Cement Industry analysis

1. Submitted by:
•Mihirkul Vikram
•Anurag Agrawal
•Prashant Gupta
•Sachin Kabra
•Shashank Kumar
Singh
•Rajeev Sharma

2. Pre Independence
• First cement production dates back to 1889 when a Calcutta firm
produced cement from kankar.
• In 1914,first commissioned manufacturing unit established by India
Cement Company at Porbandar.
Post Independence
 In 1969,full control exercised by govt. in production, capacity and
distribution.
 In 1982,quota system introduced by govt. with 66.6 % sales to govt.
and rest for open market.
Post Liberalization
• Accelerated growth with foreign investments resulted in capacity
expansion.
• Total production has increased from 43 Million tonnes in 1989-90
to 236 million tonnes in 2009-2010.

3. China accounts for nearly
Global Cement Industry is 50% of the total installed
~3100 million tonnes (MT) capacity. India is the
with an installed capacity second largest cement
of ~3900 MT producer in the world, way
behind China.
Recent growth in the
India is among the fastest
global cement
growing cement markets
consumption is primarily
in the world with a
driven by the emerging
consumption CAGR of ~
markets, generating ~ 70%
10% (2005-10).
of the demand.

4. Cement industry contributed 0.78% to GDP in 2009-2010.
Demand expected to grow at 10% per annum in foreseeable future
on the back of 8% GDP growth
54 major companies who own more than 139 large cement plants.
Top 5 players account for 50% market share and remaining 50%
market share is with more than 100 players.
Current demand estimated at 230 MT in 2011 & present capacity is
300 MT

5. Installed capacity was 236 MT in 2009–2010 and has increased
at a (CAGR) of 8.8% between 2004–05 and 2009–2010.
The production of cement in 2009–2010 was 200.7 MT.
The turnover of the industry has been estimated at US$ 15.7
billion in 2009–2010.
The Cement Manufacturers’ Association of India (CMA) estimates
the industry manpower at about 140,000 as on 31 March 2009.

6. Key Growth Drivers
• Increased allocation to programes like RAY and IAY, likely
to boost the demand in semi-urban and rural areas.
Housing
Substantial increase in the number of households.
Sector: -
• construction and modernization of airports, seaports,
railroad, and power plants are likely to boost demand for
Infrastructure
cement.
Opportunity: -
• Industries like chemicals and plastics, textiles, metallic,
Commercial
non-metallic and mineral projects are operating at full
Structures and capacity. Expansions in these sectors are likely to
Corporate increase cement demand.
Projects: -

7. SWOT Analysis

8. Porter’s Five Forces Framework
Threat of New
Entrants (High)
Rivalry
Bargaining among Bargaining
Power of existing Power of Buyer
Suppliers (Low) players (Low)
(High)
Threat of
Substitute
products (Low)

9. SPELT Analysis
o Stands for Social, Political, Economic, Legal and Technological.
o Helps the company to form the policies to grow in the industry.
Social: -
o Shifting consumption pattern to fuel industry growth.
o Creation of direct and indirect jobs each year.
o Lifestyle and standard of living
Political: -
o SEZ Act to improve Infrastructural Development.
o Government participation.
Economical: -
o Growth in Construction Activity improving GDP Growth
o Increase in Per Capita Income
o Rate hikes unlikely to slow down growth
o FDI Liberalization to enhance industry growth

10. SPELT Analysis (contd…)
Legal: -
o The Department of Industrial Policy and Promotion (DIPP), under
the Ministry of Commerce and Industry, is the nodal agency for
the development of cement industries.
o Involved in monitoring the industries’ performance at regular
intervals and suggesting suitable policy incentives.
Technological: -
The technology up gradation has helped the cement industry to
o increase the capacity of plant
o Decrease the thermal energy consumption, electrical energy
consumption, cost of production of cement and energy cost.

11. 1. Cost Analysis: -
1.Energy Cost
• Share has increased marginally
2.Cement freight cost
• Share in total operating cost has
declined
3.Other costs
• Remained constant

12. 2.Demand Supply Position
Trend in cement capacity utilization:
 100% in 2007
 Export ban in 2008

13. Regional surplus or shortages
.
Per capita cement consumption
Demand Sources
Housing
20%
Sector
Industrial
Sector
20% 60%
Infrastructur
e Sector

14. Very energy intensive
2nd largest producer of
with 3rd largest user of
quality cement
coal in the country.
Current
Scenario
High industry potential
because limestone of
excellent quality is Uses best technology
available across the in the world.
country.

15. Year 2008- Year 2009-
2009 2010
Total cement
consumption was
178 million tonnes. Industry capacity
217.80 million
Exports of cement tonnes
and clinker around
3 million tonnes.
 Strong linkages to other sectors like
construction, transportation, coal and power

16. o Positive growth trajectory.
o Overall Industry growth stood at 3% with a long term projection of 8-
9%.
o Industry has touched 300 mn benchmark and major players are in last
leg of capacity expansion.
o Housing sector accounting for 60-70% consumption expects AAGR of
230% between 03-07 and 08-12 FY.
o 12th Five Year plan suggest 1 billion$ investment in Infrastructure
directly benefitting companies with larger installed capacities
o Recommendations for the sector can be:
• Expansion of customer base.
• Minimization of production costs.
• Improved financial decision and capacity utilization.