Cement August 2013

Second largest Cement
market
With nearly 300 million tonne of cement production capacity, India is the second largest
cement producer in the world
Dominated by private
players
Of the total capacity, 98 per cent lies with the private sector and the rest with public sector
Higher share of large
plants
185 large cement plants together account for 97 per cent of the total installed capacity,
while 365 small plants account for the rest
Large concentration in
South and West
Of the total 185 large cement plants in India, 77 are located in the states of Andhra
Pradesh, Rajasthan and Tamil Nadu
Source: Planning Commission, Aranca Research
The engineering sector is delicensed;
100 per cent FDI is allowed in the
sector

Due to policy support, there was
cumulative FDI of USD14.0 billion into
the sector over April 2000 February
2012, making up 8.6 per cent of total
FDI into the country in that period
Growing demand
Source: Edelweiss
Notes: FY20E Estimated market size for 2020
Robust demand
Robust infrastructure growth
during 12
th
Five Year Plan to drive
growth

Demand is expected to be
boosted by growth in real estate
sector
Long-term potential
Oligopoly market, where large
players have partial pricing control

Low threat from substitutes
Attractive opportunities
The North-East, which is witnessing
a construction boom, offers
attractive investment opportunities

Large planned investments in
infrastructure and housing is likely to
boost demand for cement in the
coming years as well
Increasing investments
Robust investments are being
made by the existing players to
expand their capacity

Increasing presence of Tier II
cement players

Use of alternate fuels to lower
production costs and emissions
FY12
Production
capacity:
247 million
tonnes
FY20E
Production
capacity:
407 million
tonnes
Advantage
India
Source: Cement Manufacturers Association (CMA),Planning Commission, Aranca Research
Note: mtpa - Million Tonnes Per Annum, * FY12 data
Cement Industry
(FY13)
Mini And White Cement Plants Large Cement Plants
Cement plants: 185

Installed capacity: 339.5 mtpa

Cement production: 168.3 mtpa*
Cement plants: 365

Installed capacity: 11.1 mtpa

Cement production: 6.0 mtpa*
Top Cement Consumers in 2011 (million
tonnes)
Source: International Cement Review, Aranca Research
India is the 2
nd
largest cement producer as well as consumer in the world led by the enormous growth in the infrastructure
and construction sector for the last two decades
Top Cement Producer in 2011 (million
tonnes)
2,048
229
72 65 58 56 56 50 49 48
C
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2,058
222
66 66 64 63 56 56 52 49
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s
i
a
Production of Cement (million tonnes)
Source: Department of Industrial Policy and Promotion,
Working group for 12
th
Five Year Plan, Aranca Research
Notes: E - Estimate, CAGR - Compound Annual Growth Rate
Cement production increased at a CAGR of 9.7 per cent to
272 million tonnes over FY0613

As per the 12
th
Five Year Plan, production is expected to
reach 407 million tonnes by FY17
142
156 168
182
207
229
247
272
300
332
368
407
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
E
F
Y
1
4
E
F
Y
1
5
E
F
Y
1
6
E
F
Y
1
7
E
CAGR:10.0%
Domestic Cement Consumption (million tonnes)
Source: Working group for 12
th
Notes: E Estimate, CAGR - Compound Annual Growth Rate
Domestic cement consumption is expected to reach 265
million tonnes in FY13 from 222 million tonnes in FY11

The consumption is further expected to increase at a CAGR
of 10.2 per cent during FY11-17 and reach 398 million
tonnes
222
242
265
293
324
359
398
FY11 FY12 FY13E FY14E FY15E FY16E FY17E
CAGR:10.2%
323
336
350
373
405
441
479
Cement Production Capacity (million tonnes)
th
Cement production capacity reached 350 million tonnes in
FY13 from 323 million tonnes in FY11

Production capacity is expected to increase at a CAGR of
6.8 per cent during FY11-17 and reach 479 million tonnes
CAGR:6.8%
Cement capacity (million tonnes) and utilisation
rate (%)
th
Cement capacity utilisation rate is expected to touch around
78 per cent in FY13 from 71 per cent in FY11

The utilisation rate is expected to further reach 85 per cent
by FY17
60%
65%
70%
75%
80%
85%
90%
150
200
250
300
350
400
450
500
Capacity -LHS Production-LHS Utilisation rate (%)
th
Currently, India has 185 large cement plants spread across
all states

Andhra Pradesh is the leading state with 37 large cement
plants, followed by Rajasthan and Tamil Nadu having 21
and 19 plants, respectively
37
19
21
11
12
11
10
10
11
5
5
4
8
3
3
5
3
2
2
1
1
1
Source: Department of Industrial Policy and Promotion, Aranca Research
Note: mtpa - Million Tonnes Per Annum
Cement
Industry
South
North
East
West
Central
126.9 mtpa
66.4 mtpa
43.5 mtpa
44.1 mtpa
37.3 mtpa
Tamil Nadu, Andhra
Pradesh and Karnataka
Rajasthan, Punjab,
Haryana and the NCR
West Bengal,
Chhattisgarh, Orissa and
Jharkhand
West Bengal,
Chhattisgarh, Orissa and
Jharkhand
Uttar Pradesh, Madhya
Pradesh
Installed capacity (2011) Key markets
Shares in Total Capacity in Northern
Region (2011)
Rajasthan has the highest installed capacity in North India, accounting for a 66.5 per cent share in capacity in the region in
2011

Chhattisgarh leads the Eastern region with a share of 32.6 per cent of total installed capacity in the region in 2011
Shares in Total Capacity in Eastern Region
(2011)
66.5%
14.2%
7.2%
6.0%
4.5%
0.8%
0.8%
Rajasthan
Himachal Pradesh
Punjab
Uttarakhand
Haryana
Jammu & Kashmir
Delhi
0.5%
7.5%
2.3%
19.5%
20.8%
16.8%
32.6%
Assam
Meghalaya
Bihar
Jharkhand
Orissa
West Bengal
Chhattisgard
Shares in total capacity
in Southern region (2011)
Andhra Pradesh has the highest installed capacity in South India (53.5 per cent share of total installed capacity)

Madhya Pradesh leads the Central region in installed capacity, while Gujarat leads the West
53.5%
28.0%
18.0%
0.5%
Andhra Pradesh Tamil Nadu
Karnataka Kerala
34.4%
65.6%
Uttar Pradesh Madhya Pradesh
55.0%
45.0%
Gujarat Maharashtra
in Central region (2011)
in Western region (2011)
All India (million tonnes)
Total demand for cement is expected to grow at a CAGR of 10.2 per cent to 265.9 million tonnes during FY08-13

Cement demand from the Eastern and Central regions during FY08-13 is expected to grow at a CAGR of 13.5 per cent
and 12.1 per cent, respectively.
Central (million tonnes) East (million tonnes)
163.4
177.5
196.4
210.2
236.3
265.9
FY08 FY09 FY10 FY11F FY12F FY13F
23.8
26.2
30.8
34.3
38.2
42.0
24.7
28.0
33.0
37.3
41.7
46.6
CAGR: 10.2% CAGR: 12.1%
CAGR: 13.5%
32.7
34.5
38.8
41.4
45.4
49.8
33.6
35.1
38.3
40.8
48.6
51.0
48.6
53.8
55.5
56.4
62.1
63.9
South (million tonnes)
Cement demand from Western, Northern and Southern regions is expected to grow at a CAGR of 8.8, 8.7 and 5.6 per
cent, respectively, during FY08-13
North (million tonnes) West (million tonnes)
CAGR: 5.6%
CAGR: 8.7%
CAGR: 8.8%
All India
UltraTech Cement, a major player in India, accounted for 15.0 per cent of the total market share in terms of installed
capacity in 2011

It is a leading player in the Southern and Eastern regions, accounting for 50.6 and 52.1 per cent of total market share,
respectively, in terms of installed capacity in 2011
South East
10.2%
5.9%
9.9%
8.3%
7.1%
8.0%
50.6%
India Cement Madras Cement
Ultratech Cement Chettinad Cement
Dalmia Cement ACC
Others
14.2%
6.2%
12.1%
9.8%
5.5%
52.1%
Lafarge India ACC
Ultratech OCL India Ltd
Ambuja Cement Others
10.0%
7.5%
15.0%
1.4%
66.1%
Ambuja Cement ACC
Ultratech Cement Jaypee Cement
Others
North
Jaypee Cement led the Central region in terms of installed capacity, with 33.5 per cent of the market share; the Western
region was dominated by UltraTech cement with 29.0 per cent of market share in 2011

Ambuja Cements accounted for 28.9 per cent of the total market share in terms of installed capacity in the Northern region
in 2011
Central West
28.9%
16.6%
14.2%
13.8%
11.1%
7.3%
5.5%
2.5%
Ambuja Cement Shree Cement
Others Ultratech Cement
J K Cement ACC
Jaypee Cement Birla Cement
33.5%
12.3%
12.1%
42.1%
Jaypee Cement Ultratech Cement
ACC Others
29.0%
10.9%
12.5%
47.6%
Ultratech Cement Jaypee Cement
Ambuja Cement Others
Increasing presence of
small and mid-size
cement players
Presence of small and mid-size cement players across regions is increasing, which helps
to diminish market concentration of industry leaders

Small and mid-size players have been constantly increasing their installed capacity to
cater to increasing cement demand
Cost reduction through
the use of alternate
fuels **
Major cement manufacturers in India are increasingly using alternate fuels, especially
bioenergy, to fire their kilns

This is not only helping to reduce production costs of cement companies, but is also
proving effective in reducing emissions
Increasing sale of
blended cement
The proportionate sales of blended varieties of cementPortland Pozzolana Cement
(PPC) and Portland Blast Furnace Slag Cement (PBFC)has risen over the years

During 2011, blended cement accounted for 75 per cent of total cement production in the
country
Notes: ** The Success Stories section includes cases of successful employment
of alternate fuels in cement production to reduce production costs
ACC
Holcim, a Switzerland-based major cement company has plans for capacity expansion in
India through its subsidiary ACC cement
The construction of the companys new plant at Jamul, Chhattisgarh is under process.
This plant will increase ACCs capacity to 35 million tonnes per annum (mtpa) from 30
mtpa in a phased manner by 2015
Ambuja Cements
Ambuja Cements is targeting an investment of USD370.4 million for capacity expansion in
Rajasthan and Northern India
The proposed project in Rajasthan is expected to add 5 million tonnes (MT) to Ambuja
Cements existing production capacity
Dalmia Cement
Dalmia Cement is planning an investment of USD333.3 million to ramp up its
manufacturing capacity to 21 mtpa from the existing 17 mtpa over the next two years.
Dalmia has plans to set up a 2.5 million tonne (MT) greenfield unit at Belgaum in
Karnataka. It also plans to scale up its two plants in North-East India for a total value of
USD239 million and USD9.2 million, respectively
Source: Aranca Research
Heidelberg Cement
Heidelberg Cement, a Germany-based cement manufacturer has commissioned Phase-I
of its Jhansi grinding unit
The company has undertaken an investment worth USD 259.4 million for expanding its
capacity to 2.7 million tonnes (MT)
Heidelberg aims to ramp up the operational capacity to 6 MT at its Damoh plant in Madhya
Pradesh
Vicat Group
Vicat Group, a France-based company plans to sell 4.5 MT of cement in India in FY 2013
The company has recently commissioned a joint venture cement plant Vicat Sagar
Cement at Chattrasal, Karnataka, for a total value of USD333.3 million
Vicat Sagar will have a 2.8 MT of capacity in the first phase
Amrit Cement
Amrit Cement India Ltd (ACIL) has announced the launch of Amrit Cement in the North-
Eastern market.
The company plans to achieve a production level of 5 million tonnes per annum by 2015
16 through capacity expansion in North-Eastern Bihar and Nepal
Source : Aranca Research
High Huge capital investments required
present substantial barriers to entry and
achieving economies of scale
Moderate Cement players have
to depend on the railways for
carriage outward and local coal
companies for fuel, although
diversification of freight options
and fuel sources is diminishing
the suppliers power
Low Substantial market
concentration among large
players ensures low bargaining
power of buyers
Low Cement, practically,
has no substitutes
Low The Indian cement market
is oligopolistic in nature,
characterised by tacit collusion,
where large players partially
control supply for better price
discipline

Positive
Neutral
Positive Positive
Positive
Market
Attractiveness
Source: McKinsey Quarterly Report, Aranca Research
Housing Growth Infrastructure Growth
Commercial Real Estate
Growth
The Housing segment accounts for
a major portion of the total domestic
demand for cement in India
Real estate market is expected to
grow at a CAGR of 17.2 per cent
over 201115 to USD126 billion
Growing urbanisation, an increasing
number of households and higher
employment are primarily driving the
demand for housing
Initiatives by the government are
expected to provide an impetus to
construction activity in rural and
semi-urban areas through large
infrastructure and housing
development projects respectively
The government is strongly focused
on infrastructure development to
boost economic growth
It plans to increase investment in
infrastructure to USD1 trillion in the
12
th
Five Year Plan (201217),
compared with USD514 billion
under the 11
th
Five Year Plan
(200712)
Infrastructure projects such as
Dedicated Freight Corridors as well
as new and upgraded airports and
ports are expected to further drive
construction activity
The government intends to expand
the capacity of the railways and the
facilities for handling and storage to
ease the transportation of cement
and reduce transportation costs
The demand for Commercial Real
Estate segments, comprising retail
space, office space and hotels, as
well as civic facilities including
hospitals, multiplexes and schools,
has been rising due to the growth in
economy
The demand for office space in
India is being driven by the
increasing number of multinational
companies and the growth of the
services sector
Strong growth in tourism, including
both business and leisure travel,
has boosted the construction of
hotels in the country
Estimated demand by real estate
segment between 2010 and 2014:
Office (240 million sq ft), Retail (55
million sq ft), Hospitality (78 million
room nights)
Major cement demand drivers (FY12)
Demand for cement is highly correlated with cyclical
activities like construction and development

Housing sector accounts for 64 per cent of the total cement
demand

Real estate market is expected to grow at a CAGR of 17.2
per cent during 201115 to USD126 billion

The rapidly increasing real estate industry in India is
expected to push the demand for cement

Residential real estate demand is driven by rising
population and growing urbanisation

Rising income levels are leading to higher demand
for luxury projects

Demand for affordable housing is growing in order to
meet the demand from lower income groups

Commercial real estate demand will be driven by growth in
IT/ITeS sector and organised retail
64%
17%
13%
6%
Housing sector
Infrastructure
Commercial &
Institutional
Industrial
Infrastructure Spending As % Of GDP
th
Five Year Plan
Notes: Additional capacity creation estimates are based on increase in base lines, roads, housing and fiscal support
Investment in infrastructure is the main growth driver for the cement industry
The Planning Commission estimates total infrastructure spending to be about of 10 per cent of the GDP during the 12
th

Five-Year Plan (201217), up from 7.6 per cent during the previous five-year plan (200712)
Indias investment in infrastructure is estimated to double to about USD1 trillion during the 12
th
plan (201217) compared
to the previous plan
Infrastructure Spending in % during 11
th
And 12
th
Five-year Plan
75.7
69.4
89.5
101.6 101.9
157.4
181.2
206.0
233.5
264.4
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
E
F
Y
1
4
E
F
Y
1
5
E
F
Y
1
6
E
F
Y
1
7
E
5.2%
6.4%
7.2%
7.5%
7.9%
8.4%
7.6%
10.0%
10th Five year plan
FY08
FY09
FY10
FY11
FY12
11th Five year plan
12th Five year plan
12
th
Plan
11
th
Plan
North
Source: CMA, Kotak Institutional Equities, Aranca Research
Note: F- Forecast
South
82%
84%
88%
FY11F FY12F FY13F
67% 68%
73%
FY11F FY12F FY13F
81%
87%
91%
FY11F FY12F FY13F
East
West Central All India
79%
77%
80%
FY11F FY12F FY13F
90%
85%
87%
FY11F FY12F FY13F
78%
77%
82%
FY11F FY12F FY13F
12.8
13.5
23.6
31.9
35.5
38.7
FY12 FY13E FY14E FY15E FY16E FY17E
Capacity creation as per the 12
th
Five Year Plan
(million tonnes)
th
Five Year Plan
Notes: Additional capacity creation estimates are based on
increase in base lines, roads, housing and fiscal support,
E - Estimates
Total capacity of 336 million tonnes is estimated to have
been generated in FY12

The strong momentum in capacity addition is not surprising
given the sharp growth in construction, infrastructure and
real estate in Indian economy

Hence, the 12
th
Five Year Plan is estimated to have an
additional capacity requirement of 156.0 million tonnes by
FY17
Strategy Benefits Company/Plant
Madras Cement's
Alathiyur plant
India Cements Ltd's
Dalavoi plant
UltraTech's Gujarat
Cement Works
Lafarge's Arasmeta
plant
Use bioenergy through
burning of coffee husk
and cashew nut shells
Use Low Sulphur Heavy
Stock (LSHS) sludge as
alternate fuel
Use tyre chips and
rubber dust as alternate
fuel
Substitute 10% of coal
used in kilns with rice
husk
Annual cost savings of USD1.7 million
Annual savings of USD6500 approx
Reduction of about 30,000 tonnes of
carbon emissions annually
Higher energy savings and lower
carbon emissions
Source: CMA, Aranca Research
Revenue and Profit after Tax (PAT) in USD billion
Source: Company Website (www.grasim.com, Aranca Research
Notes: RMC Ready-Mix Concrete
UltraTech is India's largest exporter of cement clinker
spanning export markets in countries across the Indian
Ocean, Africa, Europe and the Middle East
UltraTech and its subsidiaries have a presence in five
countries through 11 integrated plants, one white cement
plant, one clinkerisation plant, 15 grinding units, two rail and
three coastal terminals, and 101 RMC plants
It has an annual capacity of 52 MT
Projects: Mumbai Metro, Bangalore Metro Rail, Kolkata
Metro Rail, Monorail, Coastal Gujarat Power
MILESTONES
2004 Acquisition of L&Ts Cement Business: UltraTech
Cement Ltd
2006 Narmada Cement Company Limited amalgamated
with UltraTech
2010 Samruddhi Cement Limited amalgamated with
UltraTech Cement Limited
2012 Acquisition of Adhunik Cements Meghalaya plant
1.1
1.4
1.4
1.5
3.0
4.0
3.9
0.2
0.3
0.2 0.2
0.3
0.5
0.5
FY07 FY08 FY09 FY10 FY11 FY12 FY13
CAGR: 23.5%
1.4
1.4
1.5
1.6
1.8
1.8
FY07 FY08 FY09 FY10 FY11 FY12
Revenue (USD billion)
Source: Company Website, Aranca Research
Note: mtpa Million Tonnes Per Annum
Ambuja Cements Ltd (ACL) is one of the leading cement
manufacturing companies in India.

The company, initially called Gujarat Ambuja Cements Ltd,
was founded by Narotam Sekhsaria in 1983

Ambuja Cements is the second largest cement
manufacturer in India, with nearly 10 per cent of the market
share of total installed capacity

It is the market leader in Northern India with 29 per cent of
the total installed capacity
MILESTONES
2010 Started cement plant at Nalagarh, Himachal
Pradesh and Dadri, Uttar Pradesh with a capacity
of 1.5 million tonnes
2011 Acquired 85 per cent stake in Nepal-based Dang
Cement
2012 Expansion of Sankrail Grinding Unit, thereby
increasing the capacity from 1.5 mtpa to 2.4 mtpa
CAGR: 5.2%
Source: Industry Sources, Aranca Research
Note: mtpa - Million Tonnes Per Annum
5.2
3.0
Estimated Demand Available Supply
NE India: Cement demand NE India: Cement supply
NE India: Cement demand-supply gap
Deficit of 2.2 mtpa
The North Eastern (NE) region has
consistently been in cement deficit for
several years
At present, cement demand in the NE is
about 5.2 mtpa
Cement manufactured locally is inadequate
to meet the local demand for cement
The deficit is met through cement
purchased from other parts of India
High transportation costs cause the landed
costs of cement to increase considerably
NE States Projected GDP Growth at
Constant Prices
The Government has approved a package of fiscal incentives and other concessions for the North Eastern Region, namely
the North East Industrial and Investment Policy, 2007, effective from 1 April, 2007

The major policy and fiscal initiatives are expected to catalyse infrastructure and industrial development in the region,
spurring the demand for cement
NE States Projected Per Capita Income
Growth
10.0%
13.7%
16.4%
XI 5-yr Plan XII 5-yr Plan XIII 5-yr Plan
8.6%
12.4%
15.2%
XI 5-yr Plan XII 5-yr Plan XIII 5-yr Plan
Cement Manufacturers' Association
CMA Tower, A-2E, Sector 24 NOIDA 201 301
Uttar Pradesh, India
Phone: 91-120-2411955, 2411957, 2411958
Fax: 91-120-2411956
E-mail: cmand@vsnl.com
Website: www.cmaindia.org/index.html
Indian Concrete Institute
Ocean Crest 79, Third Main Road, Gandhi Nagar, Adyar, Chennai 600 020
Phone: 91-44-24912602
Fax: 91-44-24455148
E-mail: ici3@vsnl.in, ici4@airtelmail.in, vj6314@gmail.com
Website: www.indianconcreteinstitute.org

National Council for Cement and Building Materials
34
th
Milestone, Delhi-Mathura Road, Ballabgarh 121 004 Haryana, India
Phone: 91-129-2242051/52/53/54/55/56; 4192222
Fax : 91-129-2242100; 2246175
E-mail: nccbm@vsnl.com; info@ncbindia.com
CMA: Cement Manufacturers' Association

GDP: Gross Domestic Product

GoI: Government of India

INR: Indian Rupee

MTPA: Million tonnes per annum

NE India: North-East India

FY: Indian financial year (April to March)

So FY10 implies April 2009 to March 2010

USD: US Dollar

Wherever applicable, numbers have been rounded off to the nearest whole number
Year INR equivalent of one USD
2004-05 44.95
2005-06 44.28
2006-07 45.28
2007-08 40.24
2008-09 45.91
2009-10 47.41
2010-11 45.57
2011-12 47.94
2012-13 54.31
Exchange Rates (Fiscal Year)
Year INR equivalent of one USD
2005 45.55
2006 44.34
2007 39.45
2008 49.21
2009 46.76
2010 45.32
2011 45.64
2012 54.69
2013 54.45
Exchange Rates (Calendar Year)
Average for the year
India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared
by Aranca in consultation with IBEF.
All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The
same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium
by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in
any manner communicated to any third party except with the written approval of IBEF.
This presentation is for information purposes only. While due care has been taken during the compilation of this
presentation to ensure that the information is accurate to the best of Aranca and IBEFs knowledge and belief, the
content is not to be construed in any manner whatsoever as a substitute for professional advice.
Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in
this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of
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Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on
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Second largest Cement

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