Business Barons
April 2005

With the re-christening of L&T Cement as UltraTech Cement, the Aditya Birla Group is pulling out all the stops to establish itself as not only the best domestic player but also among the global leaders in cement.

On the surface it appears to be only an ornamental change. L&T Cement has been rechristened UltraTech Cement. While O.P. Puranmalka, Group Executive President, Grasim Industries, and Chief Marketing Officer, UltraTech Cement Ltd., also insists that nothing except the name has changed, the truth is that with the unveiling of this new brand, the US$ 6.5 billion Aditya Birla group is implementing one of the largest brand transition exercises in India.

L&T had earlier demerged its cement division to create UltraTech Cement Ltd. Grasim, part of the Aditya Birla group, acquired a majority stock in the company for around Rs. 2,200 crore. Subsequently, Grasim, which has cement brands Birla Plus and Birla Super, was allowed to use the L&T Cement brand till 31 March 2005. Explaining the strategy behind the new brand name, Mr. Puranmalka says: "UltraTech has been the outcome of an in-depth research across the country. We wanted to capture the gene code of L&T in the new brand name. So we commissioned a research on customer perception about the L&T Cement brand. Of course, we were very sure in our mind that L&T Cement epitomised engineering prowess, technology quality and modernity."

The research findings threw up the same qualities, but the name itself was not associated with anything because L&T was not by itself a meaningful word. Moreover, the group wanted a new brand image which portrayed the intrinsic premium value of the brand - on cue from the findings of the survey. The outcome was UltraTech Cement. Says Mr. Puranmalka: "The name UltraTech with the signature line 'the engineer's choice' admirably captures the premium nature of the brand and its salience."

According to Mr. Puranmalka, excellent product quality and customer care will remain the hallmark of UltraTech. So while the emphasis remains on the essential quality of the established brand, the makeover is essentially to bring the Birla touch to the brand after its acquisition last year.

A strong bond
While some rivals would like to believe that this is only old wine in a new bottle, the brand transition is actually part of a large makeover keeping the quality unchanged. The Aditya Birla group is planning to invest Rs. 200 crore on enhancing the market through new capacities and bringing in higher volumes, adding 2.5 million tonnes largely by removing bottlenecks. The company has plans to maximise operational efficiencies and to sweat the assets and grow aggressively.

At the moment, the group has no plans of making changes in the existing production plants. While the cement plants at Kovaya and Jaffarabad in Gujarat, Awarpur in Maharashtra, Hirmi in Chattisgarh and Tadipatri in Andhra Pradesh provide unmatched quality, the grinding units at Durgapur, Jharsaguda, Arakkonam, Magdalla and Ratnagiri support them. Besides, there are packaging terminals set up at Mangalore, Mumbai and Sri Lanka. These facilities are managed by the same team of excellent and resourceful technocrats and backed up by the same marketing team, explains Mr. Puranmalka.

With the acquisition of L&T's cement division, the Aditya Birla group had made its intention of growing the cement business very clear. UltraTech Cement enjoys the position of a market leader in all the regions where it is present. Over 42 per cent of its domestic sales arise from the western region. Moreover, its plants and markets complement those of Grasim. With these two brands, the group's cement capacity is in excess of 31 million tonnes per annum (tpa) -- of which 17 million tpa comes from UltraTech -- cementing its position as the ninth largest player in the world. Today, the group has 11 composite plants, seven split-grinding units, four bulk terminals, including one in Sri Lanka, and eight ready-mix concrete plants.

The Aditya Birla Group has initiated measures to bring about operational synergies between Grasim's cement business and UltraTech Cement. Initiating the process, the group has started joint procurement of raw materials. "We are eyeing synergies between the group's cement businesses. This will help us save costs," says Saurabh Misra, Chief Executive Officer, UltraTech Cement. The group is exploring the option of extending the joint efforts to other areas like logistics once the brand transition exercise is complete.

Besides, the company is looking at the option of achieving full capacity utilisation in Narmada Cements, a fully owned subsidiary.

Export initiatives
UltraTech Cement recently bagged an award for being the highest exporter of the year from CAPEXIL for the eighth time in a row for its sterling performance during 2003-2004. A leading cement exporter, its plants have also received various awards for environment protection, social awareness, safety and management of better industrial relations.

The company has been credited with boosting its exports of cement and clinker last year by 25 per cent to 3.5 million tonnes from 2.8 million tonnes in 2002-2003. According to a company official, stringent quality control and testing in the best laboratories ensure that cement and clinker produced from its plants conform to and surpass international standards. The laboratory is equipped to test cement as per ASTM, British and Euro standards. All the plants are ISO 9001 certified for the latest production process and 14001 certified for environmental management. The cement plant in Gujarat has an additional OHSAS 18001 certification as well for occupation hazards and safety parameters.

The company has a captive jetty at the Gujarat plant. The jetty length of 337 metres and width of 23 metres is capable of handling ships of 45,000 DWT with 11 metres draft. Loading of cement and clinker onto the ship is carried out by a shiploader, which is fed by a four km long conveyor belt that connects the plant to the jetty. UltraTech Cement is the first and only Indian cement company to obtain an EC certification for this plant. The accreditation, given by Bureau Veritas, is a pre-requisite to supply cement to EC member countries. UltraTech is one of the few Asian cement companies to receive this recognition.

The Hirmi Cement Works in Chattisgarh and the Jharsuguda Cement Works in Orissa make them ideal locations for export of cement and clinker to Nepal and Bangladesh. With captive railway sidings to facilitate loading of railway rakes and a high-tech production facility for cement and clinker, UltraTech Cement has found wide acceptance in these neighbouring countries.

Elaborating his growth strategy, Mr. Puranmalka says: "We will leverage synergies and further strengthen our ability to compete in the Indian and the overseas markets. We expect UltraTech to grow faster than the market and to improve the market shares. At the same time, developing beachheads overseas through a profitable exports business is a priority for all of us."

'UltraTech Cement enjoys a leadership position in all markets'. Read the O.P. Puranmalka interview here