A REPORT ON THE DEMAND & SUPPLY OF CEMENT IN INDIA (20052008
INTRODUCTION ² WHAT CEMENT?
Cement is a mixture of Limestone, Clay, Silica and Gypsum. It is a fine powder which when mixed with water sets to a hard mass as a result of hydration of the constituent compounds. Cement is manufactured by burning a mixture of Limestone and Clay at high temperatures in a kiln, and then finely grinding the resulting clinker along with Gypsum. The end product thus obtained is called Ordinary Portland Cement (OPC).
The Indian Cement Industry with a total capacity of 165 million tones is the second largest after China. Cement industry has contributed around 8% to the economic development of India. Private housing sector is the major consumer of cement (53%) followed by the government infrastructure sector. Northern and Southern regions consume around 20%-30% cement while the Central and Western regions are consuming only 18%-16%. Among the states, Maharashtra has the highest share in consumption at 12.18%, followed by Uttar Pradesh. In production terms, Andhra Pradesh is leading with 14.72% of total production, followed by Rajasthan.
Associated Cement Companies Ltd (ACCL) manufactures ordinary
Portland cement, composite cement and special cement. It has twelve manufacturing plants located throughout the country with exports to SAARC nations.
Birla Corp has an installed capacity of 4.78 million metric tones and
produced 4.77 million metric tones of cement in 2003-04. The company has two plants in Madhya Pradesh and Rajasthan and one each in West Bengal and Uttar Pradesh.
Century Textiles and Industries Ltd (CTIL) has an installed capacity
of 4.7 million tones with a total cement production of 5.43 million tones in 2003-04. CTIL has four plants that manufacture cement, one in Chattisgarh, two in Madhya Pradesh and one in Maharashtra.
DOMESTIC PLAYERS (CONTD..)
Gujarat Ambuja Cements Ltd (GACL) has clinker
manufacturing facilities at Himachal Pradesh, Gujarat, Maharashtra, Chattisgarh, Punjab and Rajasthan, with a capacity of 12.6 million tonne in 2003-04.
India Cements is the largest cement producer in Southern India with a total capacity of 8.81 million tonne and plants in Andhra Pradesh and Tamil Nadu.
Grasim- UltraTech Cemco - With the acquisition of UltraTech,
L&T's cement division in early 2004, Grasim has now become the world's seventh largest cement producer with a combined capacity of 31 million tones. It has plants in Madhya Pradesh, Chattisgarh, Punjab, Rajasthan, Tamil Nadu and Gujarat among others.
MAJOR PLAYERS IN INDIA
CURRENT SCENARIO (200708)
The cement industry comprises 130 large cement plants and more than 300 mini cement plants. The industry's capacity at the end of the year 2007-08 reached 188.97 million tons which was 166.73 million tons at the end of the year 2006-07. Cement production during April to March 2007-08 was 168.31 million tons 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 whereas 155.26 during the same period for the year 2006-07. During April-March 2007-08, cement export was 3.65 million tons as compared to 5.89 during the same period for the year 2006-07.
REGION WISE CAPACITTY
REGION WISE CEMENT DISPATCHES
The demand from the housing sector is ~53% of the total Indian cement demand. During April-November 2007, cement demand grew by 10 per cent year-on-year (y-o-y) propelled by the growth witnessed in end user segments such as housing, infrastructure etc.
EXHIBIT 1: ALL-INDIA CEMENT DISPATCHES & YOY GROWTH
Cement demand is expected to outstrip supply for the next year and a half as no major capacities are coming on-stream, thus providing enough flexibility to cement manufacturers to further hike the prices.
11TH FIVE YEAR PLAN
The rise in the price of cement is because of the gap of demand & supply in the market. The demand for cement is much higher than its actual supply. But with the production maximization, which can be encountered in next few years, this gap may narrow down, that may ensure the market to be in equilibrium. In spite of high price of the product, the demand is high because of the increasing rate of infrastructural development. Major Demand was from the housing sector, which may shift to infrastructure as lots of infrastructural development processes are already being taken up & due to the increased price, housing segment started showing a slowdown.
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