Hetauda Cement

(Report)

The cement industries in Nepal, The case of Hetauda Cement English Language Skills for Business Tutor Name: Herbert Spuncut Submitted by: P151xx721 P151227xx Word counted: 2257 Submission date: 26 February 2014

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Table of contents:

1. Introduction

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1.1 Background of cement industry …………………… 1.2 Purpose of study

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1.3 Limitation of study ……………………………………….

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2. Data collection and analysis

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2.1 Method of data collection ………………….………..

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2.2 Presentation and analysis of data ……………….….

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3. Finding, Conclusion and Recommendation 3.1 Finding

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3.2 Recommendation ………………………………………… 11 3.3Conclusion

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ABSTACT: This report is a brief introduction of Hetauda Cement Industry and its relation to financial statement production, market share, and quality and production capacity. We have included a short description of cement marketing in Nepal. Mainly this report is about cement marketing and in the case of Hetauda Cement Industry. We composed different resources for finding the information which are listed end of the report and finally make it by group discussion as exchanging idea and skill of group member.

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1. Introduction

1.1 background of cement industry

The term Cement has been designated as the foremost essential constructive materials. In this 21st century cement is one kind of the most dependable and improtant constructive substance. It has been using widely in this modern society. from the inception of early 1950s, the utilization of cement in Nepal as binding materials came into result. On the context of Nepal before 1950s, there was not occurred or be found any aboriginal cement manufacturing industry. Even, early customers have a compulsion that they need to completely rely upon another country like India only to fulfill their demand of cement which imported by India. Constantly, near by the 1965, the weak condiition of cement has changed into new pattern. Though, the proccess of supplying cement was expanded in the formation of foreign aid programme. There were a several countries such as- China, Thailand, HongKong, North Korea, South Korea, Burma, Japan and innumberable other countries from where the importation of cement in commercial scale was began only in the early 1970’s. In this way,in 1975 the earliest cement plant in nepal was-Himal cement company limited, which was came into being a supply Nepal’s first state- owned cement generating facility. Initially, Himal cement manufacturing capacity was 160 tpd but later on, the capacity of himal cement was slightly increased upto 200 tpd. Eventually, by means of the chinese palnt the total production capability of Himal cement went upto 300 tpd. On the context of country Nepal, there a numerous cement industry like- Himal cement industry, Udayapur cement insudtry , Argakhachi cement industry and Hetauda cement industry and so on. But among them Hetauda cement is one of the most ranking cement in the market of nepal. However, Hetauda Cement Industries LTD ( HCIL ) constructed in A.D. 1976 Sepetember 29 under company act 1964 is an agreement of HMG/Nepal. Especially, Hetauda Cement factories plant has great production ability which remained annually 260000 MT of cement which was installed with a credit support from Asian Development Bank ( ADB ). It commercial production was started from december 1985. Particularly, Hetauda Cement Factory lies next to Lamsuredanda and its based in Narayani Zone, central region nepal. However, hetauda cement factory has occupied total length of 1.47 kilometers. In 2010, August 6, working vision’s Hetaud Cement Group organized a factory at Hetauda Cement Industry in Hetauda Nepal. In that workshop, 95 labourer were participated as well Hetauda Cement is home which have above 650 workers. That’s why, Hetauda Cement Factory was the first factory of several. Infact, Hetauda Cement Factory was guided by Dr. Ben Limbu and Tulasi Prasad. Even though, paticularly for the protection of the workers eye of Hetauda Cement Factory, protective eyewear were 4

sponsored by the grant from working vision’s US-based team. As cement manufacturing has started in fiscal year1985/86. Almost , most of the machinary equipment require recosntruction which needs vast capital. Thereofore, HCIL has strategy to do reestablishment work in different fiscal year. Although, Hetauda Cement Industry has its own materials goods an also house expertise began development work at Okhare which located in the makawanpur district in Bhaise of nepal. Mainly, it produces two types of cement namely- opc Shakti and another one is psc Tejaswani brand. Their main objective is that to having a finest level of limestone as well as HCIL planning to transfer the limestone from main quarry in the next upcoming fiscal year.

1.2 purpose of study:

This report aims to findout whole market condition of cement industry in nepal. To deal with this issue hetauda cement indutry and its market share in nepal has been taken as a case study, the one of the most recognized cement industry in nepal. Hetauda Cement in Nepal as the most popular cement company. The market of the Hetauda cement is 12% as the whole cement factory in Nepal. In this case, the factory of Hetauda cement products the services all over the East of Nepal to West. Sometimes this cement factory’s market going to ups and down in whole cement industries and business in Nepal. The purpose of study about that market of cement industries in Nepal and specially we discussion about the factory of Hetauda cement industry. Actually to find out the terms and condition about this company. It seems down and decreased in whole market from Nepal. The fact is that Hetauda cement factory cannot reached a high level or profitable company. There can be a several cause and condition on going to loss in every year. We discussion about this company is that the Nepalese political structure and there is no perfect leader or chairman of Hetauda cement factory. As many of the new modern technology and system can be other parts of causes to loss the market.

1.3 Limitation of the study:

This study attempts to potray the real situation of hetauda cement. It also tries to depict the obstacles it has been facing but there are some best resolution as well. We discussion and concern is that its goes to only the limited market share of Hetauda Cement factory. In Nepal there is several cement industries and out of that Hetauda cement industry is one of them. It means this report and the purpose of study is not belongs to other cement industries. This report belongs to the Hetauda cement industries. We mentioned with the Hetada Cement companies of terms and condition. This report can make clear analysis about this cement company with the profit and loss, market sector and how does this company have effects on

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Nepalese economic sector. Actually the Although, this report can not

present the detail of all types of cement industreis in nepal, it gives asort of clear idea about cement in nepal. Lack of authentic materials or data is another constraint that will be tackled in the terms of writing report. Thus, this work is also not out of axception.

2.1 Method of data collection : In this report secondary data related with the Hetauda cement has been used. Such data are collected through mass media and electronic of social media. Only for the Hetauda Cement industries of data collection from the internet and searching method. From that annual financial statement, price, quality, production and its market share related information are obtained. As the secondary data that given below which collection are concerning about the Hetauda cement industries of terms and condition by group discussion as well as other sources.

2.2 Presentation and analysis of data The data and documentation of Hetauda Cement factory that find out some materials. Here is the various data related with Hetauda cement by J.K Bhattarai(2015) . From that it can be analized. Its strength, weakness,opportunities and threats. These data are presented by following feagures: Accumulated loss soars to us $6.42m (at the end of 2014) 2011/12

us$ 692,829

2012/13

US$ 95,251

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2013/14

US$

6.42 M.

Line graph Series 1 7,000,000

6,420,000

6,000,000 5,000,000

US $

4,000,000 3,000,000 2,000,000 692,829 1,000,000 0 Dec-11

95,251 2012/13

2013/14

Hetauda cement in Nepal Series 1

The line graph shows the accumulated loss of Hetauda cement. In the fiscal year 2011 the accumulated loss is 692829 US dollar. It seems loss has decreased from the fiscal year 2011 to 2012/13. This loss has sharply decreased in the fiscal year 2012/13, however the loss continues for the next fiscal year 2013/14. The dramatic fall down continues. Although, it seems the market of Hetauda cement is going to loss in every year. The fact that between the 2011 and 2014 there is the continuous loss. Though it seems a bit

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progress between first two fiscal years, there is vast difference of loss between the fiscal year 2012/13 and 2013/14. With reference to this graph Hetauda cement has a huge amount of loss. In addition, the profit and sales volume of last ten years are presented as follows;-

Year 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

Profit/ (loss) (7.84) (13.82) 96.6 139.97 105.66 154.3 180.97 (4.8) 5.6

Sales 398.6 416.05 655.4 658.72 655.96 706.3 989.69 770.73 840.5

Bar diagram

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annual profit and sales of hetauda cement (in million) 989.69 1000 800

655.4

600 398.6

658.72

655.96

770.73

706.3

840.5

416.05

400 96.6

200

139.97

105.66

154.66

180.97 5.6

0

36923 -7.84

37288 -13.82

37712

38108

38504

38899

39295

39692 -4.8

40087

-200 profit (loss)

Series 2

The bar diagram shows that the annual profit and sales volume during the ten years of period. From 2001 to 2010, in this ten years of period remarkably the least figure of sales was in 2001. But, it slightly increase in 2002. However, it began to rise substantially in the year of 2003. Whereas, the figure of sales volume remained almost constant from 2003 to 2005. In the year 2006 both the sales and the profit are slightly increase which shows the positive sign to overcome the loss. Although, the sales in this year 2007 has dramatically raised to the highest level, the profit is almost the same as last year. As per the graph in the year 2008 the profit is below average despite satisfactory sales. Furthermore, in the year 2009 the profit is again below average though the sales is not bad.In Nepalese market Hetauda cement has played vital role to fulfill consumers’ need related to construction by producing qualitative product at reasonable price. So, it is able to cover out of 12% from the whole market of Nepal. It can be shown by following table.

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In addition, here is the composition of raw materials to produce cement and which is normally use by Hetauda Cement Industry. Annual Quantity of Raw Materials and Fuels of Hetauda Cement Industry Ltd. Materials

Quantities (Matric tones)

Linestone

396000

Clay

20000

Coal

50000

Gypsum

12000I

Iron Ores

4000

Jute bags

5.2 million pieces

For the composition of cement the major raw materials is limestone which is playing a major role and limestone is obtained from the Bhaise where an accumulation of around 10 million is evaluated. Likewise, near by 10 million tone of high level 3

Finding, conclusion and recommendation:

3.1 Finding: In this report, It can be determined that the Hetauda Cement Industry L.T.D has been bearing normally regular loss. Due to the high payment for workers for instance it pays $251 per month but same other private companies pay only $150 per month. So, here we can found the huge difference between public and private companies. As well as political interference, regular political and managerial instability. Even though, It never utilizes as potential capacity. Normally it has been running around 45 percent of its capacity. Moreover, this company seems able to cover only 12 percent of Nepalese market share. Though, It is too lower portion than other companies because it has huge amount of investment and as well production capacity too. In fact, the Hetauda cement. There, seems overstaffing and intra conflict between trade unions, and between trade union and management as well as company facing so many obstacles for example- technical problem, strike, charity for several parties etc. so, small problem can stop its production function normally one month or more. Although, it has own goodwill among consumers due to reasonable price and high qualitative products so it can easily

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compete with other companies.

3.2 Recommendation : This company is a reputed company among public sector. To maintain its goodwill and to run in regular profit the company needs to be concern about some improvements with very beneficial and fruitful solution. They should improve the following subject matter:  It should reduce operating expenditure that it can cut employee by paying special economic package.  It’s per month salary of the employee as higher than other companies so it should reduce allowances and other fringe benefits.  It should utilize its full capacity.  Political parties should be honest and stop their unusual activities.  The company should expand its market share.  The entire management team should be more capable and should be more conscious about the weaknesses of the company issues.  The company’s management team should get to work freely until their working period according to company’s rules and regulations.

3.3 conclusion : To conclude, Hetauda Cement Industry is a big company which is running as public sector but it seems some sort of improvement in few aspects because one of the most obvious reason is that it is facing a regular loss. Whatever, this company is trying to overcome through that dropping problem. Although, since few time ago it is true that the Hetauda cement Industry improving its situation in a proper way. But, in the past HCIL was affecting by the huge loss that is why this industry is not being able to properly overcome by this unexpected losing. Anyway, Hetauda Cement Factory is trying to come up with new or more effective methods to going through it is underlying structure of failure as well as they also attempting to uplift their dropping sales marketing into fruitful consequences. This company have to make sure their strong stability to become a profitable company. However, the entire management team should be able to tackle with all sort of setback which appear in the term of condition. Moreover, since one year the country Nepal has been suffering from massive natural disaster such as- landslide, earthquake and so on. Though, Nepal is badly affected by means of these disaster. So, thousands of houses were 12

collapsed as well as ancient historical assets were destroyed. Thus, these all aspects need to be reestablishment so on Nepal is a developing country for that various infrastructure should be built rapidly. For, this purpose the first obvious raw material Is cement which is one of the most reliable and important constructive substance. That’s why, it seems that cement market industry has bright future in Nepal and it will be used in a wide range. So, hetauda Cement may grab this ample opportunity particularly in this situations.

References:-

 http://cementmarketinnepal.blogspot.dk/p/introduction-tonepalese-cement market.htmlhttp://www.sajilo.com/hetaudacement/  Bhattrai, JK. ( 2015 ), Presentation and Analysis Of Data Of HCIL. Shodhganga. Inflibnet.ac.in. Appendix 1

1. Production of Clinker & Cement since commencement of commercial production are given below: Fiscal Year

Clinker (MT)

Cement (MT)

Capacity Utilization

1985/86 (7 month)

57,953.739

60,723.718

40%

1986/87

116,036.051

117,316.860

45%

1987/88

126,983.099

137,011.560

53%

1988/89

129,458.880

137,594.390

53%

1989/90

108,569.553

104,065.710

40%

1990/91

105,910.705

118,394.130

46%

1991/92

152,406.430

155,503.910

60%

1992/93

87,861.000

97,431.000

38%

1993/94

115,474.728

118,039.720

46%

1994/95

106,580.625

106,192.174

41%

1995/96

120,029.111

124,985.300

48%

1996/97

118,400.079

125,899.315

48%

1997/98

118,660.777

136,988.055

53% 13

1998/99

120,351.534

128,734.730

50%

1999/00

118,492.168

118,666.185

45%

2000/01

81,145.442

86,901.640

33%

2001/02 (November 30, 2001)

52,670.875

47943.000

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