SEASON 2

Building a Future-Ready Organization

Case Study
 SEASON 2

Building a Future-Ready Organization

Executive summary

UltraTech is the No. 1 Cement Company in India. During FY24, UltraTech recorded remarkable financial results in FY24.
With net revenues of 69,810 crores, an EBITDA of 13,586 crores, and a PAT of Rs 7005 crores. UltraTech provides a
wide range of innovative solutions that cater to various aspects of construction, from foundation to finish. The product
suite seamlessly covers the conventional that positions cement at the core of all construction and the contemporary
that provides a bouquet of related construction products and services. Being a new entrant into the building products
eco-system, already dominated by a few existing strong players, there is a felt need to push to gain the market share
and win over competition by leveraging its existing strengths and spot the white spaces w.r.t. the existing players,
stakeholders & influencers in the construction/building materials domain.

Industry overview

Today, the building materials segment in India is pegged as a USD 240 billion industry. Industry experts predicted a
strong recovery rate for the construction and building materials sector through FY 2023-24, buoyed by the Centre’s
focus on expediting infrastructure development. The Indian construction materials market represents a compound
annual growth rate (CAGR) of 11 % for future. The building materials industry is one of the few that regained
momentum in leaps and bounds through the last financial cycle. Much of the growth will be fuelled by the industry’s
focused push towards supporting infrastructural development.

A lot has changed in the sector, which has supported its resilient growth trajectory. Here are some of the significant
shifts that have impacted the industry positively and are worth taking note of for future developments.

• New Technologies for Impacting Efficiencies: The world is now hospitable to new and efficient technologies in
material manufacturing. From automating manual processes to incorporating modern technology processes, the
industry has undergone a huge paradigm shift. This is expected to strengthen further in coming years.
Technology is going to continue playing a key role between 2023-25.

• Sustainability: The development of sustainable building material companies in India is on the rise for the past
few years. Strict environmental regulations and policies causing increased attention towards the event of
environmentally friendly materials in both manufacturing and operational phases of the fabric life cycle of the
building and housing industry worldwide. Cities' growth will increase energy demand for building power, making
measures like the updated Energy Conservation Building Code (ECBC) critical.

• Policies and Infrastructural Development: More than 40% of the Indian population is predicted to dwell in
cities by 2030 (compared to 34% presently), resulting in a requirement for 25 million more affordable
apartments. The resurgence of the industry posts the pandemic was aided by the policy reforms like GST (Goods
and Services Tax), RERA, REIT which were introduced to provide impetus to the sector. In 2023, the reforms like
Availability of housing loans to all segments (especially Affordable housing where the customer credit profiles
may not meet standard financing norms), Long term funding support in case of long gestation projects and
compulsory adherence to the contracts irrespective of political or policy changes, helped give a push to this
sector.
 SEASON 2

Ram Kalyan Medury, Founder & CEO (Chief Executive Officers) of Jama Wealth, says high interest rates may defer
second home’s buying. But commercial construction may not be hugely impacted. Real estate is a haven bet; will
keep demand buoyant for some time, he says. Sector has seen recovery and global factors may not dampen this.

Traditionally, building materials in India have been sold through a very dedicated channel of electrical, lighting,
bathrooms, sanitaryware, furniture and hardware stores. With the addition of new suppliers in the market each day,
and with the limited space and display options (add to that an informed and an ever-evolving customer), new sales
channels are emerging with the passage of time. And what is quite interesting is that even for competing brands, as
the category overlaps don’t seem to work as effectively for one as for another, so also seems to be the case with sales
channels.

Key highlights

• Greater standardization and productization, such as better planning with building-information modelling (BIM),
could move decisions upstream to less-fragmented and more-sophisticated buyers, and reduce the scope of
materials needed.

• Better on-site efficiency could increase the need for just-in-time logistics.

• Expanded online marketplaces for materials and direct sales from suppliers could increase price transparency
versus performance, resulting in a reduction in the breadth of materials on the market and creating a new set of
competitors—while also potentially increasing direct-to-site deliveries, undermining the economics of a store
network.

• Increased off-site construction could shift procurement to factories with consolidated demand and predictable
planning horizons, reducing the need for store networks.

Ultratech Cement Ltd.

UltraTech Cement Limited is the cement flagship company of the Aditya Birla Group. A USD 8.4 billion building
solutions powerhouse, UltraTech is the largest manufacturer of grey cement and ready-mix concrete (RMC) in India. It
is also one of the leading players in the white cement segment in India. It is the third largest cement producer in the
world, excluding China. UltraTech is the only cement company globally (outside of China) to have 100+ MTPA of
cement manufacturing capacity in a single country. The Company’s business operations span UAE, Bahrain, Sri Lanka
and India.

Our Vision Our Mission

To be the leader in Building To deliver superior value to

Solutions. stakeholders on the four pillars of

• Sustainability
• Customer Centricity
• Innovation
• Team Empowernment
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UltraTech has a consolidated capacity of 140.8 Million Tonnes Per Annum (MTPA) of grey cement. UltraTech has 24
integrated manufacturing units, 30 grinding units, one Clinkerisation unit and 8 Bulk Packaging Terminals. In the white
cement segment, UltraTech goes to market under the brand name of Birla White. It has one White Cement unit and
three Wall Care putty unit, with a current capacity of 2 MTPA. With 300+ Ready Mix Concrete (RMC) plants in 100+
cities, UltraTech is the largest manufacturer of concrete in India. It also has a slew of specialty concretes that meet
specific needs of discerning customers.

Ultratech building products

In the endeavour to fulfil our Mission Statement and to be a 360-degree building material destination and provide end
to end sustainable solutions covering the entire spectrum of construction, UltraTech cement has established
UltraTech Building Products Division. UltraTech Building Products Division offers technologically re-engineered
products replacing the conventional products as well as conventional methodologies to fast track the construction
process.

Our products can be broadly classified under Dry-Mix, Liquid & AAC Blocks consisting of product categories like
Waterproofing, Tile Adhesive & Tile Grout, Plaster & Mortar, Repair products, Industrial/Precision Grouts, Flooring &
AAC Blocks. Our products have been certified as Green Building Products. Building Materials in India have been sold
through a very dedicated channel of electrical, lighting, bathrooms, sanitaryware, furniture and hardware stores. With
the addition of new suppliers in the market each day, and with the limited space and display options (add to that an
informed and an ever-evolving customer), recent sales channels are emerging with the passage of time. With people
shifting to Work-from-Home/Hybrid working, and thus spending more time within the vicinity of their homes, there
was an increase in the demand for building materials this year, where quality conscious customers will be further
driving the demand and sales especially for high end products in these categories. Few pertinent questions to be
answered: Is it necessary to have a separate and Engaging Social Media Presence for marketing this category
/product range? How do we focus on B2B and B2C segment at the same time. Hopefully, it should not confuse our
customers, influencers, and channel partners.

Waterproofing category in India

Waterproofing solutions ensure longer durability of structure, hence reduce maintenance cost. Water damage can lead
to corrosion of metals, electrical hazards, rotting of timber structures and finishes, plasterboard swelling, and growth of
fungus which may lead to health hazards. When compared to the markets of other developed or emerging countries, the
Indian waterproofing market remains in its infancy. Waterproofing, as a sunrise sector, offers healthy growth potential
(~15% p.a.) over 2020-2030 (and beyond). Although, an evolving consciousness for the waterproofing products is
observed among the designers and real estate developers of Tier I metros, the mindset of the players in Tier II, III and
beyond remains diluted, and reluctance for an advanced solution remains. Few unique insights about the industry.

Relative size of waterproofing vs. paints in India is 1:10 (1:3 in developed markets), whereas both are near necessities.
With a thriving economy and swelling disposable income, the waterproofing market of India holds a stupendous
potential. For example – If we look at the UK (United Kingdom) or France, the waterproofing industry of these economies
is as big as India, with a population one twentieth that of ours. Hence, when calculated under the same yardstick, it leads
to a figure of Five Billion USD market from the current 250 million USD. Today, the waterproofing market of India is
growing at a CAGR of 20%, and in this growth the basement waterproofing segment has evolved as a major
contributor. Owing to the attempt of standardizing the basement waterproofing, a massive domain awareness has been
generated amidst the real estate developers and waterproofing contractors. Moreover, this has also led to the
acceptance of advanced waterproofing technologies.
 SEASON 2

First type of waterproofing is called corrective, which is after the issues of seepage creep-in or surface; in India,
majority of people/customers are doing waterproofing after seepage or actual water leakage in their homes. Ideally,
it should be done at the time of construction itself as it then enhances the quality and life of the home/building. This
also leads to mitigation of seepage issues happening later owing to weather or faulty construction. This is second type
of waterproofing and is called preventive integral waterproofing; wherein compounds are applied in whole structure
along with every bag of cement and then applying coating in wet /exposed areas.

Sub-segments of waterproofing market: There are seven sub-segments of waterproofing market in India as (1) Roof,
(2) External, (3) Interior, (4) Structure, (5) Bathroom, (6) Water tank and (7) Below ground waterproofing; Roof and
Structure (50 % market share), External & Internal (30 % market share), Bathroom/Water-tank/Below Ground (20 %).
External waterproofing and roof waterproofing are the largest segments whereas bathroom waterproofing and
below-ground waterproofing segments are smallest. The revenue share of new construction and repair segments is
35:65.

Major players in waterproofing market

Major players enjoy market leadership with moats of (1) prescription route of plumbers to leverage their consumer
relationships, (2) complementary products with paints such as putty/primer with waterproofing properties and
basecoats to be used prior to paints, (3) large portfolio of problem solution products, (4) strong brand equity
(important in a ‘problem-solution’ / functional category) and (5) distribution network. Waterproofing Solutions
Market size is forecast to reach $42 billion by 2025, after growing at a CAGR of 14 % during 2020-2025.

Possible Drivers of Usage

• Increased construction costs, coupled with rising raw materials and labour costs, have led to the implementation
of integral waterproofing agents and solutions for quality building practices.

• Cement-based structures experience immense damping and erosion due to frequent climate change, which
reduces the shelf life of residential and commercial buildings. This makes waterproofing solutions a necessity as
it gives a longer life to the structure.

• In addition, growing applications in water management, geomembranes, and tunnel liners are expected to drive
the waterproofing solutions market.

Supply Chain: Key raw materials used in waterproofing products. The major raw materials used in waterproofing
industry are crude oil as well as crude oil derivatives such as bitumen.

Market dynamics of the category

Logical extension to Cement: Cement companies are leveraging the logical extension of waterproofing to promote
their inhouse building product range and offer better value to consumers. They have also introduced (1) putty with
waterproofing properties, (2) Primer with waterproofing benefits, (3) crack fillers with waterproofing properties.
Similarly, ‘Paint + waterproofing’ strategy of paint companies; waterproofing is a logical extension for paint
companies as consumers usually do waterproofing work while painting their houses. Paint companies have also
launched basecoats with waterproofing abilities to be used before painting.
 SEASON 2

• Geographical revenue mix and seasonality decided the usage and revenue.

• Prescription route is important: Being a ‘problem solution’ category, the consumer promotions are of limited
utility in this category.

• Market leader has started academy to educate the plumbers about waterproofing problems as well as solutions.

• High-seasonality industry: The waterproofing industry generates highest revenues in April-June quarter, i.e. just
before beginning of monsoon. July-September quarter is smallest due to monsoon. Delay in monsoon or
prolonged monsoon would have short-term impact. The industry is stronger in South and West India due to
higher rainfall and possibility of damage to the buildings. The East and North regions account for just ~40% of
the market. While there is structural growth potential in waterproofing industry, we believe its annual volatility
may be high due to impact of monsoon (prolonged / delayed or excessive / scant).

• Geographical revenue breakup of waterproofing segment Coastal areas face more problems of water leakage
(higher moisture in air and higher rainfall), hence require higher investments in waterproofing. We note dry
regions with relatively lower rainfall such as North India have comparatively lower propensity of waterproofing
products.

• ‘Problem solution’ category and market creation opportunities channel checks indicate the trade margin in
waterproofing is ~5-6 % (like paints). Being a ‘problem-solution category’, there are negligible consumer
promotions. However, companies push their waterproofing products through the prescription route, i.e., plumber
channel.

Competition
There are three major players in the segment currently as mentioned below:

1. Fosroc
Fosroc is a global leader in the provision of specialized construction solutions, including advanced waterproofing
systems. Established in 1934, Fosroc's extensive product range includes waterproofing membranes, protective
coatings, sealants, concrete repair products, and chemical admixtures. Known for their technical excellence and
innovation, Fosroc's solutions are designed to improve the durability, strength, and overall performance of structures
in diverse environmental conditions.

2. Pidilite Industries Limited

Pidilite Industries, established in 1959, is a leader in the Indian waterproofing market. Known for innovative products,
Pidilite's portfolio includes adhesives (like Fevicol), sealants, and the Dr. Fixit waterproofing range. They also offer
construction chemicals, industrial resins, polymers, and arts & crafts products, catering to diverse consumer and
industrial needs.

3. Asian Paints
Established in 1942, Asian Paints is a prominent name in the paint industry and has diversified its portfolio to include
waterproofing solutions. With a focus on quality and innovation, Asian Paints provides a range of waterproofing
products such as coatings, membranes, and sealants. Their solutions are designed to protect surfaces from water
damage, ensuring longevity and durability.
 SEASON 2

Tile adhesive category in India

Tiles serve more than just their function as a protective surface for areas. They play an important role in the interior
design of your home by creating an atmosphere which adds to the look and feel of the living space. Main types of Tiles
are:

• Ceramic Tile
• Vitrified Tile
• Glass Tile
• Marble Tile
• Granite Tile
• Other Natural Stone Tile

Standard floor tile sizes range from just two inches wide to a foot and a half. More common and fashionable sizes
include 12”×12”, 18”×18”, 12”×24”, and even larger dimensions for floor tiles, and 8”×10” and bigger for wall tiles.
Whether the tiles need to be installed on walls or floors, they must adhere to the base surface properly.

For a long time, cement has been most commonly used while installing tiles. The problem with cement mixture, it
shrinks after drying and leaves hollow space below the tile surface. These hollow sounds one can hear while walking
or using the floor. These are the weaker areas of the flooring and they can cause tile cracking or de-bonding from the
substrate.

Tile adhesive is a special type of glue used to fix tiles all around the home. Tile adhesive is a ready-made mixture made
from Portland cement, polymers such as epoxy and selected aggregate particles with some additives added in it to
improve its property for laying tiles. Tile adhesives are used for fixing tiles on the walls, floors, swimming pools, etc.,
which may have any type of substrate such as cement, wood, glass, etc in internal and external areas.

Tile adhesive is a flexible material which does not shrink or crack due to moisture and temperature changes. Tile
adhesive is used to prevent crazing and shedding of tiles. It is very easy to use a tile adhesive, as ready-made bags are
available and only water is to be mixed. Pre-mixed tile adhesives are also now available in the market. They are also
used to fix or prevent seeping of water underneath the tiles.

There are various types of tile adhesives based on their application, classification as per IS 15477-2019 is as follows:

• Type 1 Adhesive - For fixing Ceramic Tiles on Floor & Walls

• Type 2 Adhesive - For fixing Vitrified Tiles and Stones for both interior floor and wall applications, and for exterior
floor applications.

• Type 3 Adhesive - For fixing for Vitrified tiles and stone tiles on exterior wall substrates like plaster or concrete.

• Type 4 Adhesive - for installation on drywall board substrates.

• Type 5 Adhesive - Fixing all types of tiles on glass or metallic substrates like cement screeds, plaster, concrete,
drywall boards like gypsum boards, plywood, wood, metals composite boards, modified backer boards and the
metallic substrates.
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Tile Grouts

The process of installing tiles must include grout. It gives your tile installation more rigidity and strength, forming a
solid joint that lessens any minor stresses. Unlike adhesives, which are primarily used as binders for laying tiles.

The main function of using this material is to act as a filler between tiles after laying. Its main function is an aesthetic
complement to the tiles. Many of them are available in endless colors to match the type of tile and natural stone.
There are mainly two types of grouts used for tile installation, namely:

• Cementitious grout
• Epoxy grout
• PU Grout

Epoxy Grouts are superior compared to Cementitious grouts. Epoxy grout won't crack, shrink, or discolour, making it
ideal for applying in wet areas, such as showers. It's also highly resistant to the harsh chemicals found in cleaning
products. Aesthetics of grouts play a major role during selection, especially with the wide variety of shades and special
effects like glitters or fluorescent glows available in the market.

Key players in tile adhesive market

• Pidilite Industries
• MYK Latikrete India Pvt Ltd
• Saint Goibin
• Sika India Pvt Ltd
• Ardex Endura

Possible Drivers of usage

a. The major growth drivers for this market are increase in use of ceramic and thin porcelain decorative tiles. Use of
larger size tiles and growing residential housing projects.

b. Growing Construction activity and frequent renovations activities are anticipated to increase the demand for
Tiles and Adhesives.

c. Advantages over Traditional way of tile fixing.

Advancements in technology have revolutionized the tile adhesive industry. Manufacturers are incorporating
innovative additives and modifiers to enhance adhesive properties, such as increased flexibility, improved adhesion,
and extended open time. These technological advancements contribute to more efficient installations and improved
long-term performance.
 SEASON 2

Market dynamics of the category

UltraTech Building Products Division has recently entered the highly competitive market of tile adhesives and
waterproofing solutions. Despite the market being dominated by established players like Pidilite Industries and MYK
Laticrete India Pvt Ltd, who leverage both Above The Line (ATL) and Below The Line (BTL) marketing strategies,
UltraTech has chosen to focus on building a robust dealership network aims to create strong direct relationships with
distributors and dealers to build a loyal customer base through localized efforts and personalized service.

While the dealership network strategy allows for direct relationships with distributors, UltraTech faces challenges in
achieving rapid market penetration compared to competitors' broader marketing reach. Despite being a late entrant,
the company aims to leverage digital marketing channels like social media platforms, Google AdWords, and targeted
media circulation to enhance visibility & customer engagement. Additionally, UltraTech is diversifying its product
portfolio to cater to various market segments.

With aspirations to replicate its success as the leading cement manufacturer and by leveraging its brand identity and
embracing innovative marketing strategies, UltraTech seeks to position itself as the preferred choice for
waterproofing and tile adhesive solutions.

Problem statement

Kiran is a fast tracker talent from a top-rated management school. She joined UltraTech 10 years ago as a
management trainee. After working for Grey Cement for 9 years, she has now taken up the role of Head of Marketing
for Building Products Function for the Waterproofing & Tile Adhesive segment. She has had numerous
discussions with the Business Head - Building Products on how to run about this unique business. Building Products
currently has a market penetration of ~9%, looking at the condition of Indian markets, penetration for this segment
in the market can be possibly 50%. She has 2 issues ahead of her as below:

1. What steps UltraTech should take for giving 360-degree waterproofing solution for an Individual Home Builders?
(Preventive / Repair)

2. What steps UltraTech should take in creating a market for Tile Adhesives and Grouts? How to establish a strong
player where existing players are having strong foothold in Tile Adhesive and epoxy grout Market and how to
counter major tile manufacturers who are also in Tile Adhesive Business like Kajaria Ceramics?
 SEASON 2

Annexure A

Tile adhesive Market in India is expected to grow @ 9% for period 2011 to 2027 (from USD 97.3Mn to 165.58 Mn).
Adhesive Segments:

• Cementitious tile adhesives - Cementitious Tile Adhesive Market dominates the TA Market.
• Epoxy Tile Adhesives
• Dispersion Adhesives

Annexure B

Competitors ATL and BTL Activities