The file explains a brief overview on the Indian Cement Industry in the year 2013-14. The file explains the global scenario of the Indian Cement Industry, Major organisations and the Major players in the Indian Market and their market s

2. Table of Contents
History..................................................................................................................................... 4
Overview ................................................................................................................................. 5
Major Organisations affecting the Cement Industry........................................................ 7
Product Profile of Industry .................................................................................................. 8
Major Players in the Cement Industry in India................................................................ 10
PESTLE Analysis of Cement Industry............................................................................... 12
Porter’s Five Forces Model for Cement Industry............................................................ 13
Cement industry - Future forecasts ................................................................................. 14
Cement industry - Conclusion............................................................................................ 15
Bibliography.......................................................................................................................... 16

3. History
The indigenous Indian cement industry traces its history back to 1914, at a time when
the market was dominated by imports. In that first year the industry produced just
1000 T of cement, but over just 10 years this figure increased to 0.26 MT in 1924. In
the same 10-year bracket, India consumed a total of 2 MT of cement, with around half
imported.
From a modern perspective, the need to expand the industry is clear. However, the
industry was fighting against poor public perception surrounding not only domestic
Indian cement, but cements itself. Many producers went out of business as a result of
price-wars between Indian producers who were aiming at a bigger slice of the future
market.
To end the uncertainty surrounding the industry and to campaign for tariffs on imported
cement, the Indian Cement Manufacturers' Association (ICMA) was set up in 1925. This
subsequently transformed into two connected groups. The modern Cement
Manufacturers' Association (CMA) was reformed in 1961.
Between 1925 and the early 1940s, the capacity of the Indian cement industry
gradually increased to 1.8 MT in 1942, with imports dwindling to just 1000 T/yr over
the same period. However, all was not well with the industry, which, like many
industries across the world, suffered due to the Great Depression in the United States
and the run-up to the Second World War in Europe. To combat continued price wars,
Associated Cement Companies (ACC) was formed from 11 competing firms in 1936.
In 1942 all of India's cement capacity came under the control of Defence for India rules
as part of the war effort. With up to 90% of cement heading directly to defence
purposes, the apparent private market shrank by a factor of 10. After the conclusion of
the Second World War, during which capacity reached 3.2 MT/year, controls stayed in
place. From 1945 to 1956 the government regulated prices directly.
However, it became increasingly obvious that regulated prices from central government
could not provide the cement that the country was demanding. The controls were
relaxed in steps, with a free market from 1989 onwards. The result of de-regulation was
a massive expansion of cement capacity, which has since only accelerated as the
country has developed and opened up its economy.
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4. Overview
Today, the Indian cement industry is very large, second only to China in terms of
installed capacity, and has grown at a very fast pace in recent years. The rate of growth
over the past 20 years has been phenomenal, as shown by Figure 1.3 Since 1992 India's
cement production has more than quadrupled from around 50 MT/ Year to 220 MT/
year in 2011.
Although the Indian cement industry has some multinational cement giants, like Holcim
and Lafarge, which have interests such as ACC, Ambuja Cement and Lafarge Birla
Cement, the Indian cement industry is broadly home-grown. Ultratech Cement, the
country's largest firm in terms of cement capacity, holds around 22% of the domestic
market, with ACC (50%-owned by Holcim) and Ambuja (50%-owned by Holcim) having
15% and 13% shares respectively.
Many of the remaining dozen top players are Indian and are (in order of diminishing
market share); Jaiprakash Associates (10%), The India Cements Ltd (7%), Shree
Cements (6%), Century Textiles and Industries (5%), Madras Cements (5%), Lafarge (5%),
Birla Cement (4%) and Binani Cement (4%).
Between them the top 12 cement firms have around 70% of the domestic
market. Around 100 smaller players produce and grind cement on a wide range of
scales but are often confined to small areas. Following Table will give a brief about the
Statistics of Cement production capacity Industry in India:
Large cement plants
1 Installed Capacity (MT) 244.05
2 Turnover in 2011 (Million US$) around 19,500
3 Manpower Employed (Nos.) Approx. 1,20,000
4
Plants with Capacity of Million tonnes and
above (Nos.) 102
5 Cement Production (MT) 2011-2012 179.87
6 Cement Plants (Nos.) 144
7 Companies (Members) (Nos.) 42
Mini & White Cement Plants
1 Cement Production (MT) 2011-12
6.00
(P)
2 Cement Plants (Nos.) Approx. 365
3 Installed Capacity (MT) 11.1
(Source: www.cmaindia.org)
(Word Count: 690)

5. Facts of Indian Cement Industry (1982 – 2013)
· The Industry recorded an exponential growth with the introduction of partial
decontrol in 1982 culminating in total decontrol in 1989.
· The capacity, which was 29 MT in 1981-82, rose to 219 MT at the end of FY 09,
while it took 8 decades to reach the 1st
100 MT capacity, the 2nd
100 MT was
added in just 10 years.
· The Industry has been facing a chronic problem of insufficient availability of the
main fuel coal, driving the manufacturers to resort to use of alternatives at
steep cost.
· Taxes and Government levies on cement are high compared to countries in Asia
pacific region.
· Cement Industry, which was branded as the highest polluter of environment, now
meets the pollution standards, and no longer a polluter today.
· Contributes to environmental cleanliness by consuming hazardous wastes like
Fly Ash (around 30 MT) from Thermal Power Plants and the entire 8 Mn.t of
granulated Slag produced by Steel manufacturing units.
· As a part of Corporate Social Responsibility (CSR), the Cement Industry employs
around one lakh 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.
· Exports Cement/Clinker to around 30 countries across the globe and earns
precious foreign exchange.
· The core sector Cement Industry deserves due support from the Government by
avoiding imposition of high levies and duties, making available various inputs like
fuel, power, transport etc. at reasonable prices and in required quantities and
help its growth and improve competitivity both in domestic and international
markets.
(Word Count: 990)

6. Major Organisations affecting the Cement
Industry
o National Council for Cement and Building Materials (NCB)
o Construction Industry Development Council (CIDC)
1. National Council for Cement and Building Materials (NCB): Established in 1962,
as Cement Research Institute of India and redesignated as National Council for
Cement and Building Materials in April 1985, NCB is an apex body dedicated to
continuous research, technology development and transfer, education and
industrial services for the cement and building material industries. The entire range
of services of NCB is delivered by eight Corporate Centres through its units in
Ballabhgarh and Hyderabad. The main laboratories of the Council are located at
Ballabhgarh, about 35 kms south of New Delhi.
National Council for Cement and Building Materials (NCB) is the largest Industrial
Support Organisation of its kind in India, with units in the various regions of the
country and in the field of Cement, Building Materials and Allied Areas.
2. Construction Industry Development Council (CIDC):
The Planning Commission, Government of India, jointly with the Indian construction
industry has set up CIDC to take up activities for the development of the Indian
construction industry. The Council, for the first time in the country, provides the
impetus and the organisational infrastructure to raise quality levels across the
industry. This helps to secure wider appreciation of the interests of construction
business by the government, industry and peer groups in society.
CIDC is a change agent to accelerate a process of self-reform that should enable
the industry to answer the challenges of the future.
3. Cement Manufacturers’ Association:
Cement Manufacturers’ Association (CMA), the apex representative body of large
cement manufacturers in India was established in 1961. It is a unique body in as
much as it has both the private and public sector cement companies as its
members. It is a registered body under the Societies Registration Act XXI of 1860.
Its registered office is in New Delhi, while the Corporate Office in Noida with Branch
offices in Mumbai and Hyderabad.
Main Objectives:
· To promote Indian cement industry’s growth.
· To protect consumer interest.
· To identify newer usage of cement.
· To establish contacts with similar bodies abroad for exchange of information,
data, publications etc.
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7. Product Profile of Industry
Cement is a mixture of limestone, clay, silica and gypsum. It is a fine powder which
when mixed with water sets to a hard mass as a result of hydration of the constituent
compounds. It is the most commonly used construction material.
Different types of Cement
There are different varieties of cement based on different compositions according to
specific end uses namely Ordinary Portland Cement, Portland Pozolona Cement,
Portland Blast Furnace Slag Cement, White 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% 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 Pozolona Cement (PPC)
PPC has 80% clinker, 15% Pozolona and 5% gypsum and accounts for 18% of the
total cement consumption. Pozolona 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.
· 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.
(Word Count: 1730)

8. Manufacturing Process in brief:
There are two general processes for producing clinker and cement in India: a dry process
and a wet process. In general, the dry process is much more energy efficient than the wet
process, and the semi wet somewhat more energy efficient than the semi-dry process. The
semi-dry process has never played an important role in Indian cement production and
accounts for less than 0.2% of total production.
Over the last decade, increased preference is being given to the energy efficient dry
process technology so as to obtain a cost advantage in a competitive market. In 1960
around 94% of the cement plants in India used wet process kilns. These kilns have been
phased out over the past 46 years and at present 96.3% of the kilns are dry process, 3%
are wet and only 1% are semidry process. Dry process kilns are typically larger with
capacities in India ranging from 300- 8,000 tons per day or tpd (average of 2,880 tpd).
While capacities in semi-dry kilns range from 600-1,200 tpd and capacities in wet process
kilns range from 200-750 tpd (average 425 tpd).
The following Diagram shows a brief manufacturing process of the cements:
(Word Count: 1840)

9. Major Players in the Cement Industry in India
Here is a list of Top 10 cement companies in India; these are the best companies in
cement manufacturing field.
1. ACC Limited
Corporate office - Mumbai, Maharashtra
Establishment – 1936
ACC cement limited is one of the top cement company in India established in 1936
which is also a leading player in ready mix concrete. It is part of the world’s leader
Holcim Group.
2. UltraTech Cement
Corporate office - Mumbai, Maharashtra
Establishment – 1987
UltraTech cement is largest clinker producer and exporter which has an annual capacity
of more than 50 million tonnes. It is a flagship company of Aditya Birla group and
leading cement company which acquired all ISO and OHSAS certifications.
3. Ambuja Cement
Corporate office - Mumbai, Maharashtra
Establishment – 1983
Ambuja Cement is among of the top 5 cement companies in India. It was founded in year
1983 and formerly known as Gujrat Ambuja cement Ltd. Company has an annual
capacity to produce more than 27 million tonnes.
4. Jaypee Cement
Corporate office - Noida, Uttar Pradesh
Establishment – 2001
Jaypee is a well-known corporate group in the business of power, infrastructure,
construction and highway. Company started cement business in the year 2001 and has
annual capacity to manufacturer almost 35 MTPA.
5. India Cement
Corporate office - Chennai, Tamil Nadu
Establishment – 1946
India cement is leading cement manufacturer in southern region of India which was
established a cement plant in Sankarnagar in year 1946 and since then setup total 7
plants in various part of Andhra Pradesh and Tamil Nadu. Company has an annual
capacity to produce 15 MTPA cement.
(Word Count: 2120)

10. 6. Ramco Cement
Corporate office – Chennai, Tamilnadu
Establishment – 1957
Ramco cement is a group company of Madras cement which is also a front leader in
Ready mix concrete. It has total 5 cement units spread across the southern states of
India. It has an annual capacity to manufacture 13 MTPA cement.
7. JK Cement
Corporate office – New Delhi, India
Establishment – 1975
JK Cement Ltd was founded in year 1975 and established first cement manufacturing in
Rajasthan. It is second largest white cement manufacturer in India having a capacity of
almost 3 lakhs tonnes per annum.
8. Prism Cement
Corporate office – Mumbai, Maharashtra
Establishment – 1997
Prism cement is managed by Raheja group a largest integrated building material
company established in the year 1997. Company has significant market share in UP,
Bihar and Madhya Pradesh. It has an annual capacity to produce more than 5.5 MTPA.
9. Rain Cement
Corporate office – Hyderabad, Andhra Pradesh
Establishment – 1986
Priya Cement formerly known as Rain cement is a subsidiary of Rain commodities. It
produces 3.12 MT cement per annum and leading cement company in south India which
was established in the year 1986.
10. Shree Cement
Corporate office – Kolkata, India
Establishment – 1970
A Bangar group company Shree cement is a leading cement manufacturer in northern
India. It has three major brands in market named Shree ultra, Bangar cement and
Rockstrong cement.
(Word Count: 2350)

11. PESTLE Analysis of Cement Industry
PESTLE 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.
Ø 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.
Ø 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.
Ø 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 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.
Ø 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.
(Word Count: 2750)

12. Porter’s Five Forces Model for Cement
Industry
(Word Count: 2920)
Bargaining Power of
Suppliers - High: GOI
exercises excessive
control on Coal and
Power Prices & Supply.
Govt. authorities also
control the
transportation sector.
Threat of Substitute –
Low: Use of Bitumin in
Road construction and
Engineering plastic in
Building creates some
concern for the industry.
Barriers to entry –
Medium to High: High
Capital Investment (Rs.
3500 per Tonne),
Distribution Network
and Oversupplied
market deters new
entrants. However,
Technology and
Manpower are easily
available.
Bargaining Power of
Buyers – Low: In recent
past the cement industry
is witnessing major
change in purchase
Quantity. Now the share
of Retail Purchase has
been rising as compared
to bulk. Now with the
industry operating at 90%
level increases the
bargaining power of
manufacturers.
Rivalry among the Firms -
High: Large number of
players, overcapacity,
High degree of product
homogeneity, High
storage cost and high
exist barriers, creates
intensive rivalry among
the firms.

13. Cement industry - Future forecasts
Given the rampant growth of the Indian cement industry, few are betting against
continued capacity additions in the short- to medium-term. The extent of capacity
addition, however, and whether or not demand will rise to match it more closely than at
present, is up for debate.
In November 2012 the India Brand Equity Foundation (IBEF) said that it expected
double-digit growth in the cement industry for the 2013 and 2014 fiscal years, which
end on 31 March 2013 and 31 March 2014 respectively. It reported that the cement
industry would increase production by around 71 MT/year over the same time-frame to
reach over 300 MT/year in 2014.
Meanwhile, the Indian Government's 12th Five-Year Plan, which runs for 2013 to 2017,
states that India will require a cement capacity in the region of 480 MT/year by the end
of 2017.12 It states that a further 150 MT/year of capacity will be required to
accomplish this. Separately, ACC expects India to have a capacity of 500 MT/year by
2020.
This represents more than twice the cement that India currently consumes in a year and
so it is worth asking, if this capacity is reached, what will the capacity utilisation rate
be? The government promises significant investment in infrastructure, although
bureaucracy has hampered such investments in the past.
"Land acquisition is a big issue," said H M Bangur, chairman and managing director of
north-based Shree Cement, in August 2012. "No state government is providing land to
set up units. Greenfield expansion is tough."
Sunil Singhania, equity head at Reliance Mutual Fund, said, "Capacity creation in India is
very difficult because there is no land (in some places) and no limestone deposits at
others. Several cement companies have written down assets. I believe capacity
additions going forward will not be as aggressive as in the past. Expansion will be slower
than demand growth."
With prices remaining low due to overcapacity and low demand, the potential for future
collusion between producers and the difficulty of setting up new capacity, it is possible
that producers, under pressure to meet the expectations placed on them by the Five-
Year Plan, will see increased pressure on margins in the next few years, especially if
fuel prices continue to rise.
In the midst of this, smaller companies are likely to suffer more than most, possibly
making them acquisition targets for better-equipped multinationals. Indeed, in January
2013 Prism Cement, one of India's smaller cement producers, actually reported a net
loss for the quarter to 31 December 2012. It cited low demand, high fuel costs and
increased electricity prices.
(Word Count: 3320)

14. An academic report carried out for the Competition Commission of India in 2012 hints
at this possibility of future consolidation in the industry. The study found that, despite
capacity utilisation falling across all cement producers in India from 2006 to 2011, it
was those with the smallest market share that experienced by far the worst reduction.
Binani Cement, for example, recorded utilisation rates of only around 55-60%.
Conversely mega-players like Ultratech have been more stable, with rates of 80-95%. In
January 2013 India Ratings reported that smaller businesses were less likely to benefit
from the expected improvement in the industry.
A major reason behind this phenomenon is rising fuel costs, which have hit producers
from two directions in the past year. Firstly, demand for power in India is high and
domestic fuels are dedicated predominantly to electrical generation. Industrial
companies are forced, in many cases, to import costly foreign fuel, which must be
shipped inland to be used. A second effect of increased fuel prices is that cement is
more costly to transport once it has left the factory.
Due to their size allowing greater economies of scale, larger cement companies are
better positioned to import fuel on a large scale and are more likely to have flexible
vehicle fleets to respond as demand fluctuates in different areas. Another crucial
difference between the larger and smaller companies is that larger players are more
likely to have a pan-Indian presence. This enables them to ride-out periods of difficulty
in one area while maximising margins elsewhere. Local producers do not have this
luxury.
Smaller local producers are less well equipped to deal with expansion and their relative
size will gradually diminish compared to the top 12 producers. As this happens, it is
likely that they will become the acquisition targets of the larger firms.
Cement industry – Conclusion
The Indian cement industry is large, growing and, with consumption of just 185 kg/
capita /year in 2011 (compared to global average of 300 kg/capita/ year) the country
itself has the capacity to demand significantly more cement as it develops.
However, the industry is at a tricky point in its development. Capacity is way ahead of
actual consumption. However, cement producers are keen to maintain their market
share and so expand to secure future demand. Producers in this situation should bear in
mind the Indian cement industry of the early 20th
Century, when companies expanded,
lowered prices and, in many cases, went out of business. Some have cautioned against
rapid capacity addition in the coming years.
It is foreseeable that the Indian cement industry will see consolidation over the coming
years. Producers that can differentiate their cement from others or can make savings
on production costs by, for example, using alternative fuels, will be able to take
advantage of increasing demand while remaining ahead of their competitors.
(Word Count: 3930)

15. Bibliography
http://www.cmaindia.org/facts.php
http://www.globalcement.com/magazine/articles/752-the-incredible-indian-cement-
industry
https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD
http://www.cmaindia.org/portal/static/DynamicHistory.aspx
http://www.indiainfoline.com/Markets/News/Fragile-recovery-unlikely-to-benefit-
smaller-cement-players-India-Ratings/5582688342
Books:
Global Cement Magazine: January 2012 - January 2013.