1. By- Sapana Agarwal Shweta Karan Rishal Bhide
AMBUJA CEMENT
By-
Sapana Agarwal
Shweta Karan
Rishal Bhide

2. Cement Industry 2

3. Cement Industry – An Overview
India is the world’s second largest producer of cement after China with industry capacity of over 200 million tonnes (MT).
Growth by 9 to 10% for the current financial year.
India’s cement consumption grew 9.6% yoy.
Cement production could rise to MT in FY11 and touch MT in FY12.
There is a total number of 134 large cement plants with an installed capacity of MT and more than 350 small cement plants with an estimated capacity of MT operating in India presently

4. Major Players of Cement Industry in India
The Associated Cement Companies Limited (ACC)
Ambuja Cements Limited
UltraTech CemCo Ltd.
Grasim Industries Limited
The India Cements Limited
Century Textiles and Industries Limited
Jai Prakash Industries
Birla Corp Limited
Jaiprakash Industries Limited
Lafarge
Others

6. AMBUJA CEMENT LIMITED Ambuja Cements was set up in 1986.
In the last decade the company has grown tenfold.
The total cement capacity of the company is 18.5 MT.
Net Profit Rs. crore 318 for Qtr. Jul – Sep whereas Qtr. Jul – Sep 2008 Net Profit Rs. crore 250.
Over 40% of the production cost of cement is power.
Cheaper and higher quality coal from South Africa & furnace oil from the Middle East.

9. Annual Capacity
Market Cap. : Rs (Cr)
Plant
Capacity (MT)
Gujarat
5.00
Himachal Pradesh/ Punjab
6.00
Rajasthan
2.00
Chhattisgarh/ West Bengal
3.00
Maharashtra
2.50
Total
18.50

10. BARGAINING POWER OF BUYERS
THREAT OF COMPETITORS
* Large no. of competitors
* Marginal product differentiation
* High fixed costs
* Lack of switching cost
* High exit barriers
THREAT OF NEW ENTRANTS
* Economies of scale
* High Capital requirement
* Avg gestation period of 2-3 yrs
* Access 2 distribution channels
* Oversupplied market
BARGAINING POWER OF SUPPLIERS
* Large and few sellers
* Monopolistic control of external cost element
* No substitutes
* Seller’s product is important input
THREAT OF SUBSTITUTES
* Bitumen (construction of roads)
* Engineering plastics (construction of buildings)
BARGAINING POWER OF BUYERS
* Standard product
* Rising share of retail purchase and declining share of bulk purchasers
* No substitute
PORTER’S 5 FORCE MODEL

11. SWOT ANALYSIS STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Brand name
Most profitable cement co. in India
Lowest cost producer
Sea transportation
Captive power plant
Fuel efficiency
WEAKNESSES
Cement industry is highly fragmented
Demand-supply gap, overcapacity
Increasing cost of production
High interest rates
Packaging
OPPORTUNITIES
Government infrastructure spending
Investment in industrial and commercial projects
Commercial construction activity
THREATS
Imports from Pakistan affecting markets in North India
Excess overcapacity can hurt margins as well as prices
Consolidation through Mergers & Acquisitions

12. Value Chain Analysis Logistics Marketing and Sales
Human Resources Management
Technological Development
Procurement

13. Business Level Strategies
Target niche segment.
Lowest cost producer.

14. Corporate Level Strategies
Related Diversification.
Vertical Integration.

15. M&A’s
Gujarat Ambuja's acquisition of Modi Cement ($44 per tonne) in 1997.
Gujarat Ambuja's acquisition of DLF in 1999 ($108)
Gujarat Ambuja acquired a 14.4-per cent stake in ACC from the Tata group in 1999 at Rs 370 per share.
Holcim buys a 67-per cent stake in Ambuja Cement India in 2005 for 810million(about 3500crore).

16. Ambuja Cements Ltd M&A’s Summary
Year
Acquisitions
Stakes
Divestitures
2009
2008
2007
2006 2
2005 1
2004
2003
2002
2001
2000
1999 5
1998
1997
Total 8