sagar cements

8/9/2019 Sagar Cements

http://slidepdf.com/reader/full/sagar-cements 1/36

Balance Sheet of Sagar Cements ------------------- in Rs. Cr. -------------------

Mar

'05Mar '06 Mar '07 Mar '08 Mar '09

Sources Of Funds

Total Share Capital 11.15 11.15 12.70 13.34 15.00

Equity Share Capital 11.15 11.15 12.70 13.34 15.00

Share Application Money 0.00 0.00 1.07 0.55 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 12.14 13.70 59.89 91.43 177.22

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00Networth 23.29 24.85 73.66 105.32 192.22

Secured Loans 19.42 11.20 22.95 198.50 240.26

Unsecured Loans 11.75 8.74 1.40 19.52 12.90

Total Debt 31.17 19.94 24.35 218.02 253.16

Total Liabilities 54.46 44.79 98.01 323.34 445.38

Mar

'05Mar '06 Mar '07 Mar '08 Mar '09

Application Of Funds

Gross Block 71.89 76.14 84.16 142.07 434.31

Less: Accum. Depreciation 34.43 37.38 40.64 44.13 62.85

Net Block 37.46 38.76 43.52 97.94 371.46

Capital Work in Progress 3.06 1.80 34.13 205.90 7.77

Investments 2.80 2.80 2.80 2.80 17.80

Inventories 8.05 6.65 6.64 7.50 42.53

Sundry Debtors 9.79 9.15 8.25 5.39 24.93

Cash and Bank Balance 0.32 0.58 0.94 2.03 5.90

Total Current Assets 18.16 16.38 15.83 14.92 73.36

Loans and Advances 14.03 7.26 23.29 46.32 47.42

Fixed Deposits 0.33 0.63 15.01 4.84 5.32

Total CA, Loans & Advances 32.52 24.27 54.13 66.08 126.10



Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 19.79 21.22 25.84 33.07 70.36

Provisions 1.58 1.62 10.73 16.32 7.39

Total CL & Provisions 21.37 22.84 36.57 49.39 77.75

Net Current Assets 11.15 1.43 17.56 16.69 48.35Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 54.47 44.79 98.01 323.33 445.38

Contingent Liabilities 2.70 1.33 168.76 47.81 38.90

Book Value (Rs) 20.89 22.29 57.15 78.55 128.13

Profit & Loss account of Sagar

Cements------------------- in Rs. Cr. -------------------

Mar

'05Mar '06 Mar '07 Mar '08 Mar '09

12

mths12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 112.04 153.77 247.14 274.62 334.27

Excise Duty 26.78 20.43 21.87 20.86 27.73

Net Sales 85.26 133.34 225.27 253.76 306.54

Other Income -0.66 0.66 0.88 0.48 0.79

Stock Adjustments -1.78 -1.22 -0.51 0.16 5.22

Total Income 82.82 132.78 225.64 254.40 312.55

Expenditure

Raw Materials 39.53 55.84 89.13 92.95 93.16



Power & Fuel Cost 26.79 29.77 32.54 37.80 74.77

Employee Cost 4.34 4.21 7.54 10.88 13.01

Other Manufacturing Expenses 0.58 0.49 0.67 1.28 3.17

Selling and Admin Expenses 10.51 33.55 51.09 52.12 66.73

Miscellaneous Expenses 0.52 0.45 0.80 1.35 1.85

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Total Expenses 82.27 124.31 181.77 196.38 252.69

Mar

'05Mar '06 Mar '07 Mar '08 Mar '09

12mths

12 mths 12 mths 12 mths 12 mths

Operating Profit 1.21 7.81 42.99 57.54 59.07

PBDIT 0.55 8.47 43.87 58.02 59.86

Interest 4.65 2.61 1.60 3.40 15.90

PBDT -4.10 5.86 42.27 54.62 43.96

Depreciation 3.22 3.02 3.41 4.13 18.72

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax -7.32 2.84 38.86 50.49 25.24

Extra-ordinary items 10.34 0.00 0.00 0.00 0.40

PBT (Post Extra-ord Items) 3.02 2.84 38.86 50.49 25.64

Tax 1.30 0.02 11.18 19.50 9.19

Reported Net Profit 1.72 2.83 27.67 30.96 16.46

Total Value Addition 42.75 68.47 92.64 103.45 159.53



Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 1.27 1.27 3.02 3.40 3.85

Corporate Dividend Tax 0.00 0.00 0.42 0.58 0.61

Per share data (annualised)

Shares in issue (lakhs) 111.52 111.52 127.02 133.37 150.02

Earning Per Share (Rs) 1.55 2.54 21.78 23.21 10.97

Equity Dividend (%) 10.00 10.00 25.00 25.00 25.00

Book Value (Rs) 20.89 22.29 57.15 78.55 128.13

Yearly Results of Sagar Cements ------------------- in Rs. Cr. -------------------

Mar '06 Mar '07 Mar '08 Mar '09Mar

'10

Sales Turnover 75.89 112.50 223.14 306.55 479.57

Other Income 0.66 0.88 1.00 0.80 6.79

Total Income 76.56 113.38 224.14 307.35 486.36

Total Expenses 68.08 69.55 166.55 247.49 399.90

Operating Profit 7.81 42.95 56.59 59.06 79.67Profit On Sale Of Assets -- -- -- -- --

Profit On Sale Of Investments -- -- -- -- --

Gain/Loss On Foreign Exchange -- -- -- -- --

VRS Adjustment -- -- -- -- --

Other Extraordinary Income/Expenses -- -- -- -- --

Total Extraordinary Income/Expenses -- -- -- -- --

Tax On Extraordinary Items -- -- -- -- --

Net Extra Ordinary Income/Expenses -- -- -- -- --

Gross Profit 8.47 43.83 57.59 59.86 86.46

Interest 2.61 1.60 3.40 15.90 28.95

PBDT 5.87 42.23 54.20 43.96 57.51

Depreciation 3.02 3.41 4.14 18.72 27.69

Depreciation On Revaluation Of Assets

-- -- -- -- --

PBT 2.85 38.82 50.06 25.24 29.82



Tax 0.02 11.15 19.10 8.78 10.70

Net Profit 2.83 27.67 30.96 16.46 19.12

Prior Years Income/Expenses -- -- -- -- --

Depreciation for Previous YearsWritten Back/ Provided

-- -- -- -- --

Dividend -- -- -- -- --

Dividend Tax -- -- -- -- --

Dividend (%) -- -- -- -- --

Earnings Per Share 2.54 21.78 23.21 10.97 12.75

Book Value -- -- -- -- --

Equity 11.15 12.70 13.34 15.00 15.00

Reserves 14.98 59.89 91.43 177.22 192.10

Face Value 10.00 10.00 10.00 10.00 10.00



Profile

Sagar Cements Limited (SCL) is a Company of 25 Years standing,

engaged in manufacture of Cement at its Plant in Mattampally, NalgondaDistrict, Andhra Pradesh.

The Company is managed by a Board, whose members are highly

competent and well known. The Senior Management team consists of

highly qualified Professionals with rich experience in the area of their Specialization.

The Company employs modern technology in each of its process of

manufacture at its Plant and has adopted progressive manufacturing practices, whether it relates to maintaining high standards of quality of its products or development of its highly valued human resources or the need

to keep the pollution to the barest minimum.

The Company manufactures various varieties of cement like Ordinary

Portland Cement (OPC) of 53 grade, 43 grade, Portland Pozzalona Cement(PPC) and Sulphate Resistant Cement (SRC) to suit different needs of

customers and all these products are being sold under the Brand Name

“Sagar” which has already become popular in Andhra Pradesh, has nowfound its acceptance among the customers in the neighboring States as

well.

The Company has a strong committed marketing network comprising

various layers like Distributors, Dealers, C&F Agents, all of whom areserved by dedicated marketing personnel. The Company has a well-

designed Organizational Structure and the roles and responsibilities of each

of its personnel have been well defined. The Company believes in theimportance of development of Human Resources as a valuable asset and is

endeavoring to enhance its value by organizing various need based in-

house training programmes and encouraging their participation in the

external programmes sponsored by various institutions of repute.

Sagar Cements has a consistent Profit track record and, except for a few

years when it was either executing its expansion plans or the industry as a

whole was undergoing a difficult period, it has been declaring dividend at

reasonable percentages.

The company’s Shares are listed on Hyderabad and Bombay Stock



Exchanges, where they are actively traded.

The Company which started its operation with a Cement capacity of 66000

TPA, has gradually increased it to the level of 2.35 MTPA, while its

Clinker capacity has also witnessed a significant increase from 66000 TPAin 1982 to present level of 2.10 MTPA.



Vision

To provide foundations for society 's future

Mission

To be the India's most respected and attractive company in our industry - creating value for all

our stakeholders.



Group

Sagar is well diversified group serving various sectors of the economy.The group constitutes of

Sagar Cements Limited

- Production of Cement & Clinker

Amareswari Cements Limited

- Production of Cement & Clinker

Sagar Power Limited

- Production of Hydel Power

Panchavati Polyfibers

- Production of PP Fabric / Woven Sacks for Cement Industries

RV Consulting

- Consulting for setting Cement Plants

Sagarsoft (India) limited -www.sagarsoft.in- Software Services for global Clients



Corporate Governance

Sagar Cements has set itself high standards of corporate governance,ensuring responsible and transparent company management to enable its

long-term success.

Code of Conduct

CODE OF CONDUCT AND ETHICS FOR DIRECTORS AND

SENIOR MANAGEMENT TEAM

Sagar Cements being committed to be a good corporate citizen conducts its

business as per the applicable laws, rules, regulations and statutory

guidelines as are in force and with highest standards of business ethics.

It is expected of the Directors and Senior Management Team of the

Company to comply with applicable laws, rules, regulations and guidelines

while discharging their respective roles and to promote honesty in the process apart from abiding themselves by the policies and procedures laid

down for the conduct of the business. The accounts of the Company will

be maintained in a fare and accurate manner in accordance with the

relevant accounting and financial reporting standards.

CONFLICTS OF INTEREST

A conflict situation is deemed to arise directly or indirectly when:

• It is difficult to exercise an independent judgment of the company's

interest;

• A Director or a member of the Senior Management Team accepts any

personal benefits or gifts or entertainment beyond the customary level

either by himself or through his family as a result of his position in thecompany from any person / company with which the company may have

business dealings;

• A Director or a member of the Senior Management Team engages in any

other business activity that detracts his ability to devote appropriate time

and attention to his responsibilities to the company;

• There exists a significant ownership interest with any supplier, customer

or competitor of the company



• There is any employment relationship between a Director or a member of

the Senior Management Team with any supplier, customer, business

associate or competitor of the company.

While it is expected of a member of the Board and the Senior ManagementTeam to avoid generally the situations where the 'conflicts of interest' can

be deemed to exit, in case of unavoidable conflict of interest, he should

disclose all facts and circumstances thereof to the Board of Directors or any officer nominated for this purpose by the Board and a prior written

approval should be obtained.

FINANCIAL REPORTING AND RECORDS

As the professional and ethical conduct in the matter of financial affairs is

essential for the proper functioning of the company, the officers and

employees engaged in the finance functions should act with honesty andintegrity. The persons in-charge of finance and accounting function should

prepare and maintain company’s accounts fairly and accurately inaccordance with generally accepted guidelines, principles, standards, laws

and regulations applicable to the company. Internal accounting and audit

procedures shall fairly and accurately reflect all of the company's businesstransactions and disposition of assets. There shall be no willful omissions

of the company transactions from the books and records. Any willful

material misrepresentation or misinformation on the financial accounts and

reports shall be regarded as a violation of this code.

PROTECTING COMPANY ASSETS

The assets of the company should not be misused but employed only for

the purpose of conducting the business for which they are authorised. All

Directors and members of the Senior Management Team should strive to protect company's assets and property and ensure efficient use of them.

PROMOTING INTEREST OF THE COMPANY

Directors and Senior Management Team owe a duty to the company to

promote its legitimate interests when the opportunity to do so arises. They

should not use company's property, information or position for personalgains. All Directors and Senior Management Team of the company must

strive to perform their best at all times.

INTEGRITY AND HONESTY

The Directors and Senior Management Team shall act in accordance withthe highest standards of personal and professional integrity, honesty and



ethical conduct. They shall act and conduct free from fraud and deception.

Their conduct shall conform to the professional standards of conduct.

FAIR DEAL

Each Director and the member of Senior Management Team should deal

fairly with customers, suppliers and competitors. He should not take unfair advantage of anyone through manipulation, concealment, abuse of

confidential, proprietary or trade secret, information, misrepresentation of

material facts, or any other unfair practices.

HEALTH, SAFETY, ENVIRONMENT AND SOCIAL

RESPONSIBILITY

Sagarsoft shall strive to provide a safe and healthy working environment

and comply with all regulations regarding the preservation of theenvironment in and around its manufacturing facilities and other points of

operations. The companies is committed to efficient use of natural

resources and minimize any hazardous impact of the development,

production, use and disposal of any of its products and services on theecological environment.

CONFIDENTIALITY

The Directors and the Senior Management Team shall maintain utmostconfidentiality of information or that of any customer, supplier or businessassociates of the company to which company has a duty to maintain

confidentiality except when disclosure is authorized. The use of

confidential information for his own advantage or profit is also prohibited.

COMPLIANCES

The Directors and the Senior Management Team shall comply with all

applicable laws, rules and regulations. Transactions relating to sale or

purchase of company's equity shares should not be undertaken without

complying with the formalities contained in the company's code of internal procedures and conduct for prevention of insider trading. If any Director or

Member of the Senior Management Team who knows of or suspects of any

violation of applicable laws, rules or regulations or this Code of Conduct,he must immediately report the same to the Board of Directors or any

designated person thereof. Such person should as far as possible provide

the details of suspected violations with all known particulars relating to theissue. The company recognizes that resolving such problems or concerns



will advance the overall interests of the company that will help to

safeguard the company’s assets, financial integrity and reputation.

All Directors and Senior Management Team should adhere to the Code of

Conduct and Ethics of the company. Violations of this Code of Ethics willresult in disciplinary action, which may even include termination of

services of the employee. The Board of Directors or any person designated

by the Board for this purpose shall determine appropriate action inresponse to violations of this Code.

Products

Cement

Cement is the basic and the most widely used building material. Twice as

much Cement/Concrete is used worldwide than all other BuildingMaterials.

A Mixture of Limestone and Clay is ground and burnt at a very high

temperature to form Clinker. The Clinker is ground to a fine powder withaddition of Gypsum ( up to 5 %) to form Cement. The essential

components of Cement are Lime, Silica, Alumina and Iron Oxide.

There are different types of Cement , which differ based on their chemicalcomposition. However, the manufacturing process remains the same.

Cement - Varieties

There are different varieties of cement based on different compositionsaccording to specific end uses, namely, Ordinary Portland Cement,

Portland Puzzolona Cement, White Cement, Portland Blast Furnace Slag

Cement and Specialized Cement.

The basic difference lies in the percentage of clinker used.

Ordinary Portland cement (OPC)

OPC, popularly known as grey cement, has 95 per cent clinker and 5 per

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

consumption.

Portland Puzzolona Cement (PPC)



PPC has 80 per cent clinker, 15 per cent Pozzalona and 5 per cent gypsum

and accounts for 18 per cent of the total cement consumption. It is

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

White Cement

White cement is basically OPC - clinker using fuel oil (instead of coal)with iron oxide content below 0.4 per cent to ensure whiteness. A special

cooling technique is used in its production. It is used to enhance aesthetic

value in tiles and flooring. White cement is much more expensive thangrey cement.

Portland Blast Furnace Slag Cement (PBFSC)

PBFSC consists of 45 per cent clinker, 50 per cent blast furnace slag and 5

per cent gypsum and accounts for 10 per cent of the total cement

consumed. It has a heat of hydration even lower than PPC and is generallyused in construction of dams and similar massive constructions.

Specialized Cement

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

any porosity.

Rapid Hardening Portland cement

Rapid Hardening Portland Cement is similar to OPC, except that it is

ground much finer, so that on casting, the compressible strength increasesrapidly.

Water Proof Cement

Water Proof Cement is similar to OPC, with small portion of calcium

stearate or non- saponifibale oil to impart waterproofing properties.

53 Grade OPC

53 Grade OPC is a higher strength cement to meet the needs of the consumer for

higher strength concrete. As per BIS requirements the minimum 28 days

compressive strength of 53 Grade OPC should not be less than 53 MPa. For certain

specialized works, such as pre-stressed concrete and certain items of precastconcrete requiring consistently high strength concrete, 53 grade OPC is found very

useful. 53 grades OPC produce higher-grade concrete at very economical cement



content. In concrete mix design, for concrete M-20 and above grades a saving of 8

to 10 % of cement may be achieved with the use of 53 grade OPC.

The range of applications, the Physical / Chemical requirements as per Bureau

of Indian Standards (BIS) and strength of OPC are discussed in the followingsections.

Portland Pozzolana Cement (PPC)

Portland Pozzolana Cement is a kind of Blended Cement which is produced by

either intergrinding of OPC clinker along with gypsum and pozzolanic materialsin certain proportions or grinding the OPC clinker, gypsum and Pozzolanic

materials separately and thoroughly blending them in certain proportions.

Pozzolana is a natural or artificial material containing silica in a reactive form.

It may be further discussed as siliceous or siliceous and aluminous materialwhich in itself possesses little, or no cementitious properties but will in finely

divided form and in the presence of moisture, chemically react with calcium

hydroxide at ordinary temperature to form compounds possessing cement properties. It is essential that Pozzolana be in a finely divided state as it is only

then that silica can combine with calcium hydroxide (liberated by the hydrating

Portland Cement) in the presence of water to form stable calcium silicateswhich have cement properties

43 Grade OPC

The 43 grade OPC is the most popular general-purpose cement in the country today.

The production of 43 grade OPC is nearly 50% of the total production of cement inthe country.

43 Grade OPC can be used for the following applications.

+ General Civil Engineering construction work.

+ RCC works(preferably where grade of concrete is up to M-30).

+ Precast items such as blocks, tiles, pipes etc.

+ Asbestos products such as sheets and pipes.



+ Non-structural works such as plastering, flooring etc



Cement Industry in India

Cement Industry in India is on a roll at the moment. Driven by a booming real estate sector, global demand and

increased activity in infrastructure development such as state and national highways, the cement industry has

witnessed tremendous growth. Production capacity has gone up and top cement companies of the world are vying to

enter the Indian market, thereby sparking off a spate of mergers and acquisitions. Indian cement industry is currently

ranked second in the world.

The origins of Indian cement industry can be traced back to 1914 when the first unit was set-up at Porbandar with a

capacity of 1000 tonnes. Today cement industry comprises of 125 large cement plants and more than 300 mini

cement plants. The Cement Corporation of India, which is a Central Public Sector Undertaking, has 10 units. There

are 10 large cement plants owned by various State Governments. Cement industry in India has also made

tremendous strides in technological upgradation and assimilation of latest technology. Presently, 93 per cent of the

total capacity in the industry is based on modern and environment-friendly dry process technology. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials

substantially. Indian cement industry has also acquired technical capability to produce different types of cement like

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. Some

of the major clusters of cement industry in India are: Satna (Madhya Pradesh), Chandrapur (Maharashtra), Gulbarga

(Karnataka), Yerranguntla (Andhra Pradesh), Nalgonda (Andhra Pradesh), Bilaspur (Chattisgarh), and Chandoria

(Rajasthan).

Cement industry in India is currently going through a consolidation phase. Some examples of consolidation in the

Indian cement industry are: Gujarat Ambuja taking a stake of 14 per cent in ACC, and taking over DLF Cements and

Modi Cement; ACC taking over IDCOL; India Cement taking over Raasi Cement and Sri Vishnu Cement; and

Grasim's acquisition of the cement business of L&T, Indian Rayon's cement division, and Sri Digvijay Cements.

Foreign cement companies are also picking up stakes in large Indian cement companies. Swiss cement major Holcimhas picked up 14.8 per cent of the promoters' stake in Gujarat Ambuja Cements (GACL). Holcim's acquisition has led

to the emergence of two major groups in the Indian cement industry, the Holcim-ACC-Gujarat Ambuja Cements

combine and the Aditya Birla group through Grasim Industries and Ultratech Cement. Lafarge, the French cement

major has acquired the cement plants of Raymond and Tisco. Italy based Italcementi has acquired a stake in the K.K.

Birla promoted Zuari Industries' cement plant in Andhra Pradesh, and German cement company Heidelberg Cement

has entered into an equal joint-venture agreement with S P Lohia Group controlled Indo-Rama Cement.

Issues concerning Cement Industry

• High Transportation Cost is affecting the competitiveness of the cement industry. Freight accounts for 17%

of the production cost. Road is the preferred mode for transportation for distances less than 250km. However,

industry is heavily dependant on roads for longer distances too as the railway infrastructure is not adequate.

• Cement industry is highly capital intensive industry and nearly 55-60% of the inputs are controlled by the

government.

• There is regional imbalance in the distribution of cement industry. Limestone availability in pockets has led

to uneven capacity additions.

• Coal availability and quality is also affecting the production.



Outlook

Outlook for the cement industry looks quite bright. Given the sustained growth in the real estate sector, the

government's emphasis on infrastructure and increased global demand, it looks as if the juggernaut of cement

industry would continue to roll on the path of growth

1.INTRODUCTION

The cement industry is one of the main beneficiaries of the infrastructure boom.

With robust demand and adequate supply, the industry has bright future. The Indian

Cement Industry with total capacity of 165 million tones is the second largest after

China. Cement industry is dominated by 20 companies who account for over 70% of

the market. Individually no company accounts for over 12% of the market. The

major players like L&T and ACC have been quiet successful in narrowing the gap

between demand and supply. Private housing sector is the major consumer of

cement (53%) followed by the government infrastructure sector. Similarly northernand southern region consume around 20%-30% cement while the central and

western region are consuming only 18%-16%.

India is the 2nd largest cement producer in world after china .Right from laying

concrete bricks of economy to waving fly over’s cement industry has shown and

shows a great future. The overall outlook for the industry shows significant growth

on the back of robust demand from housing construction, Phase-II of NHDP (National

Highway Development Project) and other infrastructure development projects.

Domestic demand for cement has been increasing at a fast pace in India. Cement

consumption in India is forecasted to grow by over 22% by 2009-10 from 2007-

08.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. Cement production grew at

the rate of 9.1 per cent during 2006-07 over the previous fiscal's total production of

147.8 mt (million tons). Due to rising demand of cement the sales volume of

cement companies are also increasing & companies reporting higher production,

higher sales and higher profits. The net profit growth rate of cement firms was 85%.

Cement industry has contributed around 8% to the economic development of India.

Outsiders (foreign players) eyeing India as a major market to invest in the form of

either merger or FDI (Foreign Direct Investment). Cement industry has a long way to

go as Indian economy is poised to grow because of being on verge of development.

The company continues to emphasize on reduction of costs through enhanced

productivity, reduction in energy costs and logistics expenses. The cement sector is

expected to witness growth in line with the economic growth because of the strong

co-relation with GDP. Future drivers of cement demand growth in India would be the

road and housing projects. As per the Working Group report on Cement Industry for

the formulation of the 11th Plan, the cement demand is likely to grow at 11.5 per



cent per annum during the 11th Plan and cement production and capacity by the

end of the 11th Plan are estimated to be 269 million tones and 298 million tones,

respectively, with capacity utilization of 90 per cent.

Despite the growth of Indian cement industry India lags behind the per capita

production. Supply for cement is expected to remain tight which, in turn, will pushup prices of cement by more than 50%. The most important factor for better prices

is consolidation of the industry. It has just begun and we will see more consolidation

in the coming years. Other budget measures such as cut in import duty from 12.5

per cent to nil etc. are all intended to cut costs and boost availability of cement.

Sadly the adverse effects of global slowdown have not speared this industry too.

Demand is sluggish, the government is keeping an eagle eye on prizes, domestic

coal and pet coke, prizes have increased sharply and utilizations rates are down.

The numbers coming out are a reflection of grim times. ACC the country’s largest

cement company that’s controlled by Swiss giant HOLCIM, registered 2% fall in

august sales. It is the biggest fall since Feb 2007. Production fell by 5%.

To stand against the problematic situation, government as well as cement industry

has taken some steps. Companies are focusing on cost of transportation. One of the

strategy is to decrease dependence on road & opt for sea logistics as that can cut

transportation cost by 30- 50 %. Some plants are adopting futuristic plan such as

setting up captive power plant, moving closer to the customers by creating clicker,

crushing, and capacity in key markets, to be more customer centric to generate

better revenue. India should push for stricter regulations of market place as to

control the prices of big companies and prevent them from forming cartels and

exchanging information. To fight with the high inflation, government wants toimport more cement from Pakistan .However cement prizes are not very much high

as other items but still they are increasing. And the reason of high prize is surging

cost of raw material and transportation cost. Apart from this government also

discussed with cement industry not to have increase in prizes and keep consumer

interest in mind.

Now the question arise in front of the government is whether the demand by the

government is possible to increase through expenditure on infrastructure or not

according to the current state of economy when so many crises are going on or how

the government allocation of US$ 3.23 billion for the National HighwayDevelopment, Project will keep the demand for cement alive? And to what extent

the prizes of cement should be increase so that consumer can’t affect.

Cement industry in India has also made tremendous strides in technological up

gradation and assimilation of latest technology. Presently, 93 per cent of the total

capacity in the industry is based on modern and environment-friendly dry process

technology. The induction of advanced technology has helped the industry



immensely to conserve energy and fuel and to save materials substantially. Indian

cement industry has also acquired technical capability to produce different types of

cement like 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. Some of

the major clusters of cement industry in India are: Satna (Madhya Pradesh),Chandrapur (Maharashtra), Gulbarga (Karnataka), Yerranguntla (Andhra Pradesh),

Nalgonda (Andhra Pradesh), Bilaspur (Chattisgarh), and Chandoria (Rajasthan).

2.CURRENT SCENARIO

The Indian cement industry is the second largest producer of quality cement, which

meets global standards. 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 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 milliontons 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. During April-March 2007-08, cement export was

3.65 million tons as compared to 5.89 during the same period.

Cement industry in India is currently going through a consolidation phase. Some

examples of consolidation in the Indian cement industry are: Gujarat Ambuja taking

a stake of 14 per cent in ACC, and taking over DLF Cements and Modi Cement; ACC

taking over IDCOL; India Cement taking over Raasi Cement and Sri Vishnu Cement;

and Grasim's acquisition of the cement business of L&T, Indian Rayon's cement

division, and Sri Digvijay Cements. Foreign cement companies are also picking up

stakes in large Indian cement companies. Swiss cement major Holcim has picked up

14.8 per cent of the promoters' stake in Gujarat Ambuja Cements (GACL). Holcim's

acquisition has led to the emergence of two major groups in the Indian cement

industry, the Holcim-ACC-Gujarat Ambuja Cements combine and the Aditya Birla

group through Grasim Industries and Ultratech Cement. Lafarge, the French cement

major has acquired the cement plants of Raymond and Tisco. Italy based

Italcementi has acquired a stake in the K.K. Birla promoted Zuari Industries' cement

plant in Andhra Pradesh, and German cement company Heidelberg Cement has

entered into an equal joint-venture agreement with S P Lohia Group controlled Indo-

Rama Cement.



3.PROCESS TECHNOLOGY

While adding fresh capacities, the cement manufacturers are very conscious of the

technology used. In cement production, raw materials preparation involves primary

and secondary crushing of the quarried material, drying the material (for use in thedry process) or undertaking a further raw grinding through either wet or dry

processes, and blending the materials. Clinker production is the most energy-

intensive step, accounting for about 80% of the energy used in cement Production.

Produced by burning a mixture of materials, mainly limestone, silicon oxides,

aluminum, and iron oxides, clinker is made by one of two production processes: wet

or dry; these terms refer to the grinding processes although other configurations

and mixed forms (semi-wet, semi-dry) exist for both types. In the dry process, the

raw materials are ground, mixed, and fed into the kiln in their dry state. In the wet

process, the crushed and proportioned materials are ground with water, mixed, and

fed into the kiln in the form of slurry.

Different types of cement that are produced in India are:• Ordinary Portland cement (OPC):OPC, popularly known as grey cement, has 95 per cent clinker and 5 per centgypsum and other materials. It accounts for 70 per cent of the total consumption.

• Portland Pozzolana Cement (PPC):PPC has 80 per cent clinker, 15 per cent pozzolana and 5 per cent gypsum andaccounts for 18 per cent of the total cement consumption. It is manufacturedbecause it uses fly ash/burnt clay/coal waste as the main ingredient.

• White Cement:White cement is basically OPC - clinker using fuel oil (instead of coal) with iron oxidecontent below 0.4 per cent to ensure whiteness. A special cooling technique is usedin its production. It is used to enhance aesthetic value in tiles and flooring. Whitecement is much more expensive than grey cement.

• Portland Blast Furnace Slag Cement (PBFSC):PBFSC consists of 45 per cent clinker, 50 per cent blast furnace slag and 5 per centgypsum and accounts for 10 per cent of the total cement consumed. It has a heat of



hydration even lower than PPC and is generally used in the construction of damsand similar massive constructions.

• Specialized Cement:Oil Well Cement is made from clinker with special additives to prevent any porosity.

• Rapid Hardening Portland cement:Rapid Hardening Portland Cement is similar to OPC, except that it is ground muchfiner, so that on casting, the compressible strength increases rapidly.

• Water Proof Cement:Water Proof Cement is similar to OPC, with a small portion of calcium stearate ornon- saponifibale oil to impart waterproofing properties.

4.PROCEDURE

The main raw materials used in the cement manufacturing process are limestone,sand, shale, clay, and iron ore. The main material, limestone, is usually mined on

site while the other minor materials may be mined either on site or in nearby

quarries. Another source of raw materials is industrial by-products. The use of by-

product materials to replace natural raw materials is a key element in achieving

sustainable development.

Raw Material Preparation

Mining of limestone requires the use of drilling and blasting techniques. The blasting

techniques use the latest technology to insure vibration, dust, and noise emissionsare kept at a minimum. Blasting produces materials in a wide range of sizes from

approximately 1.5 meters in diameter to small particles less than a few millimeters

in diameter.

Material is loaded at the blasting face into trucks for transportation to the crushing

plant. Through a series of crushers and screens, the limestone is reduced to a size

less than 100 mm and stored until required.

Depending on size, the minor materials (sand, shale, clay, and iron ore) may or may

not be crushed before being stored in separate areas until required.

Raw Grinding

In the wet process, each raw material is proportioned to meet a desired chemical

composition and fed to a rotating ball mill with water. The raw materials are ground

to a size where the majority of the materials are less than 75 microns. Materials

exiting the mill are called "slurry" and have flowability characteristics. This slurry is



pumped to blending tanks and homogenized to insure the chemical composition of

the slurry is correct. Following the homogenization process, the slurry is stored in

tanks until required.

In the dry process, each raw material is proportioned to meet a desired chemical

composition and fed to either a rotating ball mill or vertical roller mill. The rawmaterials are dried with waste process gases and ground to a size where the

majority of the materials are less than 75 microns. The dry materials exiting either

type of mill are called "kiln feed". The kiln feed is pneumatically blended to insure

the chemical composition of the kiln feed is well homogenized and then stored in

silos until required.

Pyroprocessing

Whether the process is wet or dry, the same chemical reactions take place. Basic

chemical reactions are: evaporating all moisture, calcining the limestone to produce

free calcium oxide, and reacting the calcium oxide with the minor materials (sand,

shale, clay, and iron). This results in a final black, nodular product known as

"clinker" which has the desired hydraulic properties.

In the wet process, the slurry is fed to a rotary kiln, which can be from 3.0 m to 5.0

m in diameter and from 120.0 m to 165.0 m in length. The rotary kiln is made of

steel and lined with special refractory materials to protect it from the high process

temperatures. Process temperatures can reach as high as 1450oC during the clinker

making process.

In the dry process, kiln feed is fed to a preheater tower, which can be as high as

150.0 meters. Material from the preheater tower is discharged to a rotary kiln withcan have the same diameter as a wet process kiln but the length is much shorter at

approximately 45.0 m. The preheater tower and rotary kiln are made of steel and

lined with special refractory materials to protect it from the high process

temperatures.

Regardless of the process, the rotary kiln is fired with an intense flame, produced by

burning coal, coke, oil, gas or waste fuels. Preheater towers can be equipped with

firing as well.

The rotary kiln discharges the red-hot clinker under the intense flame into a clinker

cooler. The clinker cooler recovers heat from the clinker and returns the heat to thepyroprocessing system thus reducing fuel consumption and improving energy

efficiency. Clinker leaving the clinker cooler is at a temperature conducive to being

handled on standard conveying equipment.

Finish Grinding and Distribution



The black, nodular clinker is stored on site in silos or clinker domes until needed for

cement production. Clinker, gypsum, and other process additions are ground

together in ball mills to form the final cement products. Fineness of the final

products, amount of gypsum added, and the amount of process additions added are

all varied to develop a desired performance in each of the final cement products.

Each cement product is stored in an individual bulk silo until needed by thecustomer. Bulk cement can be distributed in bulk by truck, rail, or water depending

on the customer's needs. Cement can also be packaged with or without color

addition and distributed by truck or rail.

5.DEMAND & SUPPLY

The demand drivers for the cement sector continue to be housing, infrastructure

and commercial construction, etc. We expect the proportion of infrastructure in

total demand to improve further in future, as the thrust on infrastructure

development is on the rise. 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. CRISIL Research expects demand to

remain strong and grow by over 12 per cent in the next 2 years. 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.

Today, cement from Andhra is going all over India, including Assam, Meghalaya,

Jharkhand, Orissa, West Bengal, Chattisgarh, Gujarat and Maharashtra. More

cement is likely to flow into Tamil Nadu from the state in view of cut in sales tax.Any further increase in demand in the South India will benefit the cement industry

here. Cement movement from Gujarat to Mumbai is also coming down due to

exports while cement movement from Orissa into Andhra has stopped and, in fact,

cement is flowing into Orissa as well.

Earlier in 2006-07, the housing sector alone consumed 65 per cent of the total

domestic consumption. With the launch of several infrastructure projects, the

housing consumption may come down to 55 per cent as the infrastructure and other

sectors are expected to move up to 45 per cent from the present 35 per cent. Still,

the main sector of consumption continues to be housing, including commercial

space, occupying more than 60 per cent. The current demand in the state for 2005-

06 is expected to cross 15 million tons (11.5 million tons). We expect the demand

here to go past the 17.5-million mark in 2006-07 in view of irrigation and

infrastructure projects being taken up in the state. Weaker sections’ housing,

construction of public toilets, schools in rural areas apart from several private and

public infrastructure projects will also give tremendous boost to the cement



consumption in the state. Most importantly, irrigation projects, worth nearly Rs 1

lakh crore, will trigger unprecedented demand for the next 5-7 years.

Cement consumptions are as follows:

6.DEMAND DRIVERSIndian cement demand skewed towards housing

The demand from the housing sector is ~53% of the total Indian cement demand.



There are fears of a slowdown in the demand from the housing sector due to a drop

in real estate prices in the country. The worry is that builders may postpone

construction of new buildings if the property prices were to correct.

Infrastructure to give demand a big boost

Our analysis shows that Infrastructure should be the biggest growth driver for

cement demand in the country. If we were to look only at order books of the top

eight construction and manufacturing equipment companies in India, we find that

their combined order book has virtually doubled over the last two years from

INR1,000bn (USD25bn) to INR1,950bn (USD48.75bn) for completion over the next

24-30 months.

7.COST

Over the past five years, cost of cement production has grown at a CAGR of 8.4%.

Also, the producers have been able to pass on the hike in cost to consumers on the



back of increased demand. Average realizations have increased from Rs. 1,880 per

tonne in FY 03 to Rs. 3,133 per tons in FY 07, at a CAGR of 13.6%, which has been

reflected in higher profit margins of the industry.

To reduce the cost of production, the industry has focused on captive power

generation. Proportion of cement production through captive power route hasincreased over the years. Also, cement movement by rail has increased over the

years. Freight and energy costs are also increasing; however, in the current market

scenario, manufacturers have the flexibility to pass on the increase in costs to end-

consumers. Let us have a look at the cost factors affecting the cement industry

Capacity Utilization: Since the industry operates on fixed cost, higher the

capacity sold, the wider the cost distributed on the same base. But one should also

keep in mind, that there have been instances wherein despite a healthy capacity

utilization, margins have fallen due to lower realizations.

Power: The cement industry is energy intensive in nature and thus power costs

form the most critical cost component in cement manufacturing (about 30% to total

expenses). Most of the companies resort to captive power plants in order to reduce

power costs, as this source is cheaper and results in uninterrupted supply of power.

Therefore, higher the captive power consumption of the company, the better it is for

the company.

Freight: Since cement is a bulk commodity, transporting is a costly affair (over

15%). Companies, which have plants located closer to the markets as well as to the

source of raw materials have an advantage over their peers, as this leads to lower

freight costs. Also, plants located in coastal belts find it much cheaper to transportcement by the sea route in order to cater to the coastal markets such as Mumbai

and the states of Gujarat and Tamil Nadu.

On account of sufficient reserves of raw materials such as limestone and gypsum,

the raw material costs are generally lower than freight and power costs in the

cement industry. Excise duties imposed by the government and labor wages are

among the other important cost components involved in the manufacturing of

cement.

Operating margins: The company should have a consistent record of

outperforming its peers on the operational performance front i.e. it should havehigher operating margins than its competitors in the industry. Factors such as

captive power plants, effective capacity utilization results in higher operating

margins and therefore these factors should be looked into. Since cement is a

regional play on account of its high freight costs, the company should not have all

its plants concentrated in one region. It should have a geographical spread so that

adverse market conditions in one region can be mitigated by high growth in the

other region



8. Government Policies

Government policies have affected the growth of cement plants in India in various

stages. The control on cement for a long time and then partial decontrol and then

total decontrol has contributed to the gradual opening up of the market for cement

producers. The stages of growth of the cement industry can be best described in

the following stages:

Price and Distribution Controls (1940-1981)

During the Second World War, cement was declared as an essential commodity

under the Defense of India Rules and was brought under price and distribution

controls which resulted in sluggish growth. The installed capacity reached only 27.9

MT by the year 1980-81.

Partial Decontrol (1982-1988)In February 1982, partial decontrol was announced. Under this scheme, levy cement

quota was fixed for the units and the balance could be sold in the open market. This

resulted in extensive modernization and expansion drive, which can be seen from

the increase in the installed capacity to 59MT in 1988-89 in comparison with the

figure of a mere 27.9MT in 1980-81, an increase of almost 111%.

Total Decontrol (1989)

In the year 1989, total decontrol of the cement industry was announced. By

decontrolling the cement industry, the government relaxed the forces of demand

and supply. In the next two years, the industry enjoyed a boom in sales and profits.

By 1992, the pace of overall economic liberalization had peaked; ironically,

however, the economy slipped into recession taking the cement industry down with

it. For 1992-93, the industry remained stagnant with no addition to existing

capacity.

Government Controls

The prices that primarily control the price of cement are coal, power tariffs, railway,

freight, royalty and cess on limestone. Interestingly, all of these prices are

controlled by government



9.REQUIREMENTS

Coal

The consumption of coal in a typically dry process system ranges from 20-25% of

clinker production. This means for per ton clinker produced 0.20-0.25 ton of coal is

consumed. This contributes 35-40% of the production cost. The cement industry

consumes about 10mn tons of coal annually. Since coalfields like BCCL supply a

poor quality of coal, NCL and CCL the industry has to blend high-grade coal with it.

The Indian coal has a low calorific value (3,500-4,000 kcal/kg) with ash content as

high as 25-30% compared to imported coal of high calorific value (7,000-8,000

kcal/kg) with low ash content 6-7%. Lignite is also used as a fuel by blending it withcoal. However this process is not very common.

Electricity

Cement industry consumes about 5.5bn units of electricity annually while one ton of

cement approximately requires 120-130 units of electricity. Power tariffs vary

according to the location of the plant and on the production process. The state

governments supply this input and hence plants in different states shall have

different power tariffs. Another major hindrance to the industry is severe power

cuts. Most of the cement producing states like AP, MP experience power cuts to the

tune of 25-30% every year causing substantial production loss.

Infrastructure

To reduce uncertainty relating to power, most of the leading companies like ACC,

Indian Rayon, and Grasim rely on captive power plants. A few companies are also

considering power-generating windmills.

Limestone

This constitutes the largest bulk in terms of input to cement. For producing one ton

of cement, approximately 1.6 ton of limestone is required. Therefore, the cement

plant location is determined by the location of limestone mines. The major cash

outflow takes place in way of royalty payment to the central government and cesson royalties levied by the state government. The total limestone deposit in the

country is estimated to be 90 billion tons. AP has the largest share -- 34%,

Karnataka 13%, Gujarat 13%, M.P 8%, and Rajasthan 6.5%. The plants near the

limestone deposit pay less transportation cost than others.

Transportation



Cement is mostly packed in paper bags now. It is then transported either by rail or

road. Road transportation beyond 200 kms is not economical therefore about 55%

cement is being moved by the railways. There is also the problem of inadequate

availability of wagons especially on western railways and southeastern railways.

Under this scenario, manufacturers are looking for sea routes, this being not only

cheap but also reducing the losses in transit. Today, 70% of the cement movementworldwide is by sea compared to 1% in India. However, the scenario is changing

with most of the big players like L&T, ACC and Grasim having set up their bulk

terminals.

Infrastructure for Future

The consumption of cement is determined by factors influencing the level of

housing and industrial construction, irrigation projects, and roads and laying of

water supply and drainage pipes etc. The level and growth of GDP and its sectoral

composition, capital formation, development expenditure, growth in population,

level of urbanization, etc, in turn, determine these factors. But the domestic

demand for cement is mainly from the housing activities and infrastructure

development. The government paved the way for the entry of the private sector in

road projects. It has amended the National Highway Act to allow private toll

collection and identified projects, bridges, expressways and big passes for private

construction. The budget gave substantial incentives to private sector construction

companies. Ongoing liberalization will lead to an increase in industrial activities and

infrastructure development. So it is hoped that Indian cement industry shall boom

again in near future.

Incentives in StatesMost state governments, in order to attract investments in their respective states,

offer fiscal incentives in the form of sales tax exemptions/deferrals. In some states,

this applies only to intrastate sales, like Madhya Pradesh and Rajasthan. States like

Haryana offer a freeze on power tariff for 5 years, while Gujarat offers exemption

from electric duty.

Installed Capacity

India is the world’s second largest cement producing country after China. The

industry is characterized by a high degree of fragmentation that has created

intense competitive pressure on price realizations. Spread across the length andbreadth of the country, there are 120 large plants belonging to 56 companies with

an installed capacity of around 135mn tons as on March 2002.



10. OPPORTUNITIES, THREATS, RISKS AND

CONCERNS

The cement industry is going through its boom period with full capacity utilization.

Powered by the GDP growth of 8-9%, the annual demand for cement in the country

continues to grow at 8- 10%. As per NCAER study, under high growth scenario, the

demand for cement (including exports) is expected to increase to 244.82 million

tonnes by 2010-11. As per the study, the demand is expected to be much higher at

311.37 million tonnes, if the optimistic projections of the road and the housing

sectors are met. The industry has responded to this with substantial new capacity

announcements. The materialization of these capacities, however, is likely to be

delayed due to a number of factors including timely delivery of equipment and

construction of the plant due to the heavy order book position of the suppliers. It is

expected that demand growth will outstrip supply till the materialization of suchnew capacities. However, the current high level of international crude prices and its

impact on the domestic prices of petroleum products is likely to make a dent in the

profitability but its impact will have to be seen depending upon the ability of the

economy to pass on such cost increase to the consumer.

While the freight cost could be optimized on the imported coal through usage of

company’s own ships for part of the quantity, the international prices of imported

coal and its volatility together with the strengthening of the dollar against rupee

could derail this. This could impact the delivery prices of imported coal and also the

cost of production. The Government has taken steps to increase the availability of

indigenous coal for its expanded capacity across various plants which can mitigate

the impact of such high cost of imported coal for the plants located near the coal

fields in India.

The Government’s continuing efforts to rein in cement prices by freeing imports and

banning exports could artificially disable the normal market price mechanisms for

determining the price.



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 year, this gap may

narrow down, that may ensure the market to be in equilibrium.

Decreasing per capita consumption doesn’t affect the total consumption for thecement. It means the infrastructure; contacted housing is using the bulk of the

production. In spite of High price of the product, the hick of demand because of the

increasing rate of infrastructural development.

Domestic price of cement is rising as well as the imported cement price is lowering.

So altogether the supply of the cement, which is affordable, will increase. This may

in decrease the gap between supply and demand.

Major Demand was from the housing sector, which may shift to infrastructure as lots

of infrastructural development processes has already being taken up & due to the

increased price, housing segment started showing a slowdown.

11.Main Companies In India

Associated Cement Companies Ltd (ACCL)

Associated Cement Companies Ltd manufactures ordinary Portland cement,

composite cement and special cement and has begun offering its marketing

expertise and distribution facilities to other producers in cement and related areas.

It has twelve manufacturing plants located throughout the country with exports to



SAARC nations. The company plans capital expenditure through expansion of

existing units and/or through acquisitions. Non-core assets are to be divested to

release locked up capital. It is also expected to actively pursue overseas project

engineering and consultancy services.

Birla Corporation Ltd.

Birla Corp's product portfolio includes acetylene gas, auto trim parts, casting, cement,

jute goods, yarn, calcium carbide etc. The cement division has an installed capacity of

4.78 million metric tonnes and produced 4.77 million metric tonnes of cement in 2003-

04. The company has two plants in Madhya Pradesh and Rajasthan and one each in

West Bengal and Uttar Pradesh and holds a market share of 4.1 per cent. It

manufactures Ordinary Portland cement (OPC), Portland pozzolana cement, fly ash-

based PPC, Low-alkali Portland cement, Portland slag cement, low heat cement and

sulphate resistant cement. Large quantities of its cement are exported to Nepal and

Bangladesh. Going forward, the company is setting up its captive power plant to remain

cost competitive.

Century Textiles and Industries Ltd (CTIL)

The product portfolio of CTIL includes textiles, rayon, cement, pulp & paper, shipping,

property & land development, builders and floriculture. Cement is the largest division of

CTIL and contributes to over 40 per cent of the company's revenues. The company has

an installed capacity of 4.7 million tonnes with a total cement production of 5.43 million

tonnes in 2003-04. CTIL has four plants that manufacture cement, one in Chhattisgarh,

two in Madhya Pradesh and one in Maharashtra. Going forward, the company has

scripted a three-pronged strategy closing down its shipping business, continuing with its

chemicals and adhesive division, and focusing on cement, rayon and paper as its long-

term business plan.

Grasim-UltraTech Cemco

Grasim's product profile includes viscose staple fibre (VSF), grey cement, white cement,sponge iron, chemicals and textiles. 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 tonnes. Grasim (with UltraTech) held a market share of around 21

per cent in

2003-04. It has plants in Madhya Pradesh, Chhattisgarh, Punjab, Rajasthan, Tamil Nadu

and Gujarat among others. The company plans to invest over US$ 9 million in the next



two years to augment capacity of its cement and fibre business. It’s also plans to focus

on its international ventures, ramping up the capacity of Alexandra Carbon Black in

Egypt to 1,70,000 tonne per annum

(from 1, 20,000 tpa) and raising the capacity of the carbon black plant in China from

12,000 tpa to 60,000 tpa.

Gujarat Ambuja Cements Ltd (GACL)

Gujarat Ambuja Cements Ltd was set up in 1986 with the commencement of

commercial production at its 2 million tonne plant in Chandrapur, Maharashtra. The

group has clinker manufacturing facilities at Himachal Pradesh, Gujarat, Maharashtra,

Chhattisgarh, Punjab and Rajasthan. The company has a market share of around 10 per

cent, with a strong foothold in the northern and western markets. Its total sales

aggregated US$ 526 million with a capacity of 12.6 million tonnes in 2003-04. Gujarat

Ambuja is India's largest cement exporter and one of the most cost efficient firms. GACL

has a 14.45 per cent stake in ACC, making it the second largest cement group in the

country, after Grasim-UltraTech Cemco. The company has free cash flows that it is likelyto use to grow inorganically. The company is scouting for a capacity of around two

million tonne in the northern and western markets. It has also earmarked around US$

195-220 million for acquisitions

India Cements

India Cements is the largest cement producer in southern India with a total capacity of

8.81 million tonnes and plants in Andhra Pradesh and Tamil Nadu. The company has a

market share of 5.4 per cent with a total cement production of 6.36 million tonnes in

2003-04. Its product portfolio includes ordinary Portland cement and blended cement.

The company has limited its business activity to cement, though it has a marginal

exposure to the shipping business. The company plans to reduce its manpower

significantly and exit non-core businesses to turnaround its fortune. It also expects the

export market to open up, with the Gulf emerging as a major importer.

Jaiprakash Associates Limited

Jaiprakash Industries, now known as Jaiprakash Associates Limited (JAL) is part of the

Jaypee group with businesses in civil engineering, hospitality, cement, hydropower,

design consultancy and IT. It has an annual capacity of 4.6 million tonnes with plants

located in Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar Pradesh). The

company has a market share of 3.8 per cent with the cement division contributing US$



172 million to revenue in 2003-04. The company is upgrading its capacity to 6.5 million

tonnes through the modernizing of the existing units and the commissioning of a new

grinding unit at Tanda (Uttar Pradesh) with an investment of US$ 163 million. Jaiprakash

Associates has decided to concentrate on its core business of construction and

engineering and leave its cement plant to its subsidiary Jaypee Rewa Cement Ltd. The

company manufactures a wide range of world class cement of OPC grades 33, 43, 53,IRST-40 and special blends of pozzolana cement.

JK Synthetics

JK Synthetics, a Singhania Group company, started manufacturing nylon at Kota in

1962. Subsequently, it diversified into PSY/PFY, nylon tyre-cord, cement (in 1975),

acrylic and white cement (in 1984). The company has a market share of 2.7 per cent. JK

Synthetics Limited is restructuring its business divisions into two separate entities- JK

Cements and JK Synthetics. After the restructuring, it will be left with a cement plant at

Nimbahera in Rajasthan, with a capacity of 3.26 million metric tonnes and

manufacturing white cement.

Madras Cements

Madras Cements Ltd is one of the oldest cement companies in the southern region and

is a part of the Ramco group. The company is engaged in cement, clinker, dolomite, dry

mortar mix, limestone,

ready mix cement (RMC) and units generated from windmills. The company has three

plants in Tamil Nadu, one in Andhra Pradesh and a mini cement plant in Karnataka. It

has a total capacity of 5.47 million tonnes annually and holds a market share of 3.1 per

cent. Madras Cements plans to expand by putting up RMC plants. As Karnataka is a

promising market, the company is further expanding its capacity from the present 1.5million tonnes to 3.4 million tonnes through an investment of US$ 9 million.

Holcim

Holcim, earlier known as Holderbank, has a cement production capacity of 141.9 million

tonnes. It is a key player in aggregates, concrete and construction related services. It

has a strong market presence in over 70 countries and is a market leader in South

America and in a number of European and overseas markets. Holcim entered India by

means of a long-term strategic alliance with Gujarat Ambuja Cements Ltd (GACL). The

alliance aims to strengthen their clinker and cement trading activities in South Asia, the

Middle East and the region adjoining the Indian Ocean. Holcim also intends to use India

as an additional base for its IT operations, R&D projects as well as a procurement

sourcing hub to generate additional synergies and value for the group.

Italcementi Group



The Italecementi group is one of the largest producers and distributors of cement with

60 cement plants, 547 concrete batching units and 155 quarries spread across 19

countries in Europe, Asia, Africa and North America. Italcementi is present in the Indian

markets through a 50:50 joint venture company with Zuari Cements. All initiatives in

southern India are routed through the joint venture company, while Italcementi is freeto buy deals in its individual capacity in northern India. The joint venture company has a

capacity of 3.4 million tonnes and a market share of 2.1 per cent.

Lafarge India

Lafarge India Pvt Ltd, a subsidiary of the Lafarge Group, has a total cement capacity of

5 million tonnes and a clinker capacity of 3 million tonnes in the country. Lafarge

commenced operations in 1999 and currently has a market share of 3.4 per cent. It

exports clinker and cement to Bangladesh and Nepal. It produces Portland slag cement,

ordinary Portland cement and Portland pozzolana cement. The Indian cement plants are

located in Chhattisgarh and Rajasthan. Lafarge Cement has become the largest cementselling firm in the Indian markets of West Bengal, Bihar, Jharkhand and Chhattisgarh.

sagar cements

Documents