the cement industry of india

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The Cement

Industry of India

Group No 3

Raksha 102

  Adrian 110

  Apoorva 115

Nayanaksh 127

Nitya 129Kunal 161

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Cement: Some Facts

Key Raw Materials limestone,

clay,

gypsum

Types of Cement:Depending on % of clinker used

Ordinary Portland Cement OPC [grey cement] Portland pozzolana cement PPC

White cement

Specialized cement

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Key end users of cement industry-

Housing, Infrastructure and industrial segments

% onsumption

55

25

20

Housing

Infrastructure

Industrial development

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Market Size

Total capacity of over 165 m tonnes. Second largest market after China

 As per March 08

Income : 43090 crores

PAT : 10,463 crores

Per capita consumption of over 130 kgs Very low compared to Korea, Japan, China & US

Long term opportunity

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Cement Production

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Major Players

Domestic

- Cement Corporation of India (10 units)

- State Government own another 10 unit

-  Ambuja Cement

-  ACC Limited

- India Cement

- JK Cement

1

1 0

H L C I

BI L A G

In d i a C e m e n t

t h e r s

International

- Holcim

- Lafarge

- Italcementi

- Heidelberg Cements

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Cement Prices

Based to demand and supply

Larger players prices are nearly the same.

Currently cement prices are high, efforts bygovernments to bring down the prices were

futile

Talks of cartels being present within the

industry because of the high cost.

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Are Cartels Present in the

Cement Industry???

2006-07 saw 5% rise.

2007-08 saw 25% rise.

Unprecedented rise in cement prices.

Not justified by cement cos and govt.

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Cement Prices(Rs/50K

g)Delhi 233 Jaipur 214

Chennai 250 Bangalore 260

Thiruvananthapuram 260 Kolkata 229

Patna 234 Mumbai 270

Source: Market reports

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Budget on Cement

The excise duty on bulk cement has been revised fromRs 400 per tonne in 2007-08 to Rs 400 per tonne or 14per cent ad-valorem, whichever is higher.

This proposal is expected to increase the cost of cement for bulk consumers.

The excise duty on clinkers has been hiked from Rs350 per tonne in 2007-08 to Rs 450 per tonne in 2008-

09.

Import duty from 12.5 per cent to nil, removal of 16 per cent countervailing duty, 4 per cent additional customsduty on portland cement and differential excise duty areall intended to cut costs and boost availability.

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Regional consum tion

19.96

16.67

29.04

19.1

15.17

%consumption of regions

north

east

south

west

central

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Regional Production of Cement

 Andhra Pradesh : 25.14 MT

Rajasthan:22.5MT

Madhya Pradesh: 18.18MT

Tamil Nadu:17.83M

Gujarat:17.14MT Maharashtra :11.18MT

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Consum tion/Production

Findings Domestic demand for cement has been increasing at a

fast pace in India and it has surpassed the economicgrowth rate of the country.

Cement consumption in India is forecasted to grow byover 22% by 2009-10 from 2007-08.

 Among the states, Maharashtra has the highest sharein consumption at 12.18%, followed by Uttar Pradesh.

In production terms, Andhra Pradesh is leading with14.72% of total production followed by Rajasthan.

Housing sector is expected to remain the largestcement consumer in coming years.

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Cyclical Industry Characterised by the boom-and bust syndrome.  A huge potential market and rapid growth in the early

stages lead to a surge in interest and a flurry of research. The projected growth rates point to alucrative market.

The buoyant markets and huge profits raked in byplayers tempt more players into the market. Capacitiesincrease in excess of demand and a glut in capacity iscreated.

Competition increases, prices fall and margins comeunder pressure. Capacity addition comes to a halt; weaker players shut

shop or sell off to larger ones. Demand catches up and the cycle is repeated all over 

again.

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Cement Controllers

Coal

Electricity

Infrastructure

Limestone

Transportation

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Barriers to Entry

High capital costs

Long gestation periods.

 Access to limestone reserves (principal raw

material for the manufacture of cement)

Cartels

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Trends (M&A)

Holcim increased its holding in Ambuja Cement form 22 per cent to 56 per cent through various open markettransactions .

Italcementi Group, the fifth largest producer of cement in the

world acquired full stake in the K.K. Birla promoted ZuariIndustries' cement. French cement major, Lafarge, acquired the cement plants

of Raymond and Tisco. Heidelberg Cement has entered into an equal joint-venture

agreement with S P Lohia Group controlled Indo-RamaCement.

Cimpor the Portugese cement maker paid US$ 75.76 millionfor Grasim Industries¶ 53.63 per cent stake in Shree DigvijayCement.

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Cement Ex orts In the period between April 2007 and February 2008,

cement exports stood at 3.33 million tonnes, down38.78 per cent over the corresponding period of 2006-

07.

Exports of cement constitute only 3 per cent of production

Cement exports were banned in Mid April

The ban was revoked towards end of May.

It was decided that the export ban be revoked only for Gujarat, as Gujarat constitutes 90% of total export.

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Cement Industry going GREEN

Cement cos have killed two birds with one stone.

Started blending fly ash ²waste from power generating units ² with clinker to bring down their 

cost of production. Besides cost cuts, now they also stand to earn

carbon credits

e.g. Shree Cement

Earned 3,50,000 carbon credits

 At current price company hopes to make Rs 25 crore.

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GRP assessment findings:

The Indian cement sector is (after Japanand Korea ) the third most energy-efficient

cement sector in the world.

The emission of carbon dioxide fromIndian cement companies is lower than

their counter parts across the world.

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Thank You