Assignment

Crown Cement Company Bangladesh

Submitted To
Suraiya Mahbuba
Assistant Professor
Department of Business Administration
Stamford University Bangladesh.

Submitted By
Student ID Student Name
BBA 05617341 Romana Akter

Assignment Submission Date

Sunday, 6th August, 2017
INTRODUCTION

M. I. Cement Factory Ltd. is a public limited company and one of the leading manufacturers of
cement in Bangladesh. On December 31, 1994 it started its journey with the commitment for
providing high quality cement to the country. Its brand “Crown Cement” has own renowned
both at home and abroad.

Initially the plant was installed with a capacity of producing 600tpd (ton per day) of Portland
cement. With the passing of time the demand of Crown Cement increased day by day. Therefore
the sponsors expanded the project thrice. By dint of quality Crown Cement soon gained
acceptability both at home and abroad which raised the necessity for expanding the plant from
initial 600tpd (ton per day), 800tpd 2nd unit in 2002, 1400tpd 3rd unit in 2006 and 3000tpd
4th unit in 2011 thereby raising the total production capacity to 5800tpd i.e. 1.740 million
metric ton per annum.

The company has been listed in Dhaka Stock Exchange and Chittagong Stock Exchange in 2011.
Its high growth agenda have been highly appreciated by the shareholders, and have won
investors trust. Its backward and forward integration endeavors have given new dimensions to
its growth platform. With this end in view, the associate industrial units’ viz., Crown Polymer
Bagging Ltd., Crown Power Generation Ltd., Crown Mariners Ltd., Crown Transportation &
Logistics Ltd., Crown Cement Concrete & Building Materials Ltd. have been set up and are
already in operation. The company has also acquired a handy max size ocean going ship to
facilitate transportation of raw materials from abroad. It is hopefully expected that these new
growth platforms will facilitate creation of new dimensions and frontiers to the mother
company M. I. Cement Factory Limited.

Crown Cement pioneered in export of cement in 2003 and paved the way for earning hard-
earned foreign currency. Recently Crown Cement Achieved the National Export Trophy (Gold)
twice for attaining the top most place among the cement exporters in Bangladesh.

The factory of Crown Cement possesses well communications facility both through water and
road. It is located as West Mukterpur, Munshigonj on the bank of the river Dhaleswari. It is
connected by a metallic road (Dhaka-Munshigonj Highway) linked with the whole country.

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VISION Our vision is to make a contribution to the nation by creating opportunities in
the arena of industrial growth and development of Bangladesh, and to provide a
solid foundation for society’s future.

MISSION As a modern cement company, we manufacture cement (Brand name: Crown

Cement) to meet the needs of clients through innovative products & services
that create value for all our stakeholders.

GOALS Continually set the latest standards of modern technology in our industry to
satisfy the needs of customers through innovative products and services.
Contribute to the national economy and the infrastructure development of the
country.
Secure the strongest competitive position in our relevant market places
through making quality product and operational excellence.
Be partner with the best suppliers, delivering increased value for both the
company and our customers.
Be recognized as a respected & attractive company & an employer of first
choice.
Provide extensive career opportunities through competitive pay & benefits,
training & development & a congenial working environment.
Empower our employees at every level, and integrate them fully into our
network.
Continually demonstrate our commitment to sustainable environmental
performance, and play a pro-active role in Corporate Social Responsibility
(CSR) within our sphere of influence.
Achieve long-term financial performance.
Create secured investment opportunity within the country.
Enhance versatility, & diversification through the penetration of new market
segments.
Improve administrative & organization structures to review all business lines
regularly & develop the best practice in the industry.
Earn foreign currency through export.

VALUES Commitment
Shareholders – Create sustainable economic value for our shareholders by
utilizing an honest and efficient business methodology.
Community – Committed to serve the society through employment creation,
support community projects & events, and be a responsible corporate citizen.

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 Customers – Render service to our customers by using state-of-the-art
technology, offering diversified products and aspiring to fulfill their needs to
the best of our abilities.
Employees – Be reliant on the inherent merit of the employees and honor our
relationships.
Work together to celebrate and reward the unique backgrounds, viewpoints,
skills, and talents of everyone at the work place, at each level.
Accountability
We are accountable for providing quality products & excellent services along
with meeting the strict requirements of regulatory standards and ethical
business practices.
Inspiring, Motivating & Compelling
We’re ambitious and innovative. We get excited about our work. We bring
energy and imagination to our work in order to achieve a level of performance,
not achieved before. We achieve a higher standard of excellence. Everything we
produce should look fresh and modern.
Ability
We have the ability to undertake the responsibility to materialize our
commitment, and goals. In all matters we think ahead & take new initiatives. We
can see things from different perspectives; we are open to change and not
bounded by how we have done things in the past. We can respond rapidly and
adjust our mode of operation to meet stakeholder needs and achieve our goals.
Keep Promises
Everything we do should work perfectly. In all matters we maintain integrity &
excellence. We believe in actions, not in words.
Be Respectful
We respect our customers, shareholders & others stakeholders and want to
fulfill their needs. We are respectful in regard to all our interactions with them.
We always appreciate comments & suggestions from our stakeholders. We are
open, helpful & friendly. We have total commitment to customer satisfaction.

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CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

Corporate Social Responsibility (CSR) has become a fundamental business practice and has
gained much attention from board of directors and executive management team of Crown
Cement. The company understands that a strong CSR program is an essential element in
achieving good business practices and efficient leadership. That’s why the company has made a
clear vision for CSR activities.

In recent years Crown Cement has made donation in the following areas:
 Merit Scholarship
 Culture & Sports
 Environmental Issues
 Skill Development Program
 Full Education Support to a number of Underprivileged students
 Financial Support to Autistic People

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FIRM COMPETITIVE STRATEGIES

Competitive Strategy is defined as the long term plan of a particular company in order to gain
competitive advantage over its competitors in the industry. It is aimed at creating defensive
position in an industry and generating a superior ROI (Return on Investment).

Low-Cost Strategy
Here, the objective of the firm is to become the lowest cost producer in the industry and
is achieved by producing in large scale which enables the firm to attain economies of
scale. High capacity utilization, good bargaining power, high technology implementation
is some of factors necessary to achieve cost leadership.
Examples of Low-Cost Strategy
Crown Cement is giving good quality products, high technology implementation at an
affordable price which contain all others cement company in Bangladesh which a
premium offers of other.

Differentiation Strategy
Under this strategy, firm maintains unique features of its products in the market thus
creating a differentiating factor. With this differentiation leadership, firms target to
achieve market leadership. And firms charge a premium price for the products (due to
high value added features). Superior brand and quality, major distribution channels,
consistent promotional support etc. are the attributes of such products.
Examples of Differentiation Strategy
Crown Cement offers cements which are different from other cement brands. Crown Cement is
more production advanced, have better products quality, have got distribution channels, and
target to achieve market leadership.

Cost Focus
Under this strategy, firm concentrates on specific market segments and keeps its
products low priced in those segments. Such strategy helps firm to satisfy sufficient
consumers and gain popularity.
Examples of Cost Focus
Crown Cement is focused towards giving market segments at a low cost as compared to other
competitors.

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Differentiation Focus
Under this strategy, firm aims to differentiate itself from one or two competitors, again
in specific segments only. This type of differentiation is made to meet demands of
border customers who refrain from purchasing competitors’ products only due to
missing of small features. It is a clear niche marketing strategy.
Examples of Differentiation Focus
Crown Cement concentrates on premium segment which includes customer demands.

My Decisions of Firm Competitive Strategies for Crown Cement

In my decisions, differentiation strategy is better for Crown Cement, when businesses can find
the perfect balance between price and quality; it usually leads to a successful product or service.
A product or service must offer value through price or quality to ensure the business is
successful in the market. To succeed, it’s not enough to be ‘just as good as’ another business.
Success comes to firms that can deliver a product or service in a manner that is different,
meaningful and based on their customers' needs and desires. Deciding on the appropriate price
and quality depends on the business' brand image and what they hope to achieve with relation
to their competition.

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SWOT ANALYSIS

SWOT Analysis (alternatively SWOT matrix) is an acronym for strengths, weaknesses,

opportunities, and threats and is a structured planning method that evaluates those four
elements of an organization, project or business venture. A SWOT analysis can be carried out for
a company, product, place, industry, or person. SWOT analysis groups key pieces of information
into two main categories:

Internal factors – the strengths and weaknesses internal to the organization

External factors – the opportunities and threats presented by the environment external to the
organization

This SWOT Analysis of Crown Cement provides a full SWOT analysis of the company's
businesses and operations. The profile shows a comprehensive view of the company's key
strengths and weaknesses and the potential opportunities and threats. The SWOT analysis has
been utilized in community work as a tool to identify positive and negative factors within
organizations, communities, and the broader society that promote or inhibit successful
implementation of social services and social change efforts. After a SWOT analysis of Crown
Cement is completed, a social change organization can turn the SWOT list into a series of
recommendations to consider before developing a strategic plan.

In my view, the SWOT Analysis of Crown Cement is following:

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

Reputation in Shortage of Well established Large
marketplace consultants at position with a consultancies
operating level well-defined operating at
rather than market niche a minor level
partner level
Expertise at Unable to deal with Identified market Other small
partner level in multidisciplinary for consultancy in consultancies
HRM consultancy assignments areas other than looking to invade
because of size or HRM the marketplace
lack of ability

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COMPANY ANALYSIS AND STOCK VALUATION OF CROWN CEMENT

In my view of the company analysis and stock valuation is follows and determine by “Growth
Companies and Growth Stocks” for Crown Cement. Because growth companies stocks create
value by continuing to expand above-average earnings, free cash flow, and research and
development spending. Growth stocks pay lower dividends than value stocks because of the
focus to reinvest profits in the business to help continue driving earnings growth. There is some
company analysis and stock valuation of Crown Cement is given below:

Financial Analysis
The financial analysis of Crown Cement in the financial year 2016 was impressive with turnover
volume growth of 19%. However, selling costs have risen in the face of stiff competition. The
financial analysis of Crown Cement in 2015-2017A* are given below:

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Six Years’ Financial Statement Analysis Report (2011-2016)

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Turnover in Fiscal Year
The brand Crown Cement leads cement exports although exports comprised only 4.8% of
turnover in FY 2015-16. M.I Cement Factory also has a Ready Mixed Concrete factory located
near Ashulia with capacity to produce 42,000 cft concrete per day.

Capacity Utilization
Capacity utilization is significantly higher than peers at 84.5%. A massive expansion is
underway that will increase capacity to 10,000 MT/day by August 2018. The new unit will
produce high quality slag-based Portland Composite Cement.

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Products & Raw Materials
M.I Cement Factory Limited’s core product portfolio includes Portland Composite Cement and
Ordinary Portland Cement under the brand “Crown Cement”. Roller. Domestic sales continue to
be the key revenue generator while exports accounted for 4.8% of turnover in FY2015-16.
Crown Cement leads cement exports from Bangladesh comprising 40% of total cement exports.
M.I Cement also produces a waterproof plaster by the brand “Crown Izonil”.

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There are approximately 34 operational cement companies in Bangladesh including MNCs and
local companies with combined effective capacity of roughly 30 mn MT against demand of 22
mn MT. The Crown Cement is dominated by larger companies with strong regional preferences;
branding is also important leading to increased selling costs. Cement demand registered a CAGR
of 8.7% in the period 2010-15. Bangladesh lacks access to the main raw material of cement,
clinker. As a result, clinker has to be imported to the country. This imposes significant supply
chain and exchange rate risks on the sector.

Seasonality Analysis of Crown Cement

The high degree of seasonality in cement demand due to the varying amounts of rain in different
seasons is reflected in the quarterly earnings of M.I Cement (Crown Cement). There is a clear
trend that annual demand peaks in the third quarter in 2017.

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MARKETING STRATEGY

Marketing strategy has the fundamental goal of increasing sales and achieving a sustainable
competitive advantage. The marketing strategic planning begins with a scan of the business
environment, both internal and external, this includes understanding strategic constraints.

Crown Cement try to leverage opportunities while trying to buffer themselves against potential
threats. Basically, the PEST analysis guides strategic decision-making. The main elements of the
Crown Cement PEST analysis are following:

Political: Economic:
Political interventions with the potential to Economic factors with the potential to
disrupt or enhance trading conditions e.g. affect profitability and the prices that
government statutes, policies, funding or can be charged, such as, economic
subsidies, support for specific industries, trends, inflation, exchange rates,
trade agreements, tax rates and fiscal seasonality and economic cycles,
policy. consumer confidence, consumer
purchasing power and discretionary
incomes.
Social: Technological:
Social factors that affect demand for Innovation, technological developments
products and services, consumer attitudes, or breakthroughs that create
tastes and preferences like demographics, opportunities for new products,
social influencers, role models, shopping improved production processes or new
habits. ways of transacting business e.g. new
materials, new ingredients, new
machinery, new packaging solutions,
new software and new intermediaries.

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OVERVIEW

Crown Cement is currently working on its 5th unit with a capacity of producing 4,200 MT
cement per day at an estimated cost of BDT 3000 mn. This is a significant increase given that
current capacity is 5,800 MT per day; the overall post-expansion capacity will thus become
10,000 MT. The project is expected to enter trials by mid-2017 while expected operational date
is set at August 2017. The new unit is also an improvement in terms of technology.

VRM Technology will produce high-quality slag based Portland Composite Cement. In December
2016, M.I Cement reached an agreement with IPDC whereby clients using Crown Cement could
avail home loans from IPDC at more attractive rates.

Even though M.I Cement Factory Limited’s capacity utilization of 84.5% in FY 2015-16 was good
compared to peers, there is significant risk of overcapacity if sales do not rise sharply following
the expansion. The excess capacity in the industry has already resulted in increased selling
costs; potential price cuts could severely erode margins. However, given the high potential for
cement growth in the country, the risk of such a scenario although possible is unlikely.

Crown Cement has expressed intent to explore new geographic areas for exports to counter
risks of overcapacity and is currently attempting to enter the Myanmar market.

A part of the company’s “Vision 2020” goals is to venture into prospective business ideas and
concepts to strengthen the company’s portfolio. The company’s ambitious plans for 2020
include reaching an overall capacity of 16,000 MT and setting up its own clinker manufacturing
plant. It is mentionable that M.I Cement Factory Limited reached an agreement with Eagle
Vision of Japan to explore new business opportunities.

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REFERENCES

http://www.crowncement.com
www.crowncement.com/company/about-us/brief-history
www.crowncement.com/investor-relations/financial-statements/annual-report
www.crowncement.com/responsibility/csr-activities
https://www.scribd.com/doc/40618037/Cement-Industry-SWOT-Analysis
http://www.bharathdarshan.co.in/mineral/4580/financial-analysis-cement-industry-
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