ACC Cement SM Group Project XMBA 24

2013

Strategic Management XMBA- 24 ITM, Vashi

PROJECT CASE STUDY

STRATEGIC MANAGEMENT Guide : Prof. Vikram Parekh XMBA- 24 ITM, Vashi

Submitted by: Lakshmi Khandayat Madhukar Thorat Kumar Kashyap Jha Mayank Mathur 1

Task

: Group Project

Objective

: Prepare a Strategic Management report on a particular Group or company ,Provide complete understanding of the Organization, Its Mission, Vision & Values, various SBUs ,by applying the strategic management models & concepts learned in the subject 1.

Strategic Management Process : Vision , Mission, Goal, Philosophy

2.

Policies of Organization

3.

PESTLE , Industry environment (5 forces model) & Competitor environment

4.

Strategy , Strategy as planned action , its importance ,

5.

Porter’s Value chain analysis

6.

2x2 BCG matrix

7.

To provide our groups suggestions & recommendations

Chosen Company

: ACC Ltd.

2

TABLE OF CONTENTS

1.

Executive Summary

2.

Brief History of ACC

3.

ACC - Company Overview

4.

Overview of the Indian cement industry

5.

Market Analysis /Outlook

6.

PESTLE- Cement Industry Analysis

7.

ACC Products - Types of Cement

8.

Levels of strategic Management at ACC

9.

Mission , Vision , Values

10.

Core Competency of ACC

11.

Structure of ACC Cements

12.

SWOT Analysis

13.

Competitor Analysis-Porter’s 5 Forces Model

14.

BCG Analysis

15.

Strategies

16.

Analysis of Value Chain

17.

Recommendations & Conclusion

18.

Reference

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Executive Summary

The Associated Cement Companies Limited (ACC) is an Indian company in the cement manufacturing business with Its registered office called Cement House , located on Maharishi Karve Road, Mumbai. It is a blue chip company. The stock price of this company contributes in calculating BSE Sensex. ACC's operations are spread throughout the country with 16 modern cement factories, more than 40 Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a workforce of about 10,000 persons and a countrywide distribution network of over 9,000 dealers. Since inception in 1936, the company has been a trendsetter and important benchmark for the cement industry in many areas of cement and concrete technology. ACC has a unique track record of innovative research, product development and specialized consultancy services. The company's various manufacturing units are backed by a central technology support services centre - the only one of its kind in the Indian cement industry. ACC has rich experience in mining, being the largest user of limestone. As the largest cement producer in India, it is one of the biggest customers of the domestic coal industry, of Indian Railways and a considerable user of the country’s road transport network services for inward and outward movement of materials and products. Among the first companies in India to include commitment to environmental protection as one of its corporate objectives, the company installed sophisticated pollution control equipment as far back as 1966, long before pollution control laws came into existence. Today each of its cement plants has state-of-the art pollution control equipment and devices. ACC has won several prizes and accolades for environment friendly measures taken at its plants and mines. The company has also been felicitated for its acts of good corporate citizenship. ACC plants, mines and townships visibly demonstrate successful endeavors in quarry rehabilitation, water management techniques and ‘greening’ activities. The company actively promotes the use of alternative fuels and raw materials and offers total solutions for waste management including testing, suggestions for reuse, recycling and co-processing. The management control of the company was taken over by Swiss cement major Holcim in 2004. On 1 September 2006 the name of The Associated Cement Companies Limited was changed to ACC Limited. The company is the only cement company to get the Superbrand status in India. The objective of this write-up is to prepare a Strategic Management report on a particular Group or company , here chosen as ACC Ltd by our group & provide complete understanding of the Organization, Its Mission, Vision & Values, various SBUs ,by applying the strategic management models & concepts learned in the subject .

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Brief History

F. E. Dinshaw – the founder of ACC

ACC CEMENT has an interesting story - one that inspired a book. ACC was formed in 1936 when ten existing cement companies came together under one umbrella in a historic merger - the country's first notable merger at a time when the term mergers and acquisitions was not even coined. The history of ACC spans a wide canvas beginning with the lonely struggle of its pioneer F E Dinshaw and other Indian entrepreneurs like him who founded the Indian cement industry. Their efforts to face competition for survival in a small but aggressive market mingled with the stirring of a country's nationalist pride that touched all walks of life including trade, commerce and business.

The first success came in a move towards cooperation in the country's young cement industry and culminated in the historic merger of ten companies to form a cement giant. These companies belonged to four prominent business groups - Tatas, Khataus, Killick Nixon and F E Dinshaw groups. ACC was formally established on August 1, 1936. Sadly, F E Dinshaw, the man recognized as the founder of ACC, died in January 1936; just months before his dream could be realized.

ACC stands out as the most unique and successful merger in Indian business history, in which the distinct identities of the constituent companies were melded into a new cohesive organization - one that has survived and retained its position of leadership in industry. In a sense, the formation of ACC represents a quest for the synergy of good business practices, values and shared objectives. The use of the plural in ACC's original name, The Associated Cement Companies Limited, itself indicated the company's origins from a merger. Many years later, some stockbrokers in the country's leading stock exchanges continued to refer to this company simply as 'The Merger'.

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Overview of the Indian cement industry Large Cement Plants -

Cement plants: 183 Installed capacity: 234.3 mtpa Cement production: 168.3 mtpa

Mini & White Cement Plants -

Cement plants: 365 Installed capacity: 11.1 mtpa Cement production: 60mtpa

Key Industry statistics & Dynamics • • •

India is the world’s second largest cement producer after China Total turnover of the Indian cement industryy is estimated at USD25 billion in FY11 Major players contributed about 97 per cent to the installed capacity during FY11

Trend in GDP and growth in cement demand - Although India is one of the largest cement markets in the world, per capita consumption of cement is just around 156 kg, which is low in comparison to the global average consumption of about 356 kg - Demand for cement in India is cyclical barring short- term disruptions, it grows largely in tandem with economic growth

• •

The production of cement increased at a CAGR of 10.0 per cent over F Y07-11 Production is expected to reach 247 MT in F Y12 as per the 11th Five Year

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Market Analysis ACC, with an installed capacity of 22.63 MTPA, enjoys an 11% market share in India, which with its total installed capacity of 207 MTPA, is the second largest cement producing country in the world. ACC’s nationwide presence and brand image ensures a competitive edge and helps it to withstand regional fluctuations in prices and also to adapt its distribution to market place needs. Its key competitors are as follows:

Company

Capacity (in MTPA)

ACC

22.63

Ambuja Cements

18.50

Binani Cements

6.50

Birla Corporation Limited

5.80

CCI

3.85

Century Textiles

6.80

Grasim

16.75

India Cements

8.94

Jaypee Group

13.50

Kesoram Industries

5.60

Lafarge

5.50

Madras Cements

10.00

Ultratech Cement

18.20

Zuari Cement

3.50

Note: Only companies with cement production capacity >3 MTPA included here. There are likely to be other competitors not included here.

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PESTLE Analysis of Cement Industry Political •

The price of cement is primarily controlled by following rates which are predominantly control by government: •

Coal rates

•

Power tariffs

•

Freight (Railway and road tariffs)

•

Royalty and cess on limestone

•

Taxes (Excise duty and VAT)

•

Govt. of India plans to increase its investment in infrastructure to US $ 1 trillion in the Twelfth Five Year Plan (2012-17) will lead to increase in the demand of cement

•

Infrastructure projects such as the dedicated freight corridors, upgraded new airports and ports are expected to enhance the scale of economic activity, leading to a substantial increase in cement demand furthermore

•

Most state governments, in order to attract investments in their respective states, offer fiscal incentives in the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff for 5 years, while Gujarat offers exemption from electric duty

•

During election period, cement demand increases as compare to normal period. So, during 2013-2014 state assembly elections cement demand will be higher

•

Govt. programs like NREGS, Indira Awaas Yojana, rising minimum support prices enhance rural income which boosts cement demand in rural areas

•

NHAI plans to award road projects worth of Rs 57000 crores in FY 2012

•

The total Government levies and taxes, which include Royalty on Limestone, Royalty on Coal, Electricity Duty, VAT/Sales Tax etc., on cement constitute about 60% or more of the ex-factory price of cement. The levies and taxes on cement in India are far higher compared to those in countries of the Asia Pacific Region

•

Strict law & order conditions and political will of the leader of any state enhance the confidence of people living in the states as well as corporate to invest in that particular state

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Economic •

Cement demand is proportional to growth in GDP of the nation. Average cement demand to GDP ratio was 1.2 during the last decade. The cement industry is growing at the rate of 8 to 10 % CAGR following the growth rate of GDP

•

The per capita consumption of cement in India (about 155 kg) is much less compared to average per capita consumption (about 380 kg) for the rest of the world. Hence Indian cement industry has large potential to grow

•

Any instability in the world economy like political instability in Middle East countries can lead to huge increase in the crude oil prices and thus increasing the cost of fuel, power and freight considerably

•

Formal approval granted to many SEZ proposals

•

Growth in tourism sector fuelling the increase in the construction of hotels in the country

•

Upcoming industrial clusters & infrastructure development in emerging tier-II and tier III cities

•

The growing population and increased urbanization in the country

•

Increasing per capita income leading to increase in housing demand to meet the current shortages and future growth

Social •

The cement manufacturing units- with a slight regional imbalance - is spread all over India

•

Indian consumers prefer buying branded cement like ACC , ULTRATECH, JAYPEE CEMENT, LAFARGE CEMENT etc. It has been seen in the past, as well, that mini cement plants with low brand value and image are not able to survive against the cement giants

•

Looking at the growth rate of Indian cement industry and capacity expansions, it is expected that cement industry will create good number of jobs in the next 4-5 years

Technological •

It can be seen that the wet process is rapidly replaced by the dry process. It reflects increasing needs for energy conservation and suggests what the true cement plant of the future should be

•

Technological development in the design of cement kiln and furnace can promote use of cement kiln for utilization of wastes like tires etc. which can help in reducing the usage of costly fuels like coke, coal etc. thereby reducing the manufacturing cost of cement

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•

Enhanced technology will be needed to substitute coal with low cost and eco friendly alternative fuels like fuel from bio-mass wastes including fruit of Jatropha Carcus, Pongamia and Algae

•

Effectively finding the location of limestone reserves and efficient mining practices can lead to reduction in per tonne cost of limestone

Legal • •

Land acquisitions for limestone mining land, setting up of integrated units and grinding units requires proper legal procedure

Environmental •

In India, the permissible stack dust emissions from various sources for existing cement plants is 150 mg/Nm3 and 100 mg/Nm3 for plants located in critically polluted areas. However, the limit for new plants in our country is 50 mg/Nm3 which is at par with some of the developed countries

•

Since the cement production is an energy intensive process with very high emission, it has to use state of art equipment to have energy efficiency and meet environmental standards

•

Under PAT1 scheme, each particular unit (Designated Consumers (DC)) will be given Specific Energy Consumption (SEC) target to meet over a period of three years. Any additional saving will qualify for earning Energy Saving Certificates (ESCerts), which could be traded, with DC's who could be short of targets. This trade can be made bilaterally or through exchange.

1

Perform, Achieve & Trade (PAT) scheme is promoted under the National Mission on Enhanced Energy Efficiency (NMEE) which will help energy intensive large industries units in India to enhance cost effectiveness in terms of energy efficiency.

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ACC Products The company manufactures Portland cement for general construction while its blended products, acknowledged for outstanding durability, include fly ash and slag-based cements. Both these varieties of cement offer high quality and special properties that defy the harshest environments. In addition to conserving valuable mineral resources and reducing waste, these blended cements also help cut down the emission of carbon dioxide and assist in checking global warming. ACC is sensitive to consumer needs. When the company realised that large construction activities would require large amounts of cement it set up the country’s first facility for distribution of cement in bulk, as far back as 1956. To meet the needs of other consumers it introduced cement in small 25 kilogram bags as also jumbo bags of one metric tonne. Today, of course, mechanized mega construction projects receive cement from ACC delivered in bulk tankers – a welcome change from the conventional cement bag. ACC was also the first company in India to introduce Ready Mix Concrete on a commercial basis. A transit concrete mixer is now a familiar sight in India’s major cities. Ready Mix Concrete and Bulk Cement have enabled the construction industry to introduce sophisticated practices for the speedy completion of large infrastructure projects ACC manufactures the following types of cement, in addition to which, it provides Bulk Cement

• Ordinary Portland Cements 43 Grade Cement (OPC 43 Grade) ACC Cement is the most commonly used cement in all constructions including plain and reinforced cement concrete, brick and stone masonry, floors and plastering. It is also used in the finishing of all types of buildings, bridges, culverts, roads, water retaining structures, etc. What is more, it surpasses BIS Specifications (IS 8112-1989 for 43 grade OPC) on compressive strength levels. ACC Cement is marketed in specially designed 50 kg bags.

53 Grade Cement This is an Ordinary Portland Cement which surpasses the requirements of IS: 12269-53 Grade. It is produced from high quality clinker ground with high purity gypsum. ACC 53 Grade OPC provides high strength and durability to structures because of its optimum particle size distribution, superior crystalline structure and balanced phase composition. It is available in specially designed 50-kg bags.

•

Blended Cements

Fly-ash based Portland Pozzolana Cement This is special blended cement, produced by inter-grinding higher strength Ordinary Portland Cement clinker with high quality processed fly ash - based on norms set by the company's R&D division. This unique, value-

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added product has hydraulic binding properties not found in ordinary cements. It is available in specially designed 50-kg bags.

The advantages of using ACC Fly-ash based PPC In concrete made from ordinary cements, moisture reacts with calcium hydroxide in concrete to form calcium bicarbonate, which leaches out of the concrete, leaving pores that reduce its strength. ACC Fly-ash based PPC has ingredients which react with calcium hydroxide to form CSH gel, to provide additional strength, which actually makes the concrete grow in strength over the years. It also produces less heat of hydration and offers greater resistance to the attack of aggressive waters than normal Portland cement.

Portland Slag Cement This is slag-based blended cement that imparts strength and durability to all structures. It is manufactured by blending and inter-grinding OPC clinker and granulated slag in suitable proportions as per our norms of consistent quality. PSC has many superior performance characteristics which give it certain extra advantages when compared to Ordinary Portland Cement It is available in specially designed 50-kg bags.

Specialty about ACC PSC Compared to OPC, ACC PSC imparts some important additional advantages • • • • • • • •

Reduction in free lime leaching. Ultimate higher strength. Improved workability reduced bleeding as well as segregation and corrosion. Denser, less permeable concrete and mortar. Better resistance to sulphates, chlorides, and CO2 and alkali-aggregates reaction. Less heat, reduced plasticity and drying shrinkage. Increased static modulus of elasticity. Increased serviceability with less deflection of members and micro cracks and reduced cost of construction and maintenance.

All these factors make for a strong, durable, and longer lasting construction. ACC PSC benefits the structure, protects the environment by reducing CO2 emissions and helps conserve energy. This is why it is often referred to as eco-friendly cement.

Bulk Cement Yet another first in ACC’s seven-decade history of cement in India has been the introduction of Bulk Cement, an alternative to bagged cement, which is of particular advantage to large consumers of cement. Internationally, the trend is to move cement more and more in loose form rather than bagged. In fact, over 90 percent cement in the USA, and other European countries is transported and sold in bulk, unlike in India, where only one percent is transported in bulk.

Advantages of using ACC Bulk • Assured quality • No handling from the factory to usage site, therefore exact weight

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• Tamper proof delivery, therefore no adulteration possible • Immediate delivery, therefore no need to stock inventory • Order only when site is ready to use, so money is not locked up

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Levels Of Strategic Management

Board Of Directors 1.Corporate Level Management: Mr N. S. Sekhsaria Chairman Mr Paul Hugentobler Deputy Chairman Mr Kuldip K Kaura Chief Executive Officer & Managing Director

2.Business / Group Level Management: Mr S M Palia Mr Bernard Fontana Mr M L Narula Mr Shailesh Haribhakti Mr Aidan Lynam Mr Sushil Kumar Roongta Mr Ashwin Dani Mr Farrokh K. Kavarana

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Mission :

Leadership – Maintain relationship of the Indian cement industry throughout the continuous modernization and expansion of its manufacturing facilities and activities and through 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 industry. Quality- Maintain high quality of our products and services and ensure its supply their supply at fair prices. Equity- Promote and maintain fair industrial relations and an environment for the effective involvement, welfare, and development of staff at all levels.

Pioneering- Promote research and development efforts in the areas of product development and energy , and fuel conservation and to innovate and optimize productivity.

Responsibility- Fulfill ACCs obligations to society, specifically in areas of integrated rural development and in and in safeguarding the environment and natural ecological balance

1. Vision

2. Objectives And Goals : “The company wants to capitalize on the synergies seeing the big picture. The company would visualize a culture with vim & vitality for occupying a vantage position in the best cement companies across the globe” ACC believes that being a passive onlooker and keep waiting for life to happen something is not the right way to achieve success. Success comes through innovation and innovation can happen only to those who are drawn by the unknown and driven by the magnitude of challenge. The performance as a cement industry in the country has prompted everyone to pronounce its worthiness .

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4.Strategies. • • • • • •

High on quality, customer value and customer care Branding Advertising Other promotional activities Packages Retention marketing

5.Values : ACCs values are fundamental to its success. They are the foundation of the company, define who they are and set them apart from the competition. They underlie ACCs vision of the future, its business strategies and its decisions, actions and behaviors. They live by them. They endure .

Core values OF ACC CEMENT: Empathy : Empathy begins with listening ... paying close attention to the world around us , understanding, appreciating and meeting the needs of those ACC serves , including consumers, retail customers, shareholders and each other as employees.

Originality : Being Authentic and Innovative and Integrity. These values are linked. As we look at ACCs history, we see a story of how its core values work together and are the source of its success

Core Competencies : Today the core competence of ACC Limited lies in its ability to synthesize, integrate and harmonize its diverse world-class engineering, procurement, manufacturing and distribution skills to meet the expectation of their customers. This is made possible through a world class vendor base and quality technological alliances, excellent IT infrastructure (SAP R/3), modern manufacturing facilities, TQM and TPM as a guiding philosophy

ACC Limited has high efficiency state-of –art pollution control equipments and Devices . Each of its manufacturing units has a separate environment section managed by a qualified environmental engineer and supporting staff. Strategic Initiatives: Linking business with Vision Social Commitments The ACC Limited is one of the few companies in India which believes in giving back to society and mother earth. In recent years the following awards measure the contributions of ACC Limited towards society are:

-

Good Corporate Citizen Award 2005-06 by Bombay Chamber of Commerce & Industry presented to ACC in September 2006 “in recognition of its corporate achievements and ongoing endeavors in improving the quality of life of the community”.

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-

First in Small Savings Activities: ACC Lakheri was recognized by Government of Rajasthan in June 2006 for promoting small savings among employees and local community through promotion drives and opening recurring deposit bank accounts. This is the fourth time the plant has received the award in the state. - Global Challenger to World’s Leading Companies: ACC named in S&P Global Challengers class of 2007, the world’s leading index provider, in a listing of 300 mid-size companies expected to emerge as challengers to the world’s leading blue-chip companies.

- Golden Peacock Eco-Innovation Award 2008 awarded to ACC’s AFR Business by the award Jury, under the Chairmanship of Justice P N Bhagwati, former Chief Justice of India and Member, UN Human Rights Commission.

Structure of ACC Cement The cement plants of ACC are located in various regions of the country in a number of states. The gadgets and equipments are of high standards and comply with the international standards. Presently, there are around 12 cement plants of ACC which cater to the different market segments of the country. The cement plants work in coordination with each other and also independently to increase the share in the market. All the ACC Cement Plants use the cutting edge technologies and services which in turn produce high quality cement brands. Set up in the year 1936, ACC has always worked dedicatedly to produce some of the best brands of cement and its business strategy is based on providing the best of products to the changing consumer market in the country and the world. The following table provides a general idea of the ACC Plants.

Divisional Structure ACC Cement Plants across India Corporate Office : Mumbai Maharashtra Regional Offices : • •

•

Eastern Region-Kolkata Northern Region – New Delhi South & West Region – Pune

Name of the Company

Location

State

Process Used

ACC Ltd.

Gagal

Himachal Pradesh

Dry

ACC Ltd. (G)

Tikaria

Uttar Pradesh

Grinding Unit

ACC Ltd.

Lakheri

Rajasthan

Dry

ACC Ltd.

Kymore

Madhya Pradesh

Dry

ACC Ltd.

Chaibasa

Jharkhand

Chaibasa

ACC Ltd.

Sindri

Jharkhand

Grinding Unit

ACC Ltd.

Jamul

Chhattisgarh

Dry and Semi-Dry

ACC Ltd.

Chanda

Maharashtra

Dry

ACC Ltd.

Wadi

Karnataka

Dry

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ACC Ltd. - New

Wadi

Karnataka

Dry

ACC Ltd.

Macherial

Andhra Pradesh

Grinding Unit

ACC Ltd.

Madukkarai

Tamil Nadu

Semi-Dry

Strategic Management Process “Strategy is a pattern in a series of Decisions or Actions ” Henry Mintzberg (1994)

Strategic Formulation 1. Framing Mission & Objectives Mission : ACC Ltd. drives their mission statements from a particular set of tasks . They are called upon to perform in the light of their individual, national or global priorities Transforming Indian Cement industry into a Globally strong and competitive industry.

Objectives: ACC Limited is India’s foremost manufacturer of cement with a countrywide network of factories and marketing offices. Established in 1936, ACC has been a pioneer and trend-setter in cement and concrete technology. ACC’s brand name is synonymous with cement and enjoys a high level of equity in the Indian market. Among the first companies in India to include commitment to environment protection as a corporate objective, ACC has won several prizes and accolades for environment friendly measures taken at its plants and mines. The company has also been felicitated for its acts of good corporate citizenship.

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The ACC Board comprises executive, non-executive, and nominee directors. This group is responsible for determining the objectives and broad policies of the Company - consistent with the primary objective of enhancing long-term shareholder value. The Board meets once a month.

2.

Analysis Of Internal Environment

SWOT Analysis of ACC Cements SWOT Analysis explores the relationship between the environmental influences and the strategic capabilities of an organization compared to its competitors. The importance of SWOT is revealed by the value of the strategies it generates.

STRENGTHS. · It is having a good image and brand loyalty among consumers. · Service is good · Perceived to be of very superior quality cement when compared to others · Selling from the very first day the establishment came in to being & sells easily · They have same price prevailing for wholesale at dealers/stockiest / retailers end.

WEAKNESS. · The competitors are doing much promotional activity rather than ACC Limited so it is facing more problems in selling of product in the market. · Lack of awareness program for consumers.

OPPORTUNITY. · Rapid growth is taking place in North East , Bihar and Madhya Pradesh (Central India ). People are opting for more stable structures and intensive use of cement is taking place, even government is spending heavily on infrastructure projects. Thus, this is the right time to fully tap these markets. · As Indian core industry is also growing at rate of nearly 8-10% per annum, it is having a good future. · Foreign direct investment in infrastructure sector is going to increase in coming years, which will increase the demand of cement. · Roads are undergoing through a transformation process through which the traditional method of road building is being replaced by modern concrete roads.(Golden Quadrilateral WORLD BANK assisted project connecting the nation through a network of roads . )

THREATS: .Large number of players in cement industry makes it more competitive for ACC to carefully price its product and at the same time satisfy its dealers and customers. ·Players such as Ultratech , Jaypee Cement , Prism Cement, and Birla Samrat are eating up considerable market share.

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·Due to India’s exponential growth many new international cement companies are expected in coming years which will bring a tide of change and can start price war. ·The emergence of small players in this market may increase the competition and start the malpractices, and heavy discounts to retailers. They can also influence many retailers by giving better profit margin, and other benefits.

3)Analysis of External Environment · As Indian core industry is also growing at rate of nearly 8-10% per annum, it has a good future. · Foreign direct investment in infrastructure sector going to increase in coming years, which will increase the demand of cement. · Roads are undergoing a transformation process through which the traditional method of road building will be replaced by modern concrete roads.

4) Gap Analysis:- As the main aim is to satisfy the customer demand so it should see that the gap between the customer and organization is properly built up. 5) Framing Alternative strategy:-After making the Gap and SWOT analysis the company should accomplish the objective of the firm. 6) Choosing the strategy:- It follows focus strategy as its main aim is to go world wide.

II)

Strategic Evaluation :-

1) Formulation of Plans, Programmes & Projects :- A Group Head or functional expert, overseeing a number of businesses, profit centers or operating units, most likely faces tough challenges. It is hard to add value and it’s easy to make things worse. Group Level Strategy is a unique opportunity for them to rethink about the given role in creating value.

2) Project Implementation: - ACC has a unique track record of innovative research, product development and specialized consultancy services. With more than seven decades of rich experience in prospecting for raw materials, mining, setting up and managing cement plants of different sizes, technologies and processes. They are proficient in managing captive thermal power plants and now also have a few power plants based on wind energy. Their large team of talented scientists, engineers and technocrats are experienced in meeting the needs of the cement industry both in India and in many other countries. In particular they have a successful track record in modernizing old technology based cement plants to improve their operational economy and also in the design & engineering of new technology based cement plants.

3) Procedural Implementation: - The cement plants of ACC Ltd are located in various regions of the country in a number of states. The gadgets and equipments are of high standards and comply with the international standards. Presently, there are around 12 cement plants of ACC Ltd which cater to the different market

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segments of the country. The cement plants work in coordination with each other and also independently to increase the share in the market. All the ACC Ltd. Cement Plants use the cutting edge technologies and services which in turn produce high quality cement brands. Set up in the year 1936, ACC has always worked dedicatedly to produce some of the best brands of cement and its business strategy is based on providing the best of products to the changing consumer market in the country and the world. The following table provides a general idea of the ACC Ltd. Cement Plants

4) Resource Allocation :- All the ACC Ltd. Cement Plants use the cutting edge technologies and services which in turn produce high quality cement brands. Set up in the year 1936, ACC has always worked dedicatedly to produce some of the best brands of cement and its business strategy is based on providing the best of products to the changing consumer market in the country and the world.

5)Structural Implementation:- The cement plants of ACC Ltd are located in various regions of the country in a number of states. The gadgets and equipments are of high standards and comply with the international standards. Presently, there are around 12 cement plants of ACC Ltd which cater to the different market segments of the country. The cement plants work in coordination with each other and also independently to increase the share in the market.

6) Functional Implementation: - The high quality cement that is manufactured and exported by ACC Ltd is produced in the ACC Ltd. Cement Plants. ACC Ltd is one of the front runners in the cement industry in India and produces some of the best quality cement in the country. It has a significant market share in the segments of housing, real estate, infrastructure and other development projects. With more and more developmental projects coming up, the profit and the market share of the company is expected to rise at a considerable rate.

7) Behavioral Implementation:-The reaction of the employee and customer can be implemented i.e. either positive or negative. depends upon the projects whether it was customer oriented or company related.

Competitors Analysis -Porter’s 5 Forces Model Supply

The demand-supply situation is tightly balanced with the latter being marginally higher than the former.

Demand

Housing sector acts as the principal growth driver for cement. However, in recent times, industrial and infrastructure sector have also emerged as demand drivers for cement.

Barriers to entry

High capital costs and long gestation periods, high capacity. Access to limestone reserves (principal raw material for the manufacture of cement) also acts as a significant entry barrier.

Bargaining power Licensing of coal and limestone reserves, supply of power from the state grid and of suppliers availability of railways for transport are all controlled by a single entity, which is the government. However, nowadays producers are relying more on captive power, but the shortage of coal and volatile fuel prices remain a concern.

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Bargaining power Cement is a commodity business .The industries and government make bulk purchases. of customers So, they bargain and the value of the segment is less compared to individual customers whose bargaining power is less.

Competition

Due to large number of players in the industry and very little brand differentiation to speak of, the competition is intense with players resorting to expanding reach and achieving pan India presence Threat of Substitutes – Limited Only bitumen in road, and engineering plastics in building offer some element of competition, Otherwise no close competition exists

Bargaining Power of Suppliers Very High Monopolistic control of external cost element (coal, power, taxes transportation results in high bargaining power with the government

Inter Firm Rivalry Intense Large number of players, intermittent overcapacity; marginal product differentiation; high storage costs; and, high exit barrier in form of significant capital investment has led to stiff competition in the industry.

Bargaining Power of Buyers Limited The individual house owners do not make bulk purchase. So, have less bargaining power.

Threat of New EntrantsLimited High capital investment, broad distribution network and oversupplied market deter new entrants. However, technology and manpower are easily available.

Porter’s 5 Forces Model

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BCG Matrix OF ACC CEMENT

In The above matrix , ACC falls in the quadrant of “ CASH COW” with respect to the market leader. The circle size represents the absolute market share (11.16%) of ACC in the cement industry.

Value Chain Analysis

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The Value Chain of ACC Limited Firm Infras tructure : Captive Power Plants, Ex port of Power to SEB, High Effic iency Kilns

Support Activities

Human Resource Management: : Freedom to ac hieve, enriching skills & enhancing ex periments , Fair compensation, ESOS Tec hnology Development: R & D activities for new products , c onservation of res ources, recyc ling of was tes , reduction in emis sions & improv ed performance of concrete

M a

Procurement: Purc hasing Proc edures, Centralized procurement for imported items , local purchase of fas t mov ing items, Purc has e of Raw Materials

Inbound Logistics: Efficient Material Handling Systems Order Proc essing Systems Inventory Control Management of Inventories

Operations : Manufacturing Processes Mining Crushing R.M . Grinding Blending Pyro proc essing Grinding and Pac king

Outbound Logistics : Distribution Channel Sales & Distribution Procedures Evaluation of Channel Distribution Ware Houses

Marketing & Sales: Customer Satisfaction Market Planning Consumer Behavior Pric ing Polic y Promotion Mix Adv ertisement

After-Sales Servic e: Cus tomer Support Departments Complaint redressal forums Seminars Construc tion guidelines Quality Exhibitions Facility to drivers

r g i n

Value What buyers are willing to pay

Primary Activities

In ACC, value is being added in all the stages of primary activities and support activities. Comparing with the value chain of competitors, ACC has clearly got an edge over the competitors and hence the customers are willing to pay more for the products of ACC products and ACC holds the leadership position in Indian Cement Companies. Analysis Of Company Value Chain Measures For Cost Reduction Used at ACC Ltd. For Inbound Logistics: 1. Use of imported coal 2. Continue searching for new sources of raw material availability at nearby areas. 3. Basic raw material order placing at center level to take the advantage of Bulk ordering. 4. Mines in nearby areas to reduce the material movement cost. For production plant: 1. High efficiency fans for all process fans. 2. Mechanical conveying in place of pneumatic conveying 24

3. Six stage low pressure drop cyclone preheater 4. Captive power generation by sets SEB power cost Rs/-5 per unit while this captive power plant gives 2.25 per unit. 5. Use of agro waste fuels like Ground nut husk (GNH),rice husk, and different types of agro waste, baggage etc. 6. Roller press for cement grinding 7. In house energy audit for effective monitoring of energy consumption. For Outbound logistics: 1. Grouping orders area wise to reduce the transportation cost. 2. Established Regional and central sales office to transfer the orders of nearby area so as to minimize the transportation cost. 3. Using technique of big vehicle to small vehicle to reach at remote area. and reduce wait time of Big heavy vehicle to be used at other places.

Analysis Of Customer Value Chain 1. As the cement industry is one of the most energy and power intensive industry so ACC is doing many activities for energy conservation as discussed above for which it has got awards too which no any competitor is doing. Which adds value to the final consumer . 2. ACC is the pioneer in thinking about Environment protection & has done many activities for Environment prevention it has fitted dusting control bag at every dust producing stage in production plant and has established green plants. 3. ACC has performed its corporate citizenship very well. It has built check dams and temples and many more things for citizens. 4. ACC is providing excellent after sales services to the customer for that it has establish all together different department of civil engineer for guiding customer in construction activity. 5. ACC is concerned for giant strength it assures this things to customers that their decision is worth. ACC always believes in delivering value product to the customer for that it is doing the following things. 1.Focus on brand name : ACC has given more focus on Strength as any cement manufacturing company is supposed to do. ACC is the most common and known company in India. 2.Effective differentiation

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ACC is creating differentiation by the following ways. -

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ACC is the first in providing engineering services to the customer as after sales services. It is proving many services to the dealer like sponsorship & other supportive programs specially designed for its dealer and treating dealer as the family members. It was the first in proving foreign tours to dealers. It’s using best quality lime stone in manufacturing of cement to provide best strength to the customer. It has established totally different unit in the plant for controlling the quality of the produced cement hourly checking is done and then only given for dispatch. It using a best quality bag that is HDPE bags to pack the cement which are reusable. It is the first line name in providing ON TIME delivery to the customer which is very important in cement like product without which entire activity is worth less. It is the pioneer in giving saving concept to the customer. Added value in skilled labour.

3. Effective public relation ACC has maintained good relations with the public for that it has organized many seminars done many things for public welfare as corporate governance. 4.Price differentiation : ACC has always maintained the premium price which is truly convinced to the customer by the activities listed above. It is pricing on the bases of Supply and demand gap. 5. Strong distribution network : ACC has its presence in the entire market in interior level of villages too. In this area too all are direct dealer and reputed personality in town.

Types of Strategies Internal Strategy Forward Integration. ACC has created and developed an environment that ensures continual improvement in the business processes. In the same direction, this integration will help in proactively meeting the expectations of customers, stakeholders and the requirements of the regulators while on the other hand will be useful in utilizing its resources more efficiently and effectively.” they are committed to achieve customer satisfaction by ensuring excellence of performance in all its offerings and services Horizontal Integration: It involves addition of parallel new products to the existing product line. This may happen internally or externally, internally, a company may decide to enter a parallel product market in addition to the existing product line. Externally, a company combines with a competing firm. Several small cement firms combined and formed Associated Cement Companies (ACC). Intensive Strategy 1) Product Development 26

Product Development has always been an important activity at ACC, arising out of a focus on quality and process improvement. It has been a constant partner, driving research, innovation and evaluation. In 1964, a centralized research facility - the Central Research Station (CRS) was established in Thane. The research complex now renamed as ACC Thane Complex, spread over an area of 8000 sq m has modern labs with the latest equipment and manned by highly qualified scientists and technologists who carry out product development work in cement and allied fields. ACC has effectively pledged its reputation as the market leader in the quality of cement. Maintaining this lead calls for harnessing the resources and expertise of the company - from applied research and production to marketing. Accordingly, all ACC factories are equipped with state-of-the-art process control instrumentation and associated quality control and testing laboratories. Trained engineers, chemists and technicians man these. The Central Laboratory at ACC Thane Complex is used as a reference laboratory for diagnosis and resolving specific troubleshooting cases. As a result of this focus on quality, ACC cement specifications exceed those set by BIS by a wide margin. Today, all ACC cement plants have the ISO 9001 Quality Systems certification. This demonstrates ACCs tradition of providing reliable and consistent quality through the application of modern technology, and justifies the preferences of a nationwide customer base. General Strategies Cost Leadership: ACC has strived to become a cost leader by means of setting up captive power plants, and /or upgradation of technology to enhance productivity, ACC is one of the most profitable cement companies in the country. It produces cement at the lowest cost in India due to • • •

supply of power from captive power plants use of petcoke (an alternate and cheaper fuel) in power plants, proximity to key markets leading to lower outward freight costs.

ACC has a policy of supporting its cement plants with captive power plants which provide for most of its power requirements. Expansion in cement capacity is being accompanied with expansion in power plant. ACC cement is an efficient user of power, at only 77Kwh per ton compared to the industry average of 90-95Kwh per ton, also ACC cement also has a location advantage compared to others.

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Recommendations ACC Cement is highly focused on its future objectives & expansion plans, but at the same time it has to maintain a balance between the present plan & the future one. On the basis of strategic analysis following recommendations will help in achieving its future goals effectively & efficiently:· It must focus & remain on its Vision & Mission in order to attain its objective. · It should focus on expanding its market in order to expand its market shares. · It should also try to maximize the shareholders’ wealth. · It should not choose those projects which may dilute its brand name, just for the sake of gaining market shares. · It should not do overpromise as it will deteriorate its goodwill. · It must focus on its competitors’ strategy(ies) in order to gain a competitive edge. · It should try to go for diversification to minimize risk factor & to explore new market as well. Conclusion Keeping pace with changing times and an ever-growing need for specialized services, ACC has begun offering its marketing expertise and distributaries facilities to other producers in cement and related areas. However a precondition of all such agreement is quality control supervision to be carried out by an ACC expert located at the franchisee’s plant. Each of the regional Marketing offices has a customer services cell that is manned by qualified civil engineers. These, in addition to handling after-sales servicing, function as advisory bodies that can help customers, make the right choice of cement for a specific area of application. ACC can provide expert advice on getting the best value from cement and offer assistance on related issues in civil construction projects. Besides this, technical books/booklets on cement, concrete and building construction and maintenance must be made available for the benefit of the customers. In addition to this, ACC distribute publish free leaflets/ booklet, which profiles the latest information on concrete research, design, construction and maintenance. We feel ACC is forging ahead on its set mandate & is on its way to become one of the leading cement suppliers in the International markets too .

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REFERENCE WEBSITES: www.acclimited.com www.ibef.org/industry/cement.aspx www.askwiki.com www.acchelp.com www.askacc.com

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