Introduction of Cement Industry

WHAT IS CEMENT

History of Cherat Cement

VISION

MISSION

CORE VALUES

Selection of importing country

Cement export to regional markets

Why India Import Cement From Pakistan?

In order to stabilize prices domestically, the Indian government has recently abolished 12.5 per cent custom duty levied on cement, thus allowing its duty-free import. In India, hundreds of companies are operating countrywide as cement importers, while major construction contractors are also given tax concessions on imports. Pakistan, already having competitive edge of low transportation cost and better quality of cement, has therefore an excellent chance to make inroads in the Indian market.

Pakistan has already joined the world club of cement exporters, with the 48th ranking among a total of 116 exporting countries, having attained an export figure of $33.24 million.

Sri Lanka

NEW avenues for export of cement are opening up for the indigenous industry as Sri Lanka has shown interest to import 30,000 tons cement from Pakistan every month.
If the industry is able to avail the opportunity, it may secure a significant share of Sri Lanka market by supplying 360,000 tons of cement annually. This however may be just the entry to the attractive market of the size of 3.5 million tons cement a year, which continues to grow rapidly, whereas the industry in Sri Lanka meets only half of the demand. Given competitive price and quality of Pakistani product, supported with tariff concessions and other benefits under the Free Trade Agreement (FTA) between the two countries, it should not be a difficult target for our cement industry to enhance its share in future.

Afghanistan

Its biggest export market is Afghanistan, where the reconstruction activities have increased the demand of cement manifold. Afghanistan continues to offer promising future for export of Pakistani cement in a big way, despite competition from neighboring countries.

Government Support

The government is equally supportive, and has decided to resume paying rebate on the export of cement. On the other hand, the subsidy on its import has been withdrawn, leaving the domestic market fully open to the local products. The government is considering allowing further concessions/incentives for export, with a view to increase overall export volume. These measures will immensely help in promoting and protecting high investments made in the sector.

Lucky Cement Ltd was the first to undertake expansion and up-gradation of its production facilities. From initial daily capacity of 4,200 tons until the year 2002, it produces 13,200 tons per day (tpd) at its Pezu, Lakki Marwat plant, whereas completion of a Greenfield project at Karachi will bring its total capacity to 21,600 tpd. The first production line of 4,200 tpd of Karachi plant has recently started commercial production, whereas the second production line of another 4,200 tpd will be commissioned during April-June 2007.
Likewise, DG Khan Cement Co Ltd, with production facilities at Khofli Sattai, DG Khan and Kallar Kahar, Chakwal, has enhanced its production capacity from original 2,200 tpd in 1993 to a total of 13,400 tpd. . Over a period of years, the plant has achieved enhanced capacity of 6,700 tons per day, while a single largest production line of the same size is on stream at Chakwal location. Furthermore, the company is in the process of setting up a new project at Khairpur.
Bestway Cement Ltd has doubled its production capacity-from 6,300 tpd to 12,000 tpd--with addition of a new plant at Chakwal. The company, with initial production facilities at Hattar, Haripur, has taken over ownership and management of Mustehkam Cement as well. Likewise, after undertaking three expansion projects, Maple Leaf Cement has reached the total capacity of 11,700 tpd at its Iskanderabad, Mianwali plant by December last.
Also, Attock Cement production capacity has risen to 6,000 tons per day after commissioning of its second production line of 2,520 tons daily in August 2006. Other cement companies, including Fauji Cement Co, Pioneer Cement, Dewan Cement, Cherat Cement Co, Al-Abbas Cement Industries, Fecto Cement, Dadabhoy Cement, Gharibwal Cement and Dandot Cement Co, are implementing up-gradation and expansion plans that are at various stages of completion.
In the wake of its huge surplus production as a result of massive capacity expansion undertaken it rather seems imperative for the industry to sustain existing export markets and simultaneously exploring new markets. There are reports that the producers, under a cartel arrangement, have been increasing price, on a week to week basis, without any rationale. The trend is not considered to be a healthy move, since the government may renew its subsidy to importers, besides curbing exports, in order to stabilise and control prices. This will prove to be catastrophic for our cement industry, which needs to realise that its survival, sustainability and further development lie in consolidating its domestic market.

http://www.dawn.com.pk/2007/02/19/ebr10.htm

Culture of India

Geography of India

Size: Total land area in India -  2,973,190 square kilometers. Total area, including territorial seas, claimed is 3,287,590 square kilometers.

Topography of India: Three main geological regions: Indo-Gangetic Plain and Himalayas, collectively known as North India; and Peninsula or South India. Ten physiological regions: Indo-Gangetic Plain, northern mountains of the Himalayas, Central Highlands, Deccan or Peninsular Plateau, East Coast (Coromandel Coast in south), West Coast (Konkan, Kankara, and Malabar coasts), Great Indian Desert (known as Thar Desert in Pakistan) and Rann of Kutch, valley of the Brahmaputra River in Assam, northeastern hill ranges surrounding Assam Valley, and islands of Arabian Sea and Bay of Bengal.

Climate in India: Climate varies significantly from Himalayas in north to tropical south. Four seasons: relatively dry, cool winter December to February; dry, hot summer March to May; southwest monsoon June to September when predominating southwest maritime winds bring rains to most of country; and northeast, or retreating, monsoon October and November.

Politics

Legal system

Based on English common law; judicial review of legislative acts; accepts compulsory ICJ jurisdiction, with reservations; separate personal law codes apply to Muslims, Christians, and Hindus

http://www.indianchild.com/geography_of_india.htm

Classes in India

Classes in India: In village India, where nearly 74 percent of the population resides, caste and class affiliations overlap. According to anthropologist Miriam Sharma, "Large landholders who employ hired labor are overwhelmingly from the upper castes, while the agricultural workers themselves come from the ranks of the lowest--predominantly Untouchable--castes." She also points out that household-labor-using proprietors come from the ranks of the middle agricultural castes. Distribution of other resources and access to political control follow the same pattern of caste-cum-class distinctions. Although this congruence is strong, there is a tendency for class formation to occur despite the importance of caste, especially in the cities, but also in rural areas.

In an analysis of class formation in India, anthropologist Harold A. Gould points out that a three-level system of stratification is taking shape across rural India. He calls the three levels Forward Classes (higher castes), Backward Classes in India (middle and lower castes), and Harijans (very low castes). Members of these groups share common concerns because they stand in approximately the same relationship to land and production--that is, they are large-scale farmers, small-scale farmers, and landless laborers. Some of these groups are drawing together within regions across caste lines in order to work for political power and access to desirable resources. For example, since the late 1960s, some of the middle-ranking cultivating castes of northern India have increasingly cooperated in the political arena in order to advance their common agrarian and market-oriented interests. Their efforts have been spurred by competition with higher-caste landed elites.

In cities other groups have vested interests that crosscut caste boundaries, suggesting the possibility of forming classes in the future. These groups include prosperous industrialists and entrepreneurs, who have made successful efforts to push the central government toward a probusiness stance; bureaucrats, who depend upon higher education rather than land to preserve their positions as civil servants; political officeholders, who enjoy good salaries and perquisites of all kinds; and the military, who constitute one of the most powerful armed forces in the developing world.

Economically far below such groups are members of the menial underclass, which is taking shape in both villages and urban areas. As the privileged elites move ahead, low-ranking menial workers remain economically insecure. Were they to join together to mobilize politically across lines of class and religion in recognition of their common interests, Gould observes, they might find power in their sheer numbers.

India's rapidly expanding economy has provided the basis for a fundamental change--the emergence of what eminent journalist Suman Dubey calls a "new vanguard" increasingly dictating India's political and economic direction. This group is India's new middle class--mobile, driven, consumer-oriented, and, to some extent, forward-looking. Hard to define precisely, it is not a single stratum of society, but straddles town and countryside, making its voice heard everywhere. It encompasses prosperous farmers, white-collar workers, business people, military personnel, and myriad others, all actively working toward a prosperous life. Ownership of cars, televisions, and other consumer goods, reasonable earnings, substantial savings, and educated children (often fluent in English) typify this diverse group. Many have ties to kinsmen living abroad who have done very well.

The new middle class is booming, at least partially in response to a doubling of the salaries of some 4 million central government employees in 1986, followed by similar increases for state and district officers. Unprecedented liberalization and opening up of the economy in the 1980s and 1990s have been part of the picture.

There is no single set of criteria defining the middle class, and estimates of its numbers vary widely. The mid-range of figures presented in a 1992 survey article by analyst Suman Dubey is approximately 150 to 175 million--some 20 percent of the population--although other observers suggest alternative figures. The middle class appears to be increasing rapidly. Once primarily urban and largely Hindu, the phenomenon of the consuming middle class is burgeoning among Muslims and prosperous villagers as well. According to V.A. Pai Panandikar, director of the Centre for Policy Research, New Delhi, cited by Dubey, by the end of the twentieth century 30 percent--some 300 million--of India's population will be middle class.

The middle class is bracketed on either side by the upper and lower echelons. Members of the upper class--around 1 percent of the population--are owners of large properties, members of exclusive clubs, and vacationers in foreign lands, and include industrialists, former maharajas, and top executives. Below the middle class is perhaps a third of the population--ordinary farmers, tradespeople, artisans, and workers. At the bottom of the economic scale are the poor--estimated at 320 million, some 45 percent of the population in 1988--who live in inadequate homes without adequate food, work for pittances, have undereducated and often sickly children, and are the victims of numerous social inequities.

http://www.indianchild.com/classes_in_india.htm

Architecture

Indian architecture is that vast tapestry of production of the Indian Subcontinent that encompasses a multitude of expressions over space and time, transformed by the forces of history considered unique to the sub-continent, sometimes destroying, but most of the time absorbing new ideas. The result is an evolving range of architectural production that nonetheless retains a certain amount of continuity across history. The earliest production in the Indus Valley Civilization was characterised by well planned cities and houses where religion did not seem to play an active role, but which demonstrated world-famous city planning.

Population of India

Economy of India

India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. About three-fifths of the work force is in agriculture, leading the UPA government to articulate an economic reform program that includes developing basic infrastructure to improve the lives of the rural poor and boost economic performance. The government has reduced controls on foreign trade and investment. Tariffs averaged 12.5% on non-agricultural items in 2006. Higher limits on foreign direct investment were permitted in a few key sectors, such as telecommunications. However, tariff spikes in sensitive categories, including agriculture, and incremental progress on economic reforms still hinder foreign access to India's vast and growing market. Privatization of government-owned industries remained stalled in 2006, and continues to generate political debate; populist pressure from within the UPA government and from its Left Front allies continues to restrain needed initiatives. The economy has posted an average growth rate of more than 7% in the decade since 1996, reducing poverty by about 10 percentage points. India achieved 8.5% GDP growth in 2006, significantly expanding manufacturing. India is capitalizing on its large numbers of well-educated people skilled in the English language to become a major exporter of software services and software workers. Economic expansion has helped New Delhi continue to make progress in reducing its federal fiscal deficit. However, strong growth - more than 8 percent growth in each of the last three years - combined with easy consumer credit and a real estate boom is fueling inflation concerns. The huge and growing population is the fundamental social, economic, and environmental problem.

Communications system of India

Transportation in India

Antidumping
Anti-dumping Duty
Under section 12 of the Custom Act, 1962 Antidumping duties are applied at the rates specified goods imported from specified countries to protect indigenous industry from injury resulting from dumping of goods.

Countervailing Duty (CVD)
Additional duty equal to the excise leviable on like goods produced or manufactured in India. This is levied under Section 3 of CTA. This is commonly called "countervailing duty"(CVD). If such duty is on ad valorem basis then the value for this purpose is the total of the assessable value plus custom duty

Excise Duties
There are several types of excise duties in India which are applied at the time of clearance of such goods. These duties are :

Basic Excise Duty : This duty is specified against each sub-heading in the First Schedule to the Central Excise Tariff Act, 1985. There are however,  notifications issued by the Central Government which grant either total or partial exemption from incidence of basic duty. These exemptions are both general and conditional in nature. The effective rate of basic excise duty is thus determinable only after reference to the relevant exemption notification given under the heading "General Exemptions".

Special Excise Duty : This duty is leviable only on a few items. The rate of duty and the items on which it is leviable are specified under the Second Schedule to the Central Excise Tariff Act, 1985.

Additional Duties of Excise : There are a number of additional duties leviable under different enactments on various commodities. Under Additional Duties of Excise (Textile and Textile Articles) Act, 1978, duties of excise are chargeable  on specified textiles and textile articles.  Additional Duties of Excise (Goods of Special Importance) Act, 1957 prescribes additional duties on sugar, tobacco products and textile articles in lieu of sales tax.

Additional Duties
Special Additional Duty of Customs (SADD)
Special additional duty of 4% SADD will be computed on the aggregate of assessable value of basic duty of customs and additional duty of customs (CVD). The SADD will be charged under Section 3(A) of Customs Tariff Act, 1985.

Import Taxes
Octroi
In addition to the above duty, for all Mumbai destination shipments there will be Local Municipal Tax (Octroi) applicable for Import at may be @ 4.5% on the landed value is applicable. Landed Value = Assessed Value + All Customs Duty.

Exchange Controls
India's exchange control policy is set and administered by Reserve Bank of India (RBI) under the Foreign Exchange management Act for Importer and Exporter (FEMA). FEMA has been formed with the objective for facilitating external trade and payment and for promoting the orderly development and maintenance of Foreign Exchange Market in India. The Reserve Bank of India upholds this act. Under the Rule or Regulation made there under, or with the general or special permission of the Reserve Bank of India, No person shall

For formal clearance, all exporters are required to provide a Sellers' Declaration Form (SDF) or Guaranteed Remittance Form (GR) or Exchange Control Declaration (ECD), a declaration to the Reserve Bank of India (RBI) that indicates the currency involved in a transaction and the terms of payment specified.

Any advance payments required by the exporter prior to import of the goods are permitted only if the importer obtains a bank guarantee from an international bank covering the advance remittance amount. The import of the goods should normally be completed within 3 months of advance payment to the foreign exporter.

Technical Barriers to Trade (TBT's)
Technical barriers or non-tariff barriers to trade as they are sometimes known, can cause many problems for exporters looking for new markets for their products. These barriers can be in the form of regulations, standards, testing and certification procedures. The World Trade Organization (WTO) Agreement on Technical Barriers to Trade tries to ensure that these barriers do not create unnecessary obstacles.

Distribution Channels of Cement

The domestic cement industry is highly fragmented, with over 50 cement players and more than 120 manufacturing plants. This apart, the industry is highly regionalized, as cement units are concentrated in clusters, close to the limestone deposits. Competition is also regionalized since the low-value of the commodity makes transportation over long distances uneconomical.

Concentration, in terms of the number of units and the dominance of large players, is moderate. The minimum economic size of a cement plant is 1 million tonnes. However, concentration has improved over the past 6 years with the top six players accounting for 52 per cent of the total cement capacity in 2003 up from 33 per cent in 1997. The share of cement plants with capacities of less than 3 million tonnes has declined over the past 6 years from 48 per cent in 1997, to 28 per cent in 2003.

During 1999-2000 to 2003-04, the installed capacity of the industry increased at a CAGR of around 7.5 per cent to 146.4 mtpa. (The capacity of the industry is taken as the sum of the installed capacity of all the players in the industry.)

The seven states: Madhya Pradesh, Andhra Pradesh, Rajasthan, Gujarat, Karnataka, Tamil Nadu and Maharashtra, account for around 74 per cent of the total domestic capacity.

Cement sector is characterized by the following

1. Units concentrated near raw material sources or markets

2. Power intensive

3. High freight costs

4. Small value chain

5. Regional variation and volatility in prices and margins

6. High debt levels

7. Regional distribution of demand

8. Seasonality of demand and cyclicality of the industry

However the future of Cement Sector is as follows

1. Steady price growth over the next 2-3 years

2. Housing and government infrastructure spending to translate into an 8 per cent CAGR in demand

3. Greenfield/Brownfield capacity additions of around 35 million tonnes will be required to match the robust demand growth

4. Blending to contribute around 10 million tonnes of capacity

5. Operating rates to touch 88 per cent by 2006-07

6. Production costs to increase moderately

The per capita consumption of cement in India is very low, as compared with the developed economies and the overall world average per capita cement consumption. The per capita consumption of cement in India is even less than that in Africa, a relatively underdeveloped continent. 3% per capita cement consumption of cement has increased in most states, except Chandigarh, where it has declined by 7 %.

Companies invariably hire C & F agents or transport cements to own or government warehouses either via roadway or railways. Incase of exports, cement reaches the nearest port via roadways or railways and is then transferred to the importing country.

Domestically, from C & F agents or warehouses the cement is transported to the dealers/distributors and in turn to sub dealers who finally sell it to the end users. There may or may not be physical ownership of goods. In the second case, dealers and sub dealers take order from buyers and place it to the companies, co ordinate and monitor the timely dispatch of said orders, transportation of goods and final delivery.

Distributor network in cement industry is highly dominating and companies are compelled to hire as they do not really have that rapport and touch with the end consumer of their product. Apart, from this, the distributors have storage facilities as well, which help control well in the entire supply chain, as they are the ones who bring orders and therefore are directly responsible for the business that a manufacturer would do.

Industry dynamics in Cement Industry do not favor entry of MNCs into the Indian market.

http://www.beemanagement.com/pdf/2005/pn3.pdf

Cement Industry of India

The Indian cement industry is on a roll. Driven by a booming housing sector, global demand and increased activity in infrastructure development such as state and national highways, the cement industry has outpaced itself, ramping up production capacity, attracting the top cement companies in the world, and sparking off a spate of mergers and acquisitions to spur growth.

The recent boom in the housing and construction industry in India has worked wonders for cement manufacturing companies with capacity utilization crossing the 100 per cent mark for the first time in January 2007.

According to Cement Manufacturers Association (CMA), the average monthly capacity utilization during fiscal 2006-07 was 94 per cent. Also, cement despatches for the recently concluded fiscal was at an all-time high of 155 million tonnes (mt), up from 142 mt in the previous fiscal, thereby recording a growth of 10 per cent. More particularly, the despatches for March 2007 stood at 15.08 mt as against an installed capacity of 14.95 mt.

Production

Globally, India is the second largest producer of cement. Cement production grew at the rate of 9.1 per cent during 2006-07 over the previous fiscal's total production of 147.8 mt. Of this, 9.3 million tonne of cement was exported.

The Indian cement industry comprises 130 large cement plants and 365 mini-cement plants, with installed capacities of 165 million tonnes per annum (mtpa). Large cement plants accounted for over 94 per cent of the total installed capacity.

Despite the growth of the Indian cement industry, India's per capita production of 115 kilograms per year lags the world average of over 250 kilograms and China's production of more than 450 kilograms per person. Clearly there remains room for growth in the industry in India.

The cumulative FDI inflows into the cement and gypsum industry has been US$ 989 million from August 1991 to March 2007 representing 2.26 per cent of the total FDI inflows into the country.

Mergers and Acquisitions

The booming demand for cement, both in India and abroad, has attracted global majors to India. In 2005-06, four of the top-5 cement companies in the world entered India through mergers, acquisitions, joint ventures or Greenfield projects. These include France's Lafarge, Holcim from Switzerland, Italy's Italcementi and Germany's Heidelberg Cements. While Lafarge is investing over US$ 500 million in India to expand capacities by six million tonne, Italcementi will invest US$ 174 million over the next two years in various greenfield and acquisition projects.

The Indian cement industry has also witnessed a flurry of mergers and acquisitions within the domestic players, bringing smaller players under the umbrella of larger companies, and larger companies coming under the umbrella of global players like Holcim and Heidelberg. The top two groups in the industry, Aditya Birla Group and Holcim Group, now control more than 40 per cent of total capacity in the country. Further, more than global majors are now controlling a quarter pie of total capacity.

Overview of the performance of the Cement Sector

The Indian cement Industry not only ranks second in the production of cement in the world but also produces quality cement, which meets global standards. However, the industry faces a number of constraints in terms of high cost of power, high railway tariff; high incidence of state and central levies and duties; lack of private and public investment in infrastructure projects; poor quality coal and inadequate growth of related infrastructure like sea and rail transport, ports and bulk terminals. In order to utilize excess capacity available with the cement industry, the government has identified the following thrust areas for increasing demand for cement:

(i) Housing development programmes;

(ii) Promotion of concrete highways and roads;

(iii) Use of ready-mix concrete in large infrastructure projects; and

(iv) Construction of concrete roads in rural areas under Prime Ministers Gram Sadak Yojana.

Demand Projection

Given the sustained growth in the housing sector, the Government's emphasis on infrastructure (at both the national and the state level) and increased global demand, the outlook for India's cement industry is exceedingly bright.

The demand growth for the current fiscal is expected to be in the region of 10 per cent, which will translate into a demand of 175 mt.

To meet this rising demand, many Indian companies are going for capacity expansion. Close to 54 mt of additional capacity is to come up in the next three years, with an investment of around US$ 5.31 billion.

According to a Deutche Bank report, close to 5.1 mt will be added by second half of 2007-08, while 11.46 mt will be added in 2008-09. Around 28.90 mt is likely to be added in 2009-10 and 2.87 mt in 2010-11.

A similar projection by National Council of Applied Economic Research (NCAER) for cement consumption, on a conservative basis, has placed cement demand at 225 mt by the fiscal year 2011. If the Government goes ahead with infrastructure projects as planned, consumption is likely to be much higher at 291 mt.

http://www.ibef.org/artdispview.aspx?in=11&art_id=16050&cat_id=526&page=1

Price is the only element in the marketing mix that produces revenue; all other elements represent costs. Price is also one of the most flexible elements of the marketing mix. Unlike product feature and channel commitments, price can be changed quickly. At the same time, pricing and price rivalry is the number one problem facing many companies. The cement industry is facing cutthroat rivalry, so it is extemely necessary to revise the price often enough to reflect market changes. The silent features of Cherat’ s pricing policy are as follow:

Pricing Objectives

Cherat has following pricing objectives:

• To compete with the major brands in the market.

• To get maximum profit in each market.

Pricing Strategy

Basically company’s pricing strategy is based on competitors’ prices by keeping in view the area. Weightage is given to the established brand in the market or the direct competitor price. Rates and competitors vary from market to market and so prices are. Due to the Sales Tax two prices are calculated for every areas, one is Registered rate @ 15% and other is Non-Registered rate @ 18%. Registered rate is calculated on the basis of Non-Registered rate of the area.

Pricing and related adjustments

The authority of the executive director marketing fixes cement prices. Respective area managers can change the sales price but only when it is rectified by the E.D.M. Any change in sales prices is immediately brought into the knowledge of the Chief Executive and sales Chief Financial officer at head office. Sales prices are normally changed on account of the changing market conditions in accordance with the specific market strategy of the company.

Rebate is approved by the E.D.M party wise rebate allowed is sent to Head Office for verification. After verification from head office final figures are incorporated in the S&D system. Rebate allowed is adjustable against the future delivery.

Competitors

Brand Name

Our Price

Our price is $72 per m.tones and $3.6 per sack

Competitor’s price

Our competitor’s price in Pakistan of per sack ranges from $3.7 to $3.8

Our promotion and advertising methods

Competitor’s promotion and advertising methods

Competitors Distribution Channels

Manufacturer (Exporter) Middle man (Agent) Importer

Market Size

Estimation

Kolkata: The cement industry is poised to add 111 million tonnes of annual capacity by the end of 2009-10 (FY10), riding on the back of an estimated 141 outstanding cement projects.

The surplus position that was long enjoyed by the industry is steadily on the decline on account of increased demand. According to recently announced expansion plans, installed capacity is expected to increase to 186 million tonnes per annum (mtpa) by FY08-end, and 219 mtpa by end of FY09, and up to 241 mtpa by FY10-end, says the latest ICRA Industry Monitor report.

The report predicts that considering an expected production and consumption growth of 9 to 10 per cent during this year, the demand-supply position of the cement industry is expected to improve from 2008-09 onwards, resulting in an expected price stabilisation.

Cement prices shot up from Rs 158 a 50 kg bag in December 2005 to Rs 350 for the same quantity this July, while the wholesale price index (WPI) for cement increased 9.1 per cent in FY07, compared with 3.9 per cent during FY06.

Pakistan, which has a surplus of 10 to 12 million tonnes (mt), has shown interest in exporting cement to India, and the landed cost of cement imported from that country is Rs 225 a 50 kg bag.

Large imports, however, are unlikely to happen given the bulkiness of the commodity. The government has, in a bid to check cement prices, abolished the import duty on cement this year.

Domestic cement consumption for the first half of the financial year was 53.62 mt, up 10.9 per cent from the same period last year. Exports of the commodity declined 37.7 per cent during the period.

Apart from an increase in installed capacity from 165.6 mtpa at March-end to around 171 mtpa at July-end this year, higher domestic demand has resulted in increased capacity utilisation. The industry's capacity utilisation was 96.9 per cent during the April-July period.

Major players like ACC, Grasim Industries, Gujrat Ambuja Cements, operated at over 90 per cent capacity during this period. ACC was the largest producer with 15.35 mt. Next was Gujarat Ambuja with a production of 13.64 mt, followed by Grasim at 12.57 mt. All major players have resorted to a combination of greenfield capacities and takeover of existing capacities for growth.

http://www.ibef.org/artdisplay.aspx?cat_id=527&art_id=17109&arc=show

India: Foreign Trade Policy

Although India has steadily opened up its economy, its tariffs continue to be high when compared with other countries, and its investment norms are still restrictive. This leads some to see India as a ‘rapid globalizer’ while others still see it as a ‘highly protectionist’ economy.

Till the early 1990s, India was a closed economy: average tariffs exceeded 200 percent, quantitative restrictions on imports were extensive, and there were stringent restrictions on foreign investment. The country began to cautiously reform in the 1990s, liberalizing only under conditions of extreme necessity.

Since that time, trade reforms have produced remarkable results. India’s trade to GDP ratio has increased from 15 percent to 35 percent of GDP between 1990 and 2005, and the economy is now among the fastest growing in the world.

Average non-agricultural tariffs have fallen below 15 percent, quantitative restrictions on imports have been eliminated, and foreign investments norms have been relaxed for a number of sectors.

India however retains its right to protect when need arises. Agricultural tariffs average between 30-40 percent, anti-dumping measures have been liberally used to protect trade, and the country is among the few in the world that continue to ban foreign investment in retail trade. Although this policy has been somewhat relaxed recently, it remains considerably restrictive.

Nonetheless, in recent years, the government’s stand on trade and investment policy has displayed a marked shift from protecting ‘producers’ to benefiting ‘consumers’. This is reflected in its Foreign Trade Policy for 2004/09 which states that, "For India to become a major player in world trade ...we have also to facilitate those imports which are required to stimulate our economy."

India is now aggressively pushing for a more liberal global trade regime, especially in services. It has assumed a leadership role among developing nations in global trade negotiations, and played a critical part in the Doha negotiations.

http://web.worldbank.org

Marketing Plan

Marketing Objective

In Pakistan there supply is high and demand is very low due to which prices of cement in Pakistan decreases.

To eliminate the surplus we export cement to India where demand is very high and we can make good revenue to make our sales.

Target Market

Market of India is very large and the consumption of cement in recent coming years is expected to be very high particularly Uttar Perdesh and Punjab, Because of the new development projects in housing, roads and dames.

Expected Sales

It is estimated that in 2010 total demand of cement in India would increase up to 111 million tones so our sale will increase in the form of export.

Profit Expectation

As it is estimated that demand of cement in the growing Indian market by this increment in the demand that would be needed to increase in the production of cement in India but Indian current cement production units do not have much capacity to met the needs of the cement in market so than the Indian government will have to import cement from the foreign country where the price of cement is not as much high that would cause uncontrollable balance of trade. So there is lots of opportunities for the Pakistani cement industry to export cement to India by happening this the sale of our product would increase and according to our estimation we sell 50 Kg bags up to the price of $4-$4.5. That would generate millions of revenue for our company.

Market Penetration

As we looked that there are many production units in India like Ambuja cement, ACC, L & T cement, Ultra Tech Cement etc. so it is much difficult to enter in Indian cement market so we have to adopt the penetration strategy by charging low price to get share in the market and also using the promotional tools such as sales promotion and personal selling that cultivate the revenue for our company.

Promotion Mix

Objectives:

Our advertising objective is to communicate with our customer (importer) and increase sales to attract them.

We promote our product through

Cost of promotion

We use affordable method to setting promotional activities; means how much we can afford in particular activity to attract the customer.

Distribution:

Port selection

Origin port: Our origin port is wahgah border.

Mode selection

Railroads: We use railroads as distribution mode.

Advantages

Disadvantage

Packing

One side of bag is labeled in Hindi and the other side in English such as

Documentation required

Freight forwarder

We use Raaziq International (Pvt) Ltd. as a freight forwarder.

Channels of distribution

Import/Export agents

We use currently import/export agent as middleman who seeks and take orders from India importer and contact us to fulfill that order.

Manufacturer (Exporter) Middle man (Agent) Importer

Price determination

Transportation cost (Train freight and Custom Clearance Charges)

Lahore Railway Station T-10 Via Wagah Rs: 500/- per ton Recipted

Custom Clearance Charges for direct loading

Custom Clearance, Examination Rs: 100/- per ton for the said

Placement of Wagons services

Custom Seal

Security & loading Supervisor

Direct Loading from trucks to wagon

Terms of sales

C & F (Cost and freight) Wagah

The price include the cost of the goods and trasportaion costs to the named place of debarkation. The cost of insurance is borne by the buyer.

Method of payment

100% advance or through irrevocable and confirmed letter of credit of total amount of the order on C & F wagah basis payable at sight in favor of exporter. All bank charges within and outside Pakistan are on buyers account. Shipping documents shall be commercial invoice and truck receipt.