CEE Jul-Sep-2012

I Eliminate I Raise x Non Profitable Customers x Non Profitable Products x Market share with customers to whom RMC is relevant These decorative concretes can not only be used in interiors but are extensively used in exteriors as well. x Share of high grade concrete in total volumes In addition there concretes like porous concretes which when used in pavements allow the rain water to seep into the ground and recharge I Reduce I Create x Consumption of materials through better mix design x New differentiated products x Cost Emerging Opportunities Till now the concrete is being looked upon as something that is very basic to construction and fulfils functional needs. However the recent technological advances, process controls, and product innovations have made it possible for this product to move beyond traditional functionality boundaries and fulfil inspirational needs of architects and house builders. Today concretes can be used to create floor finishes which can completely eliminate the need for any tile work or any other work that is needed to finish the floor. Some of the examples of such floor finishes such as "Acid stained concrete floor" or "Stamped Concrete with wooden floor look" can be seen in the pictures below Acid Stained Concrete Floor Stamped Concrete with wooden floor look underground water reservoirs. Light weight foam concretes are used for insulation and reduce electricity consumption in HVAC systems. Likewise there are many other ways in which the concrete can be innovatively used to create value for the customer as well as protect the environment. Conclusions The importance of concrete as modern day construction material cannot be denied. In fact the innovative use of concrete can only add to its importance in coming time. For RMC business to increase its commercially viability in India and its relevance as growth strategy for a cement company, the players in this market need to look beyond the traditional boundaries defined by existing market segments and product offering. Globally cement companies like Lafarge, Holcim, and Cemex etc. are investing in innovation through concrete and are focussing on high end products and market segments. Holcim looks at 8% operating profit margin from this business, which would approx. translate to about 15 - 16% ROCE and make this business comparable to the core business of cement in terms of the returns to share holders. In our view the growth of RMC usage in India is unstoppable. However, for commercial RMC to regi ster same type of growth they would have to tweak their strategies in order to increase the proportion of concrete users buying from commercial RMC plants. References 1. Published Annual Reports of Lafarge, Holcim, Cemex etc. for the year 2009- 2011 ~ 2. A.K. Jain and Anuj Maheshwari. RMC Industry in India - Challenges & Future Outlook, 12'h NCB International Seminar on Cement & Building Material , November 2011 3. Concrete Flooring, Buildotech, July 2012. 4. Syndicated Study: City wise assessment of RMC opportunity, CRISIL, July 2012 5. Interviews with builders and contractors 5 J