CEMENT INDUSTRY

PROFILE

Prerna Mehrotra
MBA Sem 3

What is CEMENT?
The word Cement has come from the Roman word Opus
Caementicium
Cement is a binder, a substance that sets and hardens
independently, and can bind other materials together.
The most important use of cement is the production
of mortar and concretethe bonding of natural or
artificial aggregates to form a strong building material that is
durable in the face of normal environmental effects.
Joseph Aspdin, a British stonemason, invented Portland cement
way back in 1824. With this invention, Aspdin laid the foundation
of todays cement industry.

USES OF CEMENT
Production of Concrete
Construction Purpose
o Building (Floors, Beams, Columns,
Roofing)
o Transport (Roads, Pathways,
Crossings, Bridge)
o Water (Pipes, Drains, Canals)
o Agriculture (Irrigation, Housing)

TYPES OF CEMENT
The basic raw materials used in the cement manufacturing process are
limestone, sand, shale, clay, and iron ore.

Ordinary Portland Cement (OPC)

Portland Pozzolana Cement (PPC)
Portland Blast Furnace Slag Cement (PBFS)
Oil Well Cement
Rapid Hardening

Sulphate Resisting Portland Cement

White Cement etc.

GLOBAL SCENARIO
Today, it is estimated that there are around 1500 integrated cement
production plants in the world.
It is estimated that world cement consumption is to rise on an
average between 3.6% and 4.8% per year in the coming years.
Most of the growth is coming from Central and Eastern Europe and
Asia, growth in mature markets also looks healthy.
The share of the four largest firms account only for 23% of the
overall demand.
LAFARGE and CEMEX have become very strong global cement
players.

EVOLUTION OF INDIAN CEMENT

INDUSTRY
A Kolkata based company started manufacturing cement in
1889.
In 1914, Indian Cement Company Ltd was established in
Porbandar.

In 1927, Concrete Association of India was set up to create

public awareness on the utility of cement.
In 1956, price and distribution system of cement industry came
under government control.
After the economic reform in 1980s the government control on
cement industry was liberalized.
A great increase in demand of cement, has resulted India to
become 2nd largest cement producer in the world after China.

CEMENT MANUFACTURING
PROCESS
Cement is made out of limestone, shale, clay mined out of quarry
close to the plant. The raw material is crushed, and then heated at
temperature in excess of 1000 degree Celsius in rotating kiln to
become clinker. Clinker is then mixed with gypsum and ground to a
fine powder to produce final grade of cement.
The technology is a continuous process and is highly energy
intensive.
At present 93% of cement production in India is based on modern and
environment-friendly dry process technology and only 7% of the
capacity is based on old wet and semi-dry process technology.
The cost of Cement is 29% energy; 27% raw materials; 32% labour
and 12% depreciation

ECONOMIC STATUS OF
THE CEMENT INDUSTRY
Growth Rate

Investments
Exports
FDI and GDP

GROWTH RATE
India is the worlds second largest producer of cement with total capacity
of 224 million tonnes as on April 2010.
Indian Cement Industry comprises of 140 large and more than 365 mini
cement plants.

According to ACC cement report, Governments continued thrust on

infrastructure will help the cement to maintain an annual growth of 9-10%
in 2010.
With addition in the cement production, it is expected that cement
production in India will reach 300 million tonnes in the coming years.

INVESTMENTS
Cement and gypsum products have received cumulative FDI of US$
1708.69 million between April 2000 and March 2010, according to the
Department of Industrial Policy and Promotion.
Madras Cements Ltd is planning to invest US$ 178.4 million to increase
the manufacturing capacity of its Ariyalur plant in Tamil Nadu to 4.5 MT from
2 MT by April 2011.
Shree Cement, plans to invest US$ 97.13 million this year to set up a 1.5
MT clinker and grinding unit in Rajasthan. Moreover, in June 2010, Shree
Cement signed an MoU with the Karnataka government to invest US$
423.6 million for setting up a cement unit and a power plant.
Jaypee Associates plans to invest US$ 640 million to increase its cement
capacity.
Swiss cement company Holcim plans to invest US$ 1 billion in setting up
2-3 greenfield manufacturing plants in the country in the next five years to
serve the rising domestic demand.

EXPORTS
During 2007-08, the export of cement from India touched the
2.16 million tonnes mark. However during 2008-09, the cement
export from India stood at 1.46 million tonnes.
In spite of seeing fall during 2008-09, the export segment of
the industry is expected to grow again on account of various
infrastructure projects that are being taken up all over the
world. India has an immense potential to tap markets of Middle
East and South East Asia
The negative ACGR (Annual Compound Exponential Growth
Rate) of -5.52% in control period has seen ACGR of 35.35% in
decontrolled and opened up economy

FDI AND CONTRIBUTION

TO THE GDP
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 one of the major contributors to the
exchequer by way of indirect taxes.
100% FDI is permitted in the cement industry.
It contributes approximately 1.3% of GDP and the industry is
employing over 0.14 million people

MAJOR PLAYERS IN THE INDIAN

CEMENT INDUSTRY
Company
ACC
Ambuja
Ultratech
Grasim
India Cements
JK Group
Jaypee Group
Century
Madras Cements
Birla Corp.

Production*
17,902
15,094
13,707
14,649
8,434
6,174
6,316
6,636
4,550
5,150

*in Million Tonnes

(Source:Mapsofindia.com 2010, Tradechakra 2008)

Installed Capacity*
18,640
14,860
17,000
14,115
8,810
6,680
6,531
6,300
5,470
5,113

ACC Limited
14 cement plants
19 RMC plants
19 Sales offices
Gujarat Ambuja Cements Ltd
plants in 7 states
India Cements
7 cement plants in AP and TN
JK Cement Ltd
2nd largest White Cement
manufacturer in India
Holds 18% market share in
Haryana
3 production plants in Rajasthan
and Gujarat
Jaypee Group
Plants located in MP and UP
Birla Corporation
2 production plants in
MP and Rajasthan
2 Grinding units

Ultratech
A part of Aditya Birla Group
73 RMC plants
11 composite plants
1 white cement plant
12 grinding units
5 terminals
Grasim
A part of Aditya Birla Group
7 split grinding units
11 composite plants
4 Bulk terminals
10 RMC units
Madras Cements
One of the oldest cement
companies in southern
region
3 production plants in TN,
AP and Karnataka
Has put up new RMC
Century
plantsCement
4 production plants

ISSUES CONCERNING THE CEMENT

INDUSTRY
High Transportation Cost is affecting the competitiveness of the
cement industry. Freight accounts for 17% of the production cost.
Road is the preferred mode for transportation for distances less than
250km. However, industry is heavily dependant on roads for longer
distances too as the railway infrastructure is not adequate.
Cement industry is highly capital intensive industry and nearly 5560% of the inputs are controlled by the government.
There is regional imbalance in the distribution of cement industry.
Limestone availability in pockets has led to uneven capacity
additions.
Coal availability and quality is also affecting the production

ACQUISITIONS BY FOREIGN CEMENT

GIANTS IN INDIA SINCE 1999
S.No

New Entrant

Country

Purchased

Holicim Ltd

Switzerlan

14.8% of Ambuja Cement

d
2

Lafarge

France

Cement

Raymond Cement

TISCO (TATA Cement)

Italcementi

Italy

Zuari Industries

Heidelberg

Germany

Indo-Rama Cement

Diamond Cement

COMPANIES PLANNING TO ENTER

THE INDUSTRY
S.No

Future Companies

Current Business

Reliance ADAG

Infrastructure

Power etc.

Jindal Steels

Steel

Murli Agro

Agro Products

INDIAN CEMENT INDUSTRY LIFE

CYCLE
With as many as four new foreign
players having entered the Indian
cement market and two-three expected to come in the near future, the
competition is expected to get tougher
The Indian cement industry has witnessed a phenomenal capacity addition to
the tune of about 52 million tonnes in the last two financial years which
accounted for about 24% of the industrys capacity of 218 million tonnes at
the end of FY09

STRUCTURAL DRIVERS OF THE

INDUSTRY
GOVERNMENT: From the era of direct government control over cement
production and distribution to todays globalization of Indian cement industry,
Government of India has always been one of its major drivers of change. Tax
concession, Tax rebate, etc. to new foreign players have changed the entire
cement business in India. With multinational cement players coming in, the
cement quality and standards have improved a lot.
REAL ESTATE: The boom in the cement industry in India came in 2003, when
the real estate rates started rising. Over the past few years (FY03-07), cement
demand has grown at a CAGR of 8.37% which is higher than the CAGR of
supply at 4.84%. Real estate sector is the key driver and accounted for almost
55% of cement demand in FY 07.
INFRASTRUCTURE: In this FY10 budget, the Government will be spending Rs.
1.73 trillions on infrastructure. With many international events like
Commonwealth games 2010, Hockey World Cup 2010, Cricket World Cup 2011
etc, the need to develop world class infrastructure was felt in early 2000s. As a
result, many new multi billion dollars project were sanctioned to develop roads,
metros, airports, railway stations etc all across the country, thus, boosting the
demand for cement.

PEST ANALYSIS
POLITICAL

Coal rates, power tariffs, railway freight plays a very

important factor in the price determination, interestingly,
government control all of these prices
Govt is one of the biggest consumers of the cement

ECONOMIC

Future of cement industry is very strong

A lot government infrastructure and housing projects are
under construction

SOCIAL

Indian consumers prefer buying branded cement like

LAFARGE, JAYPEE,BIRLA etc
Industry will create 25 lakhs jobs in coming years

TECHNOLOGY

Govt is acquiring new technology from Japan

Emphasis is on creating highly energy efficient and
environment friendly technology to produce cement

PORTERS FIVE FORCES

FRAMEWORK

THANKYOU