Cement is Pulverized chemical powder with compounds of calcium, silica, alumina & iron used as a binding material in construction industry, available in different grades based on its compressive strength and setting properties. Global cement consumption is expected to move from 4.8 billion tons in 2016 to 6.0 billion tons by 2022.
Nuvoco Vistas Corp Ltd a group company of Nirma Industries came into existance when Lafarge India Pvt Ltd had to stop its operations in Indian Market owing to objections raised by Competition Commission of India. Nuvoco is having six cement plants in addition to sixty-five ready mix concrete plants in India. In pursuance of the CCI (Competition Commission of India) orders the shareholders of the company entered into a Share Purchase Agreement and thus Nuvoco Vistas Corp. Ltd., the new name of the company, was registered in the year 2017.
Its interesting to note that promoters of Nirma Industries Pvt ltd. is a well known player in FMCG products viz. detergent, chemicals, sugar, soaps etc. Its venture into cement market was seen as a strategic move by the company. Cement in its manufacturing process utilizes a lot of waste/ by products generated by Nirma Industries Pvt. Ltd, so it helps to bring down the manufacturing cost.
Nirma was able to acquire the Indian operations of Lafarge, even when giants of the sector viz. UltraTech were in the contest of owning the profitable and sustainable business of cement. Strategically the new company was named Nuvoco Vistas Corp Ltd. to retain the the brand value created by erstwhile Lafarge which had a experience of more than 100 years of operation in cement market globally.
To be a reliable construction materials organization that contributes to Nation building by providing innovative and best-in-class products and services; from home building to infrastructure projects.
India is second largest in terms of cement consumption in the world. India’s cement industry plays an imprtant role in India’s economic growth and creating employment opportunity to more than a million people directly or indirectly. After the 1982 deregulation of cement industry lot of indian firms and foreign investors started investing in India. Cement production capacity in india will be further be increased to 550 million tons by 2025.
The major sectors in cement industry are as follows:
Real estate and Housing Sector – 65%
Public infrastructure- 20%
India’s total cement production is close to 455 million tons, for the FY 2018 with a 4.5 per cent growth in FY 2019 as it is expected that the consumption in the housing segment and higher infrastructure spending will increase. Few companies are dominating the Indian cement industry.
Post divestment in 1987 there was not dearth of investment in the cement industry. With Ultratech cement growing 10 times in the last decade has given reason to consider that India can be a country which can look at double digit growth in the coming decade because of the Contruction and infrastructure sector boosting the demand of cement consumption. US dollar 5.25 billion FDI was received in the cement industry between April 200 and December 2017 as the reports released by concerned govt department.
The government has been approving investment schemes to help the private sector companies, thrive in the industry. Some such initiatives by the government in the recent past are as follows:
Raw Material Cost: There is a 4% increase in raw material cost because of the higher usage of sweetener in clinkerisation units in eastern operation. Nuvocco is exploring to reduce cost by utilizing Alternate Raw material like Flue dust, chemical gypsum.
Power and Fuel Cost: Although the power cost has increased by 5% because of the electricity charges increase by Rajasthan government, company has reduced the fuel cost by 8% because of usage of coals in other plants leading to a 3% reduction in fuel and power cost compared to last year.
Freight and Forwarding Cost: Nuvoco reduced the freight cost of Premium cements by strategically locating the plants in Jharkand and West Bengal which is a market for premium cement and help increase profitability of the company.
Marketing Strategy of Nuvoco: Cement is not the finished product. It’s the concrete which gives the strength and stability to the structure. Nuvoco has indentified this analogy and has developed the strategy to focus on the Ready Mix concrete plants Exhibit 14. In Ready Mix plant the aggregates are mixed in proportions based on BIS guidelines, but some additional special chemical are also mixed, which qualifies as per BIS, and also gives better workability to concrete. This Know-how they developed when they engaged extensively with the Masons (high skilled construction workers). Nuvoco focused its approach to make the cement user-friendly by constantly modifying their aggregate and cement mix ratio based on site workers inputs.
Product differentiation: Nuvoco came up with a unique concept of mixing fibre into cement. This strategy proved to be a game changer for Nuvoco as prior to this only Strength was considerd as USP for cement. By adding a synthetic fibre they claimed it helps in reducing voids in cement blocks and named it VRT (Void Reduction Technology). This was very mush accepted by the market. Customer being the focus Nuvoco continues to innovate the concept in cement marketing for spreading its footprint in the Indian market.
The company was renamed Nuvoco Vistas and is undergoing both cost reduction and brand transition exercises, with a focus on expanding its value-added offerings. Company is looking forward to improve the market cap in eastern India by introducing new & improvised products viz. Fiber cement. At present, around 50 percent of the product basket is in specialized cement.
With consumer needs changing, company focus in the coming years will remain to expand the offering of more value-added products. Citing an example, microfiber-based cement, which constitutes around 5 percent of the trade volume and its volume, is expected to increase to double in the coming years.
Also with banking upon the maximum utilization of alternate Raw Material and alternate fuel, the company is reducing the cost of production to improve NSR. Use of ARM & AFR also attracts PAT benefits which help in earning credits which can be traded in monetary terms. On the production side, the company is looking to manage costs through the installation of captive power and waste heat recovery units. It also ensures the sustainability of company’s growth.
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