grew 9.6% yoy.

Cement production could rise to 236.16 MT in FY11 and touch262.61 MT in FY12.

There is a total number of 134 large cement plants with an installedcapacity of 173.08 MT and more than 350 small cement plants withan estimated capacity of 11.10 MT operating in India presently

7/31/2019 Ambuja+Roll+No+01 10 (1)

4/16

Major Players of Cement Industryin India

The Associated Cement Companies Limited (ACC)

Ambuja Cements Limited

UltraTech CemCo Ltd.

Grasim Industries Limited

The India Cements Limited

Century Textiles and Industries Limited

Jai Prakash Industries

Birla Corp Limited

Jaiprakash Industries Limited

Lafarge

7/31/2019 Ambuja+Roll+No+01 10 (1)

5/16

7/31/2019 Ambuja+Roll+No+01 10 (1)

6/16

AMBUJACEMENT LIMITED

Ambuja Cements was set up in 1986.

In the last decade the company has grown tenfold.

The total cement capacity of the company is 18.5 MT.

Net Profit Rs. crore318 for Qtr. Jul Sep. 2009 whereas Qtr. Jul Sep 2008 Net Profit Rs. crore250.

Over 40% of the production cost of cement is power.

Cheaper and higher quality coal from South Africa & furnace oil fromthe Middle East.

7/31/2019 Ambuja+Roll+No+01 10 (1)

7/16

7/31/2019 Ambuja+Roll+No+01 10 (1)

8/16

7/31/2019 Ambuja+Roll+No+01 10 (1)

9/16

7/31/2019 Ambuja+Roll+No+01 10 (1)

10/16

THREAT OF COMPETITORS

* Large no. of competitors

* Marginal productdifferentiation

* High fixed costs

* Lack of switching cost

* High exit barriers

THREAT OF NEW ENTRANTS

* Economies of scale

* High Capital requirement

* Avg gestation period of 2-3 yrs

* Access 2 distribution channels* Oversupplied market

BARGAINING POWER OFSUPPLIERS

* Large and few sellers

* Monopolistic control ofexternal cost element

* No substitutes

* Sellers product isimportant input

THREAT OF SUBSTITUTES

* Bitumen (construction of roads)

* Engineering plastics (constructionof buildings)

BARGAINING POWER OFBUYERS

* Standard product

* Rising share of retailpurchase and decliningshare of bulk purchasers

* No substitute

S O S S

7/31/2019 Ambuja+Roll+No+01 10 (1)

11/16

SWOT ANALYSIS

STRENGTHS

Brand nameMost profitable cement co. in India

Lowest cost producer

Sea transportation

Captive power plant

Fuel efficiency

WEAKNESSES

Cement industry is highlyfragmented

Demand-supply gap, overcapacity

Increasing cost of production

High interest rates

Packaging

OPPORTUNITIES

Government infrastructurespending

Investment in industrial and

commercial projects

Commercial construction activity

THREATSImports from Pakistan affecting

markets in North IndiaExcess overcapacity can hurt

margins as well as prices

Consolidation through Mergers &

Acquisitions

7/31/2019 Ambuja+Roll+No+01 10 (1)

12/16

Value Chain Analysis

Logistics

Marketing and Sales

Human Resources Management

Technological Development

Procurement

7/31/2019 Ambuja+Roll+No+01 10 (1)

13/16

Business Level Strategies

Target niche segment.

Lowest cost producer.

7/31/2019 Ambuja+Roll+No+01 10 (1)

14/16

7/31/2019 Ambuja+Roll+No+01 10 (1)

15/16

7/31/2019 Ambuja+Roll+No+01 10 (1)

16/16

Ambuja Cements Ltd M&As Summary

Year Acquisitions Stakes Divestitures

2009 0 0 0

2008 0 0 0

2007 0 0 0

2006 0 0 2

2005 0 1 02004 0 0 0

2003 0 0 0

2002 0 0 0

2001 0 0 0

2000 0 2 0

1999 0 5 0

1998 0 0 0

1997 1 0 0

Total 1 8 2