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This is a documentation is about company analysis of Shree cement.
S h ree Cem ent I nd u s try A n aly s is : 1 . I nd u s try h a p p en in gs tren d s : In d ian an d Glob al p ers p ectives , recen t
Th e o verall domes ti c cemen t cons ump tion has been decreas ing over th e las t 3 months w ith a grow th of around 6% yo y. The main reas on co n s tr uction activit y has s low ed dow n due to s hortage of labour an d s an d . Th e f ollow ing are the Q1 es ti mates for FY 13: Q1 FY 13 es tim ates S ales (R s m n ) OPM (%) PA T (R s m n ) Q1 y oy q oq Q1 yoy q oq Q1 y oy q oq C om pany FY 13 (%) (% ) FY 13 (bp s ) (bp s ) FY 13 (%) (% ) ACC 27,112 11.4 (6.2) 24.6 71 223 3,932 16.8 (19.9) A mb u j a 24,912 13.8 (6.4) 27.4 311 30 4,781 37.6 (19.1) C em U ltr atech 49,473 13.3 (7.3) 27.3 (84) 256 8,180 19.7 (5.7) C em I n d ia C em11,281 6.3 0.9 19.1 (408) (35) 679 (35.8) 4.6 O p er ating marg ins for AC C , A C L and U ltratech is likel y to expand s eq u ential l y on back of fall in import ed coal prices (average rate s tood at US $99 as agains t U S$112 in Q4 F Y 12). P A T g row th w ould exhibit a mixed performance w ith A C L likel y to r ep o r t a robus t 36% yo y s ur ge w hile India C ements is likel y to w itnes s w eak quarter on back of poor operational performance.
2 . PE S T A n aly s is : Political, econ om ic, s ocial an d tech n ical as p ects rela t ed to th e in d us try P o litica l Th e g overnment has decided to focus on the infras tructure develop ment an d h ence ce ment demand is likel y to grow over 8%.
Th e C ompet ition C ommis s ion of India (C C I) on J une 21, 2012, levied a p en alt y of over Rs 6000 crore on 11 cemen t comp anies due to violation o f th e provis ions of the C omp eti tion A ct, 2002, which deals w ith antico mp eti tive agreements including cartels . C C I h as impos ed penalt y on 11 cement manuf actur ers at 0.5 ti mes of th eir profit for the yea r 2009-10 and 2010-11. P enalt y pa ye rs are AC C , A mb u j a C emen ts , U ltraTech C emen ts , G ras im C ements (now merged w ith U ltraTech C emen ts ), JK C emen ts , India C ements , M adras C ements , C en tu r y C emen ts , B inani C ements , Lafarge India and J a yp ee C ements . E co n o m ic Th er e s eems to be surplus in the indus tr y due to decreas e in demand. Th is scenario is expected to continue over the next 3 ye ars . An y ris e in in p u t cos ts w ill impac t margins . A ls o there has been a debate among bus ines s es as to w hether ce ment in d u s tr y alone can be bla med for increas ed cos t of cons truction. H o w ever, anal ys ts s ay that ce ment cos t forms j us t about 10-15% of the o v er all cons truction cos t. The other cos ts contributing are land, s teel, s an d and labour cos t. S o me analys t s feel that the penalt y s lapped b y the C ompeti tion C o mmis s ion of India would impac t the profitabilit y of the co mpanies . I n s o me cas es , the penalt y i mpos ed is higher than a yea r’s earning for man y firms . This w ould negative l y affect comp an y health and can en d an ger s hareholder’s interes t. A n o th er thing w hich econo mic anal ys ts point out is that the Indian eco n o my is alread y s ufferin g from negative develop ments due to v ar io u s iss ues like inflation, negative production trends , price ris e and in f lation, retros pective amendmen t in the Income Tax laws and the r ev er b erations of the various s cams . A t this juncture, penalties w ill imp act the F II confidence and would in turn endanger grow th pros pects an d d es tabil ize economy further. A cco r ding to B R IC data, India is the s econd larges t producer of cemen t in th e w orld. The Indian government inves ted U S $500 billion on in f r as tructure during the Eleventh F ive-Y ear P lan (2007–2012) and r ev ealed plans to inves t a further US $1 trillion on infras tructure during th e Tw elfth F ive-Y ear P lan (2012–2017). Th e large- s cale inves t ment on various infras tructure proj ects , including r o ad s , railw a ys , bridges and ports , w ill generate a huge demand for ce men t in the coming ye ars . Even credit rating agenc y C R IS IL s aid that
th e p enalt y w on’t caus e a maj or impac t on credit qualit y due to s trong f in an cia l ris k profiles , robus t liquidit y and low gearing. Th e ce ment indus tr y in India is unique, w ith 57% of the capaci t y bein g co n s o lidated w ith the top eight pla ye rs . The res t of the indus try is h ig h l y frag mented, w ith s mal l- to medium- s ized compani es mos tl y w ith u n eco no mica l s ize of operations . To th e extent regulator y intervent ion limits coordinated supplier action s w ith r es pect to price and quantit y, s mall er firms (s ingle or mul tipl e p lan ts w ith high geograp hic concentration) w ith uneconomic cos t s tr u ctures w ould become uncomp eti tive and face ver y s ignifican t d eter iora tion in their credit profiles . As such the fragmentat ion level in th e in dus try is expected to reduce and larger and vertical l y integrated co mp anies are likel y to gain marke t s hare. F itch has main tained a negative outlook on the Indian cement indus tr y f o r th e las t tw o yea rs . The indus tr y has been s truggling w ith exces s cap acit y (given the exis ting muted de mand s cenario) bes ides having a s tr u ctural feature of relativel y high operating leverage. Th e top five comp anies (U ltrate ch C ement Li mi ted, AC L, A C C , IC L an d M ad r as C emen ts Limited, cons tituting around 50% of the indus tr y cap acit y) enj oy a better cos t s tructure, driven by higher level of vertica l in teg r at ion and location advantage w ith res pect to s ourcing of raw ma ter i als and mark et acces s . M o s t other player s becaus e of lack of one or more of thes e factors hav e a w eaker cos t s tructure and moderat el y high leverage levels (an in d u s tr y med ian value of around 4x). G loball y, mos t marke ts hav e s ig n if icant cons olidation and this move by C C I ma y indirectl y help th e I n d ian cemen t indus tr y in correcting this s tructural imba lance. S o cia l M an y comp anies have been particip ating in C orporate S ocial R es p o ns ibilit y activities aimed at creating sus tainable livelihood cap ab il ities and increas ing the level of pros perit y of the local co mmu nit y. F or this , C ompani es have undertaken s everal meas ures for p r o v id ing health and education faciliti es , infras tructure s upport to the lo cal co mmuni t y and other w elfare activiti es . Notable meas ures taken b y th e compan y in its endeavor tow ards s ocial upliftment are: H ealth - C ompan y provides 24x7 free medica l s ervices at its premis es as w ell as free ambu lance and fire fighting s ervices to the people in its
lo cal co mmuni t y. It als o provides medi cal s ervices through full y eq u ip ped mobi le med ica l tea m w hich vis its the nearb y villages on a r eg u lar bas is and dis tributes free medic ines . I n f r as tructure - C ompan y cons tructed cement concrete road, w ard and p r a ye r hall at G overnmen t H os pital B eaw ar at approx. cos t of around R s . 3 1 lacs . It als o provided around 250 w ater tanks to local bodies and P an ch ya t for arranging drinking w ater. It cons tructed hygi ene and s an itation faciliti es at s chools in the nearb y villages and created p as s enger facili ties at local bus s tand. Wo men Empow er me nt - Pro gramme s are organized on the s ubj ects of g ir l child education, right age of marriage, gender dis cri mina tion. A r o u n d 300 people participat ed in the programs . C u ltu r al participation - To promot e cultural harmon y among people, co mp an y regularl y s upports various religious and s ocial programme s . Lar g e numbers of people from local communi t y come and enj o y thes e p er f o r mances and als o get acquaint ed w ith different cultures . 3 . C o mpe titor A nalys is : A nalyze pricing, qualit y, dis tribution and p ar tn ers hips of the neares t compe titor of the compan y Product quality - Ordinary Portland Cement ( OPC ) is categorized into three grades based on the 28 - day mortar strength – 33 grade , 43 grade and 53 grade. P r icin g – R s . 305 to 350 / kg
4 . S W OT A n aly s is : Stren gth s , w eakn ess , op p ortu n ities an d th reats f a ced by th e in d u s try S t ren gth s A cco r ding to B R IC data, India is the s econd larges t producer of cemen t in th e w orld. The Indian government inves ted U S $500 billion on in f r as tructure during the Eleventh F ive-Y ear P lan (2007–2012) and r ev ealed plans to inves t a further US $1 trillion on infras tructure during th e Tw elfth F ive-Y ear P lan (2012–2017). W ea k n es s es
Th er e s eems to be surplus in the indus tr y due to decreas e in demand. Th is scenario is expected to continue over the next 3 ye ars . An y ris e in in p u t cos ts w ill impac t margins . A ls o there has been a debate among bus ines s es as to w hether ce ment in d u s tr y alone can be bla med for increas ed cos t of cons truction. H o w ever, anal ys ts s ay that ce ment cos t forms j us t about 10-15% of the o v er all cons truction cos t. The other cos ts contributing are land, s teel, s an d and labour cos t. Op p o rtu n ities I n d ia is a developing countr y and numerous infras tructure proj ects are in p r o gress w hich can act as a maj or marke t for the cemen t compan ies . B ein g the s econd larges t producer of cement in the w orld, global mar k ets can be explored for further expans ion. T h rea ts P en alties i mpos ed, increas e in cons truction cos ts have led to increas e in s u r p lu s and decreas e in profitabi lit y of maj or player s . S talled economic reforms are als o impa cting F II confidence w hich can ad v er s el y affect the indus try. C om pany A n aly s is : 1 . C om pany d es crip tion (a b rief in trod u ction regard in g w h at b us in es s es th e com p an y is in to) S h r ee C ement Ltd (S C L) is pres ent in the cemen t and pow er s ector. It is th e lar ges t cemen t producer in N orth India and among top s ix cemen t man u f actur ing groups in the country. It has ce ment capacit y of 13.5 mi llio n ton and pow er capaci t y of 560 M W. Th e compan y offers cement under various brands , including Shree U ltr a J u n g R odhak C ement, B angur C ement, and R ocks trong C ement. 2 . Gen eral in f orm ation ab ou t th e com p an y: location of th e h ea d q u arters , year of f ou n d in g,s h areh old in g pattern , nu m b er of em p loy ees , top m an agem ent, etc . H ead q uarters – B eaw ar, India
Y ear of founding - 1986 S C L h as manuf actur ing facilit ies at B eaw ar and R as in Aj mer and P ali d is tr ict and grinding units at K hus hkhera, S uratgarh and J aipur r es p ectivel y in R aj as than and R oorkie in U ttarakhand. SC L boas ts of h ig h l y recognized brands like S hree U ltra J ung R odhak, B angur C emen t an d R ocks trong. S C L is an IS O 9001, IS O 14001, OH S AS 18001 and SA 8 0 0 0 certifi ed compan y and purs ues bes t practices in M anufacturing, En er g y C ons ervation and Environment Manage ment. Th e S hareholding P attern page of S hree C ements Ltd. pres ents the P r o mo ter' s holding, F II' s holding, DII' s Holding, and S hare holding b y g en er al public etc. S h a reh old in g p attern - S h ree C em ents L td . H o ld er ' s N ame No of S hares % S hare H olding P r o mo ters 22567147 64.78% F o r eig nO cb 3603500 10.34% F o r eig nIns titutions 2757216 7.91% O th er C omp anies 2673378 7.67% N B an k s M utualF unds 1796023 5.16% G en er alP ublic 1166209 3.35% F o r eig nN R I 156601 0.45% O th er s 62327 0.18% F in an cialIns t itut ions 50363 0.14% D ir ecto rs 4461 0.01% Lo o k ing back at a j ourney of 26 ye ar s , S C L has over the ye ar s s u cces s full y marched ahead as a loyal partner in the grow th of the n atio n . C ompan y has created enormous value for its s takeholders th r o u g h generating opportunities for emp lo ymen t, mak ing s ignificant in v es t ments in the s tate and contributed to the vas t infras tructure d ev elop men t of the nation. Emp lo yee s trength has grow n from around 200 emplo yee s in 1985 to ar o u n d 3500 emplo yee s at p res ent and its turnover ris ing from Rs . 28 cr o r es to over R s . 4500 crores . M an age ment N ame A s h o k B handari B G B angur D iw ak ar P a ya l G o p al Daga H M B angur H M B angur D es ignation C hief F inance Officer N on Executive C hairman J oint Pres ident - M arketing S enior VP - P roj ect M anagement C EO M anaging D irector
K C G andhi K K J ain K u ld eep V erma M K S inghi N itin D es ai O P S etia P C J haw ar P N C hhangani P S S harma P r as h ant B angur R L G aggar R amakant Shar ma S K Soni S S Khandelw al S S Khandelw al S an j ay M ehta S h r eekant S oman y S h r in ath S avoor Y K A lagh
S enior VP -M aterial M anage ment A ss is tant V P - A ccounts S enior VP - M arketing Executiv e D irector D irector D irector V ice P res ident - P &A J oint Pres ident - Works A ss is tant V P - M arketing Executiv e J oint P res ident D irector S enior V ice P res ident (P R ) A ss is tant V P (ER P ) C o. S ecretar y & C ompl. O fficer S ecretar y S enior VP - C ommer cia l D irector S enior V P -S trateg y D irector
3 . Fin an cial p erf orm an ce of th e com p an y: Sales , n et p rof it, s egm en t w is e p erf orm an ce of th e p as t 1 y ear C o mp an y’s turnover for 12 months period of A pril’11-M arch’12 w as R s 4 6 2 5 crores . S C L is a cons is tent dividend payin g compan y (120% d iv id end for A pril’11-M arch’12). To tal inco me 4,755.9C r. EB I T 503.9C r P A T 2 67.0C r Y ear l y - S hree C emen ts Ltd. M ar' 12 I N C OM E: N et S ales Turnover O th er Income T o t a l In com e EX P EN S ES S to ck Adj us t ments R aw M aterial C ons umed P o w er and F uel Emp lo yee Expens es A d minis tr ation and S elling M ar' 11 M ar' 10 M ar' 09 M ar' 0 8 4,625.22 3,514.13 3,643.24 2,740.57 2 , 1 2 9 . 4 2 130.63 44.51 117.24 57.34 56.54 4,755.85 3,558.64 3,760.47 2,797.92 2 , 1 8 5 . 9 6 14.81 446.67 1,158.41 244.85 770.81 -33.60 372.34 912.32 198.54 614.06 -19.66 323.78 610.48 158.61 629.83 9.63 246.13 605.81 103.87 459.28 9.03 210.99 367.23 73.60 359.77
Ex p en s es R es earch and D evelop ment Ex p en s es Ex p en s es C apital is ed O th er Expens es P r o v is ions M ade T OT A L E XPE N S E S O p er ating P rofit E B I T DA D ep r eciation EBIT I n ter es t EBT Tax es Pro f it an d L os s f or th e Y ear Ex tr ao rdinar y Items P r io r Y ear Adj us tment O th er Adj us tments R ep o rted PA T
0.00 0.00 825.05 0.00 3,460.61 1,164.62 1,295.25 791.32 503.93 187.41 316.52 52.50 264.02 0.00 15.23 0.00 266.98
0.00 0.00 562.58 0.00 2,626.24 887.90 932.41 675.76 256.65 97.83 158.82 -40.27 199.10 0.00 59.08 0.00 209.70
0.00 0.00 426.56 0.00 2,129.61 1,513.63 1,630.87 570.43 1,060.44 129.09 931.34 206.57 724.77 0.00 14.76 0.00 676.10
0.00 0.00 339.53 0.00 1,764.26 976.32 1,033.66 205.39 828.27 74.43 753.84 144.94 608.90 0.00 0.00 0.00 577.97
0.00 0.00 226.08 0.00 1,246.71 882.71 939.25 478.76 460.49 53.30 407.19 107.94 299.26 0.00 0.00 0.00 260.37
Th e r evenue has been increas ing over the recent ye ar s . The recent net p r o f it s eems to have declined in the recent yea rs due to increas e in in ter es t pa yme nt s . 4 . S W OT A n aly s is : Stren gth s , w eakn ess , op p ortu n ities an d th reats f a ced by th e com p an y S t ren gth s S C L commi tmen t to energ y efficienc y and environmen t manag emen t is r ef lected in the fact that it s et up Was te heat recover y plants of 46 M W w h ich is the larges t s uch capacit y in the w orld ce ment indus try ex clu ding china. S C L commi s s ioned Unit V III in World R ecord time of 3 3 0 d a ys agains t average period of 630 days . It enj oys approx 19% mar k et s hare in N orth India and is leader in mark ets of R aj as than, D elh i an d Har ya na. W ea k n es s es Th er e has been a decreas e in the profit marg ins of S hree C emen t. Op p o rtu n ities
Th e compan y expects to s ervice the dealer netw ork, enhance volu mes , f o cu s on unmapp ed areas and reduce cos ts . It expects to focus on R ed O x id e brand through s tronger aw arenes s building. Th er e is good new s on the realiza tions front as w ell; the all- India av er age ce ment price s tands at R s 275/bag now , up 15 per cent s ince J an u ar y. There has been aR s 5-10/bag correction in price in the current mo n th and is expected to revive, pos t- mons oon. T h rea ts P r o d u ct C hallenges : B ulk y and heavy, therefore difficult to s ell over lar g e territories P r icin g C hallenges : Low priced Tr an s port C os t C hallenges : H igher realiz ations are neutralized by h ig h er freight charges 5 . Va riou s s trategies em p loy ed by th e com p an y in th e cou rs e of co n d u ctin g b us in es s (in th e f orm of allian ces , join t ven tu res , p ro d u ct in n ovation / exp an s ion strategies , acq u is ition s / d ives titu res a n d a ny su ch s trategies th at y ou th in k m ay aff ect th e bu s in es s of th e co m p an y) in p as t 2 y ears . ( Ma k e in telligen t us e of ab ove poin ts w h ile try in g to un d ers tan d th e s t ra t egies us ed b y th e com pany ) a . Hierarch ical: At th e corp orate level, b us in es s u n it level an d f un ct ion al or d ep artm en tlevel of th e firm R es earch and D evelop ment C o mp an y has s trong R &D focus w ith a dedicat ed tea m of profes s ionals w h o r egularl y undertakes new initiat ives aimed at improving qualit y an d en ergy efficienc y, utilizing alternative fuel and raw mater ials , new p r o d u ct development and res ource opti miz ation. b . B us in es s D ivis ion : A ccord in g to variou s p rod u cts , d ivis ion s , m ark ets , etc . Po lici es
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S us tain ib ility Policy : To produce qualit y cement in an eco friendl y, health y and s afe working environmen t in a s ociall y
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res pons ible manner w ith continual i mprovemen t in performance and profitabilit y to the s atis faction of all s take holders . Qu ality Policy : To provide products conforming to national s tandards and meet ing cus tomers requirements to their total s atis faction. E n ergy Policy : To reduce to the maxi mu m extent pos s ible the cons umpt ion of energ y w ithout i mpairing productivit y. Hu m an R es ou rce Policy : Shree C emen t Ltd focus es on empow er ing the emplo yee s and honoring the individuali t y of ever y emplo yee .
c. Region al: S trategies d evis ed as p er region s , geograp h ies , etc. Ma rk ets C las s if ication
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Prim ary : R aj as than S econ d ary : D elhi, P unj ab, JK , H aryan a, Wes tern U .P . and U ttaranchal T ertiary : Guj arat, M.P . and C entral U .P .
Th er e has been a shift from P roduct C entric to C ons umer centric in the las t f ew ye ars and S hree C e ment has s tarted mark eting all its products v er y aggress ivel y. It enj o ys a mark et s hare of 17 percent in N orthern I n d ia.
doc_833984697.doc
This is a documentation is about company analysis of Shree cement.
S h ree Cem ent I nd u s try A n aly s is : 1 . I nd u s try h a p p en in gs tren d s : In d ian an d Glob al p ers p ectives , recen t
Th e o verall domes ti c cemen t cons ump tion has been decreas ing over th e las t 3 months w ith a grow th of around 6% yo y. The main reas on co n s tr uction activit y has s low ed dow n due to s hortage of labour an d s an d . Th e f ollow ing are the Q1 es ti mates for FY 13: Q1 FY 13 es tim ates S ales (R s m n ) OPM (%) PA T (R s m n ) Q1 y oy q oq Q1 yoy q oq Q1 y oy q oq C om pany FY 13 (%) (% ) FY 13 (bp s ) (bp s ) FY 13 (%) (% ) ACC 27,112 11.4 (6.2) 24.6 71 223 3,932 16.8 (19.9) A mb u j a 24,912 13.8 (6.4) 27.4 311 30 4,781 37.6 (19.1) C em U ltr atech 49,473 13.3 (7.3) 27.3 (84) 256 8,180 19.7 (5.7) C em I n d ia C em11,281 6.3 0.9 19.1 (408) (35) 679 (35.8) 4.6 O p er ating marg ins for AC C , A C L and U ltratech is likel y to expand s eq u ential l y on back of fall in import ed coal prices (average rate s tood at US $99 as agains t U S$112 in Q4 F Y 12). P A T g row th w ould exhibit a mixed performance w ith A C L likel y to r ep o r t a robus t 36% yo y s ur ge w hile India C ements is likel y to w itnes s w eak quarter on back of poor operational performance.
2 . PE S T A n aly s is : Political, econ om ic, s ocial an d tech n ical as p ects rela t ed to th e in d us try P o litica l Th e g overnment has decided to focus on the infras tructure develop ment an d h ence ce ment demand is likel y to grow over 8%.
Th e C ompet ition C ommis s ion of India (C C I) on J une 21, 2012, levied a p en alt y of over Rs 6000 crore on 11 cemen t comp anies due to violation o f th e provis ions of the C omp eti tion A ct, 2002, which deals w ith antico mp eti tive agreements including cartels . C C I h as impos ed penalt y on 11 cement manuf actur ers at 0.5 ti mes of th eir profit for the yea r 2009-10 and 2010-11. P enalt y pa ye rs are AC C , A mb u j a C emen ts , U ltraTech C emen ts , G ras im C ements (now merged w ith U ltraTech C emen ts ), JK C emen ts , India C ements , M adras C ements , C en tu r y C emen ts , B inani C ements , Lafarge India and J a yp ee C ements . E co n o m ic Th er e s eems to be surplus in the indus tr y due to decreas e in demand. Th is scenario is expected to continue over the next 3 ye ars . An y ris e in in p u t cos ts w ill impac t margins . A ls o there has been a debate among bus ines s es as to w hether ce ment in d u s tr y alone can be bla med for increas ed cos t of cons truction. H o w ever, anal ys ts s ay that ce ment cos t forms j us t about 10-15% of the o v er all cons truction cos t. The other cos ts contributing are land, s teel, s an d and labour cos t. S o me analys t s feel that the penalt y s lapped b y the C ompeti tion C o mmis s ion of India would impac t the profitabilit y of the co mpanies . I n s o me cas es , the penalt y i mpos ed is higher than a yea r’s earning for man y firms . This w ould negative l y affect comp an y health and can en d an ger s hareholder’s interes t. A n o th er thing w hich econo mic anal ys ts point out is that the Indian eco n o my is alread y s ufferin g from negative develop ments due to v ar io u s iss ues like inflation, negative production trends , price ris e and in f lation, retros pective amendmen t in the Income Tax laws and the r ev er b erations of the various s cams . A t this juncture, penalties w ill imp act the F II confidence and would in turn endanger grow th pros pects an d d es tabil ize economy further. A cco r ding to B R IC data, India is the s econd larges t producer of cemen t in th e w orld. The Indian government inves ted U S $500 billion on in f r as tructure during the Eleventh F ive-Y ear P lan (2007–2012) and r ev ealed plans to inves t a further US $1 trillion on infras tructure during th e Tw elfth F ive-Y ear P lan (2012–2017). Th e large- s cale inves t ment on various infras tructure proj ects , including r o ad s , railw a ys , bridges and ports , w ill generate a huge demand for ce men t in the coming ye ars . Even credit rating agenc y C R IS IL s aid that
th e p enalt y w on’t caus e a maj or impac t on credit qualit y due to s trong f in an cia l ris k profiles , robus t liquidit y and low gearing. Th e ce ment indus tr y in India is unique, w ith 57% of the capaci t y bein g co n s o lidated w ith the top eight pla ye rs . The res t of the indus try is h ig h l y frag mented, w ith s mal l- to medium- s ized compani es mos tl y w ith u n eco no mica l s ize of operations . To th e extent regulator y intervent ion limits coordinated supplier action s w ith r es pect to price and quantit y, s mall er firms (s ingle or mul tipl e p lan ts w ith high geograp hic concentration) w ith uneconomic cos t s tr u ctures w ould become uncomp eti tive and face ver y s ignifican t d eter iora tion in their credit profiles . As such the fragmentat ion level in th e in dus try is expected to reduce and larger and vertical l y integrated co mp anies are likel y to gain marke t s hare. F itch has main tained a negative outlook on the Indian cement indus tr y f o r th e las t tw o yea rs . The indus tr y has been s truggling w ith exces s cap acit y (given the exis ting muted de mand s cenario) bes ides having a s tr u ctural feature of relativel y high operating leverage. Th e top five comp anies (U ltrate ch C ement Li mi ted, AC L, A C C , IC L an d M ad r as C emen ts Limited, cons tituting around 50% of the indus tr y cap acit y) enj oy a better cos t s tructure, driven by higher level of vertica l in teg r at ion and location advantage w ith res pect to s ourcing of raw ma ter i als and mark et acces s . M o s t other player s becaus e of lack of one or more of thes e factors hav e a w eaker cos t s tructure and moderat el y high leverage levels (an in d u s tr y med ian value of around 4x). G loball y, mos t marke ts hav e s ig n if icant cons olidation and this move by C C I ma y indirectl y help th e I n d ian cemen t indus tr y in correcting this s tructural imba lance. S o cia l M an y comp anies have been particip ating in C orporate S ocial R es p o ns ibilit y activities aimed at creating sus tainable livelihood cap ab il ities and increas ing the level of pros perit y of the local co mmu nit y. F or this , C ompani es have undertaken s everal meas ures for p r o v id ing health and education faciliti es , infras tructure s upport to the lo cal co mmuni t y and other w elfare activiti es . Notable meas ures taken b y th e compan y in its endeavor tow ards s ocial upliftment are: H ealth - C ompan y provides 24x7 free medica l s ervices at its premis es as w ell as free ambu lance and fire fighting s ervices to the people in its
lo cal co mmuni t y. It als o provides medi cal s ervices through full y eq u ip ped mobi le med ica l tea m w hich vis its the nearb y villages on a r eg u lar bas is and dis tributes free medic ines . I n f r as tructure - C ompan y cons tructed cement concrete road, w ard and p r a ye r hall at G overnmen t H os pital B eaw ar at approx. cos t of around R s . 3 1 lacs . It als o provided around 250 w ater tanks to local bodies and P an ch ya t for arranging drinking w ater. It cons tructed hygi ene and s an itation faciliti es at s chools in the nearb y villages and created p as s enger facili ties at local bus s tand. Wo men Empow er me nt - Pro gramme s are organized on the s ubj ects of g ir l child education, right age of marriage, gender dis cri mina tion. A r o u n d 300 people participat ed in the programs . C u ltu r al participation - To promot e cultural harmon y among people, co mp an y regularl y s upports various religious and s ocial programme s . Lar g e numbers of people from local communi t y come and enj o y thes e p er f o r mances and als o get acquaint ed w ith different cultures . 3 . C o mpe titor A nalys is : A nalyze pricing, qualit y, dis tribution and p ar tn ers hips of the neares t compe titor of the compan y Product quality - Ordinary Portland Cement ( OPC ) is categorized into three grades based on the 28 - day mortar strength – 33 grade , 43 grade and 53 grade. P r icin g – R s . 305 to 350 / kg
4 . S W OT A n aly s is : Stren gth s , w eakn ess , op p ortu n ities an d th reats f a ced by th e in d u s try S t ren gth s A cco r ding to B R IC data, India is the s econd larges t producer of cemen t in th e w orld. The Indian government inves ted U S $500 billion on in f r as tructure during the Eleventh F ive-Y ear P lan (2007–2012) and r ev ealed plans to inves t a further US $1 trillion on infras tructure during th e Tw elfth F ive-Y ear P lan (2012–2017). W ea k n es s es
Th er e s eems to be surplus in the indus tr y due to decreas e in demand. Th is scenario is expected to continue over the next 3 ye ars . An y ris e in in p u t cos ts w ill impac t margins . A ls o there has been a debate among bus ines s es as to w hether ce ment in d u s tr y alone can be bla med for increas ed cos t of cons truction. H o w ever, anal ys ts s ay that ce ment cos t forms j us t about 10-15% of the o v er all cons truction cos t. The other cos ts contributing are land, s teel, s an d and labour cos t. Op p o rtu n ities I n d ia is a developing countr y and numerous infras tructure proj ects are in p r o gress w hich can act as a maj or marke t for the cemen t compan ies . B ein g the s econd larges t producer of cement in the w orld, global mar k ets can be explored for further expans ion. T h rea ts P en alties i mpos ed, increas e in cons truction cos ts have led to increas e in s u r p lu s and decreas e in profitabi lit y of maj or player s . S talled economic reforms are als o impa cting F II confidence w hich can ad v er s el y affect the indus try. C om pany A n aly s is : 1 . C om pany d es crip tion (a b rief in trod u ction regard in g w h at b us in es s es th e com p an y is in to) S h r ee C ement Ltd (S C L) is pres ent in the cemen t and pow er s ector. It is th e lar ges t cemen t producer in N orth India and among top s ix cemen t man u f actur ing groups in the country. It has ce ment capacit y of 13.5 mi llio n ton and pow er capaci t y of 560 M W. Th e compan y offers cement under various brands , including Shree U ltr a J u n g R odhak C ement, B angur C ement, and R ocks trong C ement. 2 . Gen eral in f orm ation ab ou t th e com p an y: location of th e h ea d q u arters , year of f ou n d in g,s h areh old in g pattern , nu m b er of em p loy ees , top m an agem ent, etc . H ead q uarters – B eaw ar, India
Y ear of founding - 1986 S C L h as manuf actur ing facilit ies at B eaw ar and R as in Aj mer and P ali d is tr ict and grinding units at K hus hkhera, S uratgarh and J aipur r es p ectivel y in R aj as than and R oorkie in U ttarakhand. SC L boas ts of h ig h l y recognized brands like S hree U ltra J ung R odhak, B angur C emen t an d R ocks trong. S C L is an IS O 9001, IS O 14001, OH S AS 18001 and SA 8 0 0 0 certifi ed compan y and purs ues bes t practices in M anufacturing, En er g y C ons ervation and Environment Manage ment. Th e S hareholding P attern page of S hree C ements Ltd. pres ents the P r o mo ter' s holding, F II' s holding, DII' s Holding, and S hare holding b y g en er al public etc. S h a reh old in g p attern - S h ree C em ents L td . H o ld er ' s N ame No of S hares % S hare H olding P r o mo ters 22567147 64.78% F o r eig nO cb 3603500 10.34% F o r eig nIns titutions 2757216 7.91% O th er C omp anies 2673378 7.67% N B an k s M utualF unds 1796023 5.16% G en er alP ublic 1166209 3.35% F o r eig nN R I 156601 0.45% O th er s 62327 0.18% F in an cialIns t itut ions 50363 0.14% D ir ecto rs 4461 0.01% Lo o k ing back at a j ourney of 26 ye ar s , S C L has over the ye ar s s u cces s full y marched ahead as a loyal partner in the grow th of the n atio n . C ompan y has created enormous value for its s takeholders th r o u g h generating opportunities for emp lo ymen t, mak ing s ignificant in v es t ments in the s tate and contributed to the vas t infras tructure d ev elop men t of the nation. Emp lo yee s trength has grow n from around 200 emplo yee s in 1985 to ar o u n d 3500 emplo yee s at p res ent and its turnover ris ing from Rs . 28 cr o r es to over R s . 4500 crores . M an age ment N ame A s h o k B handari B G B angur D iw ak ar P a ya l G o p al Daga H M B angur H M B angur D es ignation C hief F inance Officer N on Executive C hairman J oint Pres ident - M arketing S enior VP - P roj ect M anagement C EO M anaging D irector
K C G andhi K K J ain K u ld eep V erma M K S inghi N itin D es ai O P S etia P C J haw ar P N C hhangani P S S harma P r as h ant B angur R L G aggar R amakant Shar ma S K Soni S S Khandelw al S S Khandelw al S an j ay M ehta S h r eekant S oman y S h r in ath S avoor Y K A lagh
S enior VP -M aterial M anage ment A ss is tant V P - A ccounts S enior VP - M arketing Executiv e D irector D irector D irector V ice P res ident - P &A J oint Pres ident - Works A ss is tant V P - M arketing Executiv e J oint P res ident D irector S enior V ice P res ident (P R ) A ss is tant V P (ER P ) C o. S ecretar y & C ompl. O fficer S ecretar y S enior VP - C ommer cia l D irector S enior V P -S trateg y D irector
3 . Fin an cial p erf orm an ce of th e com p an y: Sales , n et p rof it, s egm en t w is e p erf orm an ce of th e p as t 1 y ear C o mp an y’s turnover for 12 months period of A pril’11-M arch’12 w as R s 4 6 2 5 crores . S C L is a cons is tent dividend payin g compan y (120% d iv id end for A pril’11-M arch’12). To tal inco me 4,755.9C r. EB I T 503.9C r P A T 2 67.0C r Y ear l y - S hree C emen ts Ltd. M ar' 12 I N C OM E: N et S ales Turnover O th er Income T o t a l In com e EX P EN S ES S to ck Adj us t ments R aw M aterial C ons umed P o w er and F uel Emp lo yee Expens es A d minis tr ation and S elling M ar' 11 M ar' 10 M ar' 09 M ar' 0 8 4,625.22 3,514.13 3,643.24 2,740.57 2 , 1 2 9 . 4 2 130.63 44.51 117.24 57.34 56.54 4,755.85 3,558.64 3,760.47 2,797.92 2 , 1 8 5 . 9 6 14.81 446.67 1,158.41 244.85 770.81 -33.60 372.34 912.32 198.54 614.06 -19.66 323.78 610.48 158.61 629.83 9.63 246.13 605.81 103.87 459.28 9.03 210.99 367.23 73.60 359.77
Ex p en s es R es earch and D evelop ment Ex p en s es Ex p en s es C apital is ed O th er Expens es P r o v is ions M ade T OT A L E XPE N S E S O p er ating P rofit E B I T DA D ep r eciation EBIT I n ter es t EBT Tax es Pro f it an d L os s f or th e Y ear Ex tr ao rdinar y Items P r io r Y ear Adj us tment O th er Adj us tments R ep o rted PA T
0.00 0.00 825.05 0.00 3,460.61 1,164.62 1,295.25 791.32 503.93 187.41 316.52 52.50 264.02 0.00 15.23 0.00 266.98
0.00 0.00 562.58 0.00 2,626.24 887.90 932.41 675.76 256.65 97.83 158.82 -40.27 199.10 0.00 59.08 0.00 209.70
0.00 0.00 426.56 0.00 2,129.61 1,513.63 1,630.87 570.43 1,060.44 129.09 931.34 206.57 724.77 0.00 14.76 0.00 676.10
0.00 0.00 339.53 0.00 1,764.26 976.32 1,033.66 205.39 828.27 74.43 753.84 144.94 608.90 0.00 0.00 0.00 577.97
0.00 0.00 226.08 0.00 1,246.71 882.71 939.25 478.76 460.49 53.30 407.19 107.94 299.26 0.00 0.00 0.00 260.37
Th e r evenue has been increas ing over the recent ye ar s . The recent net p r o f it s eems to have declined in the recent yea rs due to increas e in in ter es t pa yme nt s . 4 . S W OT A n aly s is : Stren gth s , w eakn ess , op p ortu n ities an d th reats f a ced by th e com p an y S t ren gth s S C L commi tmen t to energ y efficienc y and environmen t manag emen t is r ef lected in the fact that it s et up Was te heat recover y plants of 46 M W w h ich is the larges t s uch capacit y in the w orld ce ment indus try ex clu ding china. S C L commi s s ioned Unit V III in World R ecord time of 3 3 0 d a ys agains t average period of 630 days . It enj oys approx 19% mar k et s hare in N orth India and is leader in mark ets of R aj as than, D elh i an d Har ya na. W ea k n es s es Th er e has been a decreas e in the profit marg ins of S hree C emen t. Op p o rtu n ities
Th e compan y expects to s ervice the dealer netw ork, enhance volu mes , f o cu s on unmapp ed areas and reduce cos ts . It expects to focus on R ed O x id e brand through s tronger aw arenes s building. Th er e is good new s on the realiza tions front as w ell; the all- India av er age ce ment price s tands at R s 275/bag now , up 15 per cent s ince J an u ar y. There has been aR s 5-10/bag correction in price in the current mo n th and is expected to revive, pos t- mons oon. T h rea ts P r o d u ct C hallenges : B ulk y and heavy, therefore difficult to s ell over lar g e territories P r icin g C hallenges : Low priced Tr an s port C os t C hallenges : H igher realiz ations are neutralized by h ig h er freight charges 5 . Va riou s s trategies em p loy ed by th e com p an y in th e cou rs e of co n d u ctin g b us in es s (in th e f orm of allian ces , join t ven tu res , p ro d u ct in n ovation / exp an s ion strategies , acq u is ition s / d ives titu res a n d a ny su ch s trategies th at y ou th in k m ay aff ect th e bu s in es s of th e co m p an y) in p as t 2 y ears . ( Ma k e in telligen t us e of ab ove poin ts w h ile try in g to un d ers tan d th e s t ra t egies us ed b y th e com pany ) a . Hierarch ical: At th e corp orate level, b us in es s u n it level an d f un ct ion al or d ep artm en tlevel of th e firm R es earch and D evelop ment C o mp an y has s trong R &D focus w ith a dedicat ed tea m of profes s ionals w h o r egularl y undertakes new initiat ives aimed at improving qualit y an d en ergy efficienc y, utilizing alternative fuel and raw mater ials , new p r o d u ct development and res ource opti miz ation. b . B us in es s D ivis ion : A ccord in g to variou s p rod u cts , d ivis ion s , m ark ets , etc . Po lici es
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S us tain ib ility Policy : To produce qualit y cement in an eco friendl y, health y and s afe working environmen t in a s ociall y
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res pons ible manner w ith continual i mprovemen t in performance and profitabilit y to the s atis faction of all s take holders . Qu ality Policy : To provide products conforming to national s tandards and meet ing cus tomers requirements to their total s atis faction. E n ergy Policy : To reduce to the maxi mu m extent pos s ible the cons umpt ion of energ y w ithout i mpairing productivit y. Hu m an R es ou rce Policy : Shree C emen t Ltd focus es on empow er ing the emplo yee s and honoring the individuali t y of ever y emplo yee .
c. Region al: S trategies d evis ed as p er region s , geograp h ies , etc. Ma rk ets C las s if ication
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Prim ary : R aj as than S econ d ary : D elhi, P unj ab, JK , H aryan a, Wes tern U .P . and U ttaranchal T ertiary : Guj arat, M.P . and C entral U .P .
Th er e has been a shift from P roduct C entric to C ons umer centric in the las t f ew ye ars and S hree C e ment has s tarted mark eting all its products v er y aggress ivel y. It enj o ys a mark et s hare of 17 percent in N orthern I n d ia.
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