Group no.

International Finance

Birla Corporation Case

Business activities based on the recent developments
The Given data states that Birlas Profits had been increased from 4.19 crore in 2002 -03 to 41.56 crore in 2003-04 and their 88.75% sales consist of sales from cement division. But this was the case in both years 2002-03 and 2003-04 which means those profits were achieved only by improvising on internal factors of the company like improvements in performance of Cement division by achieving the higher capacity utilization of available resources and cost effective management. On the other hand Birlas Calcium-Carbide business was facing the Global Competition which is an external factor and it is out of the control of the corporation. As company know its strength in Cement sector and considering the factors that were in favor of hike in Cement demand like Growth in Economy (demand of more Infrastructure) Increase in demand of Real estates Revise of Liberalization Rules and Regulations in 2000 increased the number of export units

Due to the above said reasons company sees a future growth in the Cement sector and decided to increase the capacity of Durgapur Cement Plant by 1 Million Tonnes and Chanderia Cement Plant by 3 Lac Tonnes per annum. with this company will cater the future demand of Cement. Power requirement is major factor of the Cement plant but due to increasing Power tariffs it was becoming a hurdle for the company to be competitive in the market. So now company has decided to setup its own power plant of 27 MW as a new industrial undertaking at M.P. and Chanderia, Rajasthan. This plan to setup of Power Plant will help the company to improve upon its present cost structure and also to be a cost effective in its future plans. Company is not planning anything for its other business areas where the company is losing money as all those business were getting affected by the external factors and also depends upon the activity of its competitors and Government Polices, Rules and Regulations. As to some extent Iron and Steel are complementary products of cement. So increases in the demand of Cement will also increase the demand of Iron and Steel and the expansions by the company which will make the company more dominant and competitive in the market and helps improve in the other business areas also.