B2B Assignment Section C Group 3
B2B Assignment Section C Group 3
B2B Assignment Section C Group 3
Section C
Group 3
Pon Vinothan - 16pgp037
Gogineni sai srujan- 16pgp081
Niranjan - 16pgp097
Vikas pullela - 16pgp126
Ankit Gaikwad - 16PGP144
Rahul dewan - 16pgp167
Industry
Cement prices in India recorded a 6.7 per cent month-on-month growth in April
2017, thereby indicating the probability of growth in volume and profitability of
cement companies in the quarter ending June 2017.
The housing sector is the biggest demand driver of cement, accounting for about 67
per cent of the total consumption in India. The other major consumers of cement
include infrastructure at 13 per cent, commercial construction at 11 per cent and
industrial construction at 9 per cent.
The total capacity of the cement industry in India is 435 million tonnes (MT) and the
growth of cement industry is expected to be 6-7 per cent in 2017 because of the
governments focus on infrastructural development. The industry is currently
producing 280 MT for meetings its domestic demand and 5 MT for exports
requirement. The country's per capita consumption stands at around 225 kg.
The Indian cement industry is dominated by a few companies. The top 20 cement
companies account for almost 70 per cent of the total cement production of the
country. A total of 188 large cement plants together account for 97 per cent of the
total installed capacity in the country, with 365 small plants account for the rest. Of
these large cement plants, 77 are located in the states of Andhra Pradesh, Rajasthan
and Tamil Nadu.
b. Impact of technology and other environmental factors that drive the industry
Political
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. 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.
Economic
The industry is on the boom, with a lot of government infrastructure and housing
projects under construction. 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.
Social
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 country.
Indian consumers prefer buying branded cement like Ultratech, Jaypee Cement,
Lafarge Cement etc. 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.
Technology
The Government of India plans to study and possibly acquire new technologies from
the cement industry of world. The government is discussing technology transfer in
the field of energy conservation and environment protection to help improve
efficiency of the Indian cement industry. Cement industry has made tremendous
strides in technological up-gradation and assimilation of latest technology. At
present 93% of the total capacity in the industry is based on modern and
environment-friendly dry process technology.
The eastern states of India are likely to be the newer and virgin markets for cement
companies and could contribute to their bottom line in future. In the next 10 years,
India could become the main exporter of clinker and gray cement to the Middle East,
Africa, and other developing nations of the world. Cement plants near the ports, for
instance the plants in Gujarat and Visakhapatnam, will have an added advantage for
exports and will logistically be well armed to face stiff competition from cement
plants in the interior of the country.
Due to the increasing demand in various sectors such as housing, commercial
construction and industrial construction, cement industry is expected to reach 550-
600 Million Tonnes Per Annum (MTPA) by the year 2025.
A large number of foreign players are also expected to enter the cement sector,
owing to the profit margins and steady demand. In future, domestic cement
companies could go for global listings either through the FCCB route or the GDR
route.
With help from the government in terms of friendlier laws, lower taxation, and
increased infrastructure spending, the sector will grow and take Indias economy
forward along with it.
d. Nature of demand
The demand for cement industry depends on the growth opportunities in the
infrastructure industry and government initiatives as government being one of the
key consumers
f. Competitive Scenario
Ultratech Cement After the acquisition of 2 cement plants in 2015, UltraTech has
planned to construct 2 greenfield grinding units in West Bengal & Bihar.
After the acquisition, the installed capacity of the company has reached 67mtpa. The
capacity is likely to reach 71 mtpa, after the completion of expansion.
Ultratech plans to build a new plant with capacity of 3.5 million tons per annum at
Dhar in Madhya Pradesh with an investment of US$ 400 million. The plant is
expected to start commercial production by 2019.
2) Financial Services:
a) Size and number of players
With the potential to become the fifth largest banking industry in the world by 2020 and
third largest by 2025 according to KPMG-CII report, Indias banking and financial sector is
expanding rapidly. The Indian Banking industry is currently worth Rs. 81 trillion (US $ 1.31
trillion) and banks are now utilizing the latest technologies like internet and mobile devices
to carry out transactions and communicate with the masses.
The Indian banking sector consists of 26 public sector banks, 20 private sector banks and 43
foreign banks along with 61 regional rural banks (RRBs) and more than 90,000 credit
cooperatives.
Asset management:
The asset management industry in India is among the fastest growing in the world. As of
FY17, 42 asset management companies were operating in the country.At the end of
September 2017, the assets under management of the mutual fund industry stood at US$
325.71 billion.
Life insurance:
The life insurance market has grown from US$ 10 billion in FY02 to US$ 56.05 billion in FY16.
Over FY0216, life insurance premiums witnessed growth at a CAGR of 10.52 per cent.
Business of life insurance companies from first year premium stood at US$ 8.33 billion for
the period ended July 31, 2017
Non-life insurance:
The non-life insurance market grew from US$ 2.6 billion in FY02 to US$ 19.71 billion in FY17.
During FY0217, increase in non-life insurance premiums witnessed at a CAGR of 14.47 per
cent while premiums generated by private players surged at a CAGR of 35.2 per cent and
premiums from public sector companies increased at a CAGR of 10.05 per cent during the
same period.
NBFC:
NBFCs are rapidly gaining prominence as intermediaries in the retail finance space. NBFCs
finance more than 80 per cent of equipment leasing and hire purchase activities in India.
The public deposit of NBFCs increased from US$ 293.78 million in FY09 to US$ 6,089.52
million in FY17, registering a compound annual growth rate (CAGR) of 46.10 per cent.
b) Impact of technology and other environmental factors that drive the industry
Insurance industry:
Emergence of new distribution channels: Players in industry are investing in Information
Technology to automate various processes and cut costs without affecting service delivery.
It is estimated that digitization will reduce 15-20 per cent of total cost for life insurance and
20-30 per cent for non-life insurance From October 2016, IRDAI has mandated having an
E-insurance (electronic insurance) account to purchase insurance policies
Banking industry: Access to banking system has also improved over the years due to
persistent government efforts to promote banking-technology and promote expansion in
unbanked and non-metropolitan regions.
As of August 2017, total number of ATMs in India increased to 208,111 and is further
expected to double over next few years, thereby leading to increase in the number of ATMs
per million people in India from 105 in 2012, to about 300 by 2017.
In March 2016, ICICI Bank launched Host Card Emulation (HCE) for its debit & credit card
holders, to make contactless payments at stores by waving their phones across NFC enabled
machines. Similarly State Bank of India unveiled SBI Mingle, as social media banking
platform for Twitter & Facebook users. Banks protect margins by promoting usage of
efficient technologies like mobile & internet banking. State Bank of India is planning to
launch SBI Digi Bank, where end to end digitalization of all products and services would take
place. As of February 2017, Microsoft Corp. is planning to launch Skype with Aadhaar
authentication to allow access to bank accounts using webcams.
Technological innovations
Technological innovation will not only help to improve products and services but also to
reach out to the masses in cost effective way. Use of alternate channels like ATM, internet &
mobile hold significant potential in India. Now cloud technology & analytics also gaining
grounds.
Infrastructure financing
o India currently spends cent of GDP on infrastructure; NITI Aayog expects this fraction
to grow going ahead
o Banking sector is expected to finance part of the US$ 1 trillion infrastructure
investments in the 12th Five Year Plan, opening a huge opportunity for the sector
c) Present Demand
The financial services industry accounts for around 6% of the GDP
This sector has been growing at a CAGR of 14.8% over the last 9 years
This sector is dominated by the banking sector with commercial banks accounting for
over 64% of the total assets held by the financial system
The asset management industry in India is among the largest in the world
Domestic mutual fund (MF) industry's Assets Under Management (AUM) touched a
record high of Rs 20.06 lakh crore (US$ 313.06 billion), nearly a fifth of the banking
system deposits, in August 2017
Corporate investors accounted for around 46.95 per cent of total AUM in India,
while High Net Worth Individuals (HNWI) and retail investors account for 27.63 per
cent and 22.74 per cent
At the end of April 2017, the assets under management of the mutual fund industry
stood at US$ 299.04 billion
Total M&A activity is valued at US$ 15.8 billion
The Indian life insurance industry has begun to recover and is likely to report 12-15
per cent growth in FY 2016-17
The revenues of the brokerage industry in India are estimated to grow by 15-20 per
cent to reach Rs 18,000-19,000 crore (US$ 2.80-2.96 billion) in FY2017-18, backed by
healthy volumes and a rise in the share of the cash segment
Projected Demand
The Association of Mutual Funds in India (AMFI) is targeting nearly fivefold growth in
assets under management (AUM) to Rs 95 lakh crore (US$ 1.47 trillion) and a more
than three times growth in investor accounts to 130 million by 2025
Mobile wallet transactions to touch Rs 32 trillion (USD $ 492.6 billion) by 2022
Indias HNWIs wealth is likely to expand at a CAGR of 19.7% and reach around USD 3
trillion by 2020
d) Nature of Demand
The demand for the financial services depend on the rising income levels of the
individuals
Over 95 per cent of household savings in India are invested in bank deposits and only
5 per cent in other financial asset classes
There is also a marked increase in digital financial services in the country
Policy changes by RBI has expanded the target market to semi urban and rural areas
Also increase in HNWIs is also increasing the demand for wealth management
services
f) Competitive Scenario:
Competition is really high in the financial services segment. There are big names like Motilal,
Nalwa Sons and Edelweiss services.
Motilal Oswal Financial Services Ltd: Motilal Oswal Financial Services Ltd. is a reputed name
in Financial Services with group companies providing services such as Private Wealth
Management, Retail Broking and Distribution, Institutional Broking, Asset Management,
Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal
Strategies & Home Finance. In 2017, it worth actually rs800crores.
Nalwa Sons Investments Ltd: Nalwa Sons is in the Finance - General sector. This is one of the
leading investments company. The current market capitalisation stands at Rs 681.06 crore.
India Infoline Ltd.: IIFL is a financial services conglomerate which was started by a group of
passionate entrepreneurs in 1995. It was also recognized as Best Private Banking Services.
overall in India 2017- by Euromoney.
Edelweiss Capital Ltd. : The Edelweiss Group is one of India's leading diversified financial
services company providing a broad range of financial products and services to a substantial
and diversified client base that includes corporations, institutions and individuals. Edelweiss
has an asset base of over INR 38,000 crore with revenue of INR 6,634 crore and net profit of
INR 609 crore for FY17. At current, Edelweiss Tokio Life aims at doubling business by 2020.