JK Lakshmi Cement Ltd began its cement operations way back in 1982 in the remote Jaykaypuram area of Sirohi district in Rajasthan. It belongs to JK Organization stable under the house of Singhanias and is listed on the Bombay Stock exchange. The company focuses its produce primarily to civil and industrial works and is headquartered at New Delhi. Today, with its trademark advertising slogan of "Mazbooti Guaranteed", it is one of the largest manufacturers of cement in India and is well known for its strength, quality and superior performance. It has the distinction of being the first cement producer in North India to be awarded an ISO 9002 certification. Its Lab Quality Management systems have been accredited by NABL, a division of the Government of India's Department of Science & Technology.
JK Lakshmi Cement Ltd product portfolio includes grade 43 Portland cement, grade 53 Portland cement, Blended cement, Plaster of Paris(JK Lakshmiplast) and Ready mixed concrete(JK Lakshmi Power Mix). For maintaining superior quality, it has acquired latest technology from Blue Circle Industries and modern equipments like electronic packers from Ventomatic, Italy & Fuller International of USA. Its brand has strengthened over the period to become a preferred choice among the consumers. As a result, it was an integral part of major government Projects like Indira Gandhi Nahar Project, Sardar Sarovar Dam and Golden Quadrilateral. Even corporations like L&T, Reliance, NTPC, Essar and Airport Authority of India trust the cement brand in executing their assignments.
In order to ensure continuous cement supply to its customers, JK Lakshmi Cement boasts about a wide distribution network, comprising 70 cement dumps and over 2200 dealers across the country. Its presence is significant in the states of Rajasthan, Gujarat, Delhi, Haryana, U.P., Uttaranchal, Punjab, J&K, Mumbai & Pune. It has been expanding its capacity over the years and today stands at 4.75 Million MT per annum. JK Lakshmi Cement was the first cement producer in North India to introduce coloured bags, reiterating its focus on customer service. Currently, it operates 10 plants in Northern and Western regions of India. Its focus on environmental sustainability is reflected by the numerous green awards like Greenest Cement Plant of India by CSE GRP in 2005, Golden Peacock Award for CSR in 2007, Building Leadership Award in 2007 to name a few.
b. CEMENT INDUSTRY DYNAMICS
Indian cement industry is the second largest in the world, only next to China. A double digit growth at 10.2% in cement consumption during FY 2009-10 as against 8.3% in FY 2008-09 testifies Indian economy revival despite the global economic slowdown. This growth has been achieved after a gap of three long years. With both Central and State governments increased emphasis on infrastructure projects and road networking, there prevails positive outlook for the future. Besides, focus on affordable housing facilities for the masses, especially in Tier II and Tier III cities, would provide impetus to the cement industry. It is estimated that the housing sector accounts for almost 50% demand for cement in the economy.
The major Indian cement companies are Associated Cement Company Ltd (ACC), Ambuja Cements Ltd, Grasim Industries Ltd, J.K Lakshmi Cement Ltd and Madras Cement Ltd. To meet the emerging scenario, cement industry has taken proactive measures over the last three years by expanding their capacities. It has already added nearly 80 Million MT capacity over the period FY 2007-08 to 2009-10. Out of this additional capacity, about 35 Million MT was added in FY 2009-10 alone, a growth of 16% over the previous year's capacity.
Cement is one industry, the growth of which is highly correlated with the country's economic growth. With Indian economy promising to grow at 8-8.5% annually, the cement consumption is likely to continue its double digit growth momentum. Another sign of growth is reflected in the index of country's industrial output, which grew at 10.4% in FY 2009-10 as compared to 2.8% in FY 2008-09. While the current installed cement capacity is around 254 million MT, the Planning Commission predicts that by the year 2011-12, cement capacity requirement will be nearly 300 million MT. The industry is poised to reach this target earlier by being aggressive in building up fresh capacities.
During the year, cement industry experienced a decline in two of its major operating costs; fuel and energy. This is attributed to the decline in oil prices in the international markets during the first three quarters of last year. It was a short lived phenomenon, however, and oil prices started rising from the last quarter. The prices are already ruling at higher levels than the average of 2008-09. While the industry has shown significant growth, there are some concerns as well. The major concern being the infrastructure support required to facilitate the fast track growth. For example, the availability of railway wagons and quality power has not been able to keep pace with the cement industry's growth. This has led to cement dispatches issues in many parts of the country.
The Indian Government imposes very high taxes on cement. In fact, if we were to combine total levies, by including state tax, excise duties, Value Added Tax, electricity duty, and royalties on limestone & coal, it comes out to around 60% of the ex-factory cement price. The Government had allowed excise duty cut in cement as part of its stimulus package during recessionary conditions (2008-09). However, it was partially rolled back in March 2010. The industry has been lobbying the government for granting excise duty abatement, but to no avail. Even National Council for Applied Economic Research had recommended an abatement of 55% on excise duty for cement industry.
Overall if were to analyse the cement industry through Porter's five forces model, we would end up with the following findings.
High Rivalry among the existing payers with the top four cement companies accounting less than 40% of the total market share
High Threat of new entrants, especially with the Indian Government 2010-11 budget announcement to pump more than Rs 1.73 trillion in infrastructure
Low Threat of substitute products like timber
Low Bargaining power of Buyers
Low Bargaining power of suppliers since most of the raw materials are natural resources under Government control
While the future growth in cement consumption seems bright over the next 2-3 years, there are additional challenges as well. Some of the key risks associated with the cement industry are:
Fuel Prices Volatility
Infrastructure support including rail and road transport
Government regulations
Over capacity during temporary industry down cycle leading to pressure on prices
The industry needs to counter these risks through cost reductions, efficiency enhancement, productivity improvement and negotiation skills.
e. PRODUCTS AND BUSINESS SEGMENTS
JK Lakshmi Cement Ltd operates in only one business segment, which is cement. The major product offering is JK Lakshmi cement, which is available in three varieties in the market
Cement 53 blended: This variant is characterised by a min guaranteed strength of 53 MPa(Mega Pascal) . Due to its strength and anti-corrosive property, it finds use in applications like dams, underground structures, heavy machinery, plastering, marine, hydropower and all types of R.C.C work.
53 Grade OPC: Due to its superior compressive strength, it finds applications in industrial works, high rise buildings, pre-stressed concrete work like bridges and pre cast elements like concrete poles and railway coaches.
43 Grade OPC: This variant finds application in heavy duty floors, multi storied complexes and industrial constructions.
The other product offerings of the company include
JK Lakshmiplast: This is a superfine POP (Plaster of Paris) with superior whiteness that can be used for home interiors. With its promise of "Sundarta Guaranteed", it has decorative features along with fire resistant properties.
JK Lakshmi Power Mix: This RMC(Ready Mix Concrete) from the company ensures high quality, pre-tested RMC with considerable savings on the construction costs.
The company has been working on the execution of a large number of expansion projects to meet the growing industry demand. It is estimated that in FY 2010-11, clinker capacity will increase by 0.3 Mn MT and power capacity by 30 MW. Additionally, another 0.55 Mn MT Split Grinding unit in Haryana will increase cement production capacity to 5.3 Mn MT per annum by December 2011. The company has been also continuously striving to improve its fuel and power efficiency. This is in sync with the environmental concern prevalent in the economy.
http://www.scribd.com/doc/32159493/Overview-of-Indian-Cement-Industry-2010
