Jk Cement Research Report Free Essays

Indian Institute of Management, Bangalore PGP Program Term 1, 2012 Final Report for JK Cements †Group 2 Section 1 Business Description: JK Cements is one of the biggest concrete producers in Northern India and the eighth biggest generally India with net concrete deals of 2545 crores in 2011-12. Itsmain productsinclude dark and white concrete. It created 53. We will compose a custom article test on Jk Cement Research Report or on the other hand any comparative point just for you Request Now 2 lakh huge amounts of dim concrete and 3. 77 lakh huge amounts of white concrete in the money related year 201112. Dark concrete created comprises of Ordinary Portland Cement (â€Å"OPC†) and Portland Pozzolana Cement (â€Å"PPC†). Their concrete items are showcased under the brand names J. K. Concrete and Sarvashaktiman for OPC items, J. K. Super for PPC items and J. K. White and Camel for white concrete items. JK Wall Putty and JK Water confirmation are its white concrete based worth included items. Lodging (74%), foundation (17%), business institutional division (13%) and modern area (6%) are the significant clients of the concrete business [Refer Figure 1]. Lodging establishes a significant piece of the interest and thus rustic and urban lodging ventures are a distinct advantage generator. Key stock insights and income/profit information is remembered for the reference section [Refer Tables 1 2] Area 2 Market Profile, Competition, Strategy, Risks A. Market Profile: The interest for concrete for the most part relies upon the degree of advancement and the pace of development of the economy. The significant interest drivers for the concrete area in India are lodging, framework and business development. These are key segments of the country’s GDP and consequently, the normal development of the concrete business is roughly 1. multiple times the GDP development. Huge impulse to both rustic and urban lodging according to capita salary increments in a significant driver of the business. With the expansion in national foundation speculation, the industry is ready to extend further regardless of the overall financial downturn. The lodging division contributes around 64% of the absolute concrete interest. It likewise represents 80% of the all out land improvements in the nation. Lodging request is relied upon to be strong sponsored by different estimates embraced in the spending like proceeded with premium grant up to 15 lacs, exclusion from administration charge for ease lodging development, and increment in speculation connected conclusion of capital consumption on minimal effort lodging from 100% to 150%. There has been a significant push by the administration in foundation advancement with the planned venture being US$ 1 trillion in the twelfth multi year plan period (2012-17), against a speculation of US$ 514 billion in the eleventh multi year plan period. Enormous interest in framework would give lift to Indian Cement industry. India is the second biggest maker and buyer of concrete on the planet, representing 7-8% of the complete worldwide creation with an introduced limit of more than 300 Mtpa toward the finish of 2011-12. India’s concrete industry performed better in 1 011-12, on back of vigorous interest restoration in the second 50% of the money related year. The business developed by 6. 4 percent in 2011-12 as against under 5 percent in 2010-11. Absolute concrete deals were 223. 02 MT contrasted and 209. 5 MT in FY11. For 2012-13, CRISIL Research gauges concrete interest to expand 7-8 percent yoy (Crisil). In the close to term, request could be somewhat frail as a resu lt of the lower GDP development. Given that a huge piece of the interest originates from the lodging part, high financing costs are not helpful for the urban land request. In any case, in the long haul, the industry is required to develop at a normal of 1. times the GDP development rate. Development paces of 8-9% can be focused for the multi year time frame given the expansion in interest in foundation extends and expanding country request. Despite the fact that India is one of the biggest concrete markets on the planet, per capita utilization of concrete is still low when contrasted with the world normal just as that of other huge nations, for example, China and US. The Indian concrete industry, accordingly, has a gigantic development potential. Given the extraordinary lack of lodging, this fragment has been a significant development driver for the concrete business. The interest for private land has just expanded, fuelled by expanding urbanization, rising salary levels, diminishing family unit sizes and simple accessibility of home credits. Main part of the absolute lack of 74 million units toward the finish of the eleventh Five Year Plan (2007-2012), is required to be created by country and beneath destitution line families. The legislature has propelled different activities, for example, NREGS and Indira AwasYojana to improve provincial pay, which may expand interest for rustic lodging in the nation. Expanded framework speculations by the administration as referenced before is likewise prone to be a significant development region. Lodging (74%), framework (17%), business institutional part (13%) and mechanical area (6%) are the significant clients of the concrete business. Lodging establishes a significant lump of the interest and thus provincial and urban lodging ventures are a distinct advantage generator. Generally speaking industry edges and change in deals patterns are referenced in tables toward the end. [Refer to Table 3 4]. Kindly allude to Table 5 for an image of the business development rate dependent on the Free Cash Flow model where the normal P/B was registered with the main 5 firms of the business and various rates for cost of capital were expected. This shows the concrete business is ready for development for whatever cost of capital that may win. B. Rivalry: Inter firm rivalry and competition in the business is high. Enormous number of players, discontinuous overcapacity, minor item separation, high stockpiling cost and high leave obstruction in type of noteworthy capital venture has prompted high rivalry in the business. Danger of new contestants is restricted since it includes high capital venture, wide appropriation arrange and oversupplied markets discourage new participants. In any case, given the high potential for development, many outside transnational organizations have made acquisitions and expanded their stake in local organizations to increase full control. There are nothing but bad substitutes for concrete mainstream in India. Nonetheless, there are eco well disposed substitutes for concrete which incorporate fly debris and slag. Fly debris is the side-effect when coal is scorched to make electric force and slag is made when delivering iron in impact heaters. Coal fly debris, impact heater slag and other mineral admixtures can fill in for concrete, aving vitality and lessening cost. Bitumen in streets and designing plastics in building are some component of rivalry. Right now, the top players †UltraTech, ACC, Ambuja Cements, Jaiprakash Associates, India Cements and Shree Cement, all in all control the greater part of the concrete market in the nation. In general, there are 40 players in the business the nation over. (Source: ibef. organizati on) The nearest contenders for JK Cement are Shree Cements, Madras Cements, Birla Corporation and Binani Cement. The business has a 4-firm fixation proportion of 58. 18%. 2 C. System In spite of difficulties, JK Cement has expanded incomes and benefits inferable from higher acknowledgment and volumes in both dim concrete and white concrete business. The organization is in en route to extending its ability in India to take into account the expansion in concrete interest. It has additionally broadened its item portfolio by not just constraining itself to assortments of dim concrete yet in addition reaching out to white concrete and other worth included items. Additionally, the Company is likewise setting up a dark cum white concrete plant at Fujairah in UAE to take into account GCC and African markets. The organization is putting forth attempts to decrease working costs which thus would expand the ROE. A portion of the endeavors to lessen working expenses are: Gray Cement †¢ Implementation of CII Audit discoveries in staged way to diminish power utilization. †¢ Installation of VFDs in fans to spare force. †¢ Replacement of promoter fans by high effectiveness fans to spare force. †¢ Installation of pfisterpump for coal terminating in calciner. †¢ Replacement of Raw plant - 1 separator by high proficiency separator. †¢ Dynamic separator in Coal Mill. White Cement †¢ Covered clinker storeroom for dim and white clinker. †¢ Grinding plant for dolomite for clay item. †¢ Installation of new SG Fan Driver. The organization is additionally putting forth attempts to build its ability. The organization is returning to the size of proposed development plan at Mangrol, Rajasthan from prior conceived 3. 5 Million Tons to around 2. 5 Million Tons, by virtue of deferral in assignment of new mining region to the Company. Practicality concentrate for 2. 5 Million Tons limit plant is under planning and an official conclusion will be taken over the span of the year. D. Dangers Three most significant dangers: 1. Supported monetary log jam The development of concrete industry is legitimately relative to GDP development rate. Nonattendance of dynamic at Government level is influencing monetary development and may have unfriendly impact for the concrete business. In the event that measures are not embraced against expansion, high loan costs, deteriorating rupee, at that point it would affect the general monetary development of the nation bringing about hauling the part down. 2. Inaccessibility of coal linkages Coal costs establish 14-23% of cost of creation of concrete. The climb in coal costs is required to hit the edges. Because of decreased gracefully of coal linkers from Coal India throughout the years; the organization needs to import coal at greater expenses from South Africa and Indonesia. The deterioration of the rupee will likewise add to the expanded expense of crude materials. 3. Unfriendly interest flexibly crisscross on the off chance that, the extra limits stretch out beyond plan, at that point a condition of oversupply would rise, thusly costs may head downwards and the area may endure a sev