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in partial fulfillment of the requirements for the third semester



REG.NO. 40912





I, Mr. Akhil Raj P, hereby declare that this organization study report of Malabar Cements
Limited is an authenticate record of work done by me and submitted in partial fulfillment of the
third semester requirement for the award of the Degree of Master of Business Administration of
Mahatma Gandhi University, Kottayam under the supervision and guidance of Mrs. Anney
Chacko, Faculty Guide, Berchmans Institute of Management Studies during my period of
study. The contents in this report are based on the data collected by myself from Malabar
Cements Limited. I also state that all the information given are true to my knowledge and I have
not submitted it before, either in part or in full for the award of any other degree.

Changanacherry AKHIL RAJ P


“With God behind us and His arm before, we can face whatever lies before us”.

First of all I would like to thank God Almighty for His love, mercy and abundant grace that He
has showered upon me during my project period and preparing the report.

I would like to express my sincere thanks to Rev.Dr.Tomy Joseph padinjareveetil, Principal

St.Berchmans’ College for giving me an opportunity to do the Organizational Study. I would
also like to thank Dr. Mathew Joseph Head of the Department, BIMS for all the help in
completing this Organization Study.

I am indebted to Mrs. Anney Chacko, Faculty Guide, BIMS who guided me with valuable
suggestions and encouragement to complete this study.

I express my gratitude to Mr. K. Padmakumar, General Manager of Malabar Cements

Limited Palakkad for providing me the opportunity and facilities to do this organization study.

I express my sincere gratitude to Mr. Suliman Personnel officer, who has my guide during the
study and facilitated my performance. I express my heartfelt thanks to all the department heads
and other supporting staffs who provide me insights on their respective department functioning.

Finally I would like to express my sincere thanks and gratitude to my friends, parents and to all
my well wishers who have provided all necessary support to make this Organization Study a


SL. No Chapter Particulars Page No.

1.1 Objectives of Study 3
1 1.2 Scope of the study 3
1.3 Limitations of the study 3

2.1 History of Cement Industry 5
2 2.2 Cement Industry in India 6
2.3 Future Outlook 9

3.1 History 11
3.2 Company Policy 13
3.3 Growth Story 14
3 3.4 Certification and Achievements 15
3.5 Plant and Factor Details 16
3.6 Organizational Structure 17
3.7 Product Range 18

4.1 Purchase Department 20
4.2 Production Department 23
4.3 Stores Department 26
4.4 Quality Control Department 28
4.5 Human Resource Department 31
4 4.6 Finance Department 46
4.7 Marketing Department 50
4.8 Systems Department 57





SL. Chapter Figure Title Page No.

No Number
1 3 3.1 Organizational Structure 17
2 4 4.1 Purchase Department Structure 20
3 4 4.2 Production Department Structure 23
4 4 4.3 Production Process 25
5 4 4.4 Human Resource Department Structure 31
6 4 4.5 Time Office Structure 41
7 4 4.6 Finance Department Structure 46
8 4 4.7 Marketing Department Structure 50
9 4 4.8 Market Share Analysis 56
10 4 4.9 Systems Department Structure 57

SL. Chapter Table Title Page No.
No Number
1 4 4.1 Criteria for signing Purchase Order 22
2 4 4.2 Raw materials and its sources 22
3 4 4.3 Quality Parameters 28
4 4 4.4 Packaging 55

The Organization Study Programme is conducted at “Malabar Cements Limited.” Walayar,

Palakkad. The report consists of well defined set of objectives to understand the practical
applications learned in class and give suitable suggestion to organization, primary data and
secondary data, were sources of information also the detailed description about the entire history
of the industry and with continued growth and demand in the economy and industry, the products
of Malabar Cements are being lapped up by the eager market.

The various external factors like promoters; competitors which effect the working of the
organizations are discussed in detail. Then the report gives details of the internal factors and their
analysis. The various departments of the organization are discussed in detail like the marketing,
human resource, production, finance etc. The report also constitutes the mutual existence of each
departments to improve the performance of the organization and its policies.

Lastly, the report gives the analysis of the strengths, weakness, opportunities, threats of the
organization. Findings and recommendations are derived out of the analysis of available
information. The various sources of information are also produced in the bibliography.
Malabar Cements Limited


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Organization is the foundation upon which the whole structure of management is built.
Organization is related with developing a frame work where the total work is divided into
manageable components in order to facilitate the achievement of objectives or goals. Thus,
organization is the structure or mechanism (machinery) that enables living things to work
together. In a static sense, an organization is a structure or machinery manned by group of
individuals who are working together towards a common goal. Alike 'management', the term
'organization' has also been used in a number of ways.

Definitions of Organization

Different authors have defined organization in different ways. The main definitions of
organization are as follows:

• According to keith Davis, "Organization may be defined as a group of individuals, large

of small, that is cooperating under the direction of executive leadership in
accomplishment of certain common object."
• According to Louis A. Allen, "Organization is the process of identifying and grouping the
work to be performed, defining and delegating responsibility and authority, and
establishing relationship for the purpose of enabling people to work most effectively
together in accomplishing objectives."

Organization Study

Organizational study is an effort towards understanding the organization, its policies, structure
and methodology adopted. It gives us brief description of the overall functioning of the company
or organization.

Organizational studies is "the examination of how individuals construct organizational

structures, processes, and practices and how these, in turn, shape social relations and create
institutions that ultimately influence people", organizational studies comprise different areas that
deal with the different aspects of the organizations, many of the approaches are functionalist but
critical research also provide alternative frame for understanding in the field.

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Organizational study at MALABAR CEMENTS LIMITED, PALAKKAD was very much

helpful to achieve these objectives. Here I would like to make study on its success, & trying to
concentrate on the organization and the role of its various departments.


 To familiarize with functioning of business organization.

 To familiarize with the different departments in the organization and their
 To understand how key business processes are carried out in organizations.
 To understand the various policies and programs of the organization.
 Understand how information is used in an organization for decision making at
various levels.
 To relate theory with practice.


The study is limited to MCL Limited, Walayar. It concentrates on the functioning of different
departments in the organization. The study focuses on the organizational structure of MCL. It is
purely based on the information obtained from the departmental heads and other staffs of the


 Period of the study is limited to one month within one month an entire organization
cannot be understood to its fullest.
 Study is based on the information obtained from the department heads and other staffs of
the organization which may sometimes coloured.

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Cement is one of the core industries which plays a vital role in the growth and expansion of
a nation. It is basically a mixture of compounds, consisting mainly of silicates and aluminates of
calcium, formed out of calcium oxide, silica, aluminium oxide and iron oxide. The demand for
cement depends primarily on the pace of activities in the business, financial, real estate and
infrastructure sectors of the economy. Cement is considered preferred building material and is
used worldwide for all construction works such as housing and industrial construction, as well as
for creation of infrastructures like ports, roads, power plants, etc. Indian cement industry is
globally competitive because the industry has witnessed healthy trends such as cost control and
continuous technology up gradation.

The word “cement” derived from "caementum" in Latin meaning hewn stone chips and
then started to be used in the meaning of “binder”. The date of the first reinforced concrete
building is 1852 but yet the use of binding agents in the construction of buildings dates back to
very old times. The first material used as binding agent is lime. Although there are no precise
findings, it is possible to say that the binding property of lime was discovered in the early period
of human history, in 2000s B.C. Examples of the use of lime as a construction material have
been encountered in different regions of the Ancient Egypt, Cyprus, Crete and Mesopotamia.
The Ancient Greeks and Romans used lime as a hydraulic binder. Architect Vitruvius (70-25
B.C.), in his 10-volume book "On Architecture", mentions the hydraulic properties of pozzolana
and lime and even gives a mixing ratio that can be used in the buildings to be constructed by
rivers and seas.

Throughout the history, many different binding agents symbolizing the civilization of that
period were used in the Egyptian Pyramids and the Great Wall of China and in the castles built at
different times. Later on, nearly 2000 years ago, the Romans mixed hydrated lime with volcanic
ashes and afterwards with dusts obtained from fired brick and thus started to use a hydraulic
binder having properties similar to those of today’s cement. The first cement production plant in
the world was founded in 1848 in England. The first German Cement Standard was created in

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1860. And, the establishment of the American Concrete Institute (ACI) and the creation of the
first American Regulations coincide with 1913.

Although cement production and sales commenced in 1878 in the world, cement sector was
introduced to Turkey primarily in 1912 with private sector’s initiative. The 34-year delay in
question results from insufficient hydraulic lime production and the fact that those years
coincided with the fall of the Ottoman Empire.


The history of the cement industry in India dates back to the 1889 when a Kolkata-based
company started manufacturing cement from Argillaceous. But the industry started getting the
organized shape in the early 1900s. In 1914, India Cement Company Ltd was established in
Porbandar with a capacity of 10,000 tons and production of 1000 installed. The World War I
gave the first initial thrust to the cement industry in India and the industry started growing at a
fast rate in terms of production, manufacturing units, and installed capacity. This stage was
referred to as the Nascent Stage of Indian Cement Company.

In 1927, Concrete Association of India was set up to create public awareness on the utility
of cement as well as to propagate cement consumption. The cement industry in India saw the
price and distribution control system in the year 1956, established to ensure fair price model for
consumers as well as manufacturers. Later in 1977, government authorized new manufacturing
units (as well as existing units going for capacity enhancement) to put a higher price tag for their
products. A couple of years later, government introduced a three-tier pricing system with
different pricing on cement produced in high, medium and low cost plants.

Cement Company, in any country, plays a major role in the growth of the nation. Cement
industry in India was under full control and supervision of the government. However, it got relief
at a large extent after the economic reform. But government interference, especially in the
pricing, is still evident in India. In spite of being the second largest cement producer in the world,
India falls in the list of lowest per capita consumption of cement with 125 kg. The reason behind
this is the poor rural people who mostly live in mud huts and cannot afford to have the

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commodity. Despite the fact, the demand and supply of cement in India has grown up. In a fast
developing economy like India, there is always large possibility of expansion of cement industry.

The Indian cement industry is extremely energy intensive and is the third largest user of coal in
the country. It is modern and uses latest technology, which is among the best in the world. Also,
the industry has tremendous potential for development as limestone of excellent quality is found
almost throughout the country.

Current Scenario

The Indian cement industry is the second largest producer of quality cement. Indian Cement
Industry is engaged in the production of several varieties of cement such as Ordinary Portland
Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS),
Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement,
White Cement, etc. They are produced strictly as per the Bureau of Indian Standards (BIS)
specifications and their quality is comparable with the best in the world.

The industry occupies an important place in the national economy because of its strong linkages
to other sectors such as construction, transportation, coal and power. The cement industry is also
one of the major contributors to the exchequer by way of indirect taxes.

Facts Of Indian Cement Industry

 The Industry recorded an exponential growth with the introduction of partial decontrol in
1982 culminating in total decontrol in 1989.
 India ranks second in world cement producing countries.
 It contributes to environmental cleanliness by consuming hazardous wastes like Fly Ash
(around 30 Mn.t) from thermal power plants and the entire 8 Mn.t of slag produced by
steel manufacturing units.
 As a part of Corporate Social Responsibility (CSR), the cement Industry employs around
0.1 million people and takes care of the social needs not only of the employees but also
adopts several villages around the factories providing free drinking water, electricity,
medical and educational facilities.

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 The cement Industry produces a variety of cement to suit a host of applications matching
the world's best in quality.
 Exports Cement/Clinker to around 30 countries across the globe and earns precious
foreign exchange.


According to Ministry of Commerce & Industry data for November 2012,cement production
registered a negative growth of (-) 0.2 per cent in November 2012 against its 17.0 per cent
growth in November 2011. The cumulative growth of cement production was 6.7 per cent during
April- November 2012-13 compared to its 4.8 per cent growth during the same period of 2011-

Key Drivers Of Cement Industry

 Buoyant real estate market

 Increase in infrastructure spending
 Various governmental programmes like National Rural Employment Guarantee
 Low-cost housing in urban and rural areas under schemes like Jawaharlal Nehru National
Urban Renewal Mission (JNNURM) and Indira Aawas Yojana

Technological advancements

Modernization and technology up-gradation is a continous process for any growing industry and
is equally true for the cement industry. At present, the quality of cement and building materials
produced in India meets international standards and benchmarks and can compete in
international markets. The productivity parameters are now nearing the theoretical bests and
alternate means. Substantial technological improvements have been brought about and today, the
industry can legitimately be proud of its state-of-the-art technology and processes incorporated in
most of its cement plants. This technology up gradation is resulting in increased capacity,
reduction in cost of production of cement.

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Major Players

 Ultratech Cement
 Century Cements
 Madras Cements
 Gujarat Ambuja Cement Limited
 Grasim Industries
 India Cements Limited
 Jaiprakash Associates and
 JK Cements.

Foreign Direct Investment

The cement sector has been gradually liberalized. 100 per cent FDI is permitted in the cement


A recent report has been published by research company RNCOS titled 'Indian Cement Industry
Forecast to 2012'.The report has found that, even in the tough conditions of economic turbulence,
Indian cement industry sustained its growth rate. It further stated that, in the backdrop of the
government backed construction projects almost every cement major expanded their installed
capacity as, these projects have created strong demand for cement in the country.

The report forecasted that the cement production is expected to increase above 9 per cent year-
on-year during 2010-11 against the previous fiscal year. The research report has also anticipated
that the industry players will continue to increase their annual cement output in coming years and
the country’s cement production will grow at a CAGR of around 12 per cent during 2011-12 to
2013-14 to reach 303 Million Metric Tons.

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Cement is a necessary constituent of infrastructure development and a key raw material

for the construction industry. As late as the 70’s, the State of Kerala was virtually starving for
cement. The state lacked a Portland cement factory in either private or government Sector. In
1961-62, the Geological Survey of India located a limestone deposit in the Pandarethu valley of
the Walayar region on the northern side of the Palakkad gap. Located in dense forest area, the
hilly terrain was required heavy investment to mine. The State Govt. ventured to put up a
Cement factory in the region. The feasibility study conducted revealed that the construction of a
1200 tpd dry process cement plant using the Pandarethu limestone is feasible. KSIDC obtained
an Industrial License for the manufacture of cement in November 1976 and decided to go ahead
with the project and formed “Malabar Cements Limited” to set up, own and operate the proposed
cement plant. The Company was incorporated in April 1978. The plant was successfully
commissioned in 1984 and the commercial cement production started on 1984.

Malabar Cements Ltd., a fully owned Govt. of Kerala Undertaking, is synonymous with
superior quality cements, vouched by customers spread across the state of Kerala. The launch of
two Superior quality products under the brand name ‘Malabar Super’ and ‘Malabar Classic’,
in the year 1994-95 gave a boost to the market presence. Various modifications carried out since
1995 have improved production and productivity of Malabar Cements. A 2.5 MW multi-fuel
power plant was commissioned in June 1998 to complement 25% of the total power requirement
for the Walayar plant operations. At Malabar Cements, product improvement is not just a one-
time strategy for boosting sales, rather a quest of excellence. Perfecting the product quality is
everybody's concern here. Our distinction begins with scientifically selecting the best raw
materials for clinker. Stringent quality control is exercised right from pre-blending raw materials,
clinkerisation, clinker grinding, and finally to cement packing. Now the company has three
brands viz, "Malabar Super", "Malabar Classic" & "Malabar Aiswarya".

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Malabar Cements contributes to the developmental activities of the State by supplying the
basic construction material. Only Malabar Cements can supply its cement, 'factory fresh', without
any deterioration in the original strength either due to moisture or humidity, within 12 hrs
anywhere in Kerala. With a production capacity of 4.2 lakh tons of cement per annum, the unit at
Walayar is the largest. As part of expansion programmed, it has commissioned a 2.0 lakh tons
clinker-grinding unit at Cherthala in Alappuzha district in August 2003. Thus the total installed
capacity of MCL is 6.2 lakh tons.

Malabar Cements is the first public sector company to receive ISO Certification & to win
the National Award for best achievement in Energy Conservation. Till date, MCL has
experienced no loss of production due to labour unrest. In just over 15 years of commissioning,
Malabar Cements has been able to meet about 10% of total cement consumption in Kerala.

Malabar Cement Limited is a glittering performer among the state public sector
undertakings in Kerala. Malabar Cements also has the distinction of being the only grey cement
manufacturer in Kerala. While the full fledged main plant is located at Walayar in Palakkad
district, the cement grinding unit (CGU) is at Cherthala in Alappuzha district. MCL provides
direct employment to nearly 1000 persons and to a corresponding number indirectly.

The Limestone mine is located at Pandarathu hill inside the Walayar reserve forest. The
limestone raised and crushed at the mine is bought to the Walayar plant through mono cable
ropeway about 6km long, through the lush green dense forest. The cement produced by MCL,
constitutes 10% of the Kerala requirement, is exclusively marketed within the state where by the
company is passionately committed to the development of Kerala. MCL has been maintaining
excellent operating parameters at par with global standards in almost all areas of operations and
this fact is well accepted and valued by both the department related parliamentary standing
committee on commerce(DRPSC), Government of India and Bureau of Indian standards(BIS).

Keeping aside one or two year in which it had to inevitable suffer loss due to
indispensible reasons beyond its control, MCL has been persistently and successively running on
profits: the saga of success unique to MCL only. Every year MCL contributes several hundreds
of crores of rupees to central and state exchequers by way of various statutory levies.

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In terms of capacity utilization, it is remarkable to note that MCL has been paramount
among the Public Sector cement companies in the country. Further, its achieved capacity
utilization has also been well above the industry national coverage.

As part of CSR, MCL adopts and implements various social welfare activities
unfailingly. One among several of such prominent activities is the adoption of the Nadupathy
Girijan settlement at Walayar. As a responsible PSU committed to the cause of nature, MCL
constantly endeavors to keep its environment unsoiled and pollution free. Its pollution control
systems are regularly updated to contain the emission levels even well below the standards
promulgated by the pollution control board from time to time.

We are blessed with an astounding nature to live in and each and every one of us has the
greatest inevitable responsibility of keeping the green around us Ever-Green. Though MCL has
been planting honest efforts for quite sometimes to guarantee a clean and buoyant environment,
to put supplementary stress on such a vital social obligation, this year, it has decided to emphasis
more on the priority of caring the nature.



Manufacture and sell best quality cement at affordable price to general public of the state
and to be an important part in the socio-economic development of the state.


Every employee of Malabar Cements Limited commits to comply with all requirements
to continually improve the effectiveness of the Quality Management System and strives:

 To identify various groups of customers serviced by him

 To understand their respective needs and desires either stated or not stated
 To ensure best possible quality in products and services
 To meet and exceed their expectations

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Vision & Mission


“To help in building a better habitable Kerala by providing best solutions in the field of


“To provide quality products & services to the public through effective intervention in
the market.”


Some of the major milestones…

 Feasibility Study for a cement plant at Walayar. - 1975

 Industrial License for the manufacture of Cement - 1976
 Date of Incorporation of Malabar Cements - 1978
 Commencement of mining activities - 1981
 Commissioning of Walayar Plant - 1984
 Commencement of clinker production - 1984
 Commercial Cement Production started - 1984
 43-grade OPC cement – ‘Malabar Super’ launched - 1994
 New product: ‘Malabar Classic’ launched - 1994
 Obtained ISO : 9002 certification, first PSU in Kerala to secure this certification -
 Installation of 2.5 MW multi-fuel power gen. set - 1998
 Introduction of ‘Malabar Aiswarya’ brand - 2003
 Commissioned of 600 tpd cement grinding unit at Cherthala - 2003
 Modernization of Cement Mill to close circuiting - 2005
 Introduced ERP system for integrated operation of all functional areas. - 2007
 Switched over to Quality Certification ISO : 9001 :2008 – 2010

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ISO Certification

 “IS/ISO 9002 : 1994” certification obtained in November 1996. First PSU to secure
this certification.
 Switched over to the revised standard ISO 9001 : 2000 in Aug’2003.
 Switched over to Quality Certification ISO : 9001 :2008 in 2010


 Kerala State Pollution Control Board Award - 1990-91

 Secured first State award for Energy conservation - 1992
 VSSC Rolling Trophy for safety measures - 1994 & 1995
 NCBM National Award for the Best improvisation in energy - 1998
 Kerala State Energy Conservation Award - 1998
 Govt. of Kerala awarded for outstanding achievement in Pollution abatement - 2007
 Introduced ERP system for integrated operation of all functional areas. - 2007
 Kerala Trade Award of Kerala Government – 2010

Significant Factors For Success

 Customer satisfaction
 Varied product range
 Permissible discounts
 Timely delivery of the production
 Organization structure is reviewed from time to time
 Strong brand image and awareness
 Prevention of price wars
 High product quality
 Information system power
 Large marketing resource budget

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The Geological Survey of India had identified a cement grade limestone deposit in the Walayar
reserve forest way back in 1961-62. The Mineral Exploration Corporation Limited confirmed its

Malabar Cements Ltd., fully controlled by the Government of Kerala, is the only Portland
cement manufacturer in Kerala. The company was incorporated in April 1978 and commenced
commercial production in 1984 with capital outlay of Rs. 680 million and paid up equity capital
of Rs. 260 million. The 1200 TPD plant at Walayar has continuously registered profit year after

The company has upgraded the plant with state-of-the-art technologies through the years. After
the inception and in line with technological developments, company has carried out lot of
modifications in the system for minimizing energy consumption, Pollution control measures,
process modifications etc. Some of the salient features of the plants are listed below:

 Limestone reserve of about 10 million tons.

 Modern 110 TPH Closed Circuit Cement Mill.
 Strict Quality Control system to ensure quality of the product.
 Most modern Instrumentation & Control system for efficient process engineering.
 Modern dry process manufacturing technology with four-stage suspension pre heater
 Elaborate pollution control system to meet pollution control standards.

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Figure 3.1 Organizational Structure

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Malabar Cements uses the state of the art, dry process technology for the manufacturing of super
quality cement and the quality is much above the national standards. For Various applications,
the company has three brands viz, "Malabar Super", "Malabar Aiswarya" & "Malabar Classic"
Malabar Super

A fabulous product in every sense: Super in strength, Wonderful in workability, Incredible in

aging, Implausible in durability, and Fantastic in strength gain. An AMAZING performer!
Tests carried out by Bureau of Indian Standards have established unshakeable credentials of
Malabar Super. Super strength accelerates setting time and fine finish. Malabar super is superior
in strength to ordinary '43' grade cement. It attains the 28 days' strength required as per IS in just
7 days time. Not only that, the strength attained in 28 days time is about 50 percent more than the
IS specification. The amazing strength of Malabar Super arises from it's unequalled particle
fineness, 33 percent more than the IS specification and consistency in composition, made so by
computerized process control system

Malabar Classic

Superior in its class of cements, it offers better setting properties delayed initial set and early
final set offering more working time and reduced observation time. Structures achieve excellent
dimensional stability with the heat resistant properties of MALABAR CLASSIC. It also reduces
heat generation during hydration, making it a better workable finished product absolutely
reliable. The extra fineness welded into it allows MALABAR CLASSIC better coverage and
finish in wall and roof plastering. This in turn reduces paint consumption.

Malabar Aiswarya

It brings prosperity in many ways. It increases the life of your structures by safeguarding against
sulphate attack. Aiswarya offers high quality at reduced price. Aiswarya generates less heat of
hydration, reduces the formation of getting cracks. This product is best studied for constructions
in soil and water with excess alkali metals, sulphates, alumina, iron and acidic waters. To obtain
the best quality cement, only glassy granulated slag is used for product manufacturing. With very
low magnesium oxide content this provides shape stability for concrete structures.

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Objective: Ensure all items purchased are only from established sources meeting specification



Assistant Manager Material

Plant Engineer Material

Assistant Purchase Officers

Senior Assistants Purchase

Assistant Purchase


Figure 4.1 Purchase Department Structure

Documents Prepared



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Purchase Process

 Purchase requisition is made by the user department quoting their respective

requirements with technical specifications.
 Request for quotation is prepared and placed by the purchase department before the
 Items valued upto 1lakh enquires will be floated to the registered ventors.
 Items valued above 1 lakh E-tendering will be opened.
 For Original Equipment Manufacturer (OEM) even if value is above 1lakh
purchase will be directly made from the OEM supplier.
 After Receipt of quotation it is foreword to the technical department for scrutinizing. The
same will be forwarded to user department for technical evaluation.
 After evaluation the file will be put up to tender committee for approval.
 After approval order will be placed.

Art of Negotiation

After quoting and selecting the vendor a discussion is made as to the order payment, price and
freight charges.

Supplier Rating

Rating is done every six months on suppliers of critical item. The master list of approved
suppliers is modified once in six months.

Rating equations

SR = 100(A+B+C)

A = 0.45(QA+0.5QC)/QS

B = 0.45(QS/QO)



SR = Supplier Rating in % ; QA = Quantity Accepted ; QS = Quantity Supplied

QO = Quantity Ordered ; QC = Quantity Replaced/Rejected

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Order for purchase of material is placed by purchase department, store receives the material
supplied (QS) and request the intender for inspection. The accepted material is taken in to stock
(QA) and rejection is returned to supplier (QC) by store.

The supplier rating is recorded in form 71. A supplier rated between 50% and 75% is advised to
improve up on quantity and services. The supplier rated below 50% is removed from the list.

Signing of purchase orders

Purchase orders are signed by various authorities based on the amount. Below tabular
column shows the criteria for it.

Order value Authorized Signatory

Less than Rs.50,000 Assistant Manager Materials

Above Rs. 50,000 and less than Rs.1,00,000 Manager Materials
Above Rs.1,00,000 and less than Rs.1,00,00,00 Deputy CE (Instrumentation)
Above Rs. 1,00,00,00 Managing Director

Table 4.1 Criteria for signing Purchase Order

In the absence of the Manager Materials, Assistant Manager Materials is authorized to sign
purchase orders upto Rs.1,00,000. In the absence of General Manager, Manager Materials is
authorized to sign the orders amounting to Rs.1,00,00,000.
Managing Director issues all Purchase orders above Rs.1,00,00,000 and purchase the
work orders on specific projects in capital expenditure budget.
Raw materials and its sources


Table 4.2 Raw materials and its sources

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 Maximum production with high quality and quantity

 Production of clinker with quality
 To ensure high man power productivity
 To maintain good working environment in the factory
 To ensure safety and security to the employees











Figure 4.2 Production Department Structure

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MCL manufactures cement through the most modern dry process method based on world-
renowned German technology. The major raw materials for cement manufacture are limestone
and laterite, which are natural minerals obtained within the state. These raw materials provide all
necessary ingredients of cement like lime, silica, alumina and iron oxide. The entire
manufacturing process is computer controlled from a central control room and stringent quality
control measures are applied at all stages of production. We are in the process of installing X -
Ray Analyzer for better quality control. The state of the art pollution control measures like bag
filters are also being installed. The process generally involves three stages of production.


The limestone obtained from captive mines is enriched with higher quality limestone procured
from nearby states as and when required. The raw mix normally contains 95% limestone and 5%
laterite. The raw materials are crushed to around 20-25 mm size and the proportioned raw
materials are ground in a ball mill in dry condition to a very fine powder. The resultant product is
called raw meal and is stored in concrete silos where it is pneumatically homogenized to get a
uniform product.


Clinker is produced in a rotary kiln, which is a cylindrical steel shell of 65m length and diameter
4.2m, lined with refractory bricks. The kiln is inclined at 3% and set rotating at a speed of 2 – 2.2
rpm. It is provided with a 4-stage multi cyclone pre-heater system through which the
homogenized raw meal is fed to the kiln inlet by means of belt bucket elevators. The Kiln is fired
with pulverized coal and maintained at a temperature of about 14500C-15000C. In the pre-heater
and kiln, the raw meal undergoes a series of physical as well as chemical changes giving rise to
the cement minerals. The resultant product in nodular form obtained from the kiln is called
clinker. Clinker is immediately quenched in the clinker cooler to stabilize its properties and
stored in the clinker stockpile.

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Cement is produced by grinding clinker with 3-5% gypsum in a closed circuit ball mill to
required fineness. Gypsum is added to control the setting properties of cement. Grinding
clinker and gypsum produces ordinary Portland cement (OPC). Fly ash / Slag at required
proportion is ground along with clinker and gypsum to produce Portland pozzolana cement
(PPC) / Portland slag cement (PSC). The ground cement is stored in concrete silos and
packed in 50 Kg bags using electronic packing machines.


u lime

Primary Secondary Lime MCL lime

crushing crushing stone yard stone



Blending Blending through Raw
Cooling Clinkerisation
& & storing bucket meal


Cement Filtering through Blending Packing&

Clinker bucket elevator & storing
mill Dispatchin

Fly ash
Figure 4.3 Production Process

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Objective: - Ensure that spares and products are properly stored and maintained for user

In MCL store department is using SAP technology in making stock entries. Each item is coded in
eight digit numbers and kept in different racks of same kinds. Racks and sections are given
unique number for its easy identification.


Receipt of Goods

 Verify the number of cases/items in the cases received with the party’s delivery
challans/packing list.
 Make entries in the computer for MIGO.
 Inform user departments regarding arrival of goods.
 Arrange inspection of goods and shift the accepted items to respective locations.
 Shift the rejected items to the specified locations with proper identification tags.
 Inform vendors regarding rejections through purchase.

Preservation of Goods

 Ensure that accepted goods are properly stored.

 Keep the electronic items in a separate enclosure under lock and key custody.

Issue of Goods

 Issue items to user departments against reservation

 Issue after verifying the reservations.

Document Prepared

 Good Receipt Notes

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Determination of Stock Levels

Average of five year consumption of the item is determined from that average consumption of
0ne year is found out and their after average one month consumption is taken.

 Safety stock = monthly consumption x 1.5

 Reorder level= monthly consumption x 4
 EOQ = monthly consumption x 6
 Maximum level = safety stock + EOQ

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 Inspection and testing of incoming raw materials

 Inspection and testing of in progress materials
 Inspection and testing of final product
 Coordination with statutory agencies like BIS, Central Excise etc.
 Optimization of raw mix design and product quality
 Coordination of material handling activities
 Coordination with marketing department for attending customer requirements

Quality parameters of different materials


LIME STONE Moisture, total carbonate, silica, aluminium

oxide, iron oxide, calcium oxide(lime),
magnesium oxide, loss on ignition

COAL Moisture, ash, volatile matter & calorific value

LATERITE Moisture & chemical composition

FLY ASH Fineness, chemical & physical properties as per

BIS requirement

GYPSUM Moisture and purity

RAW MEAL Total carbonate, Residue & chemical

CLINKER Litre weight, free lime, chemical composition

CEMENT Fineness, setting time, chemical composition and

other physical composition as per BIS

Table 4.3 Quality Parameters

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 Well equipped quality control lab to meet the requirement of BIS

 Equipment / Instruments
1. Electronic balance (.1 mg accuracy)
2. Electric muffle furnace (12000 C)
3. Electric oven (3500 C)
4. Flame photo meter
5. Spectro photometer
6. Bomb calorimeter
7. Compression testing machine
8. Vibrating machine
9. Auto clave etc


 “IS/ISO 9002: 1994” certification obtained in November 1996. First PSU to secure this
 Switched over to the revised standard ISO 9001: 2000 in Aug’2003.
 Switched over to Quality Certification ISO: 9001:2008 in 2010.


The 5S concept in Malabar Cements was initially started since 2006. At the inception, they faced
lot of difficulties to change the mindset of people as it is purely an attitude based activity. In fact
5S is a people oriented and practice oriented approach.

First they established the confidence among a small group of employees in various departments
to practice 5S by way of giving training and support through factory visits and interactive
sessions with various agencies. The first mental constraint was that it cannot be adopted in a
cement factory as there will be dust generation at several points in the plant. But, the fact was
that Indian Cements had adopted the practice successfully and claimed that they could reduce
environmental pollution and increase productivity to a great extent.

In 2007, MCL started the real go in implementation of 5S in Ropeway section. The employees
were divided into different teams and zones. The entire activities were monitored by a Steering
Committee. With great enthusiastic effort the 5S programme was started there and finally then

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Managing Director at that time Sri.K.S. Sreenivas formally inaugurated the 5S implementation
by unveiling a 5S emblem at Ropeway Unloading section.

The effort was well established in the minds of all employees. The team members in mechanical
workshop had then decided to practice 5S in their work area. After 6 months of team work the
programme was successfully implemented in mechanical workshop also. The morale of each
employee there had greately boosted hen they were appreciated by visitors and other external
officials for the involvement in sustaining the practice.

In 1st January 2008, the 5S activities were started in the general store. As part of Sorting, the
scraps were segregated and disposed thereby getting revenue of about Rs.75 lakhs. The spares
and accessories are stored in numbered racks. The location code are marked and entered in SAP
system so that the item with in a fraction of seconds and minimize the time lost for searching.

Now the entire sections of the company is practicing 5S concept of housekeeping thereby
enhancing efficiency in operations.

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Human Resource Department is engaged in recruiting right person for the right job so that they
could contribute well towards the organization. There are totally 1050 employees working in
Malabar Cements Limited.


Managing Director

General Manager

Manager (P&A)

Medical Officer Lady Medical Officer

Assistant Manager (P&A)

Welfare Officer (Mines) Personnel Officer Welfare Officer (Plant)

Staff Assistant Administrative



Figure 4.4 Human Resource Department Structure

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 Identifying the vacancies

 Notification of vacancies
• Through news paper, website & employment exchange.
 Receiving application
 Registration of applications (record maintaining)
 Screening of applications
 Conducting written test/interview
• Interview committee consist of Government nominee, subject expert and persons
from HR department
 Preparing minutes of recruitment proceeding
 Preparing the rank orders of applicants
 Sending appointment letter to selected candidate


Malabar Cements has allocated 50 lakhs for training in 2012-13 same amounts is
reallocated for 2013-14. MCL spend huge amount to impart various training to employees
internally and externally.

Concern department will give instruction or inform the training department regarding the
requirement of training on the job and off the job. Along with performance appraisal form every
year requirement of training is incorporated with a view to identify the need based training.

Presently training department headed by Deputy Manager P&A assisted by personnel

office & supporting staffs.

MCL nominates officers managerial & non managerial staffs in various institutes in India



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In mean time they are also sending instructors to train on the job. Mean while MCL is
extending helping hand to the trainees and apprentice govern under the various statutes.


The administration section takes care of the company’s administration.


 Security Control

The AAO oversees the security procedures followed at MCL. He also decided about the
numbr of security to be appointed in the company.

 Vehicle Control and Maintenance

The company owns a large number of vehicles especially Lorries bring coal and other
materials required for the production. All these vehicles are being controlled by the AAO and he
gives the instruction when the vehicles have to come in and go out.

 License & ID issue

The AAO takes care of the license, which is provided for the Spirit, which is used in the
laboratory, gun, which is provided to the securities, diesel tank, which is built for the production
purpose and the explosives, which are used for blasting rocks in the mines. The AAO issues the
ID cards to all the employees.

 Reception Control

The reception connects all the incoming calls to various departments. Moreover it has to
guide the visitors to the respective departments.


The Legal Officer looks after all the legal activities of the company. If any case is filed against
the company or if the company has to file a case against any person, it is the legal officer who
looks into it. The legal officer approaches the lawyers and the lawyers appear before the court on
behalf of the company.

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Counseling is given to habitual absentees. There are two categories of absentees.

 Habitual absentees
 Absenting from duty to avoid hard work
 Other (employees working with trade unions)
As on date no systematic counseling system prevailing in the company, counseling is
done by personnel officer, industrial relation officer and Deputy General Manager as and
when required.


MCL have four recognized trade unions

 INTUC (Indian National Trade Union Congress)

 CITU (Central Indian Trade Union)
 STU (State Trade Union)

Every three years trade unions are recognized based on their membership and securing 50% of
vote among the total employees and getting recognition from registration office. Trade unions
work based on Trade union act of 1947. As per the act 7 person forming a group could make an
union of their own.

It is pertinent to note that the Industrial Relation in MCL is excellent. It has created a record of
25 years without man days lose on part of trade union strike. They put the whole hearted


It can be undoubtedly stated that our company is providing numerous measures both statutory
and non-statutory when compared to neighbouring industries as well as other Public Sector
Undertakings in the State. Here is the List of welfare measures provided by the company.

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Full-fledged round the clock canteen facilities are provided in plant and mines for employees on
duty. These provide food at subsidized rates.

 Medical Centre and Ambulance

A full-fledged Medical Centre with two bed facility is situated in Township for the benefit of
employees and their dependant family members and the treatment & medicine are provided free
of cost. The services are rendered by two Medical Officers. Apart from Medical Centre one
Ambulance each is provided at the Plant and mines for meeting emergency medical assistance of
the employees.

 Compliments & Gifts

Annual gifts are distributed among all employees in appreciation of their efforts in writing home
good profit. During the last two years, 4 gm Gold Coin was issued to each employee as annual
gift while a gold coin of 8gms was gifted to each of the employees retiring on superannuation.
Employees completing 25 years of regular services in the company were given 10 gm Gold Coin.
Gifts are also given away to employees annually in connection with Safety Day Celebrations.

 School / Festival Advance

Interest free recoverable advances are paid to all employees in connection with Onam festival
and school re-opening. In addition to this festival advances are also paid.

 Medical Reimbursement

Medical Reimbursement to the tune of one month salary per year is provided to those employees
who are not covered under the ESI Act.

 Welfare Fund

A welfare fund constituted by the company lends a helping hand to needy employees at times of
financial crises. The Governing committee consists of Management as well as elected
representatives of the workmen.

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Apart from financial assistance for treatment of specified diseases, retirement benefit, death
benefit etc., the fund is also linked with Group Medical Insurance through which members and
their dependents can avail cashless facility/reimbursement for inpatient treatment. In the case of
death, dependent benefit is also paid by the employer.

The employee contribution = Rs.150 per month.

The employer contribution = Rs.150 per month.
If the employee is hospitalized and the expense is between Rs.5000 and Rs.50000 then the
company will refund the amount. In the case of accidental death, Rs.65000 is given to the family
as compensation to the family.
 Cement at Subsidy Rate

Cement at subsidy rate is provided to employees who have completed 10 years of regular
service, on request. On superannuation, employees are offered a cement agency subject to the
rules and regulations applicable.


Conveyance facility on the Walayar – Palakkad route is provided for the employees for their to
and fro journey to attend duty. Free conveyance is also provided to school/college going children
of employees from township to Palakkad.

 Compassionate Employment Scheme

This scheme provided employment in the company to the dependant of the employees die while
in service.


Family and bachelor accommodation is provided for the company employees

 Employees Co-Operative Society

An Employees Co-operative Society is functioning in Township with ample assistance from the
company. The Society is providing provisions, stationary items etc. to the employees on credit,
which will be deducted from their salary.

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 Employees Recreation Club & Library

A recreation club is working to boost the creative talents of employees and their children in the
field of arts and sports. A full-fledged Library graded as ‘A’ by State Library Council is also
functioning in the Township.

 Community Hall

A community hall with a seating capacity of more than 300 is constructed in the Township. The
community hall is used as Indoor Stadium also for games like Badminton, Table Tennis,
Carroms etc.

 Provident Fund
The employees of MCL are provided with the facility of Provident Fund. For Provident Fund,
The employee contribution = 12% of salary (of the 12% towards PF, 8.33% goes to the
employees pension scheme).

Every industrial establishment especially profit making Public Sector Undertakings have major
role in the social upliftment of surrounding population and Malabar Cements Limited is fulfilling
it in a unique way.
Nadupathy Tribal Colony :
The company has adopted the tribal school in the Nadupathy Colony for the total upliftment of
the tribal community.
Street light with electrical connection from the company line is provided through NH from
Chandrapuram Check post to Township covering around 3 kms.
2.Special Block at Medical College
A block was at Calicut Medical College was renovated by MCL in the year 2010
3.Afforestation in mines
As part of our commitment to the mother earth we have implemented an Afforestation
Programme in our Mines.

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Employee State Insurance, shortly known as ESI, is a social security measure provided by the
company to the employees. The ESI act was passed in 1948. An Act to provide for certain
benefits to employees in case of sickness, maternity and employment injury and to make
provision for certain other matters in relation thereto. All the employees who earn a salary less
than Rs.15000 per month automatically come under the ESI scheme.

For ESI,
The employee contribution = 1.75% of salary.
The employer contribution = 4.75% of salary.
Employees who are under the ESI scheme are entitled for benefits like,
 Sickness benefit.
 Temporary disablement benefit.
 Permanent disablement benefit.
 Dependents benefit.
 Maternity benefit.
 Medical benefits to the family members.
 Funeral benefits.
Obligations of ESI:
 The obligations of the Employer are:
 Registration of employees (Form 1)
 Recovery of ESI Contribution and remittance.
 Every 6 months, the return of contribution (form 6) should be submitted to the Employee
State Insurance Corporation (ESIC).
 Submitting the accident report to the local officer (Form 16)
 Maintain register of employees (Form 7)
Record maintained
1. Register of employees (Form 7):
 Insurance number.
 Name of insured person.

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 Department and shift, if any.

 If appointed during the contribution period, date of appointment.
 Number of days for which wages payable / paid.
 Total amount of wages payable / paid.
 Employees share of contribution
 Average daily wages
2. Accident Register
 Serial number.
 Date of notice.
 Time of notice.
 Insurance number.
 Name and address of the employee.
 Date of accident.
 Time of accident.
 Place of accident.
 How the accident occurred.
 What exactly the person doing at the time of accident?
 Name and address of the person who give the notice.
 Name and address of two witnesses
 Sign and address of the person who makes the entry in accident book.
3. Return of Contribution

Grievances are general in every organization and need to be taken care of before it creates
serious issues. Malabar Cements Limited addresses all sorts of grievances with good spirit.
Being a Government company the management is taking all effort to address the pending issues
in consultation with trade unions and obtain guidance from the statutory authority. The
Managing Director of the company is directly engaged to hear the grievances of different parties
during his visit to company.

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The disputes that are not settled amicably the statutory authorities under various acts are utilized
or approached b trade union to settle the industrial disputes or grievances. Management and trade
union are having the liberty to approach the statutory authority to settle their disputes.


Performance appraisal is a routine process in Malabar Cements and is carried out every three
month after selection. Immediate superior is in charge to record the performance of the persons
working under him. Point method is practiced and the report is submitted to the Personnel
Department and the recorded facts are considered for confirmation of increment and promotion.
Attendance is a major criterion in performance appraisal.


Employees of Malabar Cements are classified in to two major classes:-


Managerial employees are paid by an agreement between Government and the Company. In the
case of non-managerial personnel cement wage board fixes the pay packages. Pay packages are
revised every five year.


Malabar Cements Limited is a 24x7 working company mainly having three shifts and General

 ‘A’ shift - 6.00am-2pm

 ‘B’ shift - 2.00pm-10pm
 ‘C’ shift - 10.00pm-6am
 General Shift – 8.30am – 5pm

The time office records the in-coming and outgoing time of the employees. This is done by using
a punch card. Each employee will be given a punch card where his code number will be typed.
When he enters in, he must feed the card into the machine, which will record the accurate time.

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Time Office Structure







Figure 4.5 Time Office Structure


 To maintain the employee’s attendance.

 To maintain the leave details.
 To record the incoming and outgoing time of the employees through gate pass.

Leave Rules

 Casual Leave
 7 days CL in a calendar year.
 CL will not be sanctioned for more than 2 days at a time.
 CL will not be combined with any paid leave.
 Unveiled CL will not be carried foreward to next year.
 Sick Leave
 12 days in a calendar year.
 Application for more than two days at a time shall be accompanied by a
medical certificate.
 Intervening holidays/weekly off will be counted as a sick leave, a SL can
be accumulated up to 180 days.

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 Earned Leave
 Confirmed employees are eligible for earned leave at the rate of one day
for every 20 days worked during the preceding year.
 EL shall be accumulated up to 90 days.
 Intervening holidays/weekly off will be counted as EL.
 EL shall not be availed for more than 4 occasions in a year.

Application for earned leave shall be submitted 15 days in advance.


The career planning and the promotion policies depend on certain rules and regulations of the
organization. the employees of MCL Ltd are eligible for promotion once they complete a period
of either 5 or 7 years in the organization and also in the particular department. At the time of
internal promotion, qualification, experience and knowledge of the employees are taken into
account. If the employee is eligible he is promoted or else company goes for external

Each position in the organization is well defined which included length of the service, education,
seniority etc.

The criteria for promotion for the managerial position depend on the seniority and the merit.
Whenever there is a vacancy for the managerial position the employees existing post is evaluated
based on the seniority and service record and then promotion interview is held and when the
employee satisfies the criteria he is promoted.

In case of non managerial position promotion tests are conducted and the employee who is
eligible is promoted.

The employees eligible for promotion are required to satisfy the basic criteria of marks. The total
of 150 mark is awarded for every employee in which 50 marks is for the written test which
normally test the knowledge of the employee in the particular section of the department and the
remaining 100 mark is for the attitude of the person, service he rendered to the company, length
of service, performance and attendance.

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Shall continually improve the Environment, Health and Safety standards in our
organization by integrating EHS objectives in our business process.

MCL commit to:

 Take appropriate measures for:

i. Optimum utilization of energy and other resources
ii. Preventing and Control of pollution
iii. Reducing potential hazards and risks
iv. Waste minimization /Disposal
 Comply with applicable legal and other requirements
 Integrate EHS concerns into decision making to achieve sustainable development
 Ensure EHS compliance through total employee involvement at all levels
 Communicate to all employee and business associates our EHS policy and their
individual obligations to achieve EHS objectives.

EHS Initiatives and objectives

In order to meet our overall need for sustainable development of our EHS initiative
draws the following objective continuation and expansion of activities such as production,
distribution and trade along with

-a still more stringent control of its environment impacts

-Supplying markets products with improved performance

-Achieving and sustaining:

• Zero accident
• Zero occupational diseases
• Zero non-recovered waste

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• Integrate EHS approach for better global comprehension and

Malabar Cements is always committed to sustain development of health and safety
working environment complying with all statutory requirements. We undertake various
programmes, methods and initiatives towards this by adopting proactive safety approach rather
than reactive ones. The plant uses sophisticated pollution control devices in various parts such as
raw mill, cement kiln, coolers and cement mill. In addition, the mining technologies that have
been implemented are also based on environment safeguard norms. Periodical inspection and
assessment of working conditions is considered as the key tool for identifying hazards and risk
involved in each activity. We give utmost importance to enhance competency of human
resources by providing adequate awareness, training with the help of an established Full-fledged
Training & Development department.

Company believes that safety is an integral part of all jobs and that can be achieved only through
active participation and involvement of employees from all levels, from top to bottom. Promise
workers participation in safety management by establishing Safety Apex Committee and
departmental safety sub committees. These committees oversee the implementation of our OH &
S policy. Company practices Japanese 5S concept of housekeeping to achieve excellence in
maintaining clean and hygienic working conditions.

Their keen attention is always to create a green & healthy environment. In its endeavor towards
greenery, the company has initiated various types of afforestation, horticulture and tree planting
programs. To comply with in the numerous standards and norms stipulated in various statutes of
environment conservation, timely Modernization plans are prepared and implemented.

Safety Guidelines

 All workers are bound to observe safety precautions as directed and notified from time to
time and use safety equipment or clothing supplied by the company as may be required.
 Workman shall engage themselves only in operation at the machine and duties to which
they have been posted.
 Removal of guards or safety devices on machines while they are running is expressly
forbidden and shall amount to misconduct.

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 Safety equipments are intended for use inside the factory premises and shall not be taken

Reason for Accident

 Unsafe Act 88%

 Unsafe condition 10%
 Grace of God 2%

Hazard Identification & Control

 Identifying Risk and Providing Control (mandatory requirement)

 Risk = Probability x Severity
 Providing training & awareness
 Keeping Near Miss Near Hit Report

Controlling Systems

 Fire hydrant system

 Pull cord
 Ambient air quality control
 Green Belt etc.,

Vulnerable Places

 Coal Yard
 Coal Mill
 General Store

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Managing Director

General Manager

Finance Manager

Deputy finance Manager Assistant Manager Finance Deputy finance Manager

(costing & budgeting)

Assistant Accounts Assistant Accounts

Assistant Accounts officer officer officer


Staff Staff Staff Staff

Figure 4.6 Finance Department Structure


Finance Department is considered as the backbone of any company. No doubt Malabar Cements
Limited has a very dynamic finance department which records all the financial transactions in a
systematic manner and carries the Company towards Success.

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 Monthly accounting of invoices.

 Making correction in the price.
 Providing Discount.

The major function of the finance department is to account all the transactions in a systematic
manner. The bill of various departments such as production, marketing, administration, welfare
is entered into goods received register by the stores person in the store. Then the bills are sent to
the respective departments for payment. Once the bills received are proper in all respects, then
the bills are entered into the system.

The other cash payments made are to be approved by the proper authority. Once the approved
bills come to the Accounts department, the vouchers are prepared and the cashier makes the
payment. Authorized person from the respective department has to acknowledge for voucher

Cost Accounting

The finance department has also an important section known as Cost Accounting. This function
identifies the entire cost centre and calculates the cost associated with them. Since it is very
important in the company’s decision making to analyze the cost structure, the cost accounting is
considered as an important function. Through cost accounting, the company can find out the
normal cost as well as excess costs and take appropriate corrective action to control and reduce
the cost of production which in turn provides more cost benefit and profit to the company. The
Malabar Cements Limited follows good cost accounting system.

Cost structure:


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Fixed expense

 Administration & Selling.


The cashier, who works in the finance department, performs the following functions

 Makes the daily cash transactions.

 Arranges all the direct payment of money as well as the receipt of money.
 Controls the liquid cash flow.
 Maintenance of registers.

Capital Structure

The company raises the capital by issuing shares only. There are 8 shareholders in the company.
7 having only one share and the 8th one is in the name of the Governor of Kerala. The company
comes under the industrial department of the state and the Government of Kerala makes the issue
of shares. Similarly the transfers of shares are also made by the Government of Kerala. Dividend
is paid to the Government.

Working Capital

Working Capital is the fund used for to the day-to-day operations of the company.

Working Capital = Current Asset – Current Liability.

Presently 15 crore is allocated for working capital management. This is a part of profit. Apart
from this they can acquire overdraft from bank but now they are not at all using the overdraft


The budgets are prepared based on past year budgets and the cost of raw materials. In MCL there
are two types of budgets called revenue and capital budget. Capital budget is prepared yearly

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once by getting proposal from various departments and then getting approval from the board of
director and then the capital budget I implemented.


The following mentioned below are the banks operated by MCL for transferring salary through
bank transfer.

 State Bank of Travancore.

 State Bank of India
 Canara Bank.
 Syndicate Bank
 Indian Bank
 Union Bank of India
 Palakkad District Co-Operative Bank.

State Bank of Travancore and HDFC banks are used for doing payment by sending E-mail in the
prescribed format given by respective banks.


Dividend is given based on the profit level. It is decided by the Board of Directors. Interim
dividend is paid quarterly by the Board of Directors. The Board of Directors should represent the
decision in Annual General Meeting lead by Government.

Sources of Finance

Sources of finance are profit and KVAT (Kerala Value Added Tax). The amount payable for
KVAT is retained in the organization and it is payable after every five year without interest. The
present money retained is Rs.50 crore.

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The market territory of Malabar Cements Limited is confined to 14 districts of the state of


Sales Department is headed by the Head of Sales Department, who is in charge of all functions
related to sale of cement produced both at Walayar and Cherthala Grinding Unit (CGU)
throughout the state as well as the neighbouring States. He is assisted by a team of officers both
in the field and in the Office.









Figure 4.7 Marketing Department Structure

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Annual Marketing Plans for a given financial year is prepared prior to commencement of the
financial year and is included as part of the Business Plan. Targeted sales for each type of cement
and each type of packaging are estimated and included as a part of the plan. Subsequently,
detailed targets for each district with break up of type of product and type of packaging is
prepared prior to the commencement of each month. Specific responsibilities are assigned to the
field officer for the sale of the monthly targeted quantities in respect of each district. Monthly
reviews are made at the level of managing director to assess the target Vs. achievement and
corrective actions are taken wherever required.


Government has made it compulsory to manufacture cement according to the standards specified
by the Bureau of Indian Standards. Malabar Cements produces three brands of cements.

BIS specifies the minimum requirements. But Malabar cements limited is maintaining
consistently much superior quality in its products to satisfy and exceed the customer expectation.

Product Profile

 Ordinary Portland Cement-43 grade (OPC- MALABAR SUPER)

 Portland Pozzolana Cement (PPC – MALABAR CLASSIC)
 Portland Slag Cement (PSC – MALABAR AISWARYA)


In the given market territory the market share of Malabar brand cement is in 8% only. The
market is controlled by giant private sector companies such as Indian Cements (Sankar), ACC,
Madras Cements (Ramco), Ultratec, Dalmia cements, Chettinad cements etc. of neighboring
States. Malabar Cements Limited is therefore compelled to follow competitors pricing strategy.

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Method of Price Fixing

The system of market intelligence followed in order to understand the price behavior of the
competing brands by collecting the trading price of different brands at dealer/retail point directly
by the field officer of the respective district on a regular basis. They submit reports on a weekly
basis to the sales department. The above field reports are analysed by the head of the Sales

There is a pricing committee consisting of the heads of sales, finance, production and materials
and also chief engineer (instrumentation), to review the market situation and to fix the price. The
convenor of the pricing committee is manager.

Pricing Methods

It is being fixed such a way to cater Palakkad and the peripheral markets such as
Malappuram and Thrissur also. Billing is done at the factory freight from the factory to the
destination and the arrangement of transport is by the buyer/stockists. Once the material has been
loaded to the lorry, the sole responsibility of the material rest with the consignee/stockists

In distant places where ex-factory price is not feasible, we offer FOT prices through
company transport contractor. Billing is done at factory. Transport arrangement and freight is the
responsibility of the company. The freight to the destination will be paid to the transporter on
production of consignee receipt certificate received by him from the buy him from the buyer or
stockists. Once the material has been loaded to the lorry at the

factory the entire responsibility of delivering the material in good condition at destination within
the territory of the consignee/stockists as specified by him to the transport contractor.


This is followed when there is problem in rail movement. Stock is transferred to depot by
road instead of rail. Billing is done at the depot office.

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Stock so reached at the depot will be billed directly from there without any handling
expenses. In this system the freight to the concerned taluk will be reimbursed to the transporter
on certification from the depot office.

Price fixed at the destination rail head. In this billing is done from the depot movement of
cement by rail is mainly on endorsement basis. Cement is moved by rail is being endorsed in the
name of the stockists against payment. For endorsement cases, clearing charges fixed by the
pricing committee from time to time is being reimbursed. But all demurrage charges and
incidental expenses if any has to be borne by the stockists.


The market is divided primarily to three segments institutions/Government and direct customers
and stockists.

Cement is also being supplied to private as well as Government Institutions in bulk quantities at
a rate fixed by the pricing committee in order to ensure bulk movement of cement. The rates for
such supply will be decided based on the market conditions from time to time by the pricing

 Government Bodies
The requirement of cement for Government bodies also being met by the company against their

 Direct Consumers
the consumers who want cement directly from the company are also being catered to at a rate
fixed by the pricing committee.

 Open Market
The open market is serviced through a network of stockists in case of open market sale, the
stockists place orders with payment and take delivery, either at the factory or at the railhead or at
our depots.

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Open market sale is the major distribution channel. There is a network of stockists in all the
districts of the state. However, Stockists are appointed based on the requirement of the company
at appropriate outlets to ensure free availability of our cement to the extent possible throughout
the state.


There is an annual budget for Sales Promotion for every year. The promotional aspects involves
in the case of cement sales are build up of brand image among the current and potential
customers largely by advertisement sales promotion and promotion of dealers for pushing higher
volume. (almost all the dealers are dealing in multiple brands and their loyalty depends on the
thrust being given to them in the promotional angle)

The budget provision for advertisement dales promotion is through the advertising agency
selected for a year. The agency is selected through tendering process. This would include both
pricing media and visual media.

The industry practice in respect of dealer promotion includes:

 Cash Discount : all major cement companies are offering cash discount to their dealer in
the range of Rs.3.00 to Rs.7.00 per bag at present.
 Annual gold scheme : based on the quantity lifted monthly volume discounts including
dispatch through wagon(wagon discount)
 Annual Incentives: certain companies credit their annual incentives to their security
deposit account of the stocklist which can be utilized as and when they require for lifting
 All major companies conduct Forien Trips for their best performing dealers.
 Offer Price Difference differences in bearish markets to protect the stock of their dealers.
 Mansons Meets, Engineers Meet And Dealer Meets
 At Railheads, they Operate Through C&F Agents so the dealer is under no pressure to
lift a particular volume on a single day. He can lift cement directly from the rake as per
his requirement. The company will shift the balance quantity to their warehouse through
the C and F agents. This also ensures availability of the material on a daily basis.

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 The Company Bears The Entire Clearing And Handling Expenses which may come
to Rs.7/- per bag at present.
 The Company or the C&F Agents Pay the Demurrage/Wharf age Charges.
MCL selectively choose a few among to the above schemes depending on the market situation.
In addition to the above, special schemes also become necessary for liquidating the stock in the
event of huge build up of clinker stock. This is also decided by the pricing committee.



Poly propylene(PP) packaging IS 11652:2000

Laminated Polypropylex(LP) IS 11652:2000

Paper Packaging(P) IS 11761:1997

Table 4.4 Packaging


 Generally payment against delivery is being followed. Cheque facility against Bank
Guarantee is at the sole discretion of the Managing Director.
 The industry practice is that they (competitors) offer credit facility to their dealers.
 In ex-factory sales, the payment by demand draft/cheque is collected at the sales office.
The instrument will be entered into the party account through SAP system. In depots, the
payments are received at the respective Sales office and the amount is creditied to the
company’s Bank Account. The payment details will be entered into party accounts
through SAP system. The fund also banked at the depot bank account will be transferred
to the HO bank A/C on a weekly basis.
 Malabar cements limited is in the process of adopting RTGS system for payment
collections on an experimental basis. In this system, the fund will be directly transferred
from the party’s bank account to company’s account. By this, we are eliminating undue
delay in depositing the instruments in the bank and transferring funds to head quarters at

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Figure 4.8 Market Share Analysis


 ACC Cements
 Ambuja Cements
 Bharathi cements
 Chetinad Cements
 Dalmia cements
 Jayajyothi cements
 Ramco Cements
 Ultratech Cements

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Department Structure







Figure 4.9 System Department Structure

Type of Network

 Optical fiber, Twisted pair, WIFI, LAN, VAN

Office automation facilities


Number and Nature of Workstations

 Total of 250 computers

Type of Servers

 IBM Servers
• IBM Production (contain actual data)
• IBM Development (contain training data)
• IBM Domain (contain domain data)

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Security Systems

 Network antivirus servers, password protections

Internet Connectivity / VSAT

 BSNL WIFI & Several Net setters

Type of Operating Systems Used


Number of Licensed Software Versions

 Kaspersky Anti Virus

 WINDOWS (every version)

System Backup Facilities

 San storage facility of IBM is used and data’s are recoverable as and when required.
 Redundant power supply is available to ensure uninterrupted functioning.

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 It is having a good image and brand loyalty among customers.

 Service is good
 They have same price prevailing for wholesale at dealers/stockiest retailers end.
 Have a committed work force.
 Quality in every steps and a powerful quality assurance.


 The competitors are doing much promotional activities rather than Malabar Cements.
Limited that is why it facing more problems in selling of product in the market.
 Lack of awareness program for consumers.
 Shortage of own Lime stone reserve.
 Shortage of manpower in many critical positions.


 Rapid growth is taking place in Kerala like building of apartments, bridges, roads etc.
 People are opting for more stable structures and intensive use of cement is taking place,
even government is spending heavily on infrastructure projects. Thus this is the right time
to fully tape these markets.
 As Indian core industry is also growing at rate of nearly 10% per annum it is having a
good future.
 Foreign direct investment in infrastructure sector going to increase in coming years,
which will increase the demand of cement.
 Roads are undergoing through the transformation process through which the traditional
method of road building will be replaced by modern concrete roads.

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 Large number of players in cement industry makes it more competitive for MCL to
carefully price its product and at the same time satisfy its dealers and customers.
 Players such as Ambuja Cement, Prism Cement and ACC are eating up considerable
market share.
 Due to India’s exponential growth many new international cement companies are
expected in coming years which will bring a tide of change and can start price war.
 The emergence of small players in this market may increase the competition and start the
malpractices, and heavy discounts to retailers. They can also influence many retailers by
giving better profit margin, and other benefits.

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 MCL has been an excellent Human Resource Department and there exists a good relation
between the management and the employees.
 As part of welfare activities there are several committees formed for making a good
working environment
 Implementation of SAP ERP has reduced the paper works to minimum.
 SAP also brought all departments under one umbrella.
 When it comes to social responsibility the company sponsers almost all the Governement
programs and adopted certain tribal villages in the region and worked hardly for the
development of them.
 In environment engineering, as the company deals with dry material only air pollution is
happening in the region and MCL has implemented three electro static precipitator(ESP)
and three bag filters for this purpose.
 Presence of rope way has reduced the transporting cost to minimum.
 The strategic location of the company has made possible to supply the material in a
speedy way
 ISO certification has made possible for the company to come out with quality products
 The life of MCL mines will only last for another 15 to 20 years
 Over depends of external supply of limestone


 The company has to permanently keep one technical support staff for the maintenance of
SAP system.
 The company should look out for other limestone resources and hence expand the
production capacity, this can help the company to expand its market from 10%.
 Company should resort to extensive promotional programs for Malabar Aiswarya,
especially in the coastal region.
 The company should try to supply its products in all parts of Kerala
 Company should see the critical positions are occupied by right persons in every time.
proper human resource forecasting need to be made time to time.

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The organization structure of the company is well organized and all the activities are
assigned and delegated in an effective manner. The organization follows a good management
principle and run by effective and qualified top management people and because of that the
company has weathered from the rough times to become a more profitable and professional
company. Work is done in correct time due to the organized structure and all the departments of
the organization are functioning in an effective manner. Departments are coordinated in such a
way that the information from each department is used for the smooth functioning of the
organization. Management has made sure that all the best principles are put into place to make
the company competitive in all business function. Sincere dedication and hard work from the
Top Level Management, Middle Level Management, and Employees of Malabar Cements has
made the company to emerge as one of the best run Public Enterprise in Kerala.

I personally thank Malabar Cements Ltd for guiding me from time to time in successful
completion of my Organizational study. I also thank each and every department staff for their
help in providing me with valuable information required for this study.

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 Kotler Philip & Keller Kelvin, Marketing Management, Pearson Education, India.
 K Aswathappa, Human Resource Management – Text & Cases Tata Mc Graw Hill.
 C R Kothari, Research Methodology, 3rd edition
 Aiswarya house Magazine, Malabar Cements Limited, Vol:21, Issue 1

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