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Cement Industry In India

Cement Industry In India

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Published by Shobhit Chandak
i made this for my office. it is a total research on everything about cement. i hope its useful to you.
i made this for my office. it is a total research on everything about cement. i hope its useful to you.

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Published by: Shobhit Chandak on Mar 18, 2009
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07/31/2013

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Report on Cement Industry In IndiaBy: Shobhit Chandak
1.INTRODUCTION
 The cement industry is one of the main beneficiaries of the infrastructure boom.With robust demand and
adequate
supply, the industry has bright future. The IndianCement Industry with total capacity of 165 million tones is the second largest afterChina. Cement industry is dominated by 20 companies who account for over 70% of the market. Individually no company accounts for over 12% of the market. Themajor players like L&T and ACC have been quiet successful in narrowing the gapbetween demand and supply. Private housing sector is the major consumer of cement (53%) followed by the government infrastructure sector. Similarly northernand southern region consume around 20%-30% cement while the central andwestern region are consuming only 18%-16%.India is the 2nd largest cement producer in world after china .Right from layingconcrete bricks of economy to waving fly over’s cement industry has shown andshows a great future. The overall outlook for the industry shows significant growthon the back of robust demand from housing construction, Phase-II of NHDP (NationalHighway Development Project) and other infrastructure development projects.Domestic demand for cement has been increasing at a fast pace in India. Cementconsumption in India is forecasted to grow by over 22% by 2009-10 from 2007-08.Among the states, Maharashtra has the highest share in consumption at12.18%,followed by Uttar Pradesh, In production terms, Andhra Pradesh is leadingwith 14.72% of total production followed by Rajasthan. Cement production grew atthe rate of 9.1 per cent during 2006-07 over the previous fiscal's total production of 147.8 mt (million tons). Due to rising demand of cement the sales volume of cement companies are also increasing & companies reporting higher production,higher sales and higher profits. The net profit growth rate of cement firms was 85%.Cement industry has contributed around 8% to the economic development of India.Outsiders (foreign players) eyeing India as a major market to invest in the form of either merger or FDI (Foreign Direct Investment). Cement industry has a long way togo as Indian economy is poised to grow because of being on verge of development. The company continues to emphasize on reduction of costs through enhancedproductivity, reduction in energy costs and logistics expenses. The cement sector isexpected to witness growth in line with the economic growth because of the strongco-relation with GDP. Future drivers of cement demand growth in India would be theroad and housing projects. As per the Working Group report on Cement Industry forthe formulation of the 11th Plan, the cement demand is likely to grow at 11.5 percent per annum during the 11th Plan and cement production and capacity by theend of the 11th Plan are estimated to be 269 million tones and 298 million tones,respectively, with capacity utilization of 90 per cent.Page | 1
 
Report on Cement Industry In IndiaBy: Shobhit ChandakDespite the growth of Indian cement industry India lags behind the per capitaproduction. Supply for cement is expected to remain tight which, in turn, will pushup prices of cement by more than 50%. The most important factor for better pricesis consolidation of the industry. It has just begun and we will see more consolidationin the coming years. Other budget measures such as cut in import duty from 12.5per cent to nil etc. are all intended to cut costs and boost availability of cement.Sadly the adverse effects of global slowdown have not speared this industry too.Demand is sluggish, the government is keeping an eagle eye on prizes, domesticcoal and pet coke, prizes have increased sharply and utilizations rates are down. The numbers coming out are a reflection of grim times. ACC the country’s largestcement company that’s controlled by Swiss giant HOLCIM, registered 2% fall inaugust sales. It is the biggest fall since Feb 2007. Production fell by 5%. To stand against the problematic situation, government as well as cement industryhas taken some steps. Companies are focusing on cost of transportation. One of thestrategy is to decrease dependence on road & opt for sea logistics as that can cuttransportation cost by 30- 50 %. Some plants are adopting futuristic plan such assetting up captive power plant, moving closer to the customers by creating clicker,crushing, and capacity in key markets, to be more customer centric to generatebetter revenue. India should push for stricter regulations of market place as tocontrol the prices of big companies and prevent them from forming cartels andexchanging information. To fight with the high inflation, government wants to importmore cement from Pakistan .However cement prizes are not very much high asother items but still they are increasing. And the reason of high prize is surging costof raw material and transportation cost. Apart from this government also discussedwith cement industry not to have increase in prizes and keep consumer interest inmind.Now the question arise in front of the government is whether the demand by thegovernment is possible to increase through expenditure on infrastructure or notaccording to the current state of economy when so many crises are going on or howthe government allocation of US$ 3.23 billion for the National HighwayDevelopment, Project will keep the demand for cement alive? And to what extentthe prizes of cement should be increase so that consumer can’t affect.Cement industry in India has also made tremendous strides in technological upgradation and assimilation of latest technology. Presently, 93 per cent of the totalcapacity in the industry is based on modern and environment-friendly dry processtechnology. The induction of advanced technology has helped the industryimmensely to conserve energy and fuel and to save materials substantially. Indiancement industry has also acquired technical capability to produce different types of cement like Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC),Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid HardeningPage | 2
 
Report on Cement Industry In IndiaBy: Shobhit ChandakPortland Cement, Sulphate Resisting Portland Cement, White Cement etc. Some of the major clusters of cement industry in India are: Satna (Madhya Pradesh),Chandrapur (Maharashtra), Gulbarga (Karnataka), Yerranguntla (Andhra Pradesh),Nalgonda (Andhra Pradesh), Bilaspur (Chattisgarh), and Chandoria (Rajasthan).
2.CURRENT SCENARIO
 The Indian cement industry is the second largest producer of quality cement, whichmeets global standards. The cement industry comprises 130 large cement plantsand more than 300 mini cement plants. The industry's capacity at the end of theyear reached 188.97 million tons which was 166.73 million tons at the end of theyear 2006-07. Cement production during April to March 2007-08 was 168.31 milliontons as compared to 155.66 million tons during the same period for the year 2006-07.Despatches were 167.67 million tons during April to March 2007- 08 whereas155.26 during the same period. During April-March 2007-08, cement export was3.65 million tons as compared to 5.89 during the same period.Cement industry in India is currently going through a consolidation phase. Someexamples of consolidation in the Indian cement industry are: Gujarat Ambuja takinga stake of 14 per cent in ACC, and taking over DLF Cements and Modi Cement; ACCtaking over IDCOL; India Cement taking over Raasi Cement and Sri Vishnu Cement;and Grasim's acquisition of the cement business of L&T, Indian Rayon's cementdivision, and Sri Digvijay Cements. Foreign cement companies are also picking upstakes in large Indian cement companies. Swiss cement major Holcim has picked up14.8 per cent of the promoters' stake in Gujarat Ambuja Cements (GACL). Holcim'sacquisition has led to the emergence of two major groups in the Indian cementindustry, the Holcim-ACC-Gujarat Ambuja Cements combine and the Aditya Birlagroup through Grasim Industries and Ultratech Cement. Lafarge, the French cementmajor has acquired the cement plants of Raymond and Tisco. Italy basedItalcementi has acquired a stake in the K.K. Birla promoted Zuari Industries' cementplant in Andhra Pradesh, and German cement company Heidelberg Cement hasentered into an equal joint-venture agreement with S P Lohia Group controlled Indo-Rama Cement.Page | 3

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