report on cement industry in india

1

CHAPTER 1

INTRODUCTION

The Indian cement industry has been on a high growth trajectory for

more than a decade, led by buoyancy in sectors such as real estate and

construction. The industry has witnessed continuous modernisation and

adoption of new technologies in recent years.

India is the world's second largest producer of cement after China

with industry capacity of over 200 million tonnes (MT). With the boost given

by the government to various infrastructure projects, road networks and

housing facilities, growth in the cement consumption is anticipated in the

coming years.

The modern Indian cement plants are state-of-the-art plants and

amongst the best in the world. The cement industry comprises of 134 large

cement plants with an installed capacity of 173.08 million tonnes and more

than 350 operating mini-cement plants, with an estimated capacity of 11.10

million tonnes per annum, making a total installed capacity of 184.18 million

tonnes in the last fiscal, as per the Department of Industrial Policy and

Promotion's latest data. In order to meet the expanding demand, cement

companies are fast developing new plants. According to a report by the ICRA

Industry Monitor, the installed capacity is expected to increase to 300 MTPA by

FY 2013-end. India's cement industry is likely to record an annual growth of 10

per cent in the coming years with higher domestic demand resulting in

increased capacity utilisation.

Housing, Infrastructure and Real estate sectors, with major construction

activity in rural and semi-urban areas through large infrastructure and

housing development projects, are expected to augment the growth rise in

cement sector. Demand in this region is being driven by infrastructure,

residential and commercial projects.

2

1.1 HISTORY

Pre Independence:-

The first endeavor to manufacture cement dates back to 1889 when a

Calcutta based company endeavored to manufacture cement from Argillaceous

(kankar). But the first endeavor to manufacture cement in an organized way

commenced in Madras. South India Industries Limited began manufacture of

Portland cement in 1904.But the effort did not succeed and the company had

to halt production.

In 1914 that the first licensed cement manufacturing unit was set up by India

Cement Company Ltd at Porbandar, Gujarat with an available capacity of

10,000 tons and production of 1000 installed. The First World War gave the

impetus to the cement industry still in its initial stages. The following decade

saw tremendous progress in terms of manufacturing units, installed capacity

and production. This phase is also referred to as the Nascent Stage of Indian

Cement Industry.

Post-Independence:-

The growth rate of cement was slow around the period after independence due

to various factors like low prices, slow growth in additional capacity and rising

cost. The government intervened several times to boost the industry, by

increasing prices and providing financial incentives.

In 1956, the price and distribution control system was set up to ensure fair

prices for both the manufacturers and consumers across the country and to

reduce regional imbalances and reach self-sufficiency.

3

1.2 TYPES OF CEMENT:-

There are different varieties of cement based on different compositions

according to specific end uses namely Ordinary Portland Cement, Portland

Pozzolona Cement, Portland Blast Furnace Slag Cement, White Cement and

Specialized Cement. The basic difference lies in the percentage of clinker used.

“CEMENT” in itself is not just one product. It has sub categorized itself in

sub products to cater various needs of customers. Following are the various

types of cement.

OPC 53 Grade:-

Its full form is 53 Grade Ordinary Portland cement.

It gives minimum 53 Newton per square millimeter compressive strength

at 28 days of curing.

Bureau of Indian Standard has specified it under IS: 12269:1987.

It is the second most commonly available type of cement in the open

market of India.

It may be used in all types of multistoried buildings like Industrial-

Institutional, Residential as well as commercial.

It is also widely used in infrastructure works like Highways, Bridge Fly

Over, Foundations of TV/Radio Towers-Electric sub stations, etc.

Specifically it is used in Pre stressed structures like Perlins, Precast

Slabs, Fencing Poles/Posts, Electric Line Poles, etc.

RCC Hume Pipes for Storm Water Drainage, Water Supply etc of

diameter up to 2600mm diameter are manufactured by using this

cement.

The leading companies in India manufacturing this product are Binani

Cement, ACC Cement, Ultratech Cement, Ambuja Cement, etc.

4

OPC 43 Grade:-

Its full form is 43 Grade Ordinary Portland cement.



Bureau of Indian Standard has specified it under IS: 8112:1989.

It is commonly available type of cement in the open market of India.

Many of the engineers/architects are now suggest this type of OPC

cement for Residential/Commercial high rise buildings.

Many of Indian Central Government institutes like BSNL, Airport

Authority of India, and Indian Coast Guard etc. have approved only this

type of OPC cement in their structures.

It is also used in Pre stressed structures like Perlins, Precast Slabs,

Fencing Poles/Posts, Electric Line Poles, etc.

This grade of Cement is also used in manufacturing of RCC pipes across

all sizes.

Instead of 53 Grade OPC, it is preferred due to comparatively less heat of

hydration which is one of the reasons for shrinkage cracks in

construction.

The leading companies in India manufacturing this product are Binani

Cement, Ultratech Cement, Ambuja Cement, etc.

PPC:-

Its full form is Portland Pozolana Cement



Bureau of Indian Standard has specified it under IS: 1489 (Part-I for Fly

Ash Based) (Part-II for Calcined Clay Based).

It is the most commonly available type of cement in the open market of

India.

5

It is used in RCC works like Column, Beam, Slab, Foundation in

Residential and Commercial Buildings.

It is also used where mass concreting is done for example Dams, Bridges,

etc.

It is commonly manufactured by intergrading Portland Clinker and

Pozzolanic material like fly ash, volcanic powder, etc.

Proportion of Pozzolana may vary from 15% to 35% by weight of Cement.

This is cement has higher resistance to chemical agents present in

surrounding atmosphere.

Possibility of crack formation is negligible, due to low heat of Hydration

of PPC. This is one of the main reasons for the acceptance of this cement

in open market.

It also imparts more durability to the structure.

Due to secondary hydration process it makes the structure more

resistant to Sulphate & Chloride attacks.

Almost all the companies manufacture this type of cement in India.

Portland Slag Cement:-

It is manufactured by intergrinding Portland Clinker and Blast Furnace

Slag.

Bureau of Indian Standard has specified it under IS: 455-1989.



Proportion of slag may vary from 25% to 65% by weight of cement.

It improves the workability, finishability, Lower permeability, resistance

to aggressive chemicals, etc. of the concrete.

Modern Structure Designers have found that improved durability

characteristics of this cement help the structure to reduce life-cycle costs

and maintenance costs.

It is specially used in marine structures, dams, bridges, etc.

6

It is manufactured by Binani Cement, Lafarge Cement, Bharathi Cement,

etc.

Sulphate Resisting Cement:-




A Sulfate Resisting Cement is blended cement designed to improve the

performance of concrete where the risk of sulfate attack may be present.

It also provides improved durability for concrete in most aggressive

environments, reducing the risk of deterioration of the structure and

structural failure.

It is used at Geothermal Areas, Sewerage treatment plants, Mines and

other acidic soil environments.

It is also suitable for Dairying, forestry, fishing and other environments

with structures susceptible to chemical attack.

Underground Structures in Sulphate-salts Abounding Environment,

Effluent Treatment Plants, Coastal Construction, Off-shore platforms,

Sugar & other Chemical Plants.

Masonry Cement:-




Masonry Cement generally contains Portland Cement for early strength,

plasticizers for water retention & plasticity and air entraining agents to

make it more workable and suitable for brick and block lying.

This cement is used to make masonry mortar for use in brick, block, and

stone masonry construction.

7

This cement is not at all for making concrete.

Rapid Hardening Cement:-


Rapid Hardening Portland Cement (RHPC) is a type of cement that is

used for special purposes when a faster rate of early high strength is

required.

Rapid-hardening hydraulic cement offers reduced shrinkage and

superior resistance to chemical attack.

It achieves strength much faster than Ordinary Portland Cement and

many installations can be put into service in as little time as one hour by

using this cement.

Formwork can be removed earlier and the structure can be used very

soon by using this cement.

Rapid-hardening hydraulic cement has been used for both concrete

repair and new construction

During the production process, rapid-hardening hydraulic cement

reduces CO2 emissions by 32% to 36% over conventional Portland

cement manufacturing procedures.

Oil Well Cement:-


Oil well cement is used in the production and exploration of oil and gas

onshore as well as deep water offshore wells.

Designed for basic cementing jobs especially specified for deeper to

depths of up to 2100 meters, hot and high pressure well condition.

Oil well cement slurries are designed for many purposes, from the

establishment of the well's safety and structural integrity during drilling,

8

to the isolation of the zone of interest and the production of oil and gas

upon completion.

Lafarge, Holcim, Heidelberg, etc are the global manufacturers of this

cement.

High Alumina Cement:-


It is produced by grinding clinkers formed by chalk and bauxite, which is

special clay of high alumina.

Imparts high early strength, high heat of hydration and resistance to

chemical attack.

High-alumina cement gains a high proportion of its ultimate strength

within 24 hours and has a high resistance to chemical attack.

It also can be used in refractory linings for furnaces as it can withstand

high temperatures.

Low Heat Cement:-


This cement is made to use in the construction of the structures where

the heat evolved during the cement hydration process is required to

reduce.

The temperature gradient in mass concrete is always significant, this

result in thermal cracks development. The use of this cement minimizes

such effect.

It is used in Mass Concreting Structures like Dams, Bridges, large raft

slabs, etc. to control Heat of Hydration

Concrete produced with Low Heat Cement may require less water to

achieve a specified level of workability when compared to a concrete

produced with OPC.

9

Setting times of Low Heat Cement significantly extended.

1.3 CEMENT MANUFACTURING

Cement is one of the core industries which plays a vital role in the

growth and expansion of a nation. It is basically a mixture of compounds,

consisting mainly of silicates and aluminates of calcium, formed out of calcium

oxide, silica, aluminium oxide and iron oxide. The demand for cement depends

primarily on the pace of activities in the business, financial, real estate and

infrastructure sectors of the economy. Cement is considered preferred building

material and is used worldwide for all construction works such as housing and

industrial construction, as well as for creation of infrastructures like ports,

roads, power plants, etc. Indian cement industry is globally competitive

because the industry has witnessed healthy trends such as cost control and

continuous technology up gradation. The Indian cement industry is extremely

energy intensive and is the third largest user of coal in the country. It is

modern and uses latest technology, which is among the best in the world. Also,

the industry has tremendous potential for development as limestone of

excellent quality is found almost throughout the country.

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1.4 TYPES OF MANUFACTURING PROCESS:-

DRY PROCESS:-

In dry process production, limestone is crushed to a uniform and usable

size, blended with certain additives (such as iron ore and bauxite) and

discharged on to a vertical roller mill where the raw materials are ground to

fine powder. An electrostatic precipitator deducts the raw mill gases and

collects the raw meal for a series of further stages of blending. The

homogenized raw meal thus extracted is pumped to the top of a preheater by

air lift pumps. In the preheaters the material is heated to 750°C. Subsequently,

the raw meal undergoes a process of 12 alcinations in a precalcinator. The

remaining 12 alcinations and clinkerization reactions are completed in the kiln

where the temperature is raised to 1,450-1,500°C. The clinker formed is cooled

and conveyed to the clinker silo from where it is extracted and transported to

the cement mills for producing cement. For producing OPC, clinker and

gypsum are used and for producing PPC, clinker, gypsum and fly ash are used.

WET PROCESS:-

The wet process differs mainly in the preparation of raw meal where water is

added to raw materials to produce slurry. The chemical composition is

corrected and the slurry is then pumped to the kiln where evaporation of

moisture, preheating, calcinations and sintering reaction takes place. The

clinker is cooled and transported, as in the case of other plants, with suitable

conveyors to cement mills for grinding. The wet process is more energy

intensive, and thus becomes expensive when power and energy prices are high.

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CHAPTER 2

BODIES PROMOTING INDUSTRIAL DEVELOPMENT

National Council for Cement and Building Materials.

Indian Concrete Institute.

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CHAPTER 3

PRESENT SCENARIO OF CEMENT INDUSTRY

The Indian cement industry is the second largest producer of quality

cement. Indian Cement Industry is engaged in the production of several

varieties of cement such as Ordinary Portland Cement (OPC), Portland

Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well

Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland

Cement, White Cement, etc. They are produced strictly as per the Bureau of

Indian Standards (BIS) specifications and their quality is comparable with the

best in the world. The industry occupies an important place in the national

economy because of its strong linkages to other sectors such as construction,

transportation, coal and power. The cement industry is also one of the major

contributors to the exchequer by way of indirect taxes.

3.1 Facts of Indian Cement Industry:-

The Industry recorded an exponential growth with the introduction of

partial decontrol in 1982 culminating in total decontrol in 1989.

India ranks second in world cement producing countries.

It contributes to environmental cleanliness by consuming hazardous

wastes like Fly Ash (around 30 MT) from thermal power plants and the

entire 8 MT of slag produced by steel manufacturing units.

As a part of Corporate Social Responsibility (CSR), the cement Industry

employs around 0.1 million people and takes care of the social needs not

only of the employees but also adopts several villages around the

factories providing free drinking water, electricity, medical and

educational facilities.

The cement Industry produces a variety of cement to suit a host of

applications matching the world's best in quality.

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Exports Cement/Clinker to around 30 countries across the globe and

earns precious foreign exchange.

Statistics:-

According to Ministry of Commerce & Industry data for November 2012,

cement production registered a negative growth of (-) 0.2 per cent in November

2012 against its 17.0 per cent growth in November 2011. The cumulative

growth of cement production was 6.7 per cent during April- November 2012-13

compared to its 4.8 per cent growth during the same period of 2011-12.

.

Key Drivers of Cement Industry:-

Buoyant real estate market

Increase in infrastructure spending

Various governmental programmes like National Rural Employment

Guarantee

Low-cost housing in urban and rural areas under schemes like

Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Indira

Aawas Yojana.

Technological Advancements:-

Modernization and technology up-gradation is a continuous process for any

growing industry and is equally true for the cement industry. At present, the

quality of cement and building materials produced in India meets international

standards and benchmarks and can compete in international markets. The

productivity parameters are now nearing the theoretical bests and alternate

means. Substantial technological improvements have been brought about and

today, the industry can legitimately be proud of its state-of-the-art technology

and processes incorporated in most of its cement plants. This technology up

17

gradation is resulting in increased capacity, reduction in cost of production of

cement.

3.2 Major Players:-

Ultratech Cement

Century Cements

Madras Cements

ACC

Gujarat Ambuja Cement Limited

Grasim Industries

India Cements Limited

Jaiprakash Associates and

JK Cements.

Holcim

Lafarge

Heidelberg Cemex

3.3 Foreign Direct Investment:-

The cement sector has been gradually liberalized. 100 per cent FDI is permitted

in the cement industry.

Future Outlook:-

A recent report has been published by research company RNCOS has found

that, even in the tough conditions of economic turbulence, Indian cement

industry sustained its growth rate. It further stated that, in the backdrop of the

government backed construction projects almost every cement major expanded

their installed capacity as; these projects have created strong demand for

cement in the country. The report stated that production capacity of cement

18

industry has grown by almost 20% in 2011-12. The research report has also

anticipated that the industry players will continue to increase their annual

cement output in coming years and the country’s cement production will grow

at a CAGR of around 12 per cent during 2013-14.

3.4 Recent Trends in Cement Industry:-

Product:-

Traditionally only one product was available in cement that was 33

Grade but due to increase in competition cement companies were forced to

improvise on the quality of the product and hence they introduced 43 Grade

and moving further they introduced 53 Grade which is the highest Grade

available as per BIS. (Bureau of Indian Standards) Moreover to meet demand

the manufacturers had to increase their capacity, so most of the

manufacturers expanded their capacity upto the best possible level. Cement is

a capital intensive industry which means that in order to produce the product

huge capital investment is required and once it has reached its optimum

production capacity in order to increase its production new investment have to

be made. In the span of last ten years companies have expanded their

production and have reached to a level where they were forced to find another

option to expand their capacity then incurring additional cost. So the

companies came up with PPC (Portland Pozzolana Cement) which is prepared

by mixing fly ash, volcanic product etc., which helped manufacturers to

increase their production by 25 to 30 % from the existing set up. Switching to

PPC was not just to increase production but the government had made it

mandatory for the companies located in the 100 Km radius of any thermal

power station to use fly ash in cement production as an environment protection

constraint.

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Packaging:-

Unlike other consumer products packaging doesn’t play major role in

marketing of cement as cement is generally used at construction site where

fancy packing isn’t required .Initially cement was packed in Jute bags but the

packing had to be changed to HDPE bags because there was a heavy loss to

companies because of damage caused by packing. There was heavy transit loss

because of leakage of cement from the jute bags during the transit and

moreover the product got damaged due to moisture content. So in order to

protect the product from seepage and moisture HDPE bags were used. In big

cities there are huge construction projects going on in which cement is

required in big quantities and so the builders have come up with the concept of

Ready Mix Concrete commonly known as RMC in cement industry. The

builders prefer to buy loose cement in huge quantity so they can save on time

and labour. This concept has helped cement companies on saving a huge

amount on packing and reduction in transit cost as bulk quantity of loose

cement is transported in bulkers directly to the place of production.

Technical Guidance:-

With the increase in competition in cement industry companies were not

only forced to improve on the quality but were also forced to improve on

marketing techniques. As a value addition to product companies started

providing technical guidance to the cement users. They started separate

department known as technical cell/ technical department which consisted of

team of qualified civil engineers. Customer facing any problem related to

construction called up the technical cell and the team of engineers was always

ready to provide guidance to the customer at their door step.Some companies

took a revolutionary step by introducing “Mobile testing laboratories” to provide

concrete testing facility to customers at their construction site. Mobile testing

laboratories consisted of latest concrete strength testing equipments. This

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facility was started with a view to provide satisfaction to the customer

regarding the quality of the product. Moreover looking at the marketing aspect

civil engineers from the technical cell keep on visiting construction sites to

promote their product by providing them knowledge about their product and

latest construction practices.

Sales Promotion:-

In order to survive competition companies had adopted all possible

marketing techniques and only place where they could improvise more was

sales promotion activities. As cement traders and masons are biggest

influencers in purchase of cement, cement manufacturing companies started

giving various incentive schemes to these influencers to ensure their

inclination towards their brand. They gave various schemes to traders ranging

from small household item to foreign tours. These schemes were based on sale

of targeted quantity for short term as well as long term. For short term

schemes gifts like household items like air conditioners, refrigerator, television

and other home appliances were provided; even schemes for gold and silver

coins were announced and for long term schemes, tours were announced

which included domestic as well as foreign tours depending on the quantity

sold. Few companies also offered kind scheme of cars and two wheelers on

achievement of specific quantity in the long term. To attract masons companies

arranged masons meets on regular basis which consisted of presentation on

companies’ products and activities followed by dinner and distribution of

various gifts. Companies also offer them annual calendar and diaries and other

small gifts and give always at regular intervals to be in touch with them on

regular basis.

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CHAPTER 4

ECONOMIC STATUS OF THE CEMENT INDUSTRY

4.1 GROWTH RATE:-

India is the world’s second largest producer of cement with total

capacity of 224 million tonnes as on April 2010.

Indian Cement Industry comprises of 185 large and more than 365

mini cement plants.

According to ACC cement report, Government’s continued thrust on

infrastructure will help the cement to maintain an annual growth of

9-10% in 2010.

With addition in the cement production, it is expected that cement

production in India will reach 300 million tonnes in the coming years.

4.2 INVESTMENTS:-

• Cement and gypsum products attracted FDI worth US$ 2.23 billion

between April 2000 and June 2014, according to the Department of

Industrial Policy and Promotion.

• Madras Cements Ltd is planning to invest US$ 178.4 million to increase

the manufacturing capacity of its Ariyalur plant in Tamil Nadu to 4.5 MT

from 2 MT by April 2011.

• Shree Cement, plans to invest US$ 97.13 million this year to set up a 1.5

MT clinker and grinding unit in Rajasthan. Moreover, in June 2010,

Shree Cement signed an MOU with the Karnataka government to invest

US$ 423.6 million for setting up a cement unit and a power plant.

• Jaypee Associates plans to invest US$ 640 million to increase its cement

capacity.

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• Swiss cement company Holcim plans to invest US$ 1 billion in setting up

2-3 greenfield manufacturing plants in the country in the next five years

to serve the rising domestic demand.

4.3 EXPORTS:-

• During 2007-08, the export of cement from India touched the 2.16

million tonnes mark. However during 2008-09, the cement export from

India stood at 1.46 million tonnes.

• In spite of seeing fall during 2008-09, the export segment of the industry

is expected to grow again on account of various infrastructure projects

that are being taken up all over the world. India has an immense

potential to tap markets of Middle East and South East Asia

• The negative ACGR (Annual Compound Exponential Growth Rate) of -

5.52% in control period has seen ACGR of 35.35% in decontrolled and

opened up economy

4.4 FDI AND CONTRIBUTION TO THE GDP:-

• The industry occupies an important place in the national economy

because of its strong linkages to other sectors such as construction,

transportation, coal and power.

• The cement industry is one of the major contributors to the exchequer by

way of indirect taxes.

• 100% FDI is permitted in the cement industry.

• It contributes approximately 1.3% of GDP and the industry is employing

over 0.14 million people

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CHAPTER 5

REGIONAL DISTRIBUTION

24

5.1 PLAYERS IN CEMENT INDUSTRY:-

MAJOR PLAYERS IN THE INDIAN CEMENT INDUSTRY:-

SR. NO. Companies Capacity

MTPA

2012

No. of

Cement

Plants

1. Ultratech Cement Ltd 48.75 22

2. ACC Ltd. 30.08 14

3. Ambuja Cements Ltd 28.00 13

4. Jaiprakash Associates

Ltd.

24.50 14

5. India Cements Ltd. (The) 15.33 09

6. Madras Cement Ltd 14.44 08

7. Shree Cement Ltd. 13.50 06

8. Chettinad Cement

Corporation Ltd.

11.50 03

9. Dalmia Bharat

Enterprises Ltd.

09.00 03

10. Century Textiles and

Industries Ltd.

07.80 03

11. Lafarge India Pvt. Ltd. 07.75 04

25

12. J.K. Cement Ltd. 07.47 04

13. Kesoram Industries Ltd. 07.25 02

14. Penna Cement

Industries Ltd.

07.00 04

15. Birla Corporation Ltd. 06.46 07

16. Binani Cement Ltd. 06.25 02

17. Zuari Cement Ltd. 06.20 03

18. Prism Cement Limited 06.10 02

19. OCL India Ltd. 05.35 02

20. JK Lakshmi Cement Ltd. 05.30 03

21. My Home Industries 05.20 02

22. JSW Cement 05.20 02

23. Orient Cement 05.00 02

24. Bharathi Cement 05.00 01

Source : Labour and Industrial Chronical, Survey of Cement Industry &

Directory 2012 : 3rd Edition

26

STATE-WISE MAJOR CEMENT PLANTS AND CAPACITIES AT A

GLANCE:-

Sr.

No.

States

No. of

Plants

2010

Capacity

MTPA

2010

No. of

Plants

2012

Capacity

MTPA

2012

1. Andhra

Pradesh

33 55.92 44 79.45

2. Assam 1 0.20 4 2.73

3. Bihar 1 1.15 1 1.00

4. Chhattisgarh 9 12.81 10 16.11

5. Delhi 1 0.50 1 0.50

6. Gujarat 15 27.37 14 27.49

7. Haryana 3 2.97 4 3.52

8. Himachal

pradesh

6 11.20 7 13.04

9. Jammu &

Kashmir

1 0.40 2 0.76

10. Jharkhand 3 5.18 4 8.6

11. Karnataka 13 23.61 13 24.4

12. Kerala 2 0.62 2 0.62

13. Madhya

Pradesh

11 21.88 10 26.16

27

14. Maharashtra 9 16.40 10 23.00

15. Meghalaya 4 1.86 8 6.77

16. Odhisa 4 7.55 5 7.79

17. Punjab 3 4.75 3 4.75

18. Rajasthan 20 41.45 21 45.62

19. Tamil Nadu 19 32.88 20 32.89

20. Uttar Pradesh 9 12.14 11 13.83

21. Uttarakhand 3 4.00 13 4.00

22. West Bengal 8 7.73 9 9.61



MAJOR PLAYERS IN THE NORTH:-

TOTAL SALES for the year 2012 = Rs. 33589.02 Cr.

Name of the

Company

Net Sales

in Cr.

(2012)

Percentage

(%)

ACC 7,942.66 23.64659642

Ambuja Cem. 7,040.70 20.96131414

Birla Corpn. 1,790.19 5.329688095

J K Cements 1,664.42 4.955250257

28

JK Lakshmi

Cem.

1,223.90 3.643750249

Shree Cement 2,716.46 8.08734521

UltraTech

Cem.

6,385.50 19.0106767





ACC, 23.65

Ambuja Cem., 20.96

Birla Corpn., 5.33J K Cements, 4.96

JK Lakshmi Cem., 3.64

Shree Cement, 8.09

UltraTech Cem., 19.01

others, 14.37

Market Share

ACC

Ambuja Cem.

Birla Corpn.

J K Cements

JK Lakshmi Cem.

Shree Cement

UltraTech Cem.

others

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MAJOR PLAYERS IN SOUTH:-

TOTAL SALES for the year 2012 = Rs. 11266.01 Cr

Name of the

company

Net Sales

in

Cr.(2012)

Percentage

(%)

Andhra

Cements

369.36 3.278534281

Chettinad

Cement

1,137.67 10.09825129

Dalmia

Cement

1,758.68 15.61049564

India Cements 3,358.34 29.8094889

Madras

Cement

2,530.90 22.46491881

Rain

Commodities

1,111.01 9.861610277

zuari Cements 438.72 3.894191466

30



Andhra Cements, 3.28

Chettinad Cement, 10.09

Dalmia Cement, 15.61

India Cements, 29.81

Madras Cement, 22.46

Rain Commodities, 9.86

zuari Cements, 3.89

others, 4.98

Market Share

Andhra Cements

Chettinad Cement

Dalmia Cement

India Cements

Madras Cement

Rain Commodities

zuari Cements

others

31

CHAPTER 6

FOUR P’S

6.1 Product:-

Ordinary Portland Cement (OPC):-

OPC, popularly known as grey cement, has 95% clinker and 5% of

gypsum and other materials. It accounts for 70% of the total

consumption. White cement is a variation of OPC and is used for

decorative purposes like rendering of walls, flooring etc. It contains a very

low proportion of iron oxide.

Portland Pozzolona Cement (PPC):-

PPC has 80% clinker, 15% Pozzolona and 5% gypsum and accounts for

18% of the total cement consumption. Pozzolona has siliceous and

aluminous materials that do not possess cementing properties but

develop these properties in the presence of water. It is cheaply

manufactured because it uses fly ash/burnt clay/coal waste as the main

ingredient. It has a lower heat of hydration, which helps in preventing

cracks where large volumes are being cast.

Portland Blast Furnace Slag Cement (PBFSC):-

PBFSC consists of 45% clinker, 50% blast furnace slag and 5% gypsum

and accounts for 10% of the total cement consumed. It has a heat of

hydration even lower than PPC and is generally used in construction of

dams and similar massive constructions.

32

White Cement:-

OPC: clinker using fuel oil (instead of coal) and with iron oxide content

below 0.4% to ensure whiteness. Special cooling technique is used. It is

used to enhance aesthetic value, in tiles and for flooring. White cement is

much more expensive than grey cement.

Specialized Cement:-

Oil Well Cement: is made from clinker with special additives to prevent

any porosity. Rapid Hardening Portland cement: It is similar to OPC,

except that it is ground much finer, so that on casting, the compressible

strength increases rapidly. Water Proof Cement: OPC, with small portion

of calcium stearate or non-saponifibale oil to impart waterproofing

properties.

6.2 PRICE:-

For all the commodities Prices are generally decided by demand supply gap,

which largely prevails in cement industry too. Cement as a product doesn’t has

much differentiation. The cement provided by various companies is more or

less the same, so there is not much difference in the pricing of cement by

various companies. Due to various advertising and marketing strategy the

cement companies have been able to categorize themselves into three

categories i.e. A, B & C. The price difference between various categories is 2 Rs

to 4 Rs Per bag. Prices of cement are decided not only on the basis of

manufacturing cost but it also includes logistic cost & government levies.

Cement companies are offering cement at FOR basis (Supplying at doorstep), so

logistic cost plays a vital role and in order to reduce the logistic cost cement

companies prefer to supply cement to nearby regions or they keep higher prices

33

in far off places. Cement price fluctuation are cyclic in nature. According to the

demand prices generally fall into four categories.

Apr- June (High demand High price) – During the period of April to June the

Demand is generally higher as compared to other months, as no festivals fall

during this period. As this is prefix period to monsoon season, pre-monsoon

demand also picks up the demand during this period. Due to greater demand

the prices are also higher as compared to other months. Prices during this

period generally fall in range of 305 Rs per bag to 310 Rs per bag.

July – Sept (Low demand Low price) – During the period of July to September

the demand is relatively low due to monsoon season and festivals like

Janmashtami. Major construction activities is at hold due to monsoon and

retail demand is also low as farmers are busy with farming activities & labours

are also diverted towards farming activities. As the demand is low, prices

remains under pressure during this period. Prices generally range from 220 Rs

per bag to 250 Rs per bag.

Oct – Dec ( Moderate demand Moderate price) – Period from October to

December is the period of moderate demand as the demand picks up a little

after monsoon season but due to Major festival of Diwali demand again slows

down. Due to moderate demand the prices also remain in mid range. The

prices range from 240 Rs per bag to 260 Rs per bag.

Jan – March (High demand High price) – Period from January to March is

period of high demand as this is the last quarter of financial year and there is

no major festival other than holi which normally falls during last fortnight of

March. Due to financial year end all government contractors’ speed up their

activities to ensure the completion of work before year end. Due to high

34

demand the prices generally remain high. Prices fall in the range of 305 Rs per

bag to 310 Rs per bag.

6.3 PLACE:-

Place plays an integral role in cement industry as logistic cost is 3% to 5% of

the total cost for retail customer, so it is very important for cement companies

to have a well planned and wide spread network. For this purpose cement

companies opens dumps at strategic locations so they can ensure timely and

cost effective delivery to the network and customers. Dumps are the store

houses owned by company where they transfer their stock from manufacturing

unit. Companies also appoint efficient C & F agents to provide best services.

Companies appoint big distributor and dealers which in turn

appoint small retailers to increase reach upto each and every corner of the

center. By using this well planned distribution system the companies distribute

their product form the manufacturing unit to the dumps, where according to

customer’s/ dealer’s need order are placed and such orders are executed

promptly. In certain cases, where the requirement is huge or order is from

nearby place companies execute the orders from the manufacturing unit itself.

To ensure customers delight and to have competitive edge over competitors,

companies try to have best distribution system in place.

6.4 PROMOTION:-

As cement was a commodity there was not much differentiation between

brands but after decontrolling of cement industry, cement companies started

building brand image. In order to create brand image, promotion played a very

important role. Initially they started by creating specific logos and design for

their bags. Gradually they moved to advertising means like wall painting,

newspaper advertisement, television and radio. As these medium were used by

all the cement companies, so in order to differentiate their product a need for

35

other innovative means of promotion was also required. They stared

distributing gift articles like pens, key chains, pocket diaries, tea coasters, wall

clock, table pieces, pen stands, calendars, annual diaries for dealers and

customers. They started offering gold scheme, domestic and foreign tours,

scholarship programme for dealer’s kids etc.In order to increase brand’s

visibility and to attract customer’s attention companies started various

activities by decorating dealer’s shop with various posters, stickers, danglers,

dealer board, and decorative gates outside dealers shop during festivals etc.

Companies also arranged meetings and conferences for influencers like

engineers and masons and provided them various gift articles after the meeting

and also after regular intervals to ensure continuous recall of their brand. Few

companies have started increasing their presence at national level, so to

increase their visibility at national level they started sponsoring various events

like Indian Premier League, television reality shows and other television

programs. With help of such intensive promotional activities companies have

been able to create a unique identity for themselves, which in turn helped them

to increase their market share and gain a competitive edge over the

competitors. As a result of this the customers also became aware about cement

as a brand rather than a commodity.

Challenges and problems of cement industry:-

Cement is generally considered as commodity and has little scope of

differentiation, so like other commodities cement industry also has its own

challenges.

36

Distribution System:-

Distribution system is heart of cement companies. Effective distribution is the

only means through which a company can get a competitive edge over other

players in the market. Effective distribution not only increases companies profit

but also helps in increasing customer satisfaction. Normally cement companies

use two modes of transportation i.e road and rail but few companies also use

sea transportation for distribution.

Fig 1 Distribution of Cement from Plant to the Customer

Distributor, Dealer, retailers and the C&F agents play most important role in

distribution channel. Companies identify reputed traders preferably dealing in

building materials or allied products and appoint them as a distributor/

Dealer. These distributor/ dealer sell cement to consumer as well as small

retailers. Dealers sell it directly to the builders who are big customers. Retailers

are small traders who have set up retail counters in various corner of the city

37

and sell directly to the consumers. Retailers have two type of customer base

which are builders who are large customers as well as small consumers which

includes contractors, individual house builders etc. Companies higher godown

nearby big markets and stock huge amount of material in those godowns. C&F

agents are appointed to redistribute material from the godown to dealers,

distributors, retailers & customers. This is a traditional means of distribution

wherein the material is transferred from plant to Godowns with C&F, from

where it is redistributed to dealers & retailers which in turn is sold to the

customer. To expand their market reach apart from the traditional means

companies have also started setting up separate grinding and packing units at

strategic locations.

Grinding unit: -

Companies transfer their clinker in bulk from plant to grinding units. At these

units the clinker is grinded and distributed to nearby market. Companies

distribute the product through the same channel of C&F, Dealer and retailer or

at times even cater it directly to customer.

Packing plants: -

Companies transfer loose cement from plant to packing units. At these units

the loose cement is packed into proper bags and distributed to nearby market.

Companies distribute the product through the same channel of C&F, Dealer

and retailer or at times even cater it directly to customer. Generally companies

use two means to distribute their product which is road and rail, but few

companies also use sea to distribute their product. Depending on the distance

and quantity of cement to be transported suitable mode of transport is

adopted. Say for instance road transport is preferred for shorter distance and

transportation by rail is preferred for longer distance as it becomes more

economical. Companies having manufacturing facilities nearby ports use Sea

38

as a mode of transportation to distribute their products. As a product, cement

offered by various companies is more or less similar so the companies can

differentiate their product by providing prompt deliveries through effective

distribution system. Effective distribution channel not only gives competitive

edge over others but also helps to reduce damage and transit loss. Distribution

strategy followed would in turn determine segmentation, pricing, customer

behavior and customer decisions. Thus having an effective distribution system

is one of the biggest challenges for the cement industry.

39

CHAPTER 7

SWOT ANALYSIS OF CEMENT INDUSTRY

7.1 Strengths:-

Second largest in the world in terms of capacity: In India there are

approximately 200 large and 300 mini plants with installed capacity of

360 million tonnes.

Low cost of production: due to the easy availability of raw materials and

cheap labour.

7.2 Weakness:-

Effect of global recession on real estate: The real estate prices are

stabilizing and facing steady slowdown especially in metros. There are

approximately twenty thousand completed flats without occupancy in

Ahmadabad. There has been drastic reduction in property prices due to

reduced demand and increased supply.

Demand-Supply gap, overcapacity: The capacity additions distort the

demand-supply equilibrium in the industry thereby affecting profitability.

Increasing cost of production due to increase in coal prices.

High Interest rates on housing: The re-pricing of the interest rates in the

last four years from 7% to 12% has resulted in the slowdown in

residential property market.

7.3 Opportunities:-

Strong growth of economy in the long run: Indian economy has been one

of the stars of global economics in the recent years

40

Increase in infrastructure projects: Infrastructure accounts for 35% of

cement consumption in India. And with increase in government focus on

infrastructure spending, such as roads, highways and airports, the

cement demand is likely to grow in future.

Growing middle class: There has been increase in the purchasing power

of emerging middle-class with rise in salaries and wages, which results in

rising demand for better quality of life that further necessitates

infrastructure development and hence increases the demand for cement.

Technological changes: The Cement industry has made tremendous

strides in technological up gradation and assimilation of latest

technology. At present ninety three per cent of the total capacity in the

industry is based on modern and environment-friendly dry process

technology and only seven per cent of the capacity is based on old wet

and semi-dry process technology. The induction of advanced technology

has helped the industry immensely to conserve energy and fuel and to

save materials substantially and hence reduce the cost of production.

Government’s emphasis on the Infrastructure.

Heavy demand of housing and other sectors in which Cement is to be

treated as raw material

Foreign direct Investment in the Retail and other Sector may surge

demand of Cement in coming years.

7.4 Threats:

Imports from Pakistan affecting markets in Northern India: In 2007,

130000 MT in 2008, 173000 MT of cement was exported to India. This

was done to keep the price of cement under check.

Excess overcapacity can hurt margins, as well as prices.

Government’s Foreign Direct Investment Policy in favor of investment in

the industry by foreign giants.

The demand supply mismatch arising out of burst of new capacity

additions (and not majorly out of lack of normal demand growth) has

41

constricted the capacity utilization levels of the industry for the last two

years in particular. Given the resilient nature of the economy, India has

been able to achieve reasonable GDP growth of 5 % in FY 12 which is

expected to increase to 6 % to 6.5 % in FY 13 is expected to translate into

a demand growth of 8% to 10% over the next few years. While demand

for cement grew by 6.6% in FY 12, there are already encouraging signs of

a pick-up in demand with demand spurting by over 10% in the last

quarter of FY 12. It is therefore expected capacity utilization to gradually

increase over the next 3 years with parity between supply and demand

being restored by then. While this being the overall scenario, there are

still pockets of high demand growth in certain regions of the country and

Industry is already moving significant quantities of cement to the

Eastern markets as far as Assam & Nepal to optimize capacity utilization,

given the overall surplus. Industry’s attempts in the short run will be

towards striking an optimum balance between volumes and profitability

and achieve best results.

The availability of power from the State Electricity Boards is another area

of concern with acute shortages in power availability in Tamil Nadu and

Andhra Pradesh.

Availability of indigenous coal from the nationalized coal companies and

the quality of supplies is another area of concern. This problem has

however been mitigated to a large extent due to the coal linkages

obtained during the last two years to cater to the requirements of the

recent capacity expansions in Andhra Pradesh. The Industry imports

coal to meet its cement plants' requirements thereby adequately

addressing the quantity, quality and cost aspects. Mining rights obtained

in Indonesia should fructify with infrastructure of roads and bridges

under completion to ensure timely coal supplies.

42

CHAPTER 8

PESTEL ANALYSIS OF CEMENT INDUSTRY

Pestel analysis is a useful tool for understanding the big picture of operating

and takes advantage of opportunities. Pest analysis includes political,

environmental, social and technological factors which affects both the

companies as well as industry.

8.1 POLITICAL

The price of cement is primarily controlled by the coal rates, power tariffs,

railway tariffs, freight, royalty and cess on limestone. Interestingly, government

controls all of these prices. Government is also one of the biggest consumers of

the cement in the country. Most state governments, in order to attract

investments in their respective states, offer fiscal incentives in the form of sales

tax exemptions/deferrals. States like Haryana offer a freeze on power tariff for

5 years, while Gujarat offers exemption from electric duty.

8.2 ECONOMIC

The industry is on the boom, with a lot of government infrastructure and

housing projects under construction. The export segment of the industry is

expected to grow again on account of various infrastructure projects that are

being taken up all over the world and numerous outstanding cement plants

coming up in near future in the country.

8.3 SOCIAL

The cement industry in India consists of both the organized sector and the

unorganized sector. Organized sector comprises of the well-known cement

manufacturing companies while the main players of the unorganized sector are

the regional and local cement-producing units in various states across the

43

country. Indian consumers prefer buying branded cement like ULTRATECH,

JAYPEE CEMENT, LAFARGE CEMENT etc. A population of more than 100

billion people, it is expected that cement industry will create another 25 lakhs

jobs in the next 4-5 years.

8.4 TECHNOLOGY

The Government of India plans to study and possibly acquire new technologies

from the cement industry of world. The government is discussing technology

transfer in the field of energy conservation and environment protection to help

improve efficiency of the Indian cement industry. Cement industry has made

tremendous strides in technological up-gradation and assimilation of latest

technology. At present 93% of the total capacity in the industry is based on

modern and environment-friendly dry process technology.

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CHAPTER 13

PORTER’S FIVE FORCES FRAMEWORK

45

CHAPTER 13

Conclusion

It can be concluded that given the sustained growth in the housing

sector, the government's emphasis on infrastructure (both at the national and

the state level) and increased global demand, the prospect for India's cement

industry is exceedingly promising. The dynamics of Indian cement industry is

undergoing a gradual shift. From an oversupply situation not long ago, a phase

has come where demand growth is outstripping supply. While tracing the

growth of the industry in different policy regimes, it became observable that the

industry has matured with the help of all indicators of performance, such as

size, production, capacity utilization, consumption and exports, after its

decontrol in 1989-90. Technology of production and quality of product too has

advanced a lot along with decrease in regional concentration. Another

significant trend which the industry has witnessed is of greater consolidation of

power by larger players through mergers and acquisitions and entry of foreign

majors in the ever growing market. This growth and development of the

industry is all the more evident in recent years especially after 1999-2000. All

the above mentioned trends in the Indian cement industry have only

contributed to the growing competitiveness between the firms and his has

resulted into improved efficiencies in procurement, manufacturing,

transportation and logistics. With the infrastructure sector poised to be being

prioritized by the Government, the demand for cement would be only

increasing in the times to come. Hence the outlook for the Indian cement sector

looks bright for corporate houses that can handle their brand repute and work

upon tight revenue margins by gaining from high volume sales.

46

CHAPTER 14

REFERENCES

Building material and construction- B.C.PUNAMIA

Websites.

www.google.com .

http://www.ibef.org.

http://en.wikipedia.org/wiki/Cement.s

https://www.equitymaster.com



http://www.google.com/

http://www.ibef.org/

http://en.wikipedia.org/wiki/Cement.s

https://www.equitymaster.com/

report on cement industry in india

Education

cement companies

cement consumption

portland cement

cement dates

cement sector

types of cement

indias cement industry

large cement plants