 Profile

 Products
 Global position
 State wise consumption
 Exports
 Demand Drivers
 Demand, Supply ,capacity utilization and price trends
 Entry barriers
 Government Control
 Capacity clusters
 Government Policies
 Competition
 Cartel formation
 Interpretation of Demand & Supply
 Non price competition
 GDP Contribution – 1.3%
 Annual production - Increased from 29 MT (1982) to 219 MT (2009)
 Employment opportunities - 1, 40,000 people.
 No of Companies – 46
 No of Plants
• Large – 148 (94% of total production)
• Small – 365
 Installed capacity - 252 million tonne per annum
 Per capita consumption - 156 kg (India)
 Carbon dioxide, emission - 5% of global emission
 FDI - US$ 1708.69 million (April 2000 – March 2010)
 Demand Type - Cyclic in nature(peak in March and low in August)

Source:www.cma.in
 Ordinary Portland Cement (OPC): - 70% of the total consumption
 Portland Pozolona Cement (PPC): - 18% of the total Consumption
 Portland Blast Furnace Slag Cement (PBFSC): - 10% of total
consumption
 White Cement: - 1% of total consumption
 Specialized Cement: - 1% of total consumption
• Oil Well Cement:
• Rapid Hardening Portland Cement
• Water Proof Cement

Source:www.cma.in
 Position - 2nd largest Producer in the world
 Contribution - 7% of the world consumption
 Competitive Strength – Technology & production Cost
 Exports - To over 30 countries

Source:www.cma.in
Source:www.cma.in
Exporting countries
•Nepal
•Sri Lanka
•South Africa
•Maldives
•Some Middle east and South east Asian countries
Potential Strength for exports
•Locational advantage
•Large-scale limestone and coal deposits
•Adequate cement capacity
•World-class quality
•Latest technology
 Growth of Infrastructure and real estate sector
• Malls, Multiplexes, Shopping complexes
 The Government’s focus on infrastructure spending
• Gram Sadak Yojana – Highways
• Indira Aawas Yojana & Rajiv Aawas Yojana, rising - low-
cost housing
 Rising income levels
 Hovering real estate market
 Announcement of special economic zones
Source:www.icra.in
Administrative
The Mines and Minerals (Development and Regulation)
Act,1957

The Mines Act, 1952

Approval from Government of India is required before

sanctioning leases for cement grade limestone

More power has been delegated to State Government

Cost of set up
•Capital cost of one ton of cement – Rs. 3500
•Capital cost of 1 Million tonne capacity – Rs. 3500 Million.

Taxes and Duty

It occupies around 30% of sale Price
•Excise - Rs. 408 per tonne
•Royalty on Limestone - Rs. 45-55 per tonne
•Royalty on Lignite - Rs. 50 per tonne
•Royalty on Non Coking Coal - Rs. 65-165
Factors that primarily control the cost of cement
• Coal
• Power tariffs
• Railway
• Freight
• Royalty
• Coal and limestone, are all bulky items that make
transportation difficult and uneconomical

• Cement plants are located close to both, sources of raw

materials and markets

• Cluster formation

• Trade-off between proximity to markets and proximity

to raw materials
There are 8 clusters in India accounted for 81% of consumption

Source: RR Information and

research
• Price and Distribution Controls (1940-1981)
Sluggish growth. The installed capacity reached only 27.9
MT by the year 1980-81.

• Partial Decontrol (1982-1988)

The increase in the installed capacity to 59MT in 1988-89
 
• Total Decontrol (1989)
In the next two years, the industry enjoyed a boom in
sales and profits
• Booming demand for cement, both in India and abroad, has
attracted global majors to India

• In 2005-06, four of the top-5 cement companies in the world

entered India through mergers, acquisitions

• Regional in nature

• Strong demand and better price realization

• Demand and supply expected to grow neck to neck

Source: RR Information and research
• Consolidation leading to reduction of players, and emergence
of major players with an ability to influence the market process

• Cement industry is known to be prone to cartelisation

worldwide

• The MRTPC (Monopolies and Restrictive Trade Practice

Commission)initiated a suo moto enquiry

• CCI (Competition commission of India) to take close look

Source: RR Information and research
Source: RR Information and research
 Source: RR Information and research

S1
Price D D S2 S3
2
D1 3

P2

P3
P1
D
D
3
2
D1

Q1 Q2 Q3
Quantity
• Emerging trends in competition
• Rising share of blended cement production
• Possibility of excess capacity
• Adequate availability of coal – a major fuel
• A well connected logistic network –major requisite
• Movement of cement through the bulk route
• Increasing pace of consolidation with entry of global cement
majors
• Fall in cement exports, along with marginal cement imports
into the country
• Vertical integration by cement companies
• Branding and greater expenditure on advertising
• Innovative packaging
• strengthening of their distribution networks as well as several
customer-focused initiatives
• Integrating vertically by moving into the ready-mix concrete
business in an attempt to retain their clients
• Regional players are moving out of their regions
Brands Advertiser % share(adv
expenditure)
Ambuja cement Ambuja cement 27
Ultratech cement Ultratech cement 17
Birla plus Grasim Industries 14
ACC The associated cement co. 10
J K Lakshmi J K Lakshmi 5
Shree ultra red oxide Shree cement 5
cement
J K Wall Putty J K Group 4
Ramco Super Grade Madras Cement Ltd 2
Lafarge concerato Lafarge India Ltd 2
Dalmiya Vajram Dalmiya cement 2
• www.cma.in
• www.Icra.in
• www.rrfinance.com