SWOT Analysis of Ultra Tech Cement Industry

SWOT Analysis of immoderate technical school Cement IndustryThe SWOT outline close to Ultra Tech cementumum and its position in the trade. The fellowship is iodin of the best in the cement industry, analysing it through the different framework of analysis in order to assay the actual situational and industrial position of the caller-up in order to find out how actually is the follow doing.The company is facing a lot of b former(a)wise regarding its advance and merchandise techniques collect to which it faces a short of awargonness in the market due to which people argon not awargon of the product solely 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 porters 5 forces and pestel analysis companys 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 establi sh the factory setup.ContentsINTRODUCTIONUltra Tech is Indias biggest exporter of cement clinker. The companys production plants have growing across eleven integrated ara, 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 everyplace plants. The company exports over 2.5 zillion tons per annum, which is about 30 per cent of the countrys total exports. The export market comprises of countries around the Indian Ocean, Africa, Europe and the Middle East.Export is a compel area in the companys strategy for growth. Worlds top 10 cement companies comprises of Ultra Tech Cement Limited. The company has an annual capa urban center of 48.8 million tones, and manufactures and markets ordinary in that location is blast furnace slag cement and There is Pozzolana cement. The companys subsidiaries are Dakshin Cements Limited, Harish Cements Limited there is Ceylinco (P) Limited and Ultra Tech Cement Middle East Investments Limited. (Kalesh, 2009)SWOT abridgmentSTRENGTHSCement motivation has grown in tandem with strong economic growth derived fromGrowth in housing sector (over 30%) key demand driver.Infrastructure projects ilk ports, airports, force projects, dam irrigation Projects.National luxuriouslyway Development Programme.Bharat Nirman Yojana for rural infrastructure and rise in industrial projects.ProductionThe companys 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 roentgenogram Analyser ens ures that each product passing out of company. There is manufacturing facility adheres to orbiculate standards of quality andperformance.LogisticsUltra Tech Can directly deal with the limestone tenders and and then the middle man do not affect its cost. Company use the local transporters which provide the efficient transportation cost. Thereby reducing the extra cost and making cement more economical for the local man to afford.PlantationUltra techs manufacturing plant uses ultra-modern technology and imported machinery. Companys Unit at Koala is the just 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 milieual friendly thereby contri scarcelying to the environment.The Ultra Tech cement manufacturing the greenbelt at companys Units is but awesome and is surrounded by trees all around. At some po ints, company is advancing to achieve the skyline. Only the leaves and the flowers and hear the cacophony of the birds.Companys CSR ( incorporated social responsibility) activities extend to 127 villages, in proximity to its plants, across the country. (William B. Werther, David B. Chandler, 2010)Brand PositioningIn the world, Aditya Birla Group is the eighth largest cement pretender. Ultra Techs 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 countrys total exports. Ordinary There is cement is the nearly commonly used cement for a wide range of process. Applications cover dry-lean interminglees, general-purpose ready-mixes, and even high strengthpre-cast and pre-stressed concrete.OPC(ordinary Portland cement) is used for applications, such as commercial buildings, industrial constructions, Multi storied complexes, cement concrete roa ds and heavy barter floors. PPC ( Portland Pozzolana cement )cement is used forbig construction like dam and thermal powerplant.Distribution ChannelsUltra Techs statistical 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.QualityAll the plants of Ultra tech are ISO 14001 Environment counseling Systems certified sustain toOHSAS 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 Durgapurin West Bengal.They have won the Capexil Certificate of Export course credit Top Expo rter -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(a) Delhi in 2004. (Narayanan, 2007)WEAKNESSESSCement Industry is highly fragmented and it is also highly regionalized and Low note value commodity makes transportation over long distances uneconomical.Not easy 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 therefore the profit margins are affected to a greater extend.Human preferenceDue to openness in the Ultra techs work culture which is very informal that does not suit forbetter 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.MarketingLack of awareness program for consumers due to low promotion mix the company faces the problem of proper promotion due to which the customers doesnt know much about the product resulting into less sales of the product instead of being a good product.Lack of marketing mix 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 dont 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)HealthHighly dusty environment at the time of dumping the cement is hazardous forhealth.It affects humans respiratory system adversely. Ultra tech is therefore not contributing to society as its corporate social responsibility remains unfulfilled due to many hazards.OthersCement 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 ANALYSISAnalysing 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.OPPORTUNI TIESWith the low per capita aspiration 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 MOUs (memorandum of understanding) withgovernment regarding supply of cement forgovernment 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 result increase the requirement. People are opting for more stable structures and good future, so large use of cement is taking place, so government isspending heavily on infrastructure project as Indian industry instal is growing rapidly Thus, this is the right time to fully invest in these market. There is regular demand of cement which in turn exit increase foreign investment in this sector. As roadstransformation process is going on throughwh ich the traditional method of road building result 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)THREATSAs capacious cement industry emerge there is more competition for ACC (Associated Cement Companies) to carefully enhanced its price , product and at the same time repay its dealers and customers. Cheap priced brand are capturing like a mushroom to lower income customerbase. 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 toloading confinement there is overloading industrialist shows increase in costs due to the shortage in coal industry.Many retailers are influence by better profit margin, andother 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)PORTERS 5-FORCE MODEL(THREAT) ANALYSISAnalysing the above through the five forces frameworkThreat of New Entrants Thehigh costs are major entry barrier for the entry of new players. The high shipment costs make it difficult to import cement. Ce ment 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 hardly a(prenominal) 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 followsDomestic players competing Ultratech areAssociated Cement Companies Ltd (ACCL)Associated Cement Companies Ltd manufactures ordinary Portl and 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 CorpBirla Corps 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 CementsMadras 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 IndiaLafarge India Pvt Ltd, a subsidiary of the Lafarge Group, has a total cement capacity of 5 million triiodothyronine and a clinker capacity of 3 million triiodothyronine 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 CemcoGrasims product profile includes viscose staple fiber (VSF), grey cement, white cement, sponge iron, chemicals andtextiles. With the acquisition ofUltra Tech, L Ts cement division inearly 2004, Grasim hasnow become the worlds seventh largest cement producer with acombined capacity of 31million tones. Grasim (with Ultra Tech) held a marketshare of around 21 percent in 2005-06.Gujarat Ambuja Cements Ltd (GACL)Gujarat Ambuja wasset up in1986 with the commencement ofcommercial production at its 2 million tonneplant 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 astrong foothold in the northern and western markets. Itstotal sales aggregated US$ 526millionwith a capacity of12.6 million tonne in 2003-04. Gujarat Ambuja is one ofIndias largest cement exporter and one ofthe most cost efficient firms. It hasalso earmarked around US$ 195-220 million for acquisitions Cements Ltd.CONCLUSIONAs 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 yearcompany 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, the re are various opportunities for companyin Indiaand 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 continuouslyin each sectorlike 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.