Diligence & Excellence

Since 1996

SWOT ANALYSIS REPORT

OF

JK LAXMI CEMENT LTD.

Submitted by

Tarunendra Agnihotri

MBA III Sem

(Production +Marketing)

S. No. TOPIC NAME PAGE No.

PIONEER

1 DEFINE THE BUSINESS AND COMPANY 3

2 VISION OF COMPANY 4

3 MISSION OF COMPANY 4

4 PROMOTERS 5

5 PRODUCT MIX 6

6 TOP MANAGEMENT 6

7 LOCATION 7

8 CURRENT GOALS AND OBJECTIVES 8

9 FINANCIAL ASPECTS OF THE COMPANY 8

10 STAKEHOLDERS OF COMPANY 10

11 BENCHMARKING 12

12 PRODUCT LIFE CYCLE 13

13 COMPANY LIFE CYCLE 13

14 INDUSTRY LIFE CYCLE 14

15 STRATEGIC MODELS 15

16 SWOT ANALYSIS 16

17 SUGGESTION 22

18 CONCLUSION 22

PHASE-1

JK LAXMI CEMENT LTD.

DEFINE THE BUSINESS AND COMPANY :

INTRODUCTION :

The most important use of cement is the production of mortar and concrete—the bonding of

natural or artificial aggregates to form a strong building material that is durable in the face of

normal environmental effects.

In the most general sense of the word, a cement is a binder, a substance that sets and hardens

independently, and can bind other materials together. The word "cement" traces to

the Romans, who used the term opus caementicium to describe masonry resembling modern

concrete that was made from crushed rock with burnt lime as binder. The volcanic ash and

pulverized brick additives that were added to the burnt lime to obtain a hydraulic binder were

later referred to as cementum, cimentum, cäment and cement.

Cement used in construction is characterized as hydraulic or non-hydraulic. Hydraulic

cements (e.g. Portland cement) harden because of hydration chemical reactions that occur

independently of the mixture's water content; they can harden even underwater or when

constantly exposed to wet weather. The chemical reaction that results when the anhydrous

cement powder is mixed with water produces hydrates that are not water-soluble. Non-

hydraulic cements (e.g. lime and gypsum plaster) must be kept dry in order to retain its

strength.

ABOUT COMPANY:

JK Lakshmi Cement Ltd is a renowned and well-established name in the Indian Cement Industry. It has completed more than 25 years of serving the nation and manufactures quality cement, a core ingredient for infrastructure development. The Company, with a capacity of 5 million tones per annum, has its clinkerisation unit at Sirohi in Rajasthan in western India and grinding capacities in Sirohi as also in Kalol near Ahmedabad. Majority of the Company’s power requirements is met by its 36MW Captive Thermal Power plant.

The Company provides "just-in-time" service to its customers through a network of over 1600 dealers, which in turn are served by nearly 60 of the Company's cement dumps located strategically in its marketing areas."JK Lakshmi Cement" brand enjoys a premium position in its markets and is recognized for its high quality and superior services.

JK Lakshmi Cement has been growing faster than the Indian Cement industry in the recent years. The operating efficiencies are in the league of the most efficient cement plants of the country. JK Lakshmi Cement has received the highest recognition in Cement Sector for National Energy Conservation in 2008 by the Bureau of Energy Efficiency.

With an eye on the futuristic trends in the Indian construction industry, JK Lakshmi Cement has made a foray and is aggressively pursuing Ready Mix Concrete (RMC) business. The Company already operates 10 RMC plants with plans to add more.

'Caring for our employees' has been the main tenet of the JK Organisation's core values. With this philosophy in mind the Company lays considerable emphasis in the areas of Human Resource Development. Its policies focus on the Competency Development with Innovative Interventions in the areas of Motivation, Talent Management and Performance Evaluation. The Company has received due recognition for its efforts by way of various awards such as CEO with HR Orientation awarded by Asia-Pacific HR Congress, the National Award for Excellence in Cost Management by Institute of Cost and Works Accountants of India (ICWAI), etc.

India is moving towards a rapid economic growth and infrastructure development. This is generating new opportunities for the cement industry. JK Lakshmi Cement's future plans include enhancing its capacities further to meet the emergent opportunities.

VISION:

12 Mil. By 2012(12x12).

MISSION :

To be recognised as an efficient ,competitive & premium cement brand.

PRODUCT MIX:

CEMENT 53 BLENDED:

JK Lakshmi Cement 53 (blended) has a minimum guaranteed strength of 53 MPa, and is used for critical applications that require the maximum level of strength and durability.

A few applications of JK Lakshmi Cement 53 (blended) are:

All Types of R.C.C. Work Plastering

Underground structures

Dams

Heavy machinery foundations

Marine structures

Hydropower stations

53 GRADE OPC :

JK Lakshmi's 53 Grade O.P.C. with superior compressive strength is ideal for: High-rise buildings All types of R.C.C. works

Industrial works

Pre-stressed concrete work like bridges, silos, etc

Pre-cast elements such as Railway sleepers and concrete poles

43 GRADE OPC:

Some applications of JK Lakshmi's 43 Grade O.P.C. are: Commercial Buildings Industrial Constructions

Multi-storeyed complexes

Cement concrete roads

Heavy Duty Floors

PROMOTERS:

Fenner (India) Ltd. Bengal & Assam Hidrive Finance Ltd. Hansdeep Investment Ltd. Panchanan Investment Ltd. Radial Finance Ltd.

CURRENT TOP MANAGEMENT:

BOARD OF DIRECTORS:

-Hari Shankar Singhania, Chairman

- Bharat Hari Singhania, Vice Chairman & Managing Director

- B.V. Bhargava, Director

- Nand Gopal Khaitan, Director

- Pradip Roy, Director (Nominee of IDBI)

- Pravinchandra V. Gandhi, Director

- Raghupati Singhania, Director

- P. Narasimharamulu, Director (Nominee of ICICI)

- V.K. Guruswamy, Director (Nominee of LIC)

- Vinita Singhania, Managing Director

- Shailendra Chouksey, Whole-time Director

- S.K. Wali, Whole-time Director

Company secretary:

B.K.Daga

Chief Financial Officer:

Sudhir A Bidakr

LOCATION AND MANUFACTURING UNIT:

JK Lakshmi CementJaykaypuram-307 019,Basantgarh,District Sirohi(Rajasthan).

JK Lakshmi CementVillage Motibhoyan,Taluka Kalol (N.G.),Distt. Gandhi Nagar-382 721,Gujarat

PHASE -2

CURRENT GOALS & OBJECTIVES:

1. The company is attempting to take advantage of the strong demand conditions for cement in eastern region, with its plan to set up a greenfield project with a capacity of 2.7 MT in Chattisgarh at a cost of nearly Rs 1,200 crore. This facility is expected to be brought-on-stream during 2011-12.

2. JK Lakshmi is also expanding its clinker capacity by nearly 0.4 MT at a cost of almost Rs 145 crore and this facility is expected to be operational by January 2011, and this should help the company raise its capacity by 0.6 MT. This will result in its capacity reaching 5.3 MT by January 2011.

3. Apart from expanding cement capacity, the company is also setting up a waste heat recovery system, which will generate 12 MW of captive power that is expected to come on stream in March 2011. 

4. The company is also setting up a 18 MW thermal power plant at cost of nearly Rs 80 crore and this facility is likely to be operational in 2011. This will enable the company to save power cost, which is one of the key operational costs for cement makers.

FINANCIAL ASPECT OF THE COMPANY:

S.NO. RATIOS Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

1 Operating margin (%) 22.11 30.73 32.32 25.86 29.11

2 Gross profit margin (%)

18.77 26.45 27.91 24.16 27.57

3 Net profit margin (%) 9.52 21.11 20.19 14.58 16.17

4 EPS (Rs) 5.57 15.60 18.28 14.59 19.70

5 Return on net worth (%)

26.01 43.04 34.82 21.48 23.60

6 Dividend payout ratio (net profit)

0.00 6.41 13.68 27.42 12.69

7 PBDIT 128.81 259.29 357.97 316.70 433.92

8 Depreciation 53.07 44.33 58.54 69.11 80.03

9 PBIT 75.74 214.96 299.43 247.59 353.89

10 PBT 119.06 214.74 245.34 260.57 267.86

11 PAT 55.45 178.11 223.67 178.59 241.13

12 Net profit 55.45 178.11 223.67 178.59 241.13

1. Operating margin (%) Operating margin is used to measure company's pricing strategy and operating efficiency. It gives an idea of how much a company makes (before interest and taxes) on each rupees of sales. Operating margin ratio shows whether the fixed costs are too high for the production or sales volume. As Jk LAXMI have the highest operating margin on year 2008 it means it have better position during that period.

The higher the Operating Profit Margin, the better. This is because a higher Operating Profit Margin shows the company can keep its costs under control (successful cost accounting).

2. Gross profit margin (%) The gross margin is not an exact estimate of the company's pricing strategy but it does give a good indication of financial health. Without an adequate gross margin, a company will be unable to pay its operating and other expenses and build for the future. . JK LAXMI GPM fluctuating from one period to another it means undergoing drastic changes which will affect the costs of goods sold or pricing policies.

Firms that have a high gross profit margin are more liquid and thus have more cash flow to spend on research & development expenses, marketing or investing.

3. Net profit margin (%) Net Profit Margin tells you exactly how the managers and operations of a business are performing. Net Profit Margin compares the net income of a firm with total sales achieved. As the JK LAXMI have a higher Gross profit margin than the Net profit margin it tells us that the marketing/administration costs of company is huge! However, this also tells us that operating costs and cost of goods sold of company is relatively low.

4. EPS (Rs) The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability.In order to make earnings comparisons more useful across companies, fundamental analysts instead look at a company's earnings per share (EPS). EPS can be

calculated for the previous year ("trailing EPS"), for the current year ("current EPS"), or for the coming year ("forward EPS"). Last year's EPS would be actual, while current year and forward year EPS would be estimates. As JK LAXMI EPS is increasing it means the earning available to equity share holders is increasing.

5. Return on net worth (%) The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. The decreased RONW of JK LAXMI shows the increase in the PAT or decrease in the share holder funds.The ROE is useful for comparing the profitability of a company to that of other firms in the same industry.

 

6. Dividend payout ratio (net profit) The dividend payout ratio shows what percentage of a company's earnings it is paying out to investors in the form of dividends. . In the year 2009 the JK LAXMI paid out 27.48% of its earnings in dividends maximum among the 5 years of period. The higher the payout ratio, the less confidence the company has that it would've been able to find better uses for the money it earned.

7.PBDITThe PBDIT is frequently increasing through out the period this shows the increase in the total

sales of the JK LAXMI

8 .Depreciation A noncash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence. The frequently increase in depreciation shows the reduction in the value of the assets. It also shows that company is frequently buying the new assets.

9.PBITThe PBIT increasing throughout the respective years shows increasing in interest and taxes due to increase in the loans and taxes.

10.PBTThe PBT increasing throughout the respective years shows increasing in taxes.

11.PATIt the net profit earned by the company after deducting all expenses like interest, depreciation and tax. It can be fully retained by a company to be used in the business.

12. Net profitNet profit is the money left over after paying all the expenses of an endeavor.

STAKEHOLDERS OF COMPANY:

Shareholding pattern

Top of Form

Holder's Name No of Shares % Share Holding

Promoters 54072353 44.19%

General Public 28279494 23.11%

Financial Institutions 13357268 10.92%

Other Companies 12539021 10.25%

Foreign Institutions 5833693 4.77%

N Banks MutualFunds 4234437 3.46%

Foreign NRI 2988374 2.44%

Others 748054 0.61%

Central Govt 306230 0.25%

Promoter and Promoter Group

NAME OF SHAREHOLDER NO OF SHARES (% of Total No. Of Shares)

1. JK Agri Genetics Limited 11.152. Juggilal Kamlapat Udyog Ltd. 0.123. Bengal & Assam Company Ltd. 22.254. BMF Investments Ltd 1.185. Nav Bharat Vanijya Ltd. 0.076. J.K. Paper Limited 0.187. Fenner (India ) Ltd 8.388. Pranav Investment (MP) Co. Ltd. 0.049. Shri Hari Shankar Singhania 0.1410. Dr. Raghupati Singhania 0.1511. Shri Bharat Hari Singhania 0.0812. Shri Anshuman Singhania 0.1213. Sidhi Vinayak Investment Ltd. 0.0714. Mayfair Finance Ltd. 0.07

15. Smt. Swati Singhania 0.0216.Shri Vikram Pati Singhania 0.05

PHASE III

15. BENCH MARKING

PERFORMANCE BENCH MARKING

The last few years of this decade have been good for cement companies as prices have remained high, and hence profits have been good. In the same period, UltraTech and ACC have shown the same trends of increasing sales growth and capacity utilization of Ultra tech and ACC both are growing continuously because of the increase in the demand of the cement in this scenario and they are very effective in meeting the demand of the consumers by doing their best performance.

PROCESS BENCH MARKING

Due to similar raw material inputs and production processes, there is no significant differentiation in the cement produced across firms and thus they follows the standarized process of manufacturing. But it can follow the Manufacturing Process of its largest competitor ACC, though ACC enjoys lower fuel cost. However, this is not sustainable has already started switching to coal. Similarly it can have the advantage of coal fuel.

STRATEGIC BENCHMARKING

Can adopt the strategies of Ultra tech cement i.e.,

Cost leadership: Striving to become a cost leader by means of setting up captive power plants, and/or up-gradation of technology to enhance productivity, is increasingly becoming critical for large cement players in this sector.

Rising Exports: Due to the increasing construction activity in the Middle-East, exports will constitute a major sales driver. Hence, the coming years would see companies scrambling for bases on the Western coast to minimize their export transportation costs.

Retail Stores: A unique concept, which Ultra Tech is experimenting with in recent times, and one that is important for the future, is to continue setting up retail stores. Other companies like Asian paints, and most recently Tata Steel have tried a similar concept.

Relationship Management: UltraTech should focus on managing its relationships with importers, exporters, distributors, warehouse providers, wholesalers, retailers and dealers for their long-term profitability.

17. PRODUCT LIFE CYCLE

18. COMPANY LIFE CYCLE

19. INDUSTRY LIFE CYCLE

20. STRATEGIC MODELS

PORTER’S FIVE FORCE MODEL

BCG MATRIX

21 . SWOT ANALYSIS

STRENGTHS

Production

High quality 43 grade OPC,53 grade OPC,cement 53 blended. Annual production capacity of 3.5 million tonnes. Use of high-end equipment such as the Gamma Metrics Machine and the X-ray

Analyser ensures that each product passing out of JK Lakshmi's manufacturing facility adheres to global standards of quality and performance.

Logistics

Can directly deals with the limestone tenders and thus the middle man does not affects its cost.

Use the local transporters which provide the efficient transportation cost.

Plantation

JK Lakshmi's manufacturing plant uses ultra-modern technology and imported machinery.

The JK Lakshmi cement manufacturing facility is spread across an area of 8 square kilometres among the lush green Arravali ranges at Jaykaypuram in Sirohi district of Rajasthan.

Jk laxmi cement has plantations in Rajasthan,Gujarat,. The plant is fully computerised and centrally controlled by programmable logic

controller with colour VDU Control Stations

Brand Positioning

Cement 53 (blended) has a minimum guaranteed strength of 53 mega pascals (Mpa), and is used for applications, such as all types of Roller Compacted Concrete (R.C.C.) work, plastering, underground structures, dams, heavy machinery foundations, marine structures and hydropower stations.

Its 43 Grade OPC is used for applications, such as commercial buildings, industrial constructions, multi-storeyed complexes, cement concrete roads and heavy duty floors.

Distribution Channels

The Company has a network of 70 cement dumps Over 2200 dealers spread across the states of Rajasthan, Gujarat, Delhi, Haryana,

Uttar Pradesh, Uttaranchal, Punjab, Jammu and Kashmir, Mumbai and Pune.

Human Resource

1288 employees

The Performance Management System at JK Lakshmi Cement ensures that performance and achievement do not go unnoticed.

It provides an opportunity to the employees to monitor their progress and develop into complete professionals.

The cornerstone of our Performance Management System is the Appraisal System. Individual performance targets in the form of Key Result Areas (KRAs) are set at the beginning of the year through consultation with the reporting managers.

At the end of the year, each employee’s performance is assessed against the set KRAs. Performance Management provides the employee an opportunity to discuss his/her achievements during the given period and to focus on improvement areas.

Training & development-We lay a lot of emphasis on developing our employees beyond their present boundaries, broadening their horizon, enabling them to think the unthinkable and rise above the benchmarks they set for themselves.

It take pride in the internal and external training programmes organized for our people. Here, the word internal also has a special significance because we train our own people to become Trainers for the rest of their team.

Power & Fuel

Power consumption decreases from 80kwh/mt to 79 kwh/mt (from year 2009 to 2010).

Fuel consumption decreases from 89kg/mt to 85 kg/mt (from year 2009 to 2010)

Finance

Consistent revenue growth. Gross sales increase from 144.05 cr. to 1644.05 cr.(from year 2009 to 2010) EBIT increase from 247.59 cr. to 353.89 cr.(from year 2009 to 2010) PAT increase from 178.59 cr. to 241.13 cr.(from year 2009 to 2010) EPS (Rs.) increase from 14.59 to 19.70(from year 2009 to 2010)

Quality

It is also the first cement producer of Northern India to be awarded an ISO 9002 certificate and be accredited by NABL (Department of Science & Technology, Government of India) for its Lab Quality Management systems. 

JK Lakshmi Cement manufacturing facility has been rated amongst Greenest Cement Plant of India by CSE GRP 2005 thus highlighting our commitment to the environment even while ensuring the highest standards of quality for our products.

Jk laxmi cement also won the Productivity Excellence Award 2007-08, Energy Conservation Award 2008, NCB award 2007, Building Leadership Award 2007, National Award for Environmental Excellence & Energy Management 2007, Golden Peacock Award for Corporate Social Responsibility 2007, ICWAI National Award 2007 for Excellence in Cost Management, The Pinnacle Cement 2006 award by MTech Zee TV, Green Tech Safety Award and a place of pride amongst the top ten companies in India in HR practices. (as per the Business Today- TNS Mercer survey). 

Projects

Major Projects like IGNP, Sardar Sarovar Dam, Golden Quadrilateral

major corporations like L&T, Reliance, NTPC, Essar and Airport Authority of India, JK Lakshmi Cement has become the preferred choice among the customers because of its consistency, high level of quality and impeccable customer service. 

WEAKNESSESS

Raw materials

• Not available in all the places.

• Losses of raw material .

Products

High cost of branded products.

Lack of availability in the market.

Operations.

High Power/ Fuel costs.

Required efficient maintaince for the wastes.

Raw material inventory required due to perishable of raw material.

High inventory handling cost.

Human Resorce

Due to openess in the organization work culture is very informal that wil not suit for better management in corporate.

Marketing

Lack of awareness program for consumers due to low promotion mix. Lack of marketing mix.

Health

Highly dusty environment is hazardous for health. It affect human’s respiratory system adversely.

OPPURTUNITIES

Rapid growth is taking place in Bihar and Madhya Pradesh. Institutional market like corporate and offices ,school society complexes are growing

in large scale,which will increase the requirement.

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 10% per annum,it is having 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 through the transformation process through which the traditional method of road building will be replaced by modern concrete 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.

Cheep priced brand are grabbing rapidly a large chunk of lower income customer base.

Players such as Jaypee Cement, Prism Cement, and Birla cement.ACC cement are eating up considerable market share.

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.

Now-a-days Timber is also being considered as one of the substitutes of cement. In

many countries like Japan, Indonesia, Singapore etc are now using timber in

construction since those areas are high earthquake affected. They now prefer timber

which is cheap and long lasting for years.

22. SUGGESTION

• Adopt new technology for the production like wet process of cement manufacturing. it will reduce the cost of product that will increase the profit margin and good for human health also.

• Proper use of waste material.

• They can increase the production plant because of high growth rate of infrastructure.

• They can increase the production for global market.

23. CONCLUSION

• As India is the second largest producer of cement in the worlds many big player presents in the market after that jk laxmi cement increases his market share due to the high growth rate of real estate.