Cement Industry

Some key point Cement demand has been posting a healthy growth rate

of around 8 per cent since 1997-98.

world demand growth rate- 3.5%

china’s demand growth rate- 7.2% The government has considered spending more than US

1 trillion infrastructure in the 12th five year plan Domestic cement demand growth rate has surpassed the

economic growth rate for past 5 years. Cement demand in the country grows at roughly 1.5

times the GDP growth. Industrial turnover is 300 billion and providing direct

employment to 150,000 person.

Over the past few years cost of cement production has grown at CAGR of 8.4%.

Cement sector continues to emphasize on cost cutting through enhanse productivity, reduction in energy cost

Key drivers for cement demand

Real state sector Increase in infrastructure spending Industry expansion project

Industry background( pre independence)

Originated in India in 1914 in Probandar, Gujarat with an available capacity of 10,000 tons

The First World War gave the impetus to the cement industry still in its initial stages.

After a few year industry face downfall. In 1927, the Concrete Association of India was

formed

Post independence The growth rate of cement was slow around the

period after independence due to low prices, slow growth in additional capacity and rising cost.

In 1956, the price and distribution control system was set up.

Period Of Restriction (1969-1982) Government hold over the industry was through

both direct and indirect means. Government intervened directly by exercising authority over production, capacity and distribution of cement and it intervened indirectly through price control.

In 1977 the government authorized higher prices for cement manufactured by new units or through capacity increase in existing units. But still the growth rate was below par.

Partial Control (1982-1989) Government of India introduced a quota system

in 1982.A quota of 66.60% was imposed for sales to Government .The remaining 33.40% was allowed to be sold in the open market.

These changes had a desired effect on the industry. Profitability of the manufacturers increased substantially, but the rising input cost was a cause for concern.

After Liberalization Liberalization resulted in an accelerated growth

for the industry. Most of the major players invested heavily for capacity expansion.

the industry laid greater focus on exports.

Current scenarioCurrent scenario second largest in the world. 140 large and more than 365 mini cement plants. Capacity : 2008-2009 197 million tons. During 2008-09, total cement consumption in

India stood at 178 million. Even during the economic slowdown in 2008-09,

growth in cement demand remained at a healthy 8.4%.

Global Bigwigs in Cement

• La Farge, France

• Holcim, Switzerland

• Cemex, Mexico

• Italcementi, Italy

• Heidelberg Cement, Germany

STRUCTURE OF THE INDIAN CEMENT STRUCTURE OF THE INDIAN CEMENT INDUSTRYINDUSTRY

• Properties of cement like high bulk and low value commodity, competition makes it localized.

• being cyclical in nature

SWOT ANALYSISSWOT ANALYSIS• Strengths

•Increase in demand•Capacity utilization over 90%•Second largest in the world in terms of capacity• Low cost of production

• Weaknesses• Cement Industry is

highly fragmented• Industry is also highly

regionalized• Effect of global

recession on real estate

• Increasing cost of production

• Opportunities•Strong growth of economy in the long run•Increase in infrastructure projects•Technological changes

• Threats• Government

intervention to adjust cement prices

• Transportation cost is scaling high.

THANK YOUTHANK YOU

REFRENCESREFRENCES

http://www.indiacements.co.in

http://en.wikipedia.org

http://business.ezinemark.com

http://business.mapsofindia.com