No endeavour can be successful without the active cooperation of the people concerned with it, which was fourth coming in full during this study. It is extremely difficult to find words which can do justice to this sort of cooperation; I got in the planning & execution of this study. I am extremely grateful to my research guide Mrs. S.Ghosh (Faculty Of BBA) and other faculty members for their whole hearted co-operation. I would like to thank them for their valuable guidance in planning & execution of this study.
I am deeply indebted to Dr. R.T.Goswami (In charge) without whose cooperation my study would not have been possible. I extend my deepest gratitude to all those persons who supported me all through my project. My interaction with all these people has left a long lasting impression in my mind that will influence my project and my behaviour for all times to come.
In today economy, one needs money to make money. Finance is the life blood of business and there must be continuous flow of funds in and out of business enterprise. Money makes the wheel of business run smoothly. Sound plan and efficient production system and excellent marketing network are all hampered in the absence of adequate funds. In modern economy, the rate of finance has increased due to large scale industrial production. IT has resulted in increasing the demand of funds in an organisation. The capital required of a company can be classified under two main categories: – Fixed Capital
Every business needs funds for various purposes – for its establishment and to carry out its day to day operations. The present project study is a humble attempt to understand the subject in a simple way. The aim of this training project is to know the financial system and financial analysis of ACC Ltd. is one of the leading companies in cement industry, producing more than one fourth of national output. The study is divided into different chapters. The chapter is related to introduction of ACC Ltd. It is based on brief history of the company and its present function in the industry. The next chapter is related to overview the financial statement shown in the annual report of the company. This chapter analysed and interpreted the result and the base of this analysis.
HISTORY OF CEMENT INDUSTRY:
The history of cement is story of civilization from primitive caves of pre-historic times to the sky scrapers of the modern age. It is said that use of cement is from period use of fire Egyptians utilized gypsum plaster as cementing material as early as 3000 BC. in building their monuments. Material cement has existed since the Roman Empire. Joseph Arpdin invented Portland cement in 1824 after the discovery of hydraulic properties of time, patented his product, which was called Portland cement. Portland stone, which is lime stone, quarried on Portland Bill in Dorset, England. Modern cement is outcome of combined research and development efforts of chemists, technologist and architects. Cement is binding agent having hydraulic properties, which after hydration gives the setting property and strength in concrete. Cement is manufactured by inter grinding, clinker, gypsum and Pozzolanic materials in a proper ratio to get Portland Pozzolane cement. Cement is essentially made up of material containing calcium, silicon, aluminium and iron. Limestone, marl and chalk are major source of calcium clay shale, quartzite, bauxite iron ore provide silicon, aluminium and iron components. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES:
India is the second largest producer of cement in the world. During the year, most cement companies operated at high capacity utilization levels to meet increasing demand. While the pricing environment was favourable during the year, there were significant increasing cost particularly in energy, transportation and other inputs. The year was commendable one considering the massive increase in the production of blended cement, especially fly ash based. With rapidly growing of housing, infrastructure and real estate sectors and the ambitious plan for the developing Special Economic Zone (SEZ), the cement industry is expected to enjoy double-digit growth. Cement remains the highest taxed among all the essential infrastructure inputs in India. Various govt. taxes and duties put together constitute over 70 % of the extra-factory price. Cement industries are a major contributed to the exchequer with excise duty alone working out to be over Rs. 5500 crores annually. Yet it is irony that cement is an essential commodity required by all sections of society including common man. The cement industry receives coal through long term linkages. Ministry of coal is not sanctioning linkages to new capacity which is adversely affecting the cement industry. The situation becomes all difficult, as the ministry of coal is supplying 80 % of total requirement of the cement industry through Fuel Agreements (FSAs). While cement plants may have to procure through other channels. Cements industry is largely dependent on captive power generation as the power availability situation is grim in the most producing steps, both in term of quality and quantity. Most cement plants have been compelled to make matters worse; some state governments are also imposing taxes and duties on these captive power plants. Although expectations are the industry will perform well during 2011 with demand likely to grow about 9 to 10 %. The demand supply scenario will be balanced most regions, though some region may experience seasonal tightness. Industry should be appreciative of the govt. as a target of 8 to 9% growth has been aimed for in the XI Plan, and the cement industry is an integral part of the core sector of industries. ACC FOUNDATION (HISTORY) The associated
cement companies (ACC) story begins in 1936. War clouds were gathering over Europe; the economy of the western world was deep in recession; and an Indian industry was reeling under severe difficulties. But one man undaunted by the times was building a vision for the future. The man was F.E. Dins haw –a man of tremendous foresight and outstanding initiative. The vision was to build a strong and unified cement industry that not would not only with stand all difficulties but also fulfil its responsibilities to the nation. The result was the amalgamation of ten of the existing cement companies – belonging to four large industrial houses of that time, viz, the house of Tata, Khatau, Dinshaw and kellick Nixon-to form the nucleus of what is today known as ACC LTD (formerly the associated cement companies). Barely three years was later the fledging company catapulted into the fiery cauldron of World War II and resources were geared to meet that onslaught. ACC was there –more than that eyewitness to the history. Over the year ACC realized that people are as different as they are similar .different needs different dreams. With its depth of knowledge and width of experience ACC today is period to fulfil the hopes and aspirations of the people across the length and breadth of the country. For more than six decades now. ACC has been forging a pioneering path making cement. Along the way it sharpened its expertise on the cutting edge of the latest processes/ technologies; learning /adapting- -no just transplanting –to meet the specifies of local operating parameters in the process- setting standards, innovating, non just meeting needs, but anticipating them.
CORPORATE PROFILE OF ACC LTD.
Acc is a very fond acronym in India, often assuming synonymy with cement. With a annual cement capacity of over 18 million tones, the company’s operation are spread throughout the country with 17 cement plants, 3 Regional Offices, 21 Sales Offices, and a dedicated band of people from all corners of India. Thus in industrial backdrop of India ACC stands for multi-product and multi-unit company. ACC has also extended its service s to overseas to the Middle East, Africa and South America where it has provided technical and management consultancy to a variety of consumers and also helps in the operational maintenance of cement plants aboard. In addition to its modernization and expansion, ACC has earmarked on an all round internal
improvement program through introduction various world class benchmarking and total productivity maintenance practices. Through organization wide business process engineering, it has able to achieve revenue enhancement and cost savings by optimally aligning business practices with customer needs. It would also result in further simplification of the internal management processes and delayering and decentralization for fast decision making purposes. Today, ACC stands poised to enter the new millennium, ready to seize the opportunity and face the challenges that lie ahead. With more than six decades of experience ACC has a rare perspective of sound business strategies, with which ACC is poised to maintain its leadership in Cement Industry. THE Associated Cement Companies Ltd. is a multi business enterprise with operation in cement manufacturing. It is one of leading companies in India, producing more than one-fourth of national output. ACC Ltd. as company duly registered under Indian Companies Act 1956, having its registered office at Cement House, 121 Maharishi Karv Road, Mumbai-400020. It has 17 cement plants spread all over the country and has various subsidiaries and other overseas projects. Each business is committed to become a major force of its industry through customer satisfaction and through continuous innovation in quality of the product. As company ACC Ltd is committed to make and deliver as cheaply as possible.
CHANGE IN THE NAME OF THE COMPANY & ACCOUNTING YEAR
The company has changed its name to ACC Limited w.e.f. Sept.01, 2006 pursuant to resolution passed by the shareholders at the 70th Annual General Meeting of the Company and after obtaining all requisite approvals. The accounting year has been changed from April-March to January-December. Therefore the accounts have been drawn up for nine months, for the period ended December 31, 2005. SUBSIDIARIES AND ASSOCIATES OF ACC
In addition to the main cement business has certain joint ventures, subsidiaries and associations formed through technical collaboration and partnership with globally reputed companies, mining and radial tyres. In the year 2000, the management of ACC decided to divest those of its non- cement businesses that are unrelated and do not enhance or complement the company’s basic strength. Bargarh Cement Limited (BCL)
The newest subsidiary of ACC, was formerly called IDCOL Cement Limited. BCL has a cement plant located at Bargarh near Sambalpur in Western Orissa with a capacity of 0.96 million tonnes per annum. The Bargarh cement plant has a modern dry process kiln and predominantly manufactures Portland cement, most of which is sold in the state of Orissa. BCL became a subsidiary of ACC in December 2003 when ACC purchased from the Industrial Development Corporation of Orissa Limited its entire shareholding in BCL amounting to 86.79% of BCL’s equity share capital. In March 2004, BCL became a 100 % subsidiary of the company after ACC purchased the remaining 13.21 % equity shares in BCL held by the Unit Trust of India. Bulk Cement Corporation (India) Limited (BCCI)
Situated at Kalamboli, in Navi Mumbai (formerly New Bombay), this company caters to bulk cement requirements of the city of Mumbai and its environs. It has two cement storage silos with a capacity of 5,000 tons each. The plant receives cement in bulk from ACC plants at Wadi. The plant has its own special purpose railway wagons and rakes and its own railway siding. The first of its kind in India, BCCI is equipped with all the facilities required by increasingly sophisticated construction sites in a bustling metropolis, including a laboratory, a fleet of specialized trucks and site silos for the convenience of customers and is capable of offering loose cement in bulk-tanker vehicles as well as packed cement in bags of varying sizes from 1 tonne down to 25 kg bags. BCCI is situated strategically on the outskirts of Mumbai, just off the new Mumbai-Pune Expressway.
Damodhar Cement & Slag Limited (DCSL)
This subsidiary company has a cement-grinding unit located at Madhukunda, in the Purulia district of West Bengal. With a capacity of 5.25 lakh tonnes per annum, it is a vital source of cement to the eastern India. DCSL offers ACC Super, a premium brand of blended cement. ACC Machinery Company Limited (AMCL)
Located in the Butibori Industrial estate near Nagpur, AMCL manufactures machinery and equipment for use in chemicals and cement industries such as
bulk transports, vertical pre-grinding roller mills and blowers and tyre and rubber manufacturing machinery such as presses, Mixer and extruders. ACC Nihon Casting Limited
This state-of-the-art foundry is also based in Butibori, near Nagpur and manufactures alloy steel castings for a range of processing and mineral industries. It was set up in technical collaboration with Nihon Cement Company (now known as Asanotec Ltd).
Everest Industries Limited (EIL)
This subsidiary of ACC is a leading building products company which manufactures fibre-based cement products, such as sheets for roofing and interiors as well as Non Asbestos Flat Sheets for varied applications including pre-fab housing. Its ‘Everest’ Brand enjoys huge brand equity. Besides roofing, the Company has introduced a range of New Generation Products called E-Board Classic for varied applications in interiors. EIL has four plants in India, Including a modern R&D facility near Nashik in Maharashtra. Aloca ACC Industrial Chemical Ltd. (AAICL)
This is a joint venture between ALOCA, Aluminium Company of America (60%) the world’s largest aluminium and aluminium chemicals company and ACC (40%). ACCICI commenced operations in Jan. 1944. The plant is on 6.3 acres of land, and processing capacity is 10,000 metric ton of white tabular alumina in a single shift operation. The safety environment, health and industrial hygiene standards of Aloca ACC are a per/comparable with other ALCOA locations worldwide.
With its large pool of skilled scientists, engineers and technocrats who keep abreast of the latest international trends and developments in cement, ACC has successfully handled a diverse range of assignments in different parts of the world, mainly in Asia and Africa. Our project engineering consultancy and project management expertise has been tested against the best in the world. Saudi Arabia Yanbu Cement Company (YCC)
Since 1979 ACC has been operating and managing a large cement plant owned by Yanbu Cement Company (YCC) and located near the port city of Yanbu in the Kingdom of Saudi Arabia. The Yanbu plant incorporates sophisticated process control systems. YCC today has a capacity of over 3.30 million-ton’s per annum. Cement production at this plant has continued to exceed the guaranteed quantum stipulated in the contract year after year. The ACC team of Yanbu has won appreciation for significant achievement make with respect to ISO 9002 certification, launching of ISO 140000 em’s certification activity manufacture of Portland Pozzalana Cement and a substantial increase in the quantum of exports. Iran and India Cement Engineering Consultants PJS (IICEC) Iran Iran and India Cement Engineering Consultants PJS (IICEC) is a joint venture company between ACC and Far Khuzestan Cement Company, Iran’s largest cement company. IICEC provides consultancy services to the Iranian Cement Industry in areas such as process diagnostic studies of existing plants, up gradation and capacity enhancement of existing cement plants and training Iranian engineers to upgrade their knowledge and skills. Nigeria – Dangote Industries
ACC has been retained by M/s Dangote Industries, a leading diversified industrial group of Nigeria, to provide comprehensive engineering consultancy for setting up their proposed new green field cement plants of capacity 3 x 7000 TPD (ton’s per day) and for optimization and up gradation of their existing plants from 2×2000 TPD to 2×3500 TPD.
MANUFACTURING UNITS ACC IN INDIA17
The Company has 17 manufacturing units located all over India17.
1. Kymore cement works P. O Kymore, Distt. Jabalpur (M.P)
Capacity, 17 LT (1995)
2.Jamul Cement Works P.O Jamul Distt Durg (M.P)
Capacity, 15.84LT (1965)
3.Lakheri Cement Works P.O Rajasthan
Capacity, 6 LT (1970)
4.Chanda Cement Works P.O Chandenrpur, Maharashtra
Capacity, 6.81 LT (1970)
5.Madukkarai Coimbatore (Tamilnadu)
Capacity, 8.40 LT (1934)
6.Mancherial cement works (A.P)
Capacity, 3.31 LT (1958)
7.Sindri cement works (Bihar)
Capacity, 6 LT (1995)
8.Chaibasa cement works Bihar
Capacity, 6.12 LT (1947)
9.Wadi Cement Works-1
Capacity, 20.47 LT (1968)
10. New Wadi cement works
Capacity, 20.47 LT (1982)
11.Gagal cement works (Barmana)
Capacity, 9.67 LT (1984)
12.Gagal cement works (Barmana)
Capacity, 14.34 LT (1994)
13. Tikaria (UP)
14. Thondebhavi (Karnataka)
15. Kudithini (Karnataka)
MISSION OF ACC LTD
LEADERSIP:-Maintain our leadership of the Indian cement industry through the country modernisation and expansion of our manufacturing facilities and activities and through the establishment of a wide and efficient marketing network. PROFITABILITY:- Achieve a fair and reasonable return on capital by promoting productivity throughout the company. GROWTH:-Ensure a steady growth of business by strengthening our position in the cement sector. QUALITY:-Maintain the high quality of our products and services and ensure
their supply at fair prices. EQUITY:-Promote and maintain fair industrial relation and environment for the effective involvement, welfare and development of staff at all levels. RESPONSIBILITY:-Fulfil our obligation to society, specifically in the area of integrated rural development and in safeguarding. PIONEERING:-Promote research and development effort in the area of product development and energy and fuel conservation, to innovate and optimize productivity.
VISION OF ACC LTD
Customer orientation: – Customer focus is a paramount .We will always try and exceed customer expectation, be it in terms of products or services, quality or care. Faster learning: – We will foster an atmosphere of continuous learning where best practices are adopted and used to create global bench marks. Cost competitiveness: – We will be the best in class technically in order to offer unmatched product and services at optimum cost. This will help us create sustainable profitability. Human resource excellence: – we will provide employers with an inspiring work environment and exciting carrier options, while encouraging team work and demonstrating care. Social and environmental responsibilities:-we will never compromise on our ethics and integrity even at the cost of business .we will continually strive to demonstrate our commitment to the environment and society we live and work in.
We shall build Quality as integral part of the system such the quality is right as first time and all the time. We believe that Quality improvement is limitless and therefore it is continuous. We shall comply with all relevant requirement of product Quality. Our concern for Quality is for entire concern and not just for the product. We will satisfy the customer fully and continuously.
We have established frame work for reviving the Quality objectives and will ensure its continuing suitability. ENVIRONMENT POLICY
Ensure continual improve mental performance by carrying out periodic revive of the action plan. Prevent pollution and minimize fugitive emissions.
Comply with all applicable legal and regulatory requirements. Conserve water, energy and natural resources.
Minimise waste generations utilize the same.
Create environmental awareness and provide clean and safe environment to employees and community at large. ACC – MILESTONES16
Incorporation of the Associated Cement Companies Limited on August 1, 1936. First Board Meeting of the Associated Cement Companies Limited held at Esplanade House, Mumbai on November 10, 1936. 1937
With the transfer of the 10th company to ACC, viz. Dewarkhand Cement Company, the formation of ACC is complete on October 23, 1937. 1944
ACC’s first community development venture near Bombay
India’s first entirely indigenous cement plant established at Chaibasa in Bihar 1952
Village Welfare Scheme launched
Sindri cement works used the waste product calcium carbonate sludge from fertilizer factory at Sindri. 1956
Bulk Cement Depot established at Okhla, Delhi
Technical training institute established at Kymore, Madhya Pradesh. Katni Refractory
Blast furnace slag from TISCO used at the Chaibasa Unit to manufacture Portland Slag Cement for the first time in India. Oilwell Cement manufactured at ACC Shahabad Cement Works in Karnataka for cementation of Oil well up to a depth of 6,000 feet. Manufacture of Hydrophobic (waterproof) cement at ACC Kalahari Cement Works in Bihar. 1962
Manufacture of Accoproof, a waterproofing additive.
ACC’s Central Research Station (CRS) established at Thane Manufacture of Portland pozzalana Cement.
Manufacture of Calundum, a High Alumina Binder; Firecrete, Low Density Alumina Castles and High Alumina Refractory Cement. 1968
Advent of computers in ACC for data processing and designing management information and control systems. ACC supplied and commissioned one-million-tonne iron ore palletizing plant ordered by TISCO 1971
Manufacture of Whitehall Castles A, K, C and Cal-Al-75
Take-over of The Cement Marketing Company of India (CMI)
ACC receives ASSOCHAM first national award for the year 1976 instituted for outstanding performance in promoting rural and agricultural development activities. 1978
Introduction of the energy efficient precalcinator technology for the first time in India. Full-scale commercial production based on MFC technology at Wadi in 1979. 1979
ACC wins international contract for operation and management of a new one million tonne cement plant at Yanbu-Ras Biridi in Saudi Arabia. 1982
Commissioning of the first 1 MTPA plant in the country at Wadi, Karnataka. 1984
ACC achieves a breakthrough in import substitution by developing and supplying a special G type of oil well cement to ONGC. 1987
ACC develops a new binder for use at sub-zero temperatures, which is successfully used in the Indian expedition to Antarctica. 1992
Incorporation of Bulk Cement Corporation of India, a joint ventures with the Government of India. 1993
ACC starts the commercial manufacture of Ready Mixed Concrete at Mumbai. 1998
Commissioning of the 0.6 MTPA cement grinds unit at Tikaria, Uttar Pradesh. 1999
Commissioning of captive power plants at the Jamul and Kymore plants in
Madhya Pradesh. Tata group sells 7.2% of its stake in ACC to Ambuja Cement Holdings Ltd, a subsidiary of Gujrat Ambuja Cements Ltd. (GACL) 2000
Tata Group sells their remaining stake in ACC to the GACL group, who with 14.45% now emerge as the single largest shareholder of ACC. 2001
Commissioning of the new plant of 2.6 MTPA capacity at Wadi, Karnataka plant, the largest in the country, and among the largest sized kilns in the world. 2002
ACC wins PHDCCI Good Corporate Citizen Award
IDCOL Cement Ltd becomes a subsidiary of ACC
IDCOL Cement Limited is renamed as Bargarh Cement Limited (BCL). ACC raises US $ 100 million abroad through Foreign Currency Convertible Bonds (FCCB’s) for US$ 60 million and Global Depository Shares (GDS’s) for US $ 40 million. Both offerings are listed on the London Stock Exchange. ACC named as a Consumer Superbrand by the Superbrand Council of India, becoming the only Cement Company to get this status. GreenTech Safety Gold and Silver Awards awarded to Madukkarai Cement Works and Katni Refractory Works by GreenTech Foundation for outstanding performance in Safety Management System.
ACC receives the CFBP Jamnalal Bajaj Uchit Vyavahar Puraskar Certificate of Merit – 2004 from Council for Fair Business Practices. Holcim group of Switzerland enters strategic and alliance with Ambuja group by acquiring a majority stake in Ambuja Cement India limited (ACCIL)which at the time held 13.8% of total equity share in ACC. Holcim simultaneously makes an open offer to acc share holders , through Holdcem Cement Pvt Ltd and ACIL, to acquire a majority shareholders in ACC . Pursuant to open offer ,ACIL’s share holding in ACC increases to 34.69% of the equity share capital of ACC . 2006
Acc receives Good Corporate Citizen award 2005-06, from Bombay chamber of
Good Green Governance Award 2007 by Srishti Publications
9th Annual Greentech Environment Excellence Award 2008 by Greentech Foundation 2009
ACC received the Jamanalal Bajaj “Uchit Vyavahar Puraskar” of Council for Fair Business Practices. ACC is allotted coal blocks in Madhya Pradesh and West Bengal. ACC’s new Grinding plant of capacity 1.60 million tonnes inaugurated at Thondebhavi in Karnataka. 2010
Kudithini Cement Grinding Plant inaugurated in Karnataka on January 4, 2010 with a capacity of 1.1 MTPA of Portland Slag Cement. ACC acquires 100 percent of the financial equity of Encore Cements ; Additives Private Limited which is a slag grinding plant in Vishakhapatnam in coastal Andhra Pradesh. This company became a wholly-owned subsidiary of ACC in January 2010. ACC enters its platinum jubilee year – the first company in the cement industry to achieve this status. ACC receives FICCI Award for Outstanding Corporate Vision Triple Impact Business Performance Social ; Environmental Action ; Globalisation for 2009-10 – a unique award received for the first time BUSINESS RELATION BETWEEN ACC ; HOLCIM18
A New Association was forged between ACC and the Holcim Group of Switzerland in 2005. In January 2005, Holcim announced its plans to enter into a long-term strategic alliance with the Ambuja Group by acquiring a majority stake in Ambuja Cements India Ltd. (ACIL), which at the time held 13.8 per cent of the total equity shares in ACC. Holcim simultaneously announced its bid to make an open offer to ACC shareholders, through Holcim Cement Pvt Limited and ACIL, to acquire a majority shareholding in ACC. An open offer was made by Holcim Cement Pvt. Limited along with Ambuja Cements India Ltd. (ACIL), following which the shareholding of ACIL increased to 34.69 per cent of the Equity share capital of ACC. Consequently, ACIL has filed declarations indicating their shareholding and declaring itself as a Promoter of ACC. Holcim is the world leader in cement as well as being large suppliers of concrete, aggregates and certain construction-related services. Holcim is also a respected name in information technology and
research and development. The group has its headquarters in Switzerland with worldwide operations spread across more than 70 countries. Considering the formidable global presence of Holcim and its excellent reputation, the Board of ACC has welcomed this new association. The company implemented an ERP system that has standardized business process to run SAP software called “CONNECT INDIA” system is based on a template that caters to ready-mix concrete business, cement and AFR process of the company with the assistance of Holcim Group. All operations, locations and transaction become fully integrated in a manner i.e. on line with updated data and information. The new system will greatly enhance the company’s capability to capture and process a comprehensive range of data to be used for decision making and day to operation while automating some processes which were not part of earlier IT system. Project connect India integrates tighter control through well defined authorization profiles and rigid system. The new features serves as triggers to usher in better work habits and practices. JUSTIFICATION OF STUDY
The study in itself is a problem of how best to manage capital of a company i.e. ACC Ltd. Therefore, needs for conducting the study are as follows:- Due to time between production and sales, every company has to maintain a substantial portion of working capital to run its operation smoothly. In case of manufacturing companies it is required to maintain about 40% – 50% of their capital as current and remaining in the form of fixed assets for the large scale production of product. So, every manufacturing company needs to arrange required working capital. Investment in current assets and the level of current liabilities have to gear quickly to change in sales. To be sure, fixed assets investment and long term financial position are also responsive to variation in sales. It’s necessary to know the short and long term liquidity position of the firm. To know that ratio analyses is done for the current year i.e. for the year 2010.
OBJECTIVE OF THE STUDY
The objectives aim to highlight the reasons how important is the financial system and financial statement for an organization or company. There are various objectives of the study are as follows: To find ratio of the firm
for the year 2010.
To study short term financial position.
To study long term financial position.
To study earning per share of the firm.
To find correlation between turnover and profits of the firm. To study the trend of the gross revenue and profits of the firm.
TYPES OF RESEARCH
1 Descriptive research
2 Analytical research
3 Qualitative research
4 Quantitative research
DESCRIPTIVE OR EX-POST FACT RESEARCH:-
To conduct the research work accurately, we conducted the descriptive research. It includes surveys ; fact-finding inequity of different kinds. ANALYTICAL RESEARCH: _
In it we have to use the fact ; information already available ; analyses of these to make an evaluation of project. QUALITATIVE RESEARCH:-
In selecting the appropriate research design of the study ; the type of data needed, the choice of data collection techniques is four grouped. It is done for:-
1 Consumer needs.
2 Consumer’s preferences for brand.
3 In depth under standing of consumers.
4 Availability for consumer.
Quantitative research is obtained to rate the different aspects on parameter i.e. image of brand, brand equity, expectation of customers, awareness among customer for scheme, switch ability of customers etc.
The project include both primary ; secondary source of data. The data collected through these sources has organized, analyzed ; interpret so as to draw conclusion ;to arrive at appropriate recommendations. 1. A primary source of data includes the personal interview from various accounts officers in the enterprise. 2. The secondary sources of data include annual report, website of ACC Ltd. Company which contains the details which is helpful for making my project report. STEPS IN RESEARCH METHODOLOGY:-
1. COLLECTION OR DATA
2. ORGANISATION F DATA
3. PRESENTATION OF DATA
4. ANALYSIS OF DATA
5. INTERPRETATION OF DATA
1. COLLECTION OF DATA:-
Both the primary ; secondary data has been collected from the market ; company. The company provided the secondary data ; primary data is collected through the medium of face-to-face interaction ; interview from various persons in the enterprise. 2. ORGANISATION OF DATA:
Data once collected the further processing is done, the data collected by me are carefully done through in a useful ; relevant manner ;properly organized. 3. PRESENTATION OF DATA:-
The data collection is of no use unless ; until it is given in the presentable form. Thus after proper organization the data is given in presentable form with the complete details, with the help of bar diagram, pie carts etc.
4. ANALYSIS OF DATA:-
The data is carefully analyzed keeping in the consideration both the pros ; cons for the purpose of arriving at concrete conclusion. 5. INTERPRETATION OF DATA:-
After carefully analyzed the data, it has been aptly interpreted in order to give concrete conclusion ; proper recommendation.
MEANING OF RATIO:-
Ratio analysis is one of the most powerful tools of financial analysis. It is the process of establishing and interpreting various ratios. It is the help of ratios that the financials statements can be analyzed more clearly and decisions made from such analysis. USE OF RATIOS:-
The use of ratio analysis is not confined to financial manager only. There are different parties interested in the ratio analysis for knowing the financial position of firm for different purposes. In view of various users of ratios, there are many types of ratios which can be calculated from the information given in the financial statements. The particular purpose of user determines the particular ratios that might be used for financial analysis. RATIO ANALYSIS OF ACC LIMITED :
ANALYSIS OF SHORT TERM FINANCIAL POSITION OR TEST OF LIQUIDITY2 The short term creditors of company like suppliers of goods of credit and commercial banks providing short term loans are primarily interested to knowing the company’s ability to meet its current or short term obligations as and when these become due. The short term obligation of a firm can be met only when there are sufficient liquid assets. Therefore, a firm must ensure that it does not suffer from lack of liquidity or there capacity to pay its current obligations. If a firm fails to meet such current obligations due to lack of good liquidity position, its goodwill in the market is likely to be affected beyond repair. It will result in a loss of creditor’s confidence in a firm may causes even closure of the firm. Even a very high degree of liquidity is not good for a firm because such a situation represents unnecessarily excessive funds of the firm being tied-up in current assets. Therefore, it is a very important to have proper balance in regards to the liquidity of the firm.
1. CURRENT RATO:
CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILITIES
CURRENT LIABILITIES =3867.42
INTERPRETATION OF CURRENT RATIO:
Current ration is an indicator of the firms liquidity and it ability to pay its current obligations in time when they become due. As a convention the minimum of two to one ratio is referred to as a banker’s rule of thumb. Current ratio of ACC Ltd. is 0.71:1. it is matter of concern. As a manufacturing concern there is more investment in the capital goods but current assets also to be increased accordingly to improve the current ratio. A business with heavy investment in fixed assets may be successful even ration is low.
2. ABSOLUTE QUICK RATIO:= CASH ; BANK+ SHORT TERM SEC./CURRENT LIABILITIES LIQUID ASSETS= 1085.56
QUICK RATIO= 0.28
INTERPRETATION OF ABSOLUTE QUICK RATIO:
Absolute quick ratio is also important tool. It shows the relation of absolute liquid assets with current liabilities. Rule of thumb for this ratio is 1:2. In regards of ACC Ltd. this ration is quite low high that is 0.28:1. Management should give attention in this context.
3. QUICK RATIO:
QUICK RATIO =QUICK ASSETS/CURRENT LIABLITIES
QUICK ASSETS= CURRENT ASSETS-SHORT TERM INVESTMENT-PREPAIED EXP. QUICK ASSETS=2763.03 CRORE.
CURRENT LIABILITIES=3876.42 CRORE.
INTERPRETATION OF QUICK RATIO:
Usually, a high acid test ratio is an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low quick ration represents that the firm’s liquidity position is not good. As a rule of thumb quick ratio of 1:1 is considered satisfactory. But quick ratio of ACC Ltd. is 0.71:1 it is low, company should take necessary steps to improve this.
4. INVENTORY TURNOVER RATIO:
INVENTORY TURNOVER RATIO = COGS OR NET SALES/AVG. STOCK AT COST NET SALES =8258.77 CRORE
AVG. STOCK=855.99 CRORE
INVENTORY TURNOVER RATIO =9.65 TIMES
INTERPRETATION OF INVENTORY TURNOVER RATIO:
Inventory turnover ratio is concerned with the maintenance of level of inventory of finished goods so as to be able to meet the requirements of the business. Level of inventory should neither be too high nor too low. Inventory turnover ration indicates the number of time the stock has been turned over during the period. In the context of ACC Ltd. is manufacturing company the inventory turnover ration is good and shows their good efficiency to manage their inventory.
5. INVENTORY CONVERSION PERIOD = DAYS IN YEAR/INVENTORY TURNOVER =365/9.65
= 37.82 Days
INTERPRETATION OF INVENTORY CONVERSION PERIOD:
This shows the time taken to clear the stock. Stock of the company cleared more than five times in the year. It shows their good management of the stores. This is good as a manufacturing concern. 6. DEBTORS TURNOVER RATIO:
DEBTORS TURNOVER RATION= NET CREDIT ANNUAL SALES OR ANNUAL TOTAL SALES/AVG. TRADE DEBTORS TOTAL SALES=8258.77 CRORE
AVG. DEBTORS=261.66 CRORE
DEBTOR TURNOVER RATIO =31.56 TIMES
INTERPRETATION OF DEBTOR TURNOVER RATIO:
Debtor turnover ration indicates the number of times the debtors are turned over during a year. Debtor’s turnover ratio of ACC LTD. is higher. It shows more efficient management of debtors.
7. AVERAGE COLLECTION PERIOD = NO. OF WORKING DAYS/DEBTORS TURNOVER
=365/31.56 =11.57 DAYS (approx.)
INTERPRETATION OF AVERAGE COLLECTION PERIOD RATIO:
The average collection period ration represent s the average number of days for which a firm has to wait before its receivables are converted into cash. Average collection period of the ACC Ltd. shows their efficiency for debt collection and shows their credits terms ; policy towards debtors.
8. CREDITORS TURNOVER RATIO:
Creditors turnover ratio =NET CREDIT ANNUAL PURCHASE /AVG TRADE CREDITORS Net credit annual purchases: =4059.27 cr
Average trade creditors = 1549.59 cr
Creditors turnover ratio =2.62 times
INTERPRETATION OF CREDITORS TURNOVER RATIO:
Creditor’s turnover ratio shows the relation between credits purchases and average trade creditors. It indicates the number of times; creditors are turned over during higher. In context of ACC creditor turnover ratio shows good management of creditors.
6. AVERAGE PAYMENT PERIOD RATIO: = NO OF DAYS/ CREDITORS TURNOVER RATIO = 365/2.62 =139.31 days
INTERPRETATION OF AVERAGE PAYMENT PERIOD RATIO:
The average payment period ratio represents the average number of days taken by the firm to pay it creditors. The payment period of the company is less it shows that company enjoys the benefit of the discount facile.
ANALYSIS OF LONG TERM FINANCIAL POSITION OR SOLVENCY1
The term solvency refers ton the ability of a concern to meet its long term obligation. The long term indebtedness of a firm includes debentures holders. Financial institution providing medium and long term loans and other creditors selling goods on instalment basis .long terms solvency ratios indicate a firm ability to meet the fixed interest and costs and repayment schedules associated with its long term borrowings. 1. DEBT EQUITY RATIO= OUTSIDER’S FUNDS/SHAREHOLDER’S FUNDS Outsiders funds=523.96cr
Therefore Debt Equity Ratio = 0.08:1
INTERPRETATION OF DEBT EQUITY RATIO:
This ratio calculated to measure the extent to which debt financing has been used in business. Being a manufacturing concern there is more investment in the capital goods. Lower of ratio gives the higher margin of safety. There is no standard norm or rule of thumb regarding this ratio. It depends upon the policy of the company. Their no mach more risk in the companies operation therefore they were rely on the shareholders funds
2. FUNDED DEBT TO TOTAL CAPITALIZATION RATIO=
FUNDED DEBT TO TOTAL CAPITALISATION x 100 = 509.93/6280.73
INTERPRETATION OF FUNDED DEBT TO TOTAL CAPITALIZATION RATIO: This ratio calculated to measure the extent to which debt financing has been used in business. Being a manufacturing concern there is more investment in the capital goods .lower of ratio gives the higher margin of safety .Their is no standard norm or rule of thumb regarding this ratio. It depends on the policy of the company. Their no much more risk in the companies therefore they were rely on the shareholders funds.
3. PROPRIETARY OR EQUITY RATIO=SHARE HOLDERS FUNDS/TOTAL ASSETS X 100 Share holder funds =6280.73 Crores
Total Assets = 5306.64 Crores
PROPEITORY OR EQUITY RATIO=118.36%
INTERPRETATION OF PROPREITORY OR EQUITY RATIO:
As equity ratio represents the relationship of owners fund to total assets. In ACC Ltd. there is high ratio it indicates better is long-term solvency of the company.
FINANCIAL SWOT ANALYSIS
Huge company with an annual cement capacity of over 18 million tones, the company’s operation are spread throughout the country with 17 cement plants,
3 refractory, 12 regional marketing offices, several area offices, and a dedicated band of people from all corners of India. Acquisition by HOLCIM (world leading cement producing industry) had strengthened ACC in much aspect. Cost Competitive
Well Developed Industry with Strong Manufacturing Base
Access to pool of highly trained scientists, both in India and abroad. Strong marketing and Distribution Network.
Wages and salaries of employees given by ACC are good in comparison with others in the Cement Industry.
The current ratio for the year 2010 is 0.71:1 which should be 2:1. The short term liquidity ratio for the year 2010 is .71:1 which should be 1:1. Low Investment in innovative R;D.
Lack of culture of innovation in industry.
High employee turnover rate.
Company is not concentrating on segmentations.
Significant Export Potential.
Increase in demand of cement and it is expected to grow about 9% to 10%. Rapid growth in housing infrastructure and real estate sector and ambitious plan for the developing Special Economic Zone (SEZ), the cement industry is expected to enjoy double digit growth. HOLCIM (World leader in Cement Industry) had acquired 34.61% of equity shares of ACC LIMITED. The group has its headquarters in Switzerland with worldwide operations spread across more than 70 countries. ACC have good prospect of growth under the supervision of HOLCIM Implementation of SAP system in ACC had connected each and every unit to each other and with the head quarter in Mumbai.
Increase in competition in cement industries.
Increase in cost particularly of energy, transport and other inputs. The ministry of coal is supplying 80 % of total requirement of the cement
industry through Fuel Agreements (FSAs). While cement plants may have to procure through other channels. Some state governments are also imposing taxes and duties on these captive power plants. Grasim cement and Jaypee cement both have opened there production unit in Himachal Pradesh Other cement industries are giving opportunity of higher salary to their employees, so there is a possibility of employee turnover.
DATA COLLECTION6 Data Sources:
There are two types of data were taken into consideration i.e. Secondary data and primary data. The secondary data has been used to make the analysis because we have no much sufficient time and resources to collect the primary data. Secondary Data:
Secondary data is that data which is collected for other purpose. This is indirect collection of data from sources containing past or recent past information like annual reports, balance sheet, books, newspapers and magazines etc. Collecting the Information:
For this research methodology, we were collecting information with the help of annual reports, balance sheets and other company’s publications.
Analyse The Information:
In this research methodology the next step is to extract the pertinent finding from the collected data. We tabulated this collected data and develop the means of analyzing the data. There are so many tools for financial analysis but we mainly concentrate on the RATIO Analysis and supportive information taken from the other means i.e. comparative financial statements with its major components viz. common size statement, comparative financial statement.
Limitations of the Study
Except the supreme power, the Almighty, no one is impeccable and prowess enough to accomplish anything without any faults and limitations. A research is no exception. No study is devoid of certain shortcomings. Some problems
encountered in this study are under mentioned: Some officers were too busy to give a sincere response to investigators ; hence their response may not relate to real picture. Manager some time denied disclosing some important financial matters, which can be helpful in this study. The time period given to me for the completion of the project was short in such a short span of time it is difficult to complete any project in detail. Some information related to the study, which had been collected from the company was rounded off because of some influence.
SHORT TERM FINANCIAL POSITION:
The short term financial position of the company is not good enough. Current Assets of the company in the year 2010 is 2763.03 crore where as the Current Liabilities is 3867.42 Crores Current Ratio is 0.71:1. Company needs bit improvement in it so that to make it 2:1. Short term liquidity position is also good as the acid test ratio is 0.71:1. Company needs bit improvement to make it 1:1. Turnover Ratio of the company reflects their good and sound position. Stock turnover over ratio is 9.56times. It is good that they clear their stock more than 5 times in the year. Debtors and creditors turnover ratio also show positive results in their efficiency. LONG TERM FINANCIAL POSTION
Long term financial policy is not as good as it should be. No doubt company adopted very nice policy of financing fixed assets from the long term fixed assets and the long term liabilities. Rest payment is made in cash, thereby leading to reduction of the amount of cash. Debt – equity ratio also gives the same picture. It should be near to one as possible. But it is not than one in every year. Not only but also showing the increasing trends. This is not a good sign. Earning per share is the one of most important factor.
Shareholders are the main stakeholders of the company they judge the companies performance on the basis of earning per share ; dividend declared.
Company is not utilizing its resources up to the maximum
Customer base remains the same
SAP is implemented properly but the employees need more training to use the same Company is not looking for increase in the plant capacity.
Implementation of new policies by Holcim is disturbing the workforce in adapting to the new work-culture. The company is more dependent on outsider’s fund.
Current Ratio is 0.71:1. Company needs bit improvement in it so that to make it 2:1. Long term financial policy is not as good as it should be. No doubt company adopted very nice policy of financing fixed assets from the long term fixed assets and the long term liabilities. Rest payment is made in cash, thereby leading to reduction of the amount of cash. The short term financial position of the company is not good enough. Current Assets of the company in the year 2010 is 2763.03 Crores where as the Current Liabilities is 3867.42 Crores Low Investment in innovative R;D. Company should invest more in R;D. High employee turnover rate. The other cement industries are paying good salaries to employees as compare to ACC LIMITED that is why employees are leaving the company.
Some suggestions that I gave to the company and the result of those suggestions are as follows: I suggested them to increase the promotion of Health and Safety at Work, including the prevention of occupational risks and it is in process. I suggested them to increase the capacity of plant. As it a long term process, the company officials said they have raised that point in the annual board meeting and it is in process. Current Ratio of the company is 0.71:1.So I suggested them to increase that to 2:1 and they are working upon it. Company is not spending much on R; D so I suggested them to increase the same and the company said that they will think to allocate more finance in the budget of the company.
1. Pandey, I.M. “Financial Management”, 3rd edition, New Delhi, Vikas Publication House Pvt. Ltd. P-143to145(Approaches of working capital) 2. Maheshwari, “S.N, Advanced Accounting”, 4th edition Sultan Chand ; Sons Publication, New Delhi, 2004, P.No. (b40-b48)(tools of financial analysis)
3. Gupta Shashi.k,,”Managemenet Accounting”, 5th ed,ition,Kalyani Publishers,New Delhi, P.No 23.1-23.9(working capital management and finance) 4. Donald R. Cooper and Pamela S. Schindler, “Business Research Methodology” Eighth Edition’ Tata McGraw Hill Publishing Company Limited, New Delhi. Chapter 3, Page 82, 86, 87. Chapter 4, Page 101,102 (helped in research design) 5. Kothari C.R., “Research Methodology Methods and Techniques” (Second Edition) New Age International Publishers, Ansari Road, Daryaganj, New Delhi-110002. Chapter 4, Page 55-58. Chapter 6, Page 95,100,111. (Methods of data collection, collection of data, and collection of secondary data” are referred before the data collection”.) 6. ANNUAL REPORT (ACC LTD.) 2010 (balance sheet and P;L account) 7. http://www.acclimited.com/financialreports.
BALANCE SHEET OF ACC LAST 4 YEAR
SOURCE OF FUNDDec 07Dec 08Dec09Dec10
12 mths12 mths12mths12mths
Total Share Capital 187.83 187.88 187.94 187.95
Equity Share Capital 187.83 187.88 187.94 187.95
Share Application Money 0.10 0.00 0.08 – Preference Share Capital 0.00 0.00 0.00 – Reserves3964.784739.855681.926092.78
Revaluation Reserves 0.00 0.00 0.00 0.00 Net worth4152.714927.735869.866280.73
Secured Loans 266.03 450.00 550.00 509.93
Unsecured Loans 40.38 32.03 16.92 14.03
Total Debt 306.41 482.03 566.92 523.93
Dec 07Dec 08Dec 09Dec10 APPLICATION OF FUND12 mths12 mths12mths12mths
Less Accum. Deprication2149.352365.972667.982994.51
Capital Work In Progress 649.191602.862156.211562.80
Investments 844.81 679.081475.651702.67
Inventories 730.86 793.27 778.98 914.98
Sundry Debtors 289.29 310.17 203.70 178.28
Cash and Bank Balance 78.87 87.57 95.64 94.96 Total current Assets1099.021191.011078.321188.22
Loans and Advance 544.31 779.76 516.11 523.94
Total CA, loan ; advance1643.331970.771594.431712.76
Provisions 666.27 963.931150.001652.46
Total Currents Liabilities2657.543209.323113.913746.42
Net Currents Assets -349.60-341.88 -857.75 -993.07
Miscellaneous Expenses 0.00 0.00 0.00 0.00 Total Assets4459.125409.766932.397354.84
PROFIT ; LOSS ACCOUNT OF ACC LAST 4 YEAR
Dec 07Dec 08Dec09Dec10
INCOME12 mths12 mths12mths12mths
Excise Duty 970.321070.21 697.04 846.38
Other Income 369.35 252.84 240.42 356.93
Power ; Fuel Cost 517.561598.961539.651598.67
Employee Cost 352.73 416.32 367.71 461.89
Other Mfd. Exp 344.17 362.90 405.31 474.03
Selling ; Admin Exp1547.301502.651563.321578.29
Misc. Expenses 354.51 270.99 371.51 354.64
Preoperative Exp. C apt. 0.00 0.00 0.00 0.00 Total Expenses4959.925447.025480.925988.18
CASH FLOW OF ACC LAST 4 YEAR
Dec 07Dec 08Dec 09Dec10
12 mths12 mths12mths12mths
Net cash form opt Acti.2004.901707.932397.081950.72
Net cash from Invt. Acti. -824.30-1159.50-1504.94 -802.25 Net cash from Finac. Acti-1057.29 -297.51 -454.58 -636.73 Net cash Ince. Or Decr. 123.31 250.92 437.56 511.74
KEY FINANCIAL RATIOS OF ACC LAST 4 YEAR
Dec 07Dec 08Dec09Dec10
12 mths12 mths12 mths12 mths
Dividend Per Share20.0020.0023.0030.50
Operating EBIDTA / Net Sales(%)29.0026.0033.0023.00
Return on capital Employed (%)42.0040.0049.0025.00
Return on net worth (%)34.6424.6127.0017.00
Current Ratio 0.99 1.00 0.72 0.73
Debts Equity Ratios 0.07 0.10 0.09 0.08
Price Earning Ratio13.74 7.3910.2318.04
Dividend Yeild Ratio(%) 2 4 3 3 Net Worth Per Share(Rs) 221 263 320 345
Dividend Per Shsre20.0020.0023.00 30.50
Basic Earning Per Share59.6685.6064.63 76.75
NET WORKING CAPITAL OF ACC LAST 4 YEAR
Dec 07Dec 08Dec09Dec10
12 mths12 mths12 mths12 mths
Debtors305.83 375.85 273.92 249.40
Inventory741.72 799.34 786.09 925.90
Other Current Assets1186.40 1570.01 1231.77 1587.73
Net Working Capital155.43(120.98)(-935.09)(-1104.39)
ACC SHARE PRICE vis a vis BSE SENSEX JANUARY – DECEMBER 2010
ACC SHARE PRICE ON NSE vis a vis S;P CNF NIFTY JANUARY – DECEMBER 2010
PROFIT AND LOSS A/C FOR THE YEAR ENDED DECEMBER 31ST, 2010
SALE OF PRODUCT AND SERVICES(GROSS) 9099.23 LESS: EXCISE DUTY RECOVERED 840.46 SALE OF PRODUCT AND SERVICES (NET)…………………………………………….. .…. OTHER INCOME…………………………………………………………………………………..
MANUFACTURING AND OTHER EXPENSES 6718.26 DEPRECIATION ; AMORTISATION 427.72 INTEREST 57.93
PROFIT/(LOSS) BEFORE TAXATION AND EXCEPTIONAL ITEMS
PROVISION FOR TAX
(a) CURRENT TAXAX (416.16) (b) TAX ADJUSTMENT OF AN EARLIER YEAR 81.97 (c) DEFFERED TAX (12.17) (d) FRINGE BENEFIT TAX –
PROFIT/(LOSS) AFTER TAX……………………………………………………………………….. Add: SHARE PROFIT OF IN ASSOCIATES
PROFIT/(LOSS) AFTER TAX………………………………………………………………………..
BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR. ……………………………..
PROFIT AVAILABLE FOR APPROPRIATION…………………………………………………… APPROPRIATIONS:
INTERIM DIVIDEND 187.75 PROPOSED DIVIDEND 384.88 DIVIDEND DISTRIBUTION TAX 95.10 GENERAL RESERVE 250.00 DEBENTURE REDEMPTION RESERVE 25.00 PREVIOUS YEAR DIVIDEND DISTRIBUTION TAX (0.93) AMORTISATION RESERVE 0.65
BALANCE CARRIED TO BALANCE SHEET
EARNING PER SHARE
BASIC EARNING PER SHARE Rupees DILUTED EARNING PER SHARE Rupees FACE VALUE PER SHARE
BALANCE SHEET AS AT DECEMBER 31, 2010
COMPARISON OF SALE VOLUME ; GROWTH9
COMPARISON OF NET SALE ; OPERATING EBITDA
COMPARISON OF PROFIT BEFORE TAX ; PROFIT AFTER TAX
COMPARISON OF CAPITAL EMPLOYED ; RETUR ON CAPITAL
COMPARISON NET WORTH ; RETURN ON NET WORTH
COMPARISON OF DIVIDENT PER SHARE
COMPARISON OF NET CASH GENERATED FROM OPERATIONS
COMPARISON OF FIXED ASSETS ; ASSET TURNOVER RATIO
COMPARISON OF EMPLOYEES ; TURNOER PER EMPLOYEE
COMPARISON OF COST AND PROFIT AS A PERCENTAGE OF SALES
STUDY OF CEMENT MARKET THROUGH DEALERS OF ACC
The topic for this project is “Study of Cement Marketing through dealers’ network in various parts of Kolkata”, assigned to me by ACC Cement. The project starts where I have provided a brief introduction where I have discussed the traditional channel that exists in the cement market. Also I have explained the reason as to why I have chosen the particular topic. Then I have gone on to briefly introduce a section on cement. Then I have brought on the aspect of corporate profile, where I have spoken about the history of ACC Cement, its plant capacity and the various technicalities that have gone by in the production. Then I have brought forward the corporate vision, the marketing policy, the HR policy and the career details. In the last part of this section I have brought forward the various properties of cement and the various technicalities that go by in the preparation of the various forms of cement. This part, though technical in nature is still indispensable from my project’s point of view as this is the section where I have been able to learn about certain physical characteristics of my cement. In the Literature Review section I have tried to link the theoretical aspects of my project with what has been taught. Here I have linked various aspects that range from what marketing and research is all about to various forms of distribution that are prevalent. I have also went ahead and discussed various aspects like what are the various forms of attitude and how they are pertinent from the dealer’s point of view. Also the nature of my research has been questionnaire and interviews so I have also mentioned that as a part of my literature review section. Then in the statement of problem section I have discussed the nature of my problem and the various objectives
that were entrusted to me by the organization. All of it has later been dealt with in the analysis section. In the analysis section, I have worked on whatever data I had collected. Here I start by the nature of the cement market in India which is then followed by the distribution pattern that is followed in West Bengal and Jharkhand. Then I have explained the questionnaire and later analyzed the same. Finally I have brought a set of recommendations and conclusions which help in bringing forward the main essence of the work that has been done. Finally in the appendix section, I have submitted the details of the dealers that I had visited with their respective contact details and their stocking details.
The topic for this project is “Study of Cement Marketing through dealers’ network in various parts of Kolkata”. This topic has been assigned to me by ACC Cement under which I am undergoing my summer internship. The main crux of this topic is discussed as follows. The distribution channel of cement industry in the generic sense consists of the company as producer on the top. Then right after the chain we have a Carrying and Freight agent who takes care of the main task of transferring the materials to the dealers and the sub dealers. In cement industry, the material comes in the goods train and they are concerned with the storage and transportation job only. They personally don’t take any further responsibility of the goods. After the Carrying and Freight agents we have set of dealers which is the most important aspect of my project as my research had mainly centered around them. Next the cement is sold either in the whole sale market or the retail market. Both the sales take place with respect to the dealers only. Finally the cement is sold to the end customers either by means of the wholesale or the retail route. The end customers are the one who are in the form of individual customer, promoter and industries. The last bit industries are further classified into three forms namely raw materials and by products, grills and pillars and different form of industries like say the cottage industries. As a intern, my main task will be to meet the dealers and to find out the details about which all cement companies are they dealing in and to what percentage is each of them contributing to the sales of each dealer. When a particular cement company is active for the dealer, my job is
to see whether he is convinced to stock cement of some other companies as well. This will in a way let me know about the viable gap which exists in the market and that the dealers have a perception about a particular brand. Also from ACC’s point of view, monthly cement that they are dealing in will give an idea about the individual capacity of cement that they handle per month; the greater is their capacity to handle further more forms of investment. Cement is the binder that concrete mortars together. This is why it is the most important component when it comes to giving solidarity and durability. On a general note, it is used for making concrete for slabs, foundations beams, sunshades and mortars for brickwork, plastering, flooring and such similar work. Three types of cements are used by the customers for their construction: i. Portland Slag Cement (PSC)
ii. Portland Pozzolana Cement (PPC)
iii. Ordinary Portland Cement (OPC)
From a consumer’s point of view this classification is quite meaningless, as for them cements is nothing more than a binder. A detailed briefing about the same is mentioned later in the introduction section. The current market has the following major brands operating namely A.C.C., Birla Gold, Ambuja, Lafarge, Ultratech, Konark and few prominent mini plants like Durgapur, Bansal, Bengal Super, Pragoti, Bharat Super to name a few. JP, Binani and Rashi Gold are a few entrants in the markets. The Indian economy is one whose growth economy is largely propelled by domestic demand. With this respect, cement industry is one of the sunrise industries – a direct beneficiary of this growth story. The incessant demand for this vital material places it as one of the more important that is inherent to manufacturing process. In this project report, I have tried to prepare a set of data that emerges out of the survey that was conducted with dealers and sub-dealers. From the organizational perspective, the most important is the metric tonnes of the dealers, from which they are able to guess as to what is their handling capacity.
ACC Cement produces 100% blended cement i.e. Ordinary Port Land Cement Portland Pozzolana Cement and4 Portland Slag Cement. The motivation for the
production of blended cement has been primarily with the aim of preserving limestone reserves and environment. PORTLAND POZZOLONA CEMENT (PPC)
Low heat of hydration resulting in resistance to cracking.
Resistance to corrosive water and chemical attacks and thereby longer life to steel/iron structure underneath. High degree of impermeability and workability for the concrete mix. Higher ultimate strength at longer duration.
Higher degree of fitness, resulting in –
Complete chemical reaction
Reduced alkali aggregate reaction as also free lime expansion and thereby resistance to cracking. Lower drying shrinkage and low leaching value.
PPC can be used for any kind of construction, which earlier was the forte of OPC. However due to its special attributes, its use is rather imperative for the following construction works. Hydraulic Structures
Mass concreting works
Masonry Mortars and Plastering
Under aggressive conditions
PORTLAND SLAG CEMENT (PSC)
Avoids premature repairs
Maximizes durability and serviceability
Maximum return on investment
Minimum cost due to nice surface finish ; slimmer constructions Facilitates speed of construction
All types of constructions like residential, high rise and commercial buildings Underground construction like foundation, drain, canals, culvert,
sewer etc. Mass concrete works like dams, roads, roof, bridges etc.
Construction under sulphatic environment conditions
Heavy foundations like machine/pile foundations
PROPERTIES OF CEMENT5
Standard consistency of cement – This is the percentage of water by mass of cement which will make a standard paste, which will permit a plunger having 10 MM dia and 50 mm length to penetrate to a depth 33-35 mm from the top of the mould surface when sink into its own weight. Fineness of cement – Fineness can be defined as a measure of specific surface of cement. Advantages
Finer cement offers a greater surface area for hydration and hence faster development of strength. Smooth finishing work.
It is more susceptible to air set and early deterioration
Responsible for drying shrinkage of concrete
Setting Time – In the initial setting time we have the time elapsed between the moments that the water is added to the cement to the time that the paste starts losing its plasticity. On the other hand, in the final setting time, it is the duration after which the cement loses its plasticity and becomes rigid. During this time the peak temperature is reached and finally the cement starts to harden after the lapse of final setting time. Soundness of Cement – It refers to the volume stability of hardened cement. In particular there should not be any expansion otherwise under restrained conditions cracks may develop. The expansion may take place due to free lime, magnesia and/or calcium sulfate in the cement. Compressive Strength – It is a measure of strength gain of cement mortar cube (mixed as per standard manner and standard materials) at 3,728 days. COMPARISON OF COMPRESSIVE STRENGTH OF CEMENT
Before starting on, it becomes important that we analyze the basics. Marketing mainly concerns with a business discipline that focuses on a firm’s marketing techniques and the firm’s marketing resources and activities. Marketing managers have their roles ranging from providing a holistic view for the entire organization, to study the company in a more detailed manner. 7Philip Kotler and Kevin Lane Keller define marketing management as “the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering, and communicating superior customer value.” Peter Drucker has defined marketing as “because the purpose of business is to create is to create a customer, the business enterprise has two – and only these two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.” On a more specific sense, marketing can be defined as the acquisition, retention and enhancement of business from the customers at a profit to the business. The above talks about the generic nature of the marketing as an activity and how the same can be integrated in the organizational perspective in order to generate the ultimate goal: maximization of shareholders wealth. From this report’s perspective another facet which comes along with marketing is the fact that research also has an exceedingly important role to play. By 8research we mainly mean scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of scientific investigation. The Advanced Learner’s Dictionary of Current English lays down the meaning of research as “a careful investigation or inquiry especially through search for new facts in any branch of knowledge.” Well, the report doesn’t exactly has a scientific nature attached to it, but nevertheless it proposes a finite sense of study that is mainly achieved by ways of a detailed analysis of the prevailing conditions that are existing in the market. The report aims at studying the marketing environment that prevails in the particular region and the details that can be derived out of the same. While working on the project, concepts have been applied keeping in mind the theoretical implication that goes along side with it. However, what is to be noted is the fact that not all form of theory or rather all the facets of a particular proposed logic or
idea might apply entirely to the project. This is the reason why there are certain aspects which are more relevant in comparison with those of another. Nevertheless, there is no intention to undermine the nature of anyone’s observation. Continuing with the research aspect, the nature of research that has been undertaken is descriptive in nature. 9Descriptive research refers to the description of the state of affairs as it exists in the present. The main element that goes under this form of research is the fact that the researcher has no control over the variables that exists and the main job that exists for him is just to report what is happening and what needs to be happening. Steps in Marketing Research10
There are mainly six steps that are involved in the process of marketing research. They are as follows: STEP 1 – Identifying and defining the problem – Our problem needs to be identified with one or two levels of the management. Sometimes we might need further definitions of the problem as there might be several tools for the particular solution. STEP 2 – Developing an approach – Our approach should be developed around a clear set of developed objectives. When we are working on our objectives we are assessing our team’s marketing skills, establishing a budget and then understanding the environment and its influencing factors, developing a model and then formulating a hypothesis. STEP 3 – Research Design – This is arguably the most vital step in marketing research. Based on step 1 and 2 we develop a framework on which this step is apparent. Some also approach the marketing research experts here. This step is most vulnerable to the typical research errors. Here we work on approaches like, incorporating knowledge from secondary information analysis, qualitative research, methodology selection, question measurement ; scale selection, questionnaire design, sample design ; size and determining data analysis to be used. We might use any of the above methods or a combination of few. STEP 4 – Collecting the data – After we have worked on our research design, it is here that we use the finalized questionnaire on the respondents. STEP 5 – Performing data analysis – All the analysis can be done on the basis of the questionnaires that we have prepared. The simple data can be handled easily while the complex set of data requires various market research software. Types of analysis that might be performed are simple frequency distributions, cross
tab analysis, multiple regressions (driver analysis), cluster analysis, factor analysis, perceptual mapping (multidimensional scaling), structural equation modeling and data mining. STEP 6 – Reporting and Presentation – All the critical information that we have collected is presented in front of the decision makers. They take vital decisions based on this research report. From a critical perspective, all the steps that are enlisted have been duly undertaken and care has been taken to ensure that the report is free from any form of human biasness. However forms of externalities like error on part of the respondents or any kind of false information are difficult to both trace and remove, especially since the nature of the report is descriptive. Bias in Marketing Research11
In spite of its widespread application, marketing research has been often been discussed as an imperfect science. There are certain inherit bias that are involved in marketing research. They are as follows. i. Poor Selection Criteria – These refer to the people who are selected for marketing research. If the people who are being questioned don’t fit adequately, then the entire research falls flat. ii. Non-random selection – Bias can come when the survey of population that is selected belongs to only one particular segment of the population. Things get worse if the segment of population doesn’t aims at our target segment. iii. Study Design – Sometimes the questionnaire who asks the question forms it in such a way that it invariably applies to a particular form of answer. The format of the question might be such that it suggests a particular form of answer and this makes the entire process of market survey gets defeated. iv. Analysis – In spite of everything going right, the person who studies the data for his analysis might have certain vested interest in obtaining a particular result. This makes the process biased. In order to avoid this we must use someone who is objective in his approach. As mentioned before, due care has been taken to minimize any form of error whatsoever that might occur during the preparation or working of the project.
Sources of Marketing Information12
We can mainly identify the following sources of marketing information. They are described below. i. Secondary Sources of Information – These are the
information that is collected by persons for purposes other than the solution to the problem at hand. Also generally no research is undertaken without finding out the available secondary sources of information. This is mainly because secondary sources have lower costs and they might solve the problem without the help of primary data. ii. Information from Respondents – Here we might work on the behavior of a person for obtaining information where people’s action is investigated or for that matter even predicted. The information can be either communicated or observed. Information when communicated can be in the form of surveys and can be included from various stakeholders. Information when observed is done such that we are analyzing the behavior of the people. Such information is less error prone than the communicated one. iii. Information from Natural and Controlled Experiments – Natural experiment is one where the investigator intervenes only till required for experimentation. He doesn’t assume any kind of a casual variable. He just observes what happens. In controlled experiments the investigator intervenes beyond the measured purpose. Here he might manipulate at least one assumed casual variable. iv. Simulation – Various factors like expenses, time involved doesn’t allow on-field experimentation. It is here that we construct a model of the operational situation and experiment alongside it. This is called simulation. Simulation can be defines as a set of techniques for manipulating a model of some real world process for the purpose of finding numerical solutions that are useful in the real process that is being modeled. These models are less frequently used in marketing, but conceptual models are constructed for obtaining information on combination of variables.
Of all the methods that are involved in measuring a particular form of marketing research, customer questionnaire is one which is arguably the most popular. Questionnaire are one in which we obtain opinions and perceptions about the organization’s products or services. These methods can however be costly and time consuming. In questionnaires, customers are asked to furnish answers on what they think about the organization’s product or services. Normally organizations ask the respondents to grade the answers on a scale of 1-5 or 1-10 against a set of pre-defined questions. However such methods
don’t provide a solution to the problem as posted by the consumer. The most detailed and useful information is one which is obtained using a mailed-questionnaire method. However, this method is again awkwardly flawed in nature as the respondents have to invest their time in filling the questionnaire. Also people who take the pain in filling a questionnaire are one who is strongly biased towards a particular issue. Thus, in refinement to the mail questionnaire the organization can engage in phone calls with their respondents. The most successful form of research being the questionnaire method, in this project all form of data is collected using this method. All the respondents have been personally interviewed and this creates a personal touch to the task. Attitude14
Kotler has defined attitude as, “attitude is a person’s enduring favorable or unfavorable evaluations, emotional feelings and action tendencies towards some object or idea.” He says that people have attitude towards almost everything in life-clothing, music, lifestyle, and social ways. People try to either move towards it or move against it. Attitudes make people behave in a consistent manner towards similar objects. Also a person’s attitude tends to get static over a period of time. A person’s attitude is said to be linked with other attitudes. Thus a person’s change in attitude requires major adjustments in those of other attitudes. Dealer’s Attitude ; Survey
When we are discussing dealer’s attitude, we can discuss it in the same light as we have defined attitude above Dealer attitude is one of the many other psychological factors – the others being belief, motivation, perception. While talking about dealer’s attitude we are discussing that some customers may be timid while others may be aggressive. One might have a traditional view of life while others might be comparatively modern. These are just some of the factors that influence the dealer and his attitude while forming a particular decision. It is this dealer attitude that is of vital importance while evaluating the aspect of marketing and its inherent applications. A dealer attitude survey is one which helps the organization by means of following Measure customer satisfaction levels
Improve customer retention
Gauge interest in new products and service offerings
Pinpoint areas for improvement
There are mainly 3 stages of this customer attitude survey design. They are, Dealer Attitude Survey Design
Dealer Attitude Survey Administration
Dealer Attitude Survey Analysis
Each of these stages is vital in the process of customer survey. Once the process of customer attitude survey is done, we then move on to identifying the solutions that have come up as a part of our analysis. Importance of Dealer’s Survey16
We can mainly highlight the following important points with respect to the advantages or significance of a dealer’s survey. They are, Dealer’s survey can help developers of products, services or programs gauge the market’s response to new development concepts. They also help in revealing the audience preferences for design, features and benefits. Dealer’s survey can help in evaluating the purchasing attitudes of customers. Dealer’s survey can reveal how the market feels about our competitors’ products and positioning in the marketplace. Customer attitude surveys measures the effectiveness, clarity or emotional impact of a message to an audience. Dealer surveys can give insight into market trends and behaviors. Dealer surveys can communicate what is most important to the dealer in terms of our relationship with them. The research that is carried out in this report is also inherently descriptive in nature. The descriptive nature of the report is important as here the nature of research will involve the questionnaire approach that is me visiting the dealers and finding out the details as and which is necessary from the organizational point of view. In the above section, we have discussed the basic that is the definition that go along with the basic idea of marketing and research. Next we go on to more detailed concepts like distribution channel. ‘A distribution or marketing channel comprises a set of interdependent institutions and agencies involved in the process of making a product or service available for consumption or use.’ In this respect, my main crux of the topic related to the dealers and sub dealers that were involved. I have briefly discussed the distribution network in my introduction of the report. Adding on to it, I was to work on
certain pockets that were mainly in the Kasba region, Kalighat area and the most important Tollygunj market. This is the market where I am to operate and had to work on. ‘Business channel management is the process of designing a set of marketing and distribution arrangements that fulfill the requirement and preferences of targeted market segments and customers, creating value through direct sales forces and logistics system, and constructing offerings for the resellers that build marketplace equity.’ From the organization’s point of view, the dealers are the most important point of connection in the supply chain network. A detailed observation of the same will be later mentioned in the analysis section.
STATEMENT OF THE PROBLEM
My topic for this project is “Study of Cement Marketing through dealers’ network in various parts of Kolkata and Jharkhand”. By means of survey conducted in the market, I am expected to find out the following that in a way act as the objectives which gets derived out of my study. a. The total market volume.
b. The brand wise market share of individual cement brands.
c. Nature of the customers as well as the nature of the dealers. d. Pocket wise market penetration strategy of various brands. e. Percentage of wholesalers and retailers.
Before moving on to the methods that are involved in research, it becomes important that we differentiate between research methods and methodology. Research methods can be understood as all the methods or techniques that are used in conducting a research. They are the methods that the researchers use in performing research operations. Since the objective of the research is to arrive at a particular solution, the available data and the unknown aspects of the problem have to be related to each other to make a solution possible. Research methodology on the other hand refers to a systematic way of solving a particular problem. It refers to not only the research methods but also considers the logic behind the methods that we use in the context of our research study and explain why we are not using others so that the research
results are capable of being evaluated either by the researcher himself or by others.
When working on the methods of data collection we are to understand that there are two types of data namely primary data and secondary data. Primary data are those which are collected afresh and for the first time whereas secondary data is one which has already been collected by someone else and which has already passed through statistical process. The collection of primary data can be done through several methods especially through i. Observation method
ii. Interview method
iii. Through questionnaires
iv. Through schedules
v. Other methods which include warranty cards, distribution audits, pantry audits, consumer panels, using mechanical devices etc.
While working on the research methodology, I will be mainly focusing on the interview method and questionnaire. A detailed explanation about them is given below. Interview Method17
This form of collecting data involves presentation of oral-verbal stimuli and reply in terms of oral-verbal responses. This method is used in two forms namely personal interview and through telephone interview. The personal interview form mainly involves the interviewer involved in a fact to face contact with the other person. The investigation can be either direct personal investigation or indirect oral investigation. The former relates to the interviewer has to collect the information personally from the sources concerned. Indirect oral investigation on the other hand relates to the interviewer cross examining other persons who are supposed to have knowledge about the problem under investigation. Merits of personal interview
More information and can be collected.
The interviewer can overcome the resistance of the respondents by his own skills. Provides greater flexibility.
Personal interview can be obtained easily.
Demerits of personal interview
It is an expensive method.
There is a possibility of bias either form the respondents or from the interviewer himself. People of varied income groups might not be easily available. This method is more time consuming.
The telephone interview method on the other hand involves collecting the information on the telephone itself. It is not a very widely used method. Merits of telephone interview
It is more flexible in comparison to mailing methods.
It is faster.
It is a cheaper method.
Recall is easier as call-backs are easier and economical.
Demerits of telephone interview
Not much time is given for the interviewer to answer.
Surveys are restricted to respondents who have telephone facilities. Extensive geographical surveys are restricted by cost considerations. Possibility of the bias on part of the interviewer is relatively more.
Of all the methods that are involved in measuring a particular form of marketing research, customer questionnaire is one which is arguably the most popular. Questionnaire are one in which we obtain opinions and perceptions about the organization’s products or services. These methods can however be costly and time consuming. In questionnaires, customers are asked to furnish answers on what they think about the organization’s product or services. Normally organizations ask the respondents to grade the answers on a scale of 1-5 or 1-10 against a set of pre-defined questions. However such methods don’t provide a solution to the problem as posted by the consumer. The most detailed and useful information is one which is obtained using a mailed-questionnaire method. However, this method is again awkwardly flawed in nature as the respondents have to invest their time in filling the questionnaire. Also people who take the pain in filling a questionnaire are one who is strongly biased towards a particular issue. In addition to the above discussed primary data sources, I might also be working on secondary data which will be provided by company. The reason why I have chosen the
following as my primary data sources is that for my project, it was important that I regularly interact with the dealers and hence personally avail the critical data which is required for the working of my project. The various details are very vital for the company and this collection of these would have been possible only through personal interaction.
Ethical issues involved in research methodology19
When we are talking about ethicality we are denoting morality and matters which are right and wrong. In the same way when we are talking speak of ethics in context of marketing research activities; we are dealing with the judgment that certain types of research activities are inappropriate. Such questionable activities of individuals for testing a new product, attempting to secure information from individuals who are unwilling to respond, and delving into the privacy of an individual who are unwilling to respond. Thus the issue of ethics is very vital in research methodology. The ethical issues can be classified in two respects – issues with respect to the treatment of respondents and issues relating to treatment of researchers.
Issues relating to the treatment of respondents
There are mainly two issues that are addressed by American Marketing Association (AMA) i. The activity must be research and not have as its real purpose the sale of merchandise to the respondent. ii. If it has been agreed to or promised, the participants’ anonymity must be protected. Tybout and Zaldman have together suggested the following rights which are important for the participants. The respondents should have the freedom to choose whether ro or not to participate in a study. The respondent’s anonymity should be maintained and that he/she should be protected from physical or psychological harm. The respondents must be informed on all aspects of the research. The researchers should try to convince consumers that the research activities will ultimately benefit them with products and services that will be more attuned to their needs. Issues relating to ethical treatment of researchers
There are mainly two issues that are addressed by American Marketing Association (AMA) i. The first of these obligations is that the user shall
not knowingly disseminate conclusions that are inconsistent with or not warranted by the data. The distortion of results not only misleads the audience, but is potentially damaging to the researcher and the firm as well. ii. It is unethical for users to solicit unique designs or concepts not commonly available and then to deliver it to another researcher for execution. Researchers rightly regard these techniques as being proprietary. Another possibility is that the client will utilize the information obtained from proposals and incorporate the researcher’s ideas into a project that will be carried out by his or her own staff. However, one thing to be noted is the fact that this report is devoid of any form of descriptive or hypothesis testing research. Thus there hasn’t been any hypothesis proposed, on the basis of which another set of statement that follows can be accepted or refuted. The nature of the study here is exploratory that is objective .
Cement Industry in India
Cement industry can be considered to be one of the sunrise industries that the country has. Driven by a booming real estate sector, global demand and increased activity in infrastructure development such as state and national highways, the cement industry has witnessed tremendous growth. Production capacity has gone up and top cement companies of the world are vying to enter the Indian market, thereby sparking off spate of mergers and acquisitions. Indian cement industry is currently ranked second in the world. The origins of Indian cement industry can be traced back to 1914 when the first unit was setup at Porbandar with a capacity of 1000 tonnes. Today cement industry comprises of 125 large cement plants and more than 300 mini cement plants that is again increasing on an everyday basis. The Cement Corporation of India, which is a central public sector undertaking has 10 units. There are 10 large cement plants owned by various state governments. Cement industry in India has also made tremendous strides in technological up gradation and assimilation of latest technology. Presently, 93 percent of the total capacity of the industry is based on modern and environment-friendly dry process technology. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially. Indian cement industry has also acquired
technical capability to produce different types of cements like Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFSC), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement etc. Some of the major clusters of cement industry in India are: Satna (Madhya Pradesh), Chandrapur (Maharashtra), Gulbarga (Karnataka), Yerranguntala (Andhra Pradesh), Nalgonda (Andhra Pradesh), Bilaspur (Chattisgarh) and Chandoria (Rajasthan). The cement industry in India has gone over a consolidation phase. Some examples are Gujarat Ambuja taking a stake of 14 per cent in ACC and taking over Rassi and Sri Vishnu Cement. Grasim has also acquired the cement business of L&T, Indian Rayon’s cement division ad Sri Digvijay Cements. Foreign cement companies are also picking up stake in large Indian cement companies. Swiss cement major Holcem has picked up 14.8 per cent of promoter’s stake in Gujrat Ambuja Cements (GACL). Holcem’s acquisition has led to the emergence of two major groups in the Indian cement industry, the Holcem-ACC-Gujrat Ambuja Cements combine and the Aditya Birla Group through Grasim Industries and Ultratech Cement. Lafarge, the French cment major has acquired the cement plants of Raymond and Tisco. Italy based Italcementi has acquired a stake in the K.K. Birla promoted Zuari Industries’ cement plant in Andhra Pradesh, and German cement company Heidelberg Cement has entered into an equal joint venture agreement with S P Lohia Group controlled Iondo-Rama Cement.
Explanation of the Questionnaire
In the start of the questionnaire, first there are general questions that are in the form of name, address and who is the owner of the shop. Next we have the phone no. of the organization. Here both the office and residential no. were sought by, however the respondents normally replied with only the office no. There is a column of ‘person met’, which is done to show that it might not always be such that the owner is available at desk. They might also have a manager concept prevalent. Next we see a column that is probably most important from the organization’s point of view. It contains all the details that are important from ACC Cement’s point of view. It has a detailed bifurcation with respect to the amount that is purchased and sold. In the purchase column, we see whether sales are made directly from the co.
or from someone else. Simply put, it is done to find out whether a particular dealer purchases directly from the co. or from some other that is acts as a sub dealer of sorts. In the quantity sold portion, we have the sales that are what percentage of sales is in the form of wholesale and what is in the form of retail. The security deposit part is mentioned to find out what amount the dealers had to pay in order to get the agency. Also there is a section to find out the interest that the dealer expects out of the security deposit. Rarely has this interest exceeded the rate of interest provided by the banks. Then we have something in the form of credit period that the dealer provides, and finally we have the volume target scheme which mentions whether the co. provides some kind of such scheme or not or rather whether the dealer has availed any of such scheme or not. Then the duration of dealership provides how long has the dealer been in business which is provided to bring forward the experience element of the dealer. The next column which talks about the main dealers in the area is done in order to cross check on the materials handling capacity of the other dealers in the area. Thus this kind of provides a statistical check, without getting into the details. Note that this information proved to be quite helpful as confirming the details of the dealers with other dealers gave away the falsifying information that would have otherwise occurred. Next the questionnaire asks the dealers as to what are the brands that he personally prefers out of a given set of brands that he stocks. This is done with the reason of finding the dealer’s biasness for a particular brand and to what extent. The reason for such biasness is normally because the dealer might be getting more commission from a particular brand. The next question ask whether the dealer wants to take an agency of some brand in the future. This will not only let us know about the popularity of a particular brand, it also lets us know about the gap that exists in the market and how can it be duly taken care of. Next question asks about the fact that who influences the purchase of cement customers. For those who are preparing their own houses and hence are more involved in the raw materials that go in, the ‘mistri’ is very important. On the other hand for people who purchase flats and are less involved, the contractor becomes a more vital reason for purchase. Few of the shopkeepers have also said that they themselves have helped the cement customers decide on the industry. About the question of
mergers in the industry and how it will affect their operations, none of the dealers had any idea and this in a way made the question kind of redundant. The next question asked about the fact that whenever the purchase of cement occurs, what are the various parties that are there as customers. Almost the entire dealers quoted that about 60-90 percent of their parties were the customer themselves while there were quite a handful of parties that said that customers come along with the mason as well and that the contractor himself comes along for the purchase. One reason why most of the dealers said that the customer himself comes along is that the nature of the residences that were going on was surprisingly individual homes instead of the normal high-rise apartments that a capital city like Kolkata and Ranchi is so used to. The next form talks about the various forms of promotion techniques that are possible for the various cement brands. There were many instances when the dealer used to stock certain brands of cements while for the wall hoarding they show only a particular brand. The dealers however didn’t bother much about this as the company representatives themselves later got the wall done in various time periods. Wall painting is an important aspect as the same is the most visible feature of any cement market. Similar importance is given to the sign boards as well. The next aspect talks about the intangibles that are involved with respect to the cement that the dealer is using. Here the availability of cement with regards to an unforeseen demand is important that is during a particular month if the demand for cement exceeds the normal average for the dealer. The next set of options talks about the behaviour of company representatives and how frequently they visit them. Also the accounting system that each company has separately with the dealer is kind of vital from the organizational point of view. Finally I got quite a varied response when it comes to the packaging of materials. The dealers were normally impressed with Lafarge’s packaging while on the other hand they were not so impressed with ACC’s packaging. This was owing to the fact that cement takes up a huge space when it comes to the inventory and if some of it is left in the open, then slightly miscalculation on part of packaging from the company’s side makes a huge difference. This is true especially during the rainy season. Analysis with respect to the set of objectives
The main aspect of the questionnaire that is vital from the organizational point of view has been discussed in the annexure. It mainly consists of the purchase capacity of the individual dealer and the credit period that is involved. It also mentions the full address of the dealer and their contact details. Then there are the details that belong to the credit period of the dealer with the companies involved. The total purchase that is involved gives us an idea about the total market volume for that particular dealer. If we add up the total volume of a particular set of market then we get the total volume for a particular market. The reason why I have not done the same is because of the fact that I was unable to cover all the shops that were there in a particular region. This was owing to a few limitations that had come up while working on the questionnaires. The next objective consists of the brand wise market share that was worked on during the market. Well, each market was dominated by certain individual brands. For example, there was Lafarge that was dominant in the Behala and Thakurpukur region owing to the fact that the C&F of Lafarge was nearby and this made transportation easy. ACC was on the other hand a most dominating player in Kasba, Tollygunj, Jadavpur, Kashipur region. The nature of the customers was in a way a mixed lot. There were elements of customers coming for either construction of their own house or for that matter construction of the flats. In the former the customer involvement is arguably more. The dealers on the other hand were also a healthy mix of both the wholesalers and the retail dealers. The wholesale dealers are one who operates in bulk and from whom the dealers later purchase the materials, for probably further selling. Also the idea of wholesaler also kind of generates from the fact that these lot deal in bulk. It might not necessarily refer to the traditional idea of wholesale that exists in the distribution channel. There is something called as the market penetration strategy that relates to all the brands that have been covered. The penetration strategy that has been concerned with mainly concerns with market where there is some form of gap that has been existing and henceforth is a more or less maturing market. This form of market is one where there is a chance for other cement companies to enter. Well one thing to be noted is the fact that all the markets that I had operated under didn’t have any kind of or rather negligible presence when it comes to ACC Cement. My study is not to be confused with some kind of survey in the way
ACC Cement was operating in the market. It was more of an analysis of the existence of other cements in the market and how ACC Cement can make a foray into the same. These markets are also one that has reasonably matured over a period of time and as such there is intense competition that needs to be crossed before ACC can do the required amount of cross hold. The way in which the same can be achieved is by overcoming the negative points that has been pointed out so well and henceforth creating an unparallel cement company that is inherently devoid of the usual flaws that exists in other cements. Finally, the percentage of wholesalers and retailers can also be derived out of this data that has been provided. It is nothing else but an extension of the earlier data that has been derived. This has been pointed out but again needs to be strengthened that the idea of this survey is to find out the installed capacity that exists with respect to dealers that is they are operating to what level of their capacity and to what extent. CONCLUSIONS AND RECOMMENDATIONS
This project has been prepared keeping in mind the format as prescribed by the Project Guide. While the survey was being conducted, there were quite a no. of issues and observations that had invariably led to certain recommendations, as part of changes that I found were necessary and needed to be looked into. What needs to be noted is that these changes are merely suggestive in nature and I sincerely hope that a few of them could be seriously considered. There was a sense of resentment amongst the cement dealers that they don’t have that much of power in their hands when it comes to making decisions that are in a way slightly strategic in nature. E.g. they need to be consulted when there is a shift in the way the packaging needs are taken care of. The business model of cement industry needs a big overhaul. For instance, the return on investment in the cement industry is as low as Rs. 5 for Rs. 500 that a dealer invests. That is abysmally low and again it would make sense if the same could be taken care of. Lesser amount of investment on part of the investor as a part of the cement model would probably make a bit more sense as compared to the high rate or investment that is currently followed now. The price determination of the cement industry is not something that is completely determined by the owners themselves. There is a huge element of demand supply determinance that is
the price being determined by the interaction of the market forces. This is the prime reason why there has been a huge no of cement shops that are located in or around a particular area, and this makes the competition associated with it kind of extremely cut throat. I had proposed a business model in which the no of shops that are operating in a particular location be brought down. This is done on the basis of say people who don’t deal with ‘x’ no of tonnes of cement are not allowed to work on the same. This will make the dealers market a lot more cartelized, but at the same time one thing to be noted is that since they will start dealing in bulk, they will be able to book higher profits and accordingly be able to make the necessary adjustments that are otherwise so difficult at the sales part. On the part of the company, it is not that much of an issue, as there they are still having their profits guaranteed, no matter what. They can always control the supply side of the model by limiting the supply in case any kind of problem arises. On account of the physical properties, there was a marked difference that was noted in the packaging that was provided by ACC and say Lafarge Concreto. This is owing to the fact that the company is so particular about the packaging that is done in the bulk that they are not much concerned about the cement that is dealt in smaller quantities. There were very few people who had spoken about ACC Cement, but the overall impression about the packaging was satisfying but was not too good. Even though my survey was to centre with the fact that I wasn’t to show any inherent bias towards any particular brand of cement, I made it a point to find out about the performance of ACC Cement. The reason for ACC not doing well is because the profit margin which a dealer gets is very low as compared to any other cement brand and this had led it to losing some of its credibility. A lot of advertising and other form of promotion is necessary in order for ACC to make a mark. The good news is that ACC hasn’t been forgotten and had an excellent reputation. In this way, whatever is done from their side will be taken in a positive direction only. The fact that the real estate and infrastructure market is here to stay makes it extremely promising from the organizational point of view. There is a rising concern over the gradual rise of the mini plant dealers in the state. These manufacturers are the one who don’t follow all the traditional methods that are involved in the manufacturing process – especially when it comes to the extracting process.
Thus on account of the fact that they have discounted a part of the processing stage and hence have not incurred any capital expense, they are able to make considerably higher amount of margins as compared to their other counterpart. In accordance to the same, there is a rising issue that has come up with regards to the issue of quality. Cement is one commodity on whose quality people are not willing to compromise. Still the question of profits is something that has interested a lot of dealers in stocking these cements which are a ready hit in the suburban areas of West Bengal. Cement industry is something that is dependent a lot on other natural resources that are present in the nation. Thus if there could have been ways by which the same could have been controlled then it would have made a significant impact to the way the raw materials was handled. SWOT ANALYSIS
Thus in accordance with all that has been discussed; there is a brief SWOT analysis that has been done for ACC Cement. STRENGTHS
The production capacity utilization is over 90 percent.
Presence of ‘bleakness’ makes it a preferred brand, especially since it carries an important functional attribute. The packaging is well received as compared to many popular counterparts, which makes it kind of preferred. The demand of cement has been excellent in the recent past acknowledging it to be nothing short of a sunrise industry. They are much sought after in the infrastructure and housing sector.
The marketing team of the ACC doesn’t have a very good relationship with their channel partner members. What is needed is that they must be a lot more proactive and responsive from their side. The competitors are much ahead with their promotional activities as compared to ACC that makes things extremely difficult for them. The brand name ACC is perceived to be something great, especially when it comes to Ambuja and Lafarge as their counterparts. But then also what is required is that they create a superior brand perception and further more for brand recall to occur, high sets of advertising is a must. Cement when ordered in small parts turns out to be a low order commodity and hence long transportation adds on to the cost of the commodity, which is again largely market deterministic. The low cost of
return that is involved in the cement market that again makes it highly unattractive, especially for small players. OPPORTUNITY
Cement industry has no signs of slowing down in the near future and this makes it an extremely viable industry. The Indian core industry is clocking excellent growth over the last year, quarter after quarter so that is also a positive sign. The FDI in the infrastructure sector is going to increase in the coming years, again making the cement industry a direct beneficiary. The no. of people who are aspiring to buy houses is on the rise. Plus with the softening of the interest rates from the unusual high that they were in has once again made financing a viable option.
There have been talks of Government walking in to adjust the price of the cement. The prices of coal increasing on a perennial basis and this might again hamper the prospects as coal is an important commodity as a raw material. The small players in the market have more than just been giving the big houses the regular headache. Mini plants are slowly making their presence felt. Brands like ACC have an extremely high percentage of brand loyalty, something that was evident from the survey that was conducted. A huge amount of small players are grabbing a large chunk of lower income cement base.
A Brief Note
This project was done with the intention of finding the nature of the cement market by means of visits to the dealers. However the project has certain inherent limitations as well. Not everyone was willing to talk when I had approached them. That brought the question of conversion rate being extremely low when it comes to the no. of people who were willing to respond. The next aspect was the fact that there was no physical address given to me by the project guide. The entire project was done on the basis of something called as a broad location contour that was mentioned that made things again extremely difficult for me. I had to physically go and search for all the shops that were around and this in a way made things slightly complicated. The nature of the cement shops is something like that of a
small unit, simply owing to the fact that the infrastructure cost that is involved in setting up a shop is at its bare minimum. Often this fact made the spotting of the dealers a bit difficult. A good look at the annexure points out that there are substantial fractions of the people around that are nothing else but just small dealer.
NAME & ADDRESS
PERSON CONCERNED & PHONE NO.
QUANTITY PURCHASE (MT)
DAYS OF CREDIT
Deshapran Cement Agencies.
82 Tollygunj Circular Road. Kol-53
Ph No. (033) 2400-0416
Goswami Cement Suppliers.
34 Tollygunj Circular Road. Kol-53
Ph No.(033) 2400-7479
M/s Shankar Badiya.
S299 BP-Township. Kol-924
Ph. No. 9051012444
M/s Biswas Builders.
3/1B Naskar Para Lane.
Ph. No. 9330065284
Kamal Gachi By-pass more.
Ph. No. 9831157247
M/s Asha Traders.
3, Ramlal Bazaar Road. Kol-78
Ph. No. (033) 2484-5008
77/1B Hazra Road. Kol-29
Ph.No. (033) 2475-0533
M/s Chandani C. Banarjee.
63, Garpar Main road. Kol-78
Chandani C. Banarjee.
Rameshwar Ram Sahu.
Ph. No. 98351-46748
M/s Kumar cement Agencies.
Hinoo Main road.
Ph. No. 98351-12260
M/s Cement Enterprise.
Ph. No. 9934141476
Baba Steel House.
Solanki Chowk. Hatia
Ph. No. 73527-54045
Lowadih chowk. Ranchi-10
Ph. No. 93341-45381
M/s Poddar Enterprise.
Main Road, Ranchi-01
Ph. No. (0651) 2213831
M/s Tirkey Agencies.
Ph. No. 98351-91289
M/s Maha Laxmi Steel Traders.
Prem Chand Jaiswal
Ph. No. 94311-03746
Jharkhand Ghar Nirman Agencies.
Anjali Cement Center,
H.B Road Kokar
Ph. No. (0651)2206262
M/s Sanjay Kumar.
M/s Bharat Sales Corporation
Raj kr. Chand.
Ph. No. 94315-90446
Subhash ch. Agarwal.
QUESTIONNAIRE ON CEMENT MARKET
1 a) Name
b) Name of the dealing person Mr. /Ms.
3. a) Phone No. i) Residential
b) Mobile No.
c) Person met
4. Fill in the blanks with appropriate answers
Name of the company
Quantity purchase (mt)
Quantity selling (mt)
Security Deposit (Rs.)
Interest of Security Deposit (%)
Volume Target Scheme (if any)
Duration of dealership
Directly from co.
5. Who are the main dealers of this area
Name of the dealer
6. When a customer asks for a particular brand do you try selling other brands?
Yes ( )No ( )
If yes, then which are those brands? Why?
7. Have you ever thought of taking dealership of any other company in the future?
Yes ( )No ( )
If yes, then which are those brands? Why?
8. According to you, who influences a cement customer purchase most?
9. What have you got to say about the mergers in the cement industry?
10. What percentage of your cement customers are
Individual customer accompanied by mason
11. Advertising / Sales Promotion (Write poor/ok/good/very good in the appropriate blank) Name of company
12. Service (Write poor/ok/good/very good in the appropriate blank) Company Name
Regular availability of cement
Behaviour of company representatives
Visits by company representatives
13. Any other remarks / Opinions?
Place: …………………………….. …………………………………… (Surveyor’s Signature)