14-08-2012, 01:28 PM
SALES AND DISTRIBUTION NETWORK OF JAYPEE CEMENT
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Introduction to the Title
Today it is fashionable to talk about the new economy. We hear that the business are operating in globalize economy, things are moving at a nano second pace our market are characterized by hyper competition and disruptive technologies are challenging every business and so business must adopt to empower consumer.
To become successful in such a competitive environment the business organizations have to be customer oriented. Customers need and want must be taken care of. Built customer and not only products. Customer must be delighted. This information about the market could be collected by the way of proper market survey.rom the market survey we get the feed about the good or services of the organization. For this purpose the said project work is undertaken.
The project was carried out for knowing prevailing market condition of jaypee cement in Bhubaneswar region. The second object of the project was to study the market share activities undertaken by jaypee and its other competitors.
The project was carried out in the market of Bhubaneswar and kendrapara of Orissa state. There are 8 market players in cement industry .they are jaypee, Century, Ultratech, ACC, Ambuja, ,Lafarge,RASSI,OCL from these they are few local brands selling in the market.
The information about the market was gathered by visiting retailers in the market. Interview of retailers was taken depending upon their accessibility.
While doing the project attempt was made to collect maximum information about the maker. To get actual and correct information, it was not told retailers that the survey is conducted by JAYPEE cement for the obvious reasons. Numbers of retailers were visited to get the actual picture of the market .Again the retailers of each grade were visited, to get each and every detail about the market.
Most of the time was spent in travelling for the retailer were reluctant to give the information, as they do not want to disclose their business details. Visit to such retailers were loss of time, money and energy.
After collecting the detailed information about the maker analysis is done. In the analysis, the observations recorded during the project were carefully analyzed and the results are prepared. The findings are results of the project work are given at the later stage in the report.
INDIAN CEMENT INDUSTRY-AN OVERVIEW
Cement production commenced in India as early as 1914.
The first cement unit was set up at Porbandar in 1914 with a
capacity of 1,000 tones per annum. Cement is the preferred building material in India. It is used extensively in household and industrial construction. Earlier, government sector used to consume over 50% of the total cement sold in India, but in the last decade, its share has come down to 35%. Rural areas consume less than 23% of the total cement. Availability of cheaper building materials for non-permanent structures affects the rural demand.
Demand for cement is linked to the economic activity in any country. Broadly, it can be categorized into demand for housing construction (homes,offices etc.) and infrastructure creation (ports, roads, power plants etc). The real driver of cement demand is creation of infrastructure; hence cement demand in emerging economies is much higher than developed countries where the demand has reached a plateau. In India too, the demand for cement will be affected by spending on infrastructure (including housing).
With the boost given by the government to various infrastructure projects, road network and housing facilities, growth in the cement consumption is anticipated in the coming year. The favourable housing finance environment is expected to fulfil the vast housing requirements, both in rural and urban areas. The increase in infrastructure projects by the government coupled with the construction of the Golden Quadrilateral and the North-South and East-West corridor projects have led to an increase in consumption of cement. This increase is expected to continue in the future. The reduction in import duties is not likely to affect the industry as the cement produced is at par with the international standards and the prices are lower than those Prevailing in international markets. The graph below show the consumption of cement in different areas of housing, infrastructure and industries.
Two players call all the shots;
For the first time in India, two companies - Grasim and Gujarat Ambuja, along with their associate companies, control almost 50% of India’s cement capacity and supply. In a commodity business, where profits move disproportionately with even small changes in cement prices, this is a significant development The emphasis laid by the government on the development of physical infrastructure mainly roads, airports, seaports and railroads and the boom in housing driven by easy availability of cheap housing credit have been the key growth drivers for the sector. Government is the single largest buyer of cement. Historically, in the last
year, drive to complete pending infrastructure project has driven demand growth. One of the major cement consuming projects is the Golden Quadrilateral Project-Besides construction and modernization of four airports and two seaports. Gujarat Ambuja has always traded at a premiumits peers due to its higher operational efficiency, presence in high growth markets and fiscal benefits. This edge got further sharpened post ACC acquisition that added to scale as well as geographical diversity. Grasim and ultra tech on the other hand are doing so well to capture the more and more market share.
State wise Capacity
As cement is a low value commodity, freight costs assume a significant proportion of the final cost. Transporting costs render the prices of cement in distant destinations uncompetitive. For instance, it is financially infeasible to transport cement by road over 250 kms. Railways are mostly used to transport cement over longer distances. However, its bulky nature and infrastructure bottlenecks render even rail transport unviable over very long distances (that is why Madras Cements or India Cements, located in the south, can hardly make a difference to the fortunes of west-based companies
like Gujarat Ambuja). Therefore, manufacturers tend to sell cement at the nearest market first and sell in distant markets only if additional realization is greater than freight costs incurred. This is the reason for showing regional demand rather than state demand in case of cement.
Mechanics of Distribution Channels of Sector
Companies invariably hire agents or transport cements to own or
government warehouses either via roadway or railways. In case of exports , cement reaches the nearest port via roadways or railways and is then transferred to the importing country. Domestically, from agents or warehouses the cement is transported to the dealers/distributors and in turn to sub dealers who finally sell it to the end users. There may or may not be physical ownership of goods. In the second case, dealers and sub dealers take order from buyers and place it to the companies, co ordinate and monitor the timely dispatch of said orders
ENERGY AND TRANSPORT REQUIREMENTS
The cement industry is dependent on three major infrastructural sectors of the economy: coal, power and transport. The inputs from these three sectors account for roughly 50% of the cost of cement. Both the availability and the cost of these inputs have a vital bearing on the fortunes of the cement players. All these sectors are largely in the State sector, and, historically cement companies have had virtually no control on the cost or availability of these inputs.
Hence, the industry response has largely been in the form of achieving efficiency gains and finding alternatives (captive power, use of water ways). One additional external influencer of the cement industry performance is the taxes and levies imposed by the Central and State Governments.