CEMENT INDUSTRY

PROFILE

Prerna Mehrotra
MBA Sem 3
 What is CEMENT?

• The word Cement has come from the Roman word ‘Opus
Caementicium’

• Cement is a binder, a substance that sets and hardens independently,

and can bind other materials together.

• The most important use of cement is the production

of mortar and concrete—the bonding of natural or
artificial aggregates to form a strong building material that is durable
in the face of normal environmental effects.

• Joseph Aspdin, a British stonemason, invented Portland cement way

back in 1824. With this invention, Aspdin laid the foundation of
today’s cement industry.
USES OF CEMENT

•Production of Concrete

• Construction Purpose
o Building (Floors, Beams, Columns,
Roofing)
o Transport (Roads, Pathways, Crossings,
Bridge)
o Water (Pipes, Drains, Canals)
o Agriculture (Irrigation, Housing)
 TYPES OF CEMENT
The basic raw materials used in the cement manufacturing process are
limestone, sand, shale, clay, and iron ore.

•Ordinary Portland Cement (OPC)

•Portland Pozzolana Cement (PPC)

•Portland Blast Furnace Slag Cement (PBFS)

•Oil Well Cement

•Rapid Hardening

• Sulphate Resisting Portland Cement

•White Cement etc.

 GLOBAL SCENARIO

•Today, it is estimated that there are around 1500 integrated cement

production plants in the world.

•It is estimated that world cement consumption is to rise on an average

between 3.6% and 4.8% per year in the coming years.

•Most of the growth is coming from Central and Eastern Europe and Asia,
growth in mature markets also looks healthy.

•The share of the four largest firms account only for 23% of the overall
demand.

•LAFARGE and CEMEX have become very strong global cement players.
EVOLUTION OF INDIAN CEMENT
INDUSTRY
•A Kolkata based company started manufacturing cement in 1889.

•In 1914, Indian Cement Company Ltd was established in Porbandar.

•In 1927, Concrete Association of India was set up to create public

awareness on the utility of cement.

•In 1956, price and distribution system of cement industry came under
government control.

•After the economic reform in 1980’s the government control on

cement industry was liberalized.

•A great increase in demand of cement, has resulted India to become

2nd largest cement producer in the world after China.
 CEMENT MANUFACTURING
PROCESS
•Cement is made out of limestone, shale, clay mined out of quarry close to
the plant. The raw material is crushed, and then heated at temperature in
excess of 1000 degree Celsius in rotating kiln to become clinker. Clinker is
then mixed with gypsum and ground to a fine powder to produce final grade
of cement.

•The technology is a continuous process and is highly energy intensive.

•At present 93% of cement production in India is based on modern and

environment-friendly dry process technology and only 7% of the capacity is
based on old wet and semi-dry process technology.

•The cost of Cement is 29% energy; 27% raw materials; 32% labour and 12%
depreciation
 ECONOMIC STATUS OF
THE CEMENT INDUSTRY

Growth Rate

Investments

Exports

FDI and GDP

 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 140 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.
 INVESTMENTS
•Cement and gypsum products have received cumulative FDI of US$ 1708.69
million between April 2000 and March 2010, 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.

•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.
 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
 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
 MAJOR PLAYERS IN THE INDIAN
CEMENT INDUSTRY
Company Production* Installed Capacity*
ACC 17,902 18,640
Ambuja 15,094 14,860
Ultratech 13,707 17,000
Grasim 14,649 14,115
India Cements 8,434 8,810
JK Group 6,174 6,680
Jaypee Group 6,316 6,531
Century 6,636 6,300
Madras Cements 4,550 5,470
Birla Corp. 5,150 5,113
*in Million Tonnes

(Source:Mapsofindia.com 2010, Tradechakra 2008)

• ACC Limited • Ultratech
• 14 cement plants • A part of Aditya Birla Group
• 19 RMC plants • 73 RMC plants
• 19 Sales offices • 11 composite plants
• Gujarat Ambuja Cements Ltd • 1 white cement plant
• plants in 7 states • 12 grinding units
• India Cements • 5 terminals
• 7 cement plants in AP and TN • Grasim
• JK Cement Ltd • A part of Aditya Birla Group
• 2nd largest White Cement • 7 split grinding units
manufacturer in India • 11 composite plants
• Holds 18% market share in Haryana • 4 Bulk terminals
• 3 production plants in Rajasthan and • 10 RMC units
Gujarat • Madras Cements
• Jaypee Group • One of the oldest cement
• Plants located in MP and UP companies in southern region
• 3 production plants in TN, AP
• Birla Corporation and Karnataka
• Has put up new RMC plants
• 2 production plants in MP
and Rajasthan
• Century Cement
• 2 Grinding units
• 4 production plants
 ISSUES CONCERNING THE 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

ACQUISITIONS BY FOREIGN CEMENT
GIANTS IN INDIA SINCE 1999

S.No New Entrant Country Purchased

1 Holicim Ltd Switzerland 14.8% of Ambuja Cement

2 Lafarge Cement France o Raymond Cement
o TISCO (TATA Cement)
3 Italcementi Italy Zuari Industries
4 Heidelberg Germany o Indo-Rama Cement
o Diamond Cement

COMPANIES PLANNING TO
ENTER THE INDUSTRY
S.No Future Companies Current Business

1 Reliance ADAG o Infrastructure

o Power etc.
2 Jindal Steels o Steel
3 Murli Agro o Agro Products
 INDIAN CEMENT INDUSTRY LIFE
CYCLE
•With as many as four new foreign players having entered the Indian cement
market and two-three expected to come in the near future, the competition is
expected to get tougher
•The Indian cement industry has witnessed a phenomenal capacity addition to the
tune of about 52 million tonnes in the last two financial years which accounted for
about 24% of the industry’s capacity of 218 million tonnes at the end of FY09
 STRUCTURAL DRIVERS OF THE
INDUSTRY
GOVERNMENT: From the era of direct government control over cement production
and distribution to today’s globalization of Indian cement industry, Government of India
has always been one of its major drivers of change. Tax concession, Tax rebate, etc. to
new foreign players have changed the entire cement business in India. With
multinational cement players coming in, the cement quality and standards have
improved a lot.

REAL ESTATE: The boom in the cement industry in India came in 2003, when the
real estate rates started rising. Over the past few years (FY03-07), cement demand has
grown at a CAGR of 8.37% which is higher than the CAGR of supply at 4.84%. Real
estate sector is the key driver and accounted for almost 55% of cement demand in FY
07.

INFRASTRUCTURE: In this FY10 budget, the Government will be spending Rs. 1.73
trillions on infrastructure. With many international events like Commonwealth games
2010, Hockey World Cup 2010, Cricket World Cup 2011 etc, the need to develop world
class infrastructure was felt in early 2000’s. As a result, many new multi billion dollars
project were sanctioned to develop roads, metros, airports, railway stations etc all across
the country, thus, boosting the demand for cement.
 PEST ANALYSIS
●
●Coal
Coal rates,
rates, power
power tariffs,
tariffs, railway
railway freight
freight plays
plays aa very
very important
important factor
factor in
in

POLITICAL ●
the price
prices
determination, interestingly, government

●Govt is one of the biggest consumers of the cement

Govt is one of the biggest consumers of the cement
control all of
the price determination, interestingly, government control all of these
prices
these

●
●Future
Future of
of cement
cement industry
industry is
is very
very strong
strong
ECONOMIC ●A lot government infrastructure and housing projects are
●
A lot government infrastructure and housing projects are
under
under construction
construction

Indian
Indian consumers
consumers prefer
prefer buying
buying branded
branded cement
cement like
SOCIAL
like
●
●

LAFARGE,
LAFARGE, JAYPEE,BIRLA
JAYPEE,BIRLA etc etc
●Industry will create 25 lakhs jobs in coming years
Industry will create 25 lakhs jobs in coming years
●

TECHNOLO ●
●Govt
Govt is
is acquiring
acquiring new
new technology
technology from
from Japan
Japan
●Emphasis is on creating highly energy efficient and
Emphasis is on creating highly energy efficient and
●

GY environment
environment friendly
friendly technology
technology to
to produce
produce cement
cement
PORTER’S FIVE FORCES
FRAMEWORK
THANKYOU