Environmental scanning Essay

Custom Student Mr. Teacher ENG 1001-04 14 September 2016

Environmental scanning

International Players

Cement and Lafarge Birla Cement, the Indian cement industry is broadly home-grown. Ultratech Cement, the country’s largest firm in terms of cement capacity, holds around 22% of the domestic market, with ACC (50%-owned by Holcim) and Ambuja (50%-owned by Holcim) having 15% and 13% shares respectively.

•Many of the remaining dozen top players are Indian and are (in order of diminishing market share); Jaiprakash Associates (10%), The India Cements
Ltd (7%), Shree Cements (6%), Century Textiles and Industries (5%), Madras Cements (5%), Lafarge (5%), Birla Cement (4%) and Binani Cement (4%).

• Between them the top 12 cement firms have around 70% of the domestic market. Around 100 smaller players produce and grind cement on a wide range of scales but are often confined to small areas

Economic Environment’s Impact on Cement Industry

• Currently, the industry is on the boom, with a lot of government infrastructure and housing projects under construction. In spite of seeing a fall during 2008-09, the export segment of the industry is expected to grow again on account of various infrastructure projects that are being taken up all over the world and numerous outstanding cement plants coming up in near future in the country. • Over time more sophisticated and refined methodologies in connection with longer time series were employed to study productivity change. The contribution of total factor productivity to output growth was of primary interest to explain the continuously low economic development.

• During that time, labor productivity as well as capital availability and use increased considerably, while the overall growth rate of the economy stagnated at low levels

• Concerned about the efficiency of resource use researchers started investigating productivity growth and input factor substitutions for aggregate manufacturing as well as various industries


• Its financial statements i.e balance sheet and profit and loss, profits are increasing every year and its share price is also high as compared to other cement industries and its assets are also increased. It means that its financial position is very strong as compared to others.
• From here we can analyse that its profits are increasing year by year and it means that they are providing more to GPI,with this our NPI will also be increase and overall position of country will be better.
• From here we can analyse that if industry position is strong then our country’s position will also be strong.
• It means it is beneficial for the people and country.

Social Environment’s impact on industry
• Usually, the cement industry in India consists of both the organized sector and the unorganized sector.
• Organized sector comprises of the well-known cement manufacturing companies while the main players of the unorganized sector are the regional and local cement-producing units in various states across the state.

• Indian consumers prefer buying branded cement like ULTRATECH, JAYPEE CEMENT, LAFARGE CEMENT etc.
• It has been seen in the past, as well, that mini cement plants with low brand value and image are not able to survive against the cement giants.
• With a population of more than 100 billion people, it is expected that cement industry will create another 25 lakhs jobs in the next 4-5 years.

Ambuja Cements’ Social Impact
• This particular company is totally different from. On this case they really helped by doing lot of social work like they putt off various health centres for the poor people and provide Monetary help also to some reason.

• They also helped by providing education facilities to poor people like books etc.
• Not only this they are also providing good quality products that doesn’t harm any kind of injuries to the people while they are using it.

• The Company strives to provide a safe and healthy work environment for its employees and to avoid adverse impact and injury to the environment and communities in which the company conducts its business. The commitment is reflected in the number of awards the Company has received including National Award for outstanding pollution control.

• The awareness and training programme on health and safety related issues should be conducted regularly. All the employees, and directors shall comply with all applicable laws and regulations relating to health and safety so as to ensure healthy and safe work environment. Using or being under the influence of illegal drugs and alcohol on the job is absolutely prohibited.


• The price of cement is primarily controlled by the coal rates, power tariffs, railway tariffs, freight, royalty and cess on limestone. Interestingly, government controls all of these prices. • Government is also one of the biggest consumers of the cement in the country.
• Govt. of India plans to increase its investment in infrastructure to US $ 1 trillion in the TwelfthFive Year Plan (2012-17) will lead to increase in the demand of cement.
• Infrastructure projects such as the dedicated freight corridors, upgraded new airports and ports are expected to enhance the scale of economic activity, leading to a substantial increase in cement demand furthermore.
• Most state governments, in order to attract investments in their respective states, offer Fiscal incentives in the form of sales tax exemptions/deferrals. States like Haryana offer a freeze on power tariff for 5 years, while Gujarat offers exemption from electric duty.
• Strict law & order conditions and political will of the leader of any state enhance theconfidence of people living in the states as well as corporate to invest in that particular state.
• The total Government levies and taxes , which include Royalty on Limestone, Royalty on Coal,Electricity Duty, VAT/Sales Tax etc.,on cement constitute about 60% or more of the exfactoryprice of cement.

Political Environment for Ambuja Cements

Its political environmental is totally different from others because they never put any kind of political pressure on any other whether it is against or in favor for them. They always try to follow the proper rules and regulations that are made by the central government.
• But still they have to change their strategies as per change in the political environment.
• This policy applies solely to the Company and is not intended to discourage or prevent individual Director or Employee from making political contributions or engaging in political activities on their own behalf.
• No personal political contribution is reimbursed by the Company. No personal political activities should interfere with duties to be discharged with the Company in line with this Code of Conduct.


• Ambuja cements is most recognized unit in India and they always they are following proper rules and regulations that are made by central government and also follows that are mentioned in the Company’s ACT 1947 regarding Safety, Health and Social needs.

• They should Endeavour to keep abreast of the developments in laws and regulations and comply with the same. If any one gets to know of any non compliance of any of the laws in his or her colleagues area of operation in the company the same is brought to his/her immediate notice as well to the notice of his/her Head of the Department.

• All Directors and Employees of the Company conduct business affairs with honesty and integrity and in full compliance with all applicable laws, rules and regulations and shall not commit any illegal or unethical act or instruct others to do so, for any reason.

Technological Factors affecting the Cement

• From mining to production the entire process depends on technology.
• The Government of India plans to study and possibly acquire new technologies from the cement industry of Japan.
• The government is discussing technology transfer in the field of energy conservation and environment protection to help improve efficiency of the Indian cement industry.
• At present 93% of the total capacity in the industry is based on modern and environment-friendly dry process technology.
• There is tremendous scope for waste heat recovery in cement plants and thereby reduction in emission level.
• One project for co-generation of power utilizing waste heat in an Indian cement plant is being implemented with Japanese assistance under Green Aid Plan.
• The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially.
• Also, some cement plants have set up dedicated jetties for promoting bulk transportation and export.

Technological environment for Ambuja
Cements Ltd.

• It is one of the most important factor as compared to others. In this particular we are going to discuss that what type of technology they are using and how much beneficial for them as well as for the people who are using this particular product.
• Ambuja cements industry is having good quality machines to make their products and also they are using latest technology machines. And their technology is very effective that is implemented and they also implanted modern technology like Inventory Control system etc

INTERNATIONAL Factors affecting Cement Industry

• With the rapid growth rate of the Indian economy after the 1990s, the infrastructural developments within the country has been tremendous.
• The increase in the construction activities has led to the increase in the demand for updated quality building materials and other allied products.
• Cement being one of the major elements in the construction work, there is a growth in the cement industry in India. The consumption of cement has increased in India by nearly 7.5%.
• With the globalization of Indian cement industry many foreign cement manufacturers are engaging themselves in agreements and deals with their India counter parts to have a share of the growth.
• Large cement players in India will use the acquisition route to enhance capacity and market share. It is clear that smaller plants will not survive in the long term. The top five players will hold 70-80 % of capacities and market in the next decade.
• There is an expectation that more global players would come into India as they would like to get a foothold in the market as the demand will propel in the emerging economies.
• Acquisition appears a good route primarily because a Greenfield cement plant takes 3-4 years to build and another 3-4 years to break even at an operating level of even 70-75 %. E.g.:- The acquisition of the Larsen & Toubro cement (ULTRATECH CEMENT LIMITED) business by Grasim Industries Limited in 2003-04 is a case in point.

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