INTRODUCTION

The cement industry accounts for approximately 1.3% of GDP and employs over 0.14 million people. It is a significant contributor to the revenue collected by both the central and state governments through excise and sales taxes. For example, central excise collections from cement industry aggregated Rs. 45.23 billion in FY2005 and accounted for 4.3% of total excise revenue collected by the government. Cement has consistently figured among the top 5-7 commodities. It is a heavily taxed commodity and the duties amount to around 30% of the selling price of cement. India is the second largest producer of cement in the world. In 2005, India produced 142 mt of cement, accounting for 6.4% of global production of 2.22 billion tonnes. India is the second largest producer-behind China (1,000 mt), but ahead of the US (99 mt) and Japan (66 mt). India's cement industry-both installed capacity and actual production-has grown significantly over the past three decades, with production increasing at an average rate of 8.1% per year between 1981 and 2004-05. In recent years, the cement sector has accounted for a declining share of gross bank credit (GBC) of scheduled commercial banks (SCBs), largely because of decline in credit during FY2004. With GBC of Rs. 61.12 billion in March 2005, the cement industry accounted for 1.67% of industry GBC of SCBs in March 2005, as compared with 1.81% in March 2000.

Duties on Cement Traditionally, cement has been a heavily taxed sector with both the central and the state governments levying the taxes. The major taxes/ levies comprise central excise duty; sales tax levied by the respective state governments; royalty and cess on limestone and coal; and, duties on power tariff. These duties account for around 30% of the sale price of cement or around 70% of the exfactory price (excluding local transport and dealer margins). The excise duty rates on cement are on specific basis, as against ad valorem rates on most products. These specific rates have risen manifold from Rs. 65 per tonne in 1977 to the current level of Rs. 400 per tonne. The excise revenue collection from the cement Industry has shown an increasing trend over the years. The duties in India (relative to the selling price of cement) are among the highest in the world.
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DEMAND-SUPPLY POSITION Robust Production Growth India's cement production increased 11.2% during FY2006 to 141.81 mt. By comparison, production increased 8.6% during FY2005, and 5.5% during FY2004. Production has increased at a 3-year compound annual growth rate (CAGR) of 8.4%. On a decadal basis, India's cement production increased at an annual average of 8.2% during FY1996-2006, as compared with 6.9% during FY1986-96

The increased growth in cement consumption since 2004 has had a positive impact of the capacity utilization of cement producers. Capacity utilisation increased from 76% in FY2002 to around 90% in FY2006.

Regional Production Patterns The Indian cement industry is comprised of 129 large cement plants and 300 mini-cement plants, with installed capacities of 153.6 mtpa and 11.10 mtpa, respectively at end-FY2005. Since cement is a high bulk and low value commodity, the growth of the cement industry has been around the limestone deposits. Proximity to limestone deposits contributes considerably to pushing down the costs of transportation of heavy limestone. If units are located close to limestone resources, trucks can be used to move limestone instead of railways. The proximity of coal deposits constitutes another important factor in cement manufacturing. Nearly 68% of the coal required by the cement industry during FY2005 was transported by rail; the balance 32% was moved by road. There are at present seven clusters-Satna (Madhya Pradesh), Chandrapur (North Andhra Pradesh and Maharashtra), Gulbarga (North Karnataka and East AP), Chanderia (South Rajasthan + Jawad & Neemuch in MP), Bilaspur (Chattisgarh), Yerraguntla (South AP), and Nalgonda (Central AP)-with a total capacity of 75.23 mtpa at end-March 2005, accounting for 48.4% of the total installed capacity.

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12. which increased 10. Thus. it is used worldwide for all construction work. As cement is a basic construction material with virtually no substitute. High growth in the cement sector reflected robust demand from the construction sector and high exports. and 10. This has had a positive impact on cement consumption. as compared with 8.5% during FY2005. the growth in the construction industry has a direct relation with the production and consumption of cement.1% during FY2006. 3 .During FY2006.9% during FY2004.1% during FY2005. after the slack of the monsoon season. cement production registered high growth since October 2005. GDP from the construction industry has grown at a high rate over the last three years-12.1% during FY2006.

the proposed merger will not only benefit in terms of this marketing strategy but will also reduce lots of cost on selling and administrative overheads of both the companies. formerl known as DLF Cement Ltd. Gujarat Ambuja whole-time director Anil Singhvi says in view of the strategic location of ACRLs cement plant. The proposed merger is subject to necessary approvals from shareholders. the cement capacity of GACL will go up to 10. This will increase GACLs share capital from Rs 155.5 million-tonne cement plant along with a captive power plant of 21 mw located in Rajasthan. Upon merger. Based on the valuation ratio. have unanimousl approved the merger of ACRL with GACL. Haryana and Delhi.424 sh ares to the shareholders of ACRL. 4 . "With the proposed merger GACL will have a leadership position in all the markets from Maharashtra to Jammu and Kashmir.19 crore to Rs 157. The management control of ACRL was acquired by GACL in March 2 000.AMBUJA GUJARAT. RAJASTHAN PR POSE MERGER news Mumbai: The boards of directors of Gujarat Ambuja Cements Ltd (GACL) and Ambuja Cement Rajasthan Ltd (ACRL). an increase of 1.5 million tones. Since ast two years.62. it has l acquired a good market share in each of these markets. subject to necessary approvals.5 million tonnes.85 crore. which fits well into GACLs market strategy of having leadership in the cement markets of north and west India. which is based on the valuation report of M/s NM Raiji and Company. ACRL has a 1. out of which Rs 128 crore (49 per cent) is owned by GACL." The current share capital of ACRL is about Rs 261 crore. It markets its cement under the brand name Ambuja Cement and enjoys a leadership position in the markets of Rajasthan. the Board of Industrial and Financial Reconstruction and any other approvals as may be necessary.7 per cent. GACL will issue 26. They have recommended an exchange ratio of 1 new share of GACL to be issued for every 50 shares of ACRL. and with its subsidiary AC L the total capacity is 12.

5 . Other raw materials. and iron). STEP 2 PROPORTIONING. Raw materials Most plants rely on a nearby quarry for limestone. cement uses minerals containing the four essential elements for it¶s creation: calcium. BLENDING & GRINDING Proportioning and Blending The raw materials are now analyzed in the plant laboratory. silicon. and then ground even finer. the material is now ready for the kiln or preheater. such as mill scale. shale. where chair sized rocks are broken into pieces the size of baseballs. aluminum. depending on plant type. A secondary crusher reduces them to the size of gravel. After grinding. Crusher Rock blasted from the quarry face is transported to the primary crusher. wheel-type rollers that crush the materials into powder against a rotating table. are brought in from outside sources when necessary. aluminium. and iron.CEMENT MAKING PROCE STEP 1 QUARRY Basic Elements For it¶s raw materials. blended in the proper proportion. Some plants now crush materials in a single stage. bauxite and fly ash. The most common combination of ingredients is limestone(for calcium) coupled with much smaller quantities of clay and sand( as sources of silica. Grinding Plants grind the raw materials with heavy.

the raw materials emerge as a new substance: red hot particles called clinker. 6 . lined with firebrick. Intense Heat From the preheater. The kiln is the world¶s largest piece of moving industrial equipment. At the lower end of the kiln. hot exit gases from the kiln heat the raw materials as they swirl through the cyclones. It slides and tumbles down the kiln through progressively hotter zones toward the flame. the raw material enters the kiln at the upper end. STEP 4 KILN Raw materials Raw materials now enter the huge rotating furnace called a kiln. It¶s the heart of the cement making process ± a horizontally sloped steel cylinder. Hot Gases To save energy. fuels such as powdered coal and natural gas feed a flame that reaches 3400 F (1870 C) ± one-third of the temperature of the sun¶s surface. turning from about one to three revolutions per minute. modern cement plants preheat the materials before they enter the kiln. Clinker This intense heat triggers chemical and physical changes. Expressed at its simplest. cement¶s primary constituent.STEP 3 PREHEATER TOWER Tower The preheater tower supports a series of vertical cyclone chambers through which the raw materials pass on their way to the kiln. Here in the hottest parts of the kiln. the raw materials reach about 2700 F (1480 C) and become partially molten. Rising more than 200 feet. the series of chemical reactions converts the calcium and silicon oxides into calcium silicates. At the lower end of the kiln.

The cement is so fine it will easily pass through a sieve that is fine enough to hold water. heat recovered from this cooling process is recirculated back to the kiln or preheater tower. Re-circulate To save energy. Once cooled the clinker is ready to be ground into the gray powder known as Portland cement.STEP 5 CLINKERCOOLER & FINISH GRINDING Cooler The clinker tumbles onto a grate cooled by forced air. Ball-Mill The clinker is ground in a ball mill ± a horizontal steel tube filled with steel balls. the steel balls tumble and crush the clinker into a super-fine powder. It can now be considered Portland cement. As the tube rotates. 7 . A small amount of gypsum is added during final grinding to control the set.

namely. Cement is also used for a wide array of precast concrete products. has 95 per cent clinker and 5 per cent gypsum and other materials. White Cement. Ordinary Portland Cement. Most cement is shipped to ready-mixed concrete producers.STEP 6 BAGGING & SHIPPING Silos From the grinding mills. Portland Blast Furnace Slag Cement and Specialised Cement. sand. Portland Pozzolana Cement. popularly known as grey cement. The basic difference lies in the percentage of clinker used. It accounts for 70 per cent of the total consumption. rail. the cement is conveyed to silos where it awaits shipment. and gravel to make concrete delivered in the familiar trucks with revolving drums. it¶s combined with water. or barge. Bagged A small percentage of the cement is bagged for customers who need only small amounts or for special uses such as mortar. CEMENT ± VARIETIES AND TECHNOLOGY There are different varieties of cement based on different compositions according to specific end uses. Transportation Most cement is shipped in bulk by trucks. There. 8 . ‡ Ordinary Portland Cement (OPC) OPC.

‡ Portland Blast Furnace Slag Cement (PBFSC) PBFSC consists of 45 per cent clinker. with a small portion of calcium stearate or nonsaponifibale oil to impart waterproofing properties.‡ Portland Pozzolana Cement (PPC) PPC has 80 per cent clinker. except that it is ground much finer. ‡ White Cement White cement is basically OPC . It is manufactured because it uses fly ash/burnt clay/coal waste as the main ingredient. 15 per cent pozolona and 5 per cent gypsum and accounts for 18 per cent of the total cement consumption. the compressible strength increases rapidly. 50 per cent blast furnace slag and 5 per cent gypsum and accounts for 10 per cent of the total cement consumed. so that on casting. It is used to enhance aesthetic value in tiles and flooring. ‡ Water Proof Cement Water Proof Cement is similar to OPC. 9 .4 per cent to ensure whiteness. ‡ Specialised Cement Oil Well Cement is made from clinker with special additives to prevent any porosity. ‡ Rapid Hardening Portland Cement Rapid Hardening Portland Cement is similar to OPC. A special cooling technique is used in its production. It has a heat of hydration even lower than PPC and is generally used in the construction of dams and similar massive constructions. White cement is much more expensive than grey cement.clinker using fuel oil (instead of coal) with an iron oxide content below 0.

A splitlocation cement plant can be a good compromise between the two options. With 95 per cent of the total capacity based on the modern dry process technology. Locational Issues Cement being a high bulk and low value commodity. Century Textiles.28 tonnes of coal and 110 kWh of power to manufacture one tonne of cement. Coal and power costs account for 35 per cent of the total cement production costs. whereas the dry process requires only 0. road or waterways). there is a trade-off between proximity to raw material sources and proximity to markets. and availability of materials (limestone. close to 1.the wet. In addition. Madras Cements. and Birla Corp. raw material is produced by mixing limestone and water (called slurry) and blending it with soft clay. The dry and semidry processes are more fuel-efficient. semi-dry and dry processes. Top companies in the cement industry match quite well with world standards in terms of energy (thermal energy Kcal/kg of clinker . coal.5 mtpa of subsidiary Narmada Cement). Major Players (Capacity-wise) As discussed. the Indian cement industry has become more cost efficient. Lafarge. Jaypee group. 10 . In the dry process technology.64 mtpa at end-March 2006. now occupies the second slot with a capacity of 17 mtpa (which includes 1. ACC is the largest player with a capacity of 18. The plant also has to address issues of logistics (evacuation of cement by rail.There are three types of processes to form cement .7 tonnes of raw material (including coal) is transported. In this scenario. outward freight accounts for close to one fifth of the total manufacturing cost. for every tonne of cement produced. the location of the cement plant becomes crucial. Grasim ranks fourth with a capacity of 14. The wet process requires 0.18 tonnes of coal and 100 kWh of power. slag.86 mtpa. etc). While deciding on the plant location.India 665 against 690 of Japan) and pollution norms (SPM of 40 in India against 20 in Japan). The Gujarat Ambuja group has emerged as the third largest player with a capacity of 14. Other leading players include India Cements. crushed limestone and raw materials are ground and mixed together without the addition of water. power availability in the region.12 mtpa. UltraTech CemCo Ltd. In the wet/semi-dry process.

decontrol. The second strategy is to locate the plant close to the mineral deposits. Therefore. In the manufacture of cement. which is not merely to minimise unit-manufacturing cost.4-1. a hybrid strategy exists. Rewa. all companies continue to opt for the limestone-deposit bias in locating new capacity. The clinker to cement ratio is virtually 1:1 for OPC. if the list of new plants which have come up since 1982 as well as those under implementation today. With the introduction of partial. locating the plant along the limestone deposits is the logical corollary. The advantages of this split location strategy derive from the ease of transporting clinker in open-to-sky condition (rather than bagged cement under protective cover). stemming from the principal objective. lower handling losses in transit and ease of storage of clinker (as opposed to cement at the market centred grinding mills). and Raipur. as in areas like Satna. For PPC. with fly ash addition. For PPC. However. about 1. outward freight is minimised and marketing flexibility enhanced at the cost of higher raw material assembly costs. As long as retention prices were the norm. so as to minimise raw material assembly costs. the clinker to cement ratio is 0. Given that 1. and around the country's urban centres. steel producers face problems in disposing slag.6-1. which are located in. Flyash disposal by power utilities has become a contentious environmental issue.5 tonnes of limestone are required per tonne of clinker.8:1. Split location plants thus become a distinct possibility. Similarly. the coal pitheads are also quite close by. utilisation of these materials in this 11 . The first strategy is to locate manufacturing facilities near the consuming centres. with the addition of gypsum being only 5%. For OPC. All the cement plants thus naturally gravitated to one of the several large limestone bearing areas in the country. up to another 250 kg of pozzolonic material such as fly ash requires to be assembled.7 tonnes of limestone and coal need to be assembled. Thus. In this case. This is especially true for PPC/PBFS. but to minimise unit delivered cost as well. outward freight was of no concern to cement companies. since fly ash/slag is available from the thermal power stations/steel plants. and later full. Occasionally. is examine. However. it may be observed that barring some. outward freight has become a critical issue in determining a company's profitability. for every 1 tonne of clinker. with the clinker manufacture near limestone deposits and grinding and bagging facilities near the consuming centres.The bulk of the cement manufactured is consumed near urban centres. another 50 kg of gypsum is required while grinding the clinker down. there can be two broad locational strategies.

which provide for a longer uninterrupted operational life of 1824 months. By locating such grinding units close to the markets. Over the last decade.6% in FY2005.56 mt. this becomes an ideal situation for targeting the export markets. and 5. High Growth in Domestic Cement Consumption India's cement consumption increased 10.3% in FY1995 to 55. In practice. the life of the refractory material is 6-8 months (with the indigenously made high-alumina bricks). By comparison. a process.manner can improve the cement company's profitability while benefiting the environment. Production has increased at a 3-year compound annual growth rate (CAGR) of 8%. Typically. MAINTENANCE AND STORES REQUIREMENTS The two important items of stores and spares in the case of cement manufacture are refractory material and grinding media. However. If the grinding unit is near a port with a steel mill or power plant nearby.1% during FY2006 to 135. In the case of refractory materials. the distribution costs are reduced to a great extent. Such possibilities exist near Mangalore. consumption 8. Kiln relining is normally made to coincide with the normal planned shutdown. 12 . high chrome grinding balls are normally used. Some companies are also experimenting with imported high-chrome bricks. where the clinker can also be moved economically by coastal shipping from plants located in North-western India. companies go in for two kinds of refractory brickshigh alumina and high chrome. the share of PPC/PBFS has increased significantly from 28.1% during FY2005. this strategy will be limited somewhat by the extent in which PPC is accepted in the market.8% during FY2004. this can extend the availability of calendar hours and thereby enhance the actual capacity of the plant. For grinding media. which takes 3-4 days. after which the kiln has to be stopped and the affected sections relined. Vizag and Cochin.

In India. The inputs from these three sectors account for roughly 50% of the cost of cement. These together account for around 30% of the selling price of cement in the Indian context. power and transport. efficiency improvements in cement kilns and the increased use of fly ash produced in power plants and granulated slag produced in blast furnaces of steel plants in the production of cement. Coal serves a dual role in cement manufacture. Coal Coal is an important input in cement manufacture and accounts for 15-20% of the total cost. around 200-220 kg of coal is consumed. Hence. Coal consumption by cement plants has increased from 19 mt in FY2000 to around 33 mt in FY2005. For every tonne of clinker.ENERGY AND TRANSPORT REQUIREMENTS The cement industry is dependent on three major infrastructural sectors of the economy: coal. use of waterways). historically cement companies have had virtually no control on the cost or availability of these inputs. this order has been amended and the new Colliery Control Order 2000 has been notified according to which the price and distribution of all grades of coal have been 13 . and. silica content) acts as a constituent in clinker. Both the availability and the cost of these inputs have a vital bearing on the fortunes of the cement players. Cement accounts for around 4. Consumption of coal for production of cement has not increased proportionately with cement production because of the switch to the dry process. One additional external influencer of the cement industry performance is the taxes and levies imposed by the Central and State Governments.5% of India's coal demand. Firstly. the industry response has largely been in the form of achieving efficiency gains and finding alternatives (captive power. Subsequently. Secondly. overall coal distribution was statutorily governed by the Colliery Control Order of 1945. All these sectors are largely in the State sector. the mineral content in coal (basically. the heat value in coal provides the thermal energy required for the operation of the kiln.

1.deregulated with effect from 1. These clusters are distant from the collieries and the markets for cement. The classification is done based on the Useful Heat Value content of coal. the dependence on rail network is still very high and accounts for around 70% of coal movement. The actual movement programme is.2000. Key members of the SLC include representatives from the Ministry of Coal. To ensure smooth and co-ordinated supplies of coal to all consumers. All consumers are broadly classified into two different categories viz. It accounts for around one third of the total variable costs. cement companies have started preferring road transportation even for longer distances because of 14 . The linkages to cement plants and power utilities are decided by the Standing Linkage Committee (SLC). Cement companies use both road and rail transport to transport cement and to receive coal. To meet the requirement of Indian consumers. The share of road over rail has only gone up over the years. cement companies have to rely on extensive transportation for moving coal from the coal pitheads to the cement plants and for despatching cement from the plant to the markets. the mode of transport and the coal Fields / Coal Company with which the cement company is to be linked. and the coalfields from where the coal is to be supplied to a particular cement plant. as mentioned below: Transportation Outward freight on cement is an important element in the operating cost of a cement plant. Cement comes under the core sector. Although rail transportation is more economical for distances beyond 250-300 km. however. freight costs are considerably high for cement plants. The balance 1% is accounted by Sea transporation. the Government and the coal companies have adopted a system of linking of supply sources with consuming units and their requirement. is decided by the SLC even before the cement plant is commissioned. For coal transportation. the Planning Commission. Cement has an average lead of around 535 km. the coal companies and the Central Fuel Research Institute (CFRI). As both coal and cement are of low value and bulky in nature. the Ministry of Power/Industry. Each consumer is given a linkage (allocation) of quantity on an appropriate field. The quantity. Most of the cement plants in India are located in and around the limestone clusters. there are seven grades of coal available from Indian collieries. Rail dispatches amount for about 33% while roads carry the balance 66%. Thus. the Ministry of Railways. core sector and non-core sector. drawn up by the SLC every quarter indicating the quantities to be moved.

The railways had launched the "Own Your Wagon" scheme-a scheme where companies could buy wagons and lease it to the Railways and the Railways would in turn operate these wagons and ensure their availability to the owner. The company plans capital expenditure through expansion of existing units and/or through acquisitions. yarn. Non-core assets are to be divested to release locked up capital. The cement division has an installed capacity of 4. cement.several reasons. casting.1 per cent. making them uneconomical vis-à-vis road tariffs even for longer distances. Birla Corp Birla Corp's product portfolio includes acetylene gas. auto trim parts.77 million metric tonnes of cement in 2003-04. The Railways have also increased their tariff on a regular basis (often higher than the increases in the road sector). Rising railway traffic coupled with insufficient investments by the railways for increased wagon supplies and the fact that the cement industry is not an important customer of the Railways (cement cargo accounts for just 7-8% of the total railway freight) have resulted in a shortage of wagon supply to the cement industry. calcium carbide etc. It manufactures Ordinary Portland 15 . It is also expected to actively pursue overseas project engineering and consultancy services. jute goods. It has twelve manufacturing plants located throughout the country with exports to SAARC nations.78 million metric tonnes and produced 4. But the unfavourable terms and conditions of this scheme prevented its successful commercialization. composite cement and special cement and has begun offering its marketing expertise and distribution facilities to other producers in cement and related areas. The company has two plants in Madhya Pradesh and Rajasthan and one each in West Bengal and Uttar Pradesh and holds a market share of 4. MA OR PLAYERS Domestic players Associated Cement Companies Ltd (ACCL) Associated Cement Companies Ltd manufactures ordinary Portland cement.

low heat cement and sulphate resistant cement. sponge iron.20. ramping up the capacity of Alexandra Carbon Black in Egypt to 1. Cement is the largest division of CTIL and contributes to over 40 per cent of the company's revenues. Large quantities of its cement are exported to Nepal and Bangladesh. Portland pozzolana cement. continuing with its chemicals and adhesive division. chemicals and textiles. The company is setting up its captive power plant to remain cost competitive. Ambuja Cements Ltd (ACL) 16 . fly ash-based PPC. one in Chhattisgarh. Low-alkali Portland cement.000 tpa) and raising the capacity of the carbon black plant in China from 12.7 million tonnes with a total cement production of 5. CTIL has four plants that manufacture cement. Punjab. and focusing on cement. two in Madhya Pradesh and one in Maharashtra. Portland slag cement. It has plants in Madhya Pradesh. Going forward.cement (OPC). Century Textiles and Industries Ltd (CTIL) The product portfolio of CTIL includes textiles. Rajasthan.70. The company plans to invest over US$ 9 million in the next two years to augment capacity of its cement and fibre business. property & land development. L&T's cement division in early 2004. shipping. Going forward. The company has an installed capacity of 4. Tamil Nadu and Gujarat among others. the company has scripted a three-pronged strategy closing down its shipping business. Chhattisgarh. pulp & paper. With the acquisition of UltraTech. Grasim has now become the world's seventh largest cement producer with a combined capacity of 31 million tonnes. Its also plans to focus on its international ventures.000 tpa. white cement. rayon and paper as its long-term business plan. cement.000 tpa to 60. rayon.43 million tonnes in 2003-04. Grasim (with UltraTech) held a market share of around 21 per cent in 2003-04. grey cement.000 tonne per annum (from 1. builders and floriculture. Grasim-UltraTech Cemco Grasim's product profile includes viscose staple fibre (VSF).

making it the second largest cement group in the country. The company has free cash flows that it is likely to use to grow inorganically. cement.81 million tonnes and plants in Andhra Pradesh and Tamil Nadu. The company plans to reduce its manpower significantly and exit non-core businesses to turnaround its fortune. It has an annual capacity of 4. It has also earmarked around US$ 195-220 million for acquisitions India Cements India Cements is the largest cement producer in southern India with a total capacity of 8. The group has clinker manufacturing facilities at Himachal Pradesh. Punjab and Rajasthan. Its total sales aggregated US$ 526 million with a capacity of 12.6 million tonnes in 2003-04.36 million tonnes in 2003-04. hospitality. The company has a market share of around 10 per cent.5 million tonnes through the 17 . The company has limited its business activity to cement. ACL has a 14. Maharashtra. Ambuja is India's largest cement exporter and one of the most cost efficient firms. hydropower. with a strong foothold in the northern and western markets. Its product portfolio includes ordinary portland cement and blended cement. with the Gulf emerging as a major importer. The company is scouting for a capacity of around two million tonne in the northern and western markets.6 million tonnes with plants located in Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar Pradesh).45 per cent stake in ACC. now known as Jaiprakash Associates Limited (JAL) is part of the Jaypee Group with businesses in civil engineering. design consultancy and IT. Jaiprakash Associates Limited Jaiprakash Industries. after Grasim-UltraTech Cemco. Maharashtra. It also expects the export market to open up. The company has a market share of 3.8 per cent with the cement division contributing US$ 172 million to revenue in 2003-04.Ambuja Cements Ltd was set up in 1986 with the commencement of commercial production at its 2 million tonne plant in Chandrapur. Chhattisgarh. The company is upgrading its capacity to 6. Gujarat. The company has a market share of 5.4 per cent with a total cement production of 6. though it has a marginal exposure to the shipping business.

The company has three plants in Tamil Nadu. As Karnataka is a promising market. cement (in 1975). JK Synthetics Limited is restructuring its business divisions into two separate entities.5 million tonnes to 3. Madras Cements Madras Cements Ltd is one of the oldest cement companies in the southern region and is a part of the Ramco group. JK Synthetics JK Synthetics. Subsequently.4 million tonnes through an investment of US$ 9 million. 18 . with a capacity of 3. The company has a market share of 2. started manufacturing nylon at Kota in 1962. nylon tyre-cord. Madras Cements plans to expand by putting up RMC plants. clinker. 43. it diversified into PSY/PFY.7 per cent. After the restructuring. Jaiprakash Associates has decided to concentrate on its core business of construction and engineering and leave its cement plant to its subsidiary Jaypee Rewa Cement Ltd.modernising of the existing units and the commissioning of a new grinding unit at Tanda (Uttar Pradesh) with an investment of US$ 163 million.47 million tonnes annually and holds a market share of 3. 53. a Singhania Group company. IRST-40 and special blends of pozzolana cement. dolomite. it will be left with a cement plant at Nimbahera in Rajasthan.26 million metric tonnes and manufacturing white cement. ready mix cement (RMC) and units generated from windmills. The company manufactures a wide range of world class cement of OPC grades 33. The company is engaged in cement. dry mortar mix. acrylic and white cement (in 1984). limestone. one in Andhra Pradesh and a mini cement plant in Karnataka.1 per cent.JK Cements and JK Synthetics. It has a total capacity of 5. the company is further expanding its capacity from the present 1.

It has a strong market presence in over 70 countries and is a market leader in south America and in a number of European and overseas markets. has a cement production capacity of 141. while Italcementi is free to buy deals in its individual capacity in northern India. Holcim entered India by means of a long-term strategic alliance with Gujarat Ambuja Cements Ltd (GACL) now Ambuja Cement Limited (ACL) . All initiatives in southern India are routed through the joint venture company. The alliance aims to strengthen their clinker and cement trading activities in South Asia. R&D projects as well as a procurement sourcing hub to generate additional synergies and value for the group Italcementi Group The Italecementi group is one of the largest producers and distributors of cement with 60 cement plants. earlier known as Holderbank. Africa and North America. Holcim also intends to use India as an additional base for its IT operations.4 per cent. Asia. has a total cement capacity of 5 million tonnes and a clinker capacity of 3 million tonnes in the country. 19 . It is a key player in aggregates. Lafarge commenced operations in 1999 and currently has a market share of 3. The joint venture company has a capacity of 3. Lafarge India Lafarge India Pvt Ltd. the Middle East and the region adjoining the Indian Ocean. It exports clinker and cement to Bangladesh and Nepal.Foreign players Holcim Holcim. 547 concrete batching units and 155 quarries spread across 19 countries in Europe.9 million tonnes. Italcementi is present in the Indian markets through a 50:50 joint venture company with Zuari Cements.1 per cent.4 million tonnes and a market share of 2. concrete and construction related services. a subsidiary of the Lafarge Group.

Lafarge Cement has become the largest cement selling firm in the Indian markets of West Bengal. The Indian cement plants are located in Chhattisgarh and Rajasthan.It produces Portland slag cement. ordinary Portland cement and Portland pozzolana cement. Bihar. 20 . Jharkhand and Chhattisgarh.

SOME OF THE PRODUCTS OF AMBUJA y y y y y y y y y y Waterproof cement coating Pozzocrete . agencyfaqs!. It¶s ironic. executed along similar lines. January 09. really. but one can¶t help but notice the strikingly opposite thoughts. the context is vastly different in the two cases.a cement replacement product Cement concrete blocks-application super grip pvc solvent cement Cement Mosaic Tiles Birla White Cement Starlite a white cement based plaster Interior Wall Finishes (cement primer oil base) Interior Wall Finishes (cement primer water base) Decorative waterproof cement coating(Supremcem) Ambuja Cement: Wall-to-wall advertising By Devina Joshi. while on the other. Grey Worldwide has ensured that the strength of the cement rides on the strength of emotion There¶s something about walls and advertising. Mumbai. you have telecom brand Airtel talking of breaking down walls (µDeewarein Gir Jaati Hain¶). 2008 Section: News Category: Advertising Share In an ad for Ambuja Cement. 21 . you have Ambuja Cement talking of unbreakable walls (µYeh Deewaar Nahin Tootegi¶). On the one hand. Obviously.

The demolition talks in progress Boy.67 lac tonnes and 1. The Company has substantially increased its share in the trade segment and developed a potential network of Dealers/Stockists. interrupted Bulldozer fails The stumped builder Rejoicing children 'Ambuja Cement. Cost Impacts Raw Materials-There was a marginal increase of 5% in cost of raw materials in the year 2002-2003 compared to the previous year. mainly due to raw mix optimisation for improved cement quality and higher production of pozzolona Portland cement by 18%.58 lac tonnes and 1. Reorientation of marketing strategy continues with a strong focus on the Company's natural markets. 22 . Yeh Deewaar nahin tootegi' Marketing Total sales of cement and clinker in the year 2002-2003 were 14. Inspite of increase in sales by 14%. The Company's brand name Ambuja continued to gain wider preference due to its superior quality and the Company's fair practices with its dealers and stockists.55 lac tonnes in the previous year. sales value increased by only 9% due to extremely depresses selling prices.70 lac tonnes respectively compared to 12.

Government levies and duties are major cost components the cement industry and the same are under the control of the Government.to Rs. In the Union Budget 2003-2004. Cement demand also depends heavily on the Government¶s policy on infrastructure and housing development.350/. The department submits its report to the Audit Committee on quarterly basis or earlier if required by the Audit Committee. This has put further strain on the Company's profitability. power. Therefore.Further savings of Rs.the Company saved a large amount in interest cost due to continuing restructuring of its debt by way of replacement of high cost funds by low cost funds. Power-Power requirements continued to be met largely from captive generation with only 12% of the total being sourced from the grid. The overall interest burden of the Company was reduced by almost 14%over and above the 13%achieved last year. The proposal for implementation of Value Added Tax (VAT) when made effective will pose a challenge to trade and industry. compliance with procedures and their adequacy from time to time. The Company has its Internal Audit Department headed by a senior Chartered Accountant which monitors internal controls. the excise duty on cement which was already very high has been further increased from Rs.There was a saving of 8% in cost of coal due to lower consumption and more production of pozzolona Portland cement. Interest. 237 lacs were achieved in freight and forwarding due to dynamic management of logistics. Logistics Management . The reduced dependence on grid power helped in reducing the total power cost by 3%.per tonne. INTERNAL CONTROL SYSTEMS The Company is committed to maintain high standards of internal control systems.Coal . SOME RISKS & CONCERNS Coal. 23 . any change in government policy may have significant impact on the industry.400/.

plantation. Ambuja Cement Foundation (ACF) also widened theiractivities by: Alleviating the drinking water problem due to drought conditions prevalent for four years by supplying drinking water through tankers. ENVIRONMENT MANAGEMENT & COMMUNITY DEVELOPMENT Drought in Rajasthan was widespread.constructing Roof Rain Water HarvestingStructures & Waterstorage tanks. 24 .In addition.The Company believes that its Internal Control Systems are adequate keeping in view the nature and size of the Company's operations. In order to improve the ability and skills of its employees the Company organized in-house workshops and conferences covering wide-ranging subjects. This department is enlarging its scope and size to meet the fast changing business scenario and the Company's philosophy to strive for high standards of Corporate Governance. installing new hand pumps andmaintaining existing hand pumps. The Company continued with assistance to neighbouring villages by constructing anicuts and earthern dams to help in water preservation. Conducting cattle camp for examination of animals. Drinking watertankers were supplied to nearby villages and fodder for cattle was distributed in many parts of Pali district. deepening existing wells. These programmes have helped to motivate the employees and to integrate them with the core ethos of the organisation. Employees were also deputed to attend seminars externally to widen their exposure. HUMAN RESOURCES The Company maintained cordial relationship with its employees at all levels. Free grain and lentils were distributed to more than 270 individuals identified to be the hardest hit due to drought. horticulture. distributing water and fodder and bringing home to farmers the beneficial aspects of sustainable farming practices. dripirrigation etc.

CORPORATE GOVERNANCE The Company has complied with the Corporate Governance Code in accordance with the listing agreement with Stock Exchanges. Directors of the Company.Conducting regular health check-up camps and distributing free medicines through the mobile dispensary.. Nanabhoy & Co. M/s. A. 1956. Singhvi. Ferguson & Co. if made. P. The Board of Directors recommend reappointment of the Auditors and fix their remuneration.Supplying furniture. shall be within the limits under Section 224( 1 B) of the Companies Act.. C. 25 . F. have been appointed Cost Auditor of the Company for the year 2003-2004. Cost Accountants. offer themselves for re-appointment. notebooks. AUDITORS M/s. along with a certificate from the Auditors confirming compliance is annexed and forms part of the Directors' Report. DIRECTORS Shri Suresh Neotia and Shri A. Ferguson & Co. The Board recommends their reappointment. . M. sports kits. retire by rotation and being eligible. A.appointment. have confirmed that their appointment. F.M/s. will retire at the ensuing Annual General Meeting and are eligible for re. Auditors of the Company.. uniforms and utensils (for mid-day meal programmes) and conducting training programmes for women. A separate section on Corporate Governance.

PUBLIC DEPOSITS The Company has neither invited nor accepted any deposits from the public within the meaning of Section 58A of the Companies Act. 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules. the applicable accounting standards have been followed along with proper explanations relating to material departures. 1956. iv) The annual accounts have been prepared on a going concern basis. 2003 and of the loss of the company forth year ended 30th June. ii) Appropriate accounting policies have been selected and applied consistently and have made judgements and estimates that are reasonable And prudent. required to be given pursuant to Section 217(1)(e) of the Companies Act. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information with respect to Conservation of Energy. 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. 1988 is set out in Annexure I and forms part of this Report. 1956. 26 . 2003.during the year under review. so as to give a true and fair view of the state of affairs of the Company as on 30*' June. Foreign Exchange Earnings and Outgo. the Directors hereby confirm that: i) In the preparation of the Annual Accounts. CONSERVATION OF ENERGY. DIRECTORS' RESPONSIBILITY STATEMENT As required u/s 217(2AA) of the Companies Act. Technology Absorption. iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act.

quality & power and fuel efficiencies. ii) Optimisation of particle size to improve raw mix burn ability. 3. iv) Installation of XRD for mineralogical analysis of raw mix. 27 . 2 Benefits derived as a result of above R & D: i) Improved productivity. ii) To procure microscope to continue microscopic studies of raw materials and clinker. Future plan of actions: i) Upgradation of XRD software. iii) Optimisation of Kiln operation by microscopy.RESEARCH AND DEVELOPMENT (R & D) 1 Specific areas in which R & D carried out by the Company: i) Optimization of raw-mix design. iii) Differential thermal analysis (DTA) and thermal gravimetry (TG) of kiln feed samples.

Growth of 9% per annum from FY2006-10 would result in cement production increasing to around 196 mt in FY2010. consumption could increase to 190 mt in FY2010. The Planning Commission's Working Group on Cement Industry predicts cement production in India to grow at a rate of 10% during the Tenth Five-Year Plan (2002-2007). has seen sustained cement production average annual growth of 10% since 1980. demand from infrastructure projects and industrial/commercial ventures account for 20% each. By comparison. By comparison. It is estimated that requirement of new dwelling units over a period of 25 years (1996-97 to 2020-21) will be around 140 million units requiring an investment of approximately Rs. Even as NHDP-I (comprising (200615) envisages construction of another 36. mostly due to the enormous infrastructure development that country has experienced over this period. In India the cement was mostly demanded by housing sector The cement sector is expected to witness strong production and consumption growth of 10% during FY2007 in line with the economic growth because of the strong co-relation with GDP and the increased activity in the construction sector.000 kms of roads at an estimated cost of Rs. Besides. and cement demand in the medium term is expected to grow by around 9%. from the demand perspective. the fundamentals look bright. 20. Overall.270 billion.000 billion. China. the cement industry is expected to grow at around 8-10% during the 2003-07 period. 28 . the world's largest producer of cement.Conclusion I concluded that the cement industry in India is on great boom and accounting a lot to Indian GDP. 1.