report on cement industry in india

1
CHAPTER 1
INTRODUCTION
The Indian cement industry has been on a high growth trajectory for
more than a decade, led by buoyancy in sectors such as real estate and
construction. The industry has witnessed continuous modernisation and
adoption of new technologies in recent years.
India is the world's second largest producer of cement after China
with industry capacity of over 200 million tonnes (MT). With the boost given
by the government to various infrastructure projects, road networks and
housing facilities, growth in the cement consumption is anticipated in the
coming years.
The modern Indian cement plants are state-of-the-art plants and
amongst the best in the world. The cement industry comprises of 134 large
cement plants with an installed capacity of 173.08 million tonnes and more
than 350 operating mini-cement plants, with an estimated capacity of 11.10
million tonnes per annum, making a total installed capacity of 184.18 million
tonnes in the last fiscal, as per the Department of Industrial Policy and
Promotion's latest data. In order to meet the expanding demand, cement
companies are fast developing new plants. According to a report by the ICRA
Industry Monitor, the installed capacity is expected to increase to 300 MTPA by
FY 2013-end. India's cement industry is likely to record an annual growth of 10
per cent in the coming years with higher domestic demand resulting in
increased capacity utilisation.
Housing, Infrastructure and Real estate sectors, with major construction
activity in rural and semi-urban areas through large infrastructure and
housing development projects, are expected to augment the growth rise in
cement sector. Demand in this region is being driven by infrastructure,
residential and commercial projects.

2
1.1 HISTORY
Pre Independence:-
The first endeavor to manufacture cement dates back to 1889 when a
Calcutta based company endeavored to manufacture cement from Argillaceous
(kankar). But the first endeavor to manufacture cement in an organized way
commenced in Madras. South India Industries Limited began manufacture of
Portland cement in 1904.But the effort did not succeed and the company had
to halt production.
In 1914 that the first licensed cement manufacturing unit was set up by India
Cement Company Ltd at Porbandar, Gujarat with an available capacity of
10,000 tons and production of 1000 installed. The First World War gave the
impetus to the cement industry still in its initial stages. The following decade
saw tremendous progress in terms of manufacturing units, installed capacity
and production. This phase is also referred to as the Nascent Stage of Indian
Cement Industry.
Post-Independence:-
The growth rate of cement was slow around the period after independence due
to various factors like low prices, slow growth in additional capacity and rising
cost. The government intervened several times to boost the industry, by
increasing prices and providing financial incentives.
In 1956, the price and distribution control system was set up to ensure fair
prices for both the manufacturers and consumers across the country and to
reduce regional imbalances and reach self-sufficiency.

3
1.2 TYPES OF CEMENT:-
There are different varieties of cement based on different compositions
according to specific end uses namely Ordinary Portland Cement, Portland
Pozzolona Cement, Portland Blast Furnace Slag Cement, White Cement and
Specialized Cement. The basic difference lies in the percentage of clinker used.
“CEMENT” in itself is not just one product. It has sub categorized itself in
sub products to cater various needs of customers. Following are the various
types of cement.
OPC 53 Grade:-
 Its full form is 53 Grade Ordinary Portland cement.
 It gives minimum 53 Newton per square millimeter compressive strength
at 28 days of curing.
 Bureau of Indian Standard has specified it under IS: 12269:1987.
 It is the second most commonly available type of cement in the open
market of India.
 It may be used in all types of multistoried buildings like Industrial -
Institutional, Residential as well as commercial.
 It is also widely used in infrastructure works like Highways, Bridge Fly
Over, Foundations of TV/Radio Towers-Electric sub stations, etc.
 Specifically it is used in Pre stressed structures like Perlins, Precast
Slabs, Fencing Poles/Posts, Electric Line Poles, etc.
 RCC Hume Pipes for Storm Water Drainage, Water Supply etc of
diameter up to 2600mm diameter are manufactured by using this
cement.
 The leading companies in India manufacturing this product are Binani
Cement, ACC Cement, Ultratech Cement, Ambuja Cement, etc.

4
OPC 43 Grade:-
 Its full form is 43 Grade Ordinary Portland cement.
 Bureau of Indian Standard has specified it under IS: 8112:1989.
 It is commonly available type of cement in the open market of India.
 Many of the engineers/architects are now suggest this type of OPC
cement for Residential/Commercial high rise buildings.
 Many of Indian Central Government institutes like BSNL, Airport
Authority of India, and Indian Coast Guard etc. have approved only this
type of OPC cement in their structures.
 It is also used in Pre stressed structures like Perlins, Precast Slabs,
Fencing Poles/Posts, Electric Line Poles, etc.
 This grade of Cement is also used in manufacturing of RCC pipes across
all sizes.
 Instead of 53 Grade OPC, it is preferred due to comparatively less heat of
hydration which is one of the reasons for shrinkage cracks in
construction.
 The leading companies in India manufacturing this product are Binani
Cement, Ultratech Cement, Ambuja Cement, etc.
PPC:-
 Its full form is Portland Pozolana Cement
 Bureau of Indian Standard has specified it under IS: 1489 (Part-I for Fly
Ash Based) (Part-II for Calcined Clay Based).
 It is the most commonly available type of cement in the open market of
India.

5
 It is used in RCC works like Column, Beam, Slab, Foundation in
Residential and Commercial Buildings.
 It is also used where mass concreting is done for example Dams, Bridges,
etc.
 It is commonly manufactured by intergrading Portland Clinker and
Pozzolanic material like fly ash, volcanic powder, etc.
 Proportion of Pozzolana may vary from 15% to 35% by weight of Cement.
 This is cement has higher resistance to chemical agents present in
surrounding atmosphere.
 Possibility of crack formation is negligible, due to low heat of Hydration
of PPC. This is one of the main reasons for the acceptance of this cement
in open market.
 It also imparts more durability to the structure.
 Due to secondary hydration process it makes the structure more
resistant to Sulphate & Chloride attacks.
 Almost all the companies manufacture this type of cement in India.
Portland Slag Cement:-
 It is manufactured by intergrinding Portland Clinker and Blast Furnace
Slag.
 Bureau of Indian Standard has specified it under IS: 455-1989.
 Proportion of slag may vary from 25% to 65% by weight of cement.
 It improves the workability, finishability, Lower permeability, resistance
to aggressive chemicals, etc. of the concrete.
 Modern Structure Designers have found that improved durability
characteristics of this cement help the structure to reduce life-cycle costs
and maintenance costs.
 It is specially used in marine structures, dams, bridges, etc.

 It is manufactured by Binani Cement, Lafarge Cement, Bharathi Cement,
6
etc.
Sulphate Resisting Cement:-
 A Sulfate Resisting Cement is blended cement designed to improve the
performance of concrete where the risk of sulfate attack may be present.
 It also provides improved durability for concrete in most aggressive
environments, reducing the risk of deterioration of the structure and
structural failure.
 It is used at Geothermal Areas, Sewerage treatment plants, Mines and
other acidic soil environments.
 It is also suitable for Dairying, forestry, fishing and other environments
with structures susceptible to chemical attack.
 Underground Structures in Sulphate-salts Abounding Environment,
Effluent Treatment Plants, Coastal Construction, Off-shore platforms,
Sugar & other Chemical Plants.
Masonry Cement:-
 Masonry Cement generally contains Portland Cement for early strength,
plasticizers for water retention & plasticity and air entraining agents to
make it more workable and suitable for brick and block lying.
 This cement is used to make masonry mortar for use in brick, block, and
stone masonry construction.

7
 This cement is not at all for making concrete.
Rapid Hardening Cement:-
 Rapid Hardening Portland Cement (RHPC) is a type of cement that is
used for special purposes when a faster rate of early high strength is
required.
 Rapid-hardening hydraulic cement offers reduced shrinkage and
superior resistance to chemical attack.
 It achieves strength much faster than Ordinary Portland Cement and
many installations can be put into service in as little time as one hour by
using this cement.
 Formwork can be removed earlier and the structure can be used very
soon by using this cement.
 Rapid-hardening hydraulic cement has been used for both concrete
repair and new construction
 During the production process, rapid-hardening hydraulic cement
reduces CO2 emissions by 32% to 36% over conventional Portland
cement manufacturing procedures.
Oil Well Cement:-
 Oil well cement is used in the production and exploration of oil and gas
onshore as well as deep water offshore wells.
 Designed for basic cementing jobs especially specified for deeper to
depths of up to 2100 meters, hot and high pressure well condition.
 Oil well cement slurries are designed for many purposes, from the
establishment of the well's safety and structural integrity during drilling,

to the isolation of the zone of interest and the production of oil and gas
upon completion.
 Lafarge, Holcim, Heidelberg, etc are the global manufacturers of this
8
cement.
High Alumina Cement:-
 It is produced by grinding clinkers formed by chalk and bauxite, which is
special clay of high alumina.
 Imparts high early strength, high heat of hydration and resistance to
chemical attack.
 High-alumina cement gains a high proportion of its ultimate strength
within 24 hours and has a high resistance to chemical attack.
 It also can be used in refractory linings for furnaces as it can withstand
high temperatures.
Low Heat Cement:-
 This cement is made to use in the construction of the structures where
the heat evolved during the cement hydration process is required to
reduce.
 The temperature gradient in mass concrete is always significant, this
result in thermal cracks development. The use of this cement minimizes
such effect.
 It is used in Mass Concreting Structures like Dams, Bridges, large raft
slabs, etc. to control Heat of Hydration
 Concrete produced with Low Heat Cement may require less water to
achieve a specified level of workability when compared to a concrete
produced with OPC.

9
 Setting times of Low Heat Cement significantly extended.
1.3 CEMENT MANUFACTURING
Cement is one of the core industries which plays a vital role in the
growth and expansion of a nation. It is basically a mixture of compounds,
consisting mainly of silicates and aluminates of calcium, formed out of calcium
oxide, silica, aluminium oxide and iron oxide. The demand for cement depends
primarily on the pace of activities in the business, financial, real estate and
infrastructure sectors of the economy. Cement is considered preferred building
material and is used worldwide for all construction works such as housing and
industrial construction, as well as for creation of infrastructures like ports,
roads, power plants, etc. Indian cement industry is globally competitive
because the industry has witnessed healthy trends such as cost control and
continuous technology up gradation. The Indian cement industry is extremely
energy intensive and is the third largest user of coal in the country. It is
modern and uses latest technology, which is among the best in the world. Also,
the industry has tremendous potential for development as limestone of
excellent quality is found almost throughout the country.

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1.4 TYPES OF MANUFACTURING PROCESS:-
DRY PROCESS:-
In dry process production, limestone is crushed to a uniform and usable
size, blended with certain additives (such as iron ore and bauxite) and
discharged on to a vertical roller mill where the raw materials are ground to
fine powder. An electrostatic precipitator deducts the raw mill gases and
collects the raw meal for a series of further stages of blending. The
homogenized raw meal thus extracted is pumped to the top of a preheater by
air lift pumps. In the preheaters the material is heated to 750°C. Subsequently,
the raw meal undergoes a process of 12 alcinations in a precalcinator. The
remaining 12 alcinations and clinkerization reactions are completed in the kiln
where the temperature is raised to 1,450-1,500°C. The clinker formed is cooled
and conveyed to the clinker silo from where it is extracted and transported to
the cement mills for producing cement. For producing OPC, clinker and
gypsum are used and for producing PPC, clinker, gypsum and fly ash are used.
WET PROCESS:-
The wet process differs mainly in the preparation of raw meal where water is
added to raw materials to produce slurry. The chemical composition is
corrected and the slurry is then pumped to the kiln where evaporation of
moisture, preheating, calcinations and sintering reaction takes place. The
clinker is cooled and transported, as in the case of other plants, with suitable
conveyors to cement mills for grinding. The wet process is more energy
intensive, and thus becomes expensive when power and energy prices are high.

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CHAPTER 2
BODIES PROMOTING INDUSTRIAL DEVELOPMENT
 National Council for Cement and Building Materials.
 Indian Concrete Institute.

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CHAPTER 3
PRESENT SCENARIO OF CEMENT INDUSTRY
The Indian cement industry is the second largest producer of quality
cement. Indian Cement Industry is engaged in the production of several
varieties of cement such as Ordinary Portland Cement (OPC), Portland
Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well
Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland
Cement, White Cement, etc. They are produced strictly as per the Bureau of
Indian Standards (BIS) specifications and their quality is comparable with the
best in the world. The industry occupies an important place in the national
economy because of its strong linkages to other sectors such as construction,
transportation, coal and power. The cement industry is also one of the major
contributors to the exchequer by way of indirect taxes.
3.1 Facts of Indian Cement Industry:-
 The Industry recorded an exponential growth with the introduction of
partial decontrol in 1982 culminating in total decontrol in 1989.
 India ranks second in world cement producing countries.
 It contributes to environmental cleanliness by consuming hazardous
wastes like Fly Ash (around 30 MT) from thermal power plants and the
entire 8 MT of slag produced by steel manufacturing units.
 As a part of Corporate Social Responsibility (CSR), the cement Industry
employs around 0.1 million people and takes care of the social needs not
only of the employees but also adopts several villages around the
factories providing free drinking water, electricity, medical and
educational facilities.
 The cement Industry produces a variety of cement to suit a host of
applications matching the world's best in quality.

 Exports Cement/Clinker to around 30 countries across the globe and
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earns precious foreign exchange.
Statistics:-
According to Ministry of Commerce & Industry data for November 2012,
cement production registered a negative growth of (-) 0.2 per cent in November
2012 against its 17.0 per cent growth in November 2011. The cumulative
growth of cement production was 6.7 per cent during April- November 2012-13
compared to its 4.8 per cent growth during the same period of 2011-12.
.
Key Drivers of Cement Industry:-
 Buoyant real estate market
 Increase in infrastructure spending
 Various governmental programmes like National Rural Employment
Guarantee
 Low-cost housing in urban and rural areas under schemes like
Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Indira
Aawas Yojana.
Technological Advancements:-
Modernization and technology up-gradation is a continuous process for any
growing industry and is equally true for the cement industry. At present, the
quality of cement and building materials produced in India meets international
standards and benchmarks and can compete in international markets. The
productivity parameters are now nearing the theoretical bests and alternate
means. Substantial technological improvements have been brought about and
today, the industry can legitimately be proud of its state-of-the-art technology
and processes incorporated in most of its cement plants. This technology up

gradation is resulting in increased capacity, reduction in cost of production of
cement.
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3.2 Major Players:-
 Ultratech Cement
 Century Cements
 Madras Cements
 ACC
 Gujarat Ambuja Cement Limited
 Grasim Industries
 India Cements Limited
 Jaiprakash Associates and
 JK Cements.
 Holcim
 Lafarge
 Heidelberg Cemex
3.3 Foreign Direct Investment:-
The cement sector has been gradually liberalized. 100 per cent FDI is permitted
in the cement industry.
Future Outlook:-
A recent report has been published by research company RNCOS has found
that, even in the tough conditions of economic turbulence, Indian cement
industry sustained its growth rate. It further stated that, in the backdrop of the
government backed construction projects almost every cement major expanded
their installed capacity as; these projects have created strong demand for
cement in the country. The report stated that production capacity of cement

industry has grown by almost 20% in 2011-12. The research report has also
anticipated that the industry players will continue to increase their annual
cement output in coming years and the country’s cement production will grow
at a CAGR of around 12 per cent during 2013-14.
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3.4 Recent Trends in Cement Industry:-
Product:-
Traditionally only one product was available in cement that was 33
Grade but due to increase in competition cement companies were forced to
improvise on the quality of the product and hence they introduced 43 Grade
and moving further they introduced 53 Grade which is the highest Grade
available as per BIS. (Bureau of Indian Standards) Moreover to meet demand
the manufacturers had to increase their capacity, so most of the
manufacturers expanded their capacity upto the best possible level. Cement is
a capital intensive industry which means that in order to produce the product
huge capital investment is required and once it has reached its optimum
production capacity in order to increase its production new investment have to
be made. In the span of last ten years companies have expanded their
production and have reached to a level where they were forced to find another
option to expand their capacity then incurring additional cost. So the
companies came up with PPC (Portland Pozzolana Cement) which is prepared
by mixing fly ash, volcanic product etc., which helped manufacturers to
increase their production by 25 to 30 % from the existing set up. Switching to
PPC was not just to increase production but the government had made it
mandatory for the companies located in the 100 Km radius of any thermal
power station to use fly ash in cement production as an environment protection
constraint.

19
Packaging:-
Unlike other consumer products packaging doesn’t play major role in
marketing of cement as cement is generally used at construction site where
fancy packing isn’t required .Initially cement was packed in Jute bags but the
packing had to be changed to HDPE bags because there was a heavy loss to
companies because of damage caused by packing. There was heavy transit loss
because of leakage of cement from the jute bags during the transit and
moreover the product got damaged due to moisture content. So in order to
protect the product from seepage and moisture HDPE bags were used. In big
cities there are huge construction projects going on in which cement is
required in big quantities and so the builders have come up with the concept of
Ready Mix Concrete commonly known as RMC in cement industry. The
builders prefer to buy loose cement in huge quantity so they can save on time
and labour. This concept has helped cement companies on saving a huge
amount on packing and reduction in transit cost as bulk quantity of loose
cement is transported in bulkers directly to the place of production.
Technical Guidance:-
With the increase in competition in cement industry companies were not
only forced to improve on the quality but were also forced to improve on
marketing techniques. As a value addition to product companies started
providing technical guidance to the cement users. They started separate
department known as technical cell/ technical department which consisted of
team of qualified civil engineers. Customer facing any problem related to
construction called up the technical cell and the team of engineers was always
ready to provide guidance to the customer at their door step.Some companies
took a revolutionary step by introducing “Mobile testing laboratories” to provide
concrete testing facility to customers at their construction site. Mobile testing
laboratories consisted of latest concrete strength testing equipments. This

facility was started with a view to provide satisfaction to the customer
regarding the quality of the product. Moreover looking at the marketing aspect
civil engineers from the technical cell keep on visiting construction sites to
promote their product by providing them knowledge about their product and
latest construction practices.
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Sales Promotion:-
In order to survive competition companies had adopted all possible
marketing techniques and only place where they could improvise more was
sales promotion activities. As cement traders and masons are biggest
influencers in purchase of cement, cement manufacturing companies started
giving various incentive schemes to these influencers to ensure their
inclination towards their brand. They gave various schemes to traders ranging
from small household item to foreign tours. These schemes were based on sale
of targeted quantity for short term as well as long term. For short term
schemes gifts like household items like air conditioners, refrigerator, television
and other home appliances were provided; even schemes for gold and silver
coins were announced and for long term schemes, tours were announced
which included domestic as well as foreign tours depending on the quantity
sold. Few companies also offered kind scheme of cars and two wheelers on
achievement of specific quantity in the long term. To attract masons companies
arranged masons meets on regular basis which consisted of presentation on
companies’ products and activities followed by dinner and distribution of
various gifts. Companies also offer them annual calendar and diaries and other
small gifts and give always at regular intervals to be in touch with them on
regular basis.

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CHAPTER 4
ECONOMIC STATUS OF THE CEMENT INDUSTRY
4.1 GROWTH RATE:-
 India is the world’s second largest producer of cement with total
capacity of 224 million tonnes as on April 2010.
 Indian Cement Industry comprises of 185 large and more than 365
mini cement plants.
 According to ACC cement report, Government’s continued thrust on
infrastructure will help the cement to maintain an annual growth of
9-10% in 2010.
 With addition in the cement production, it is expected that cement
production in India will reach 300 million tonnes in the coming years.
4.2 INVESTMENTS:-
• Cement and gypsum products attracted FDI worth US$ 2.23 billion
between April 2000 and June 2014, according to the Department of
Industrial Policy and Promotion.
• Madras Cements Ltd is planning to invest US$ 178.4 million to increase
the manufacturing capacity of its Ariyalur plant in Tamil Nadu to 4.5 MT
from 2 MT by April 2011.
• Shree Cement, plans to invest US$ 97.13 million this year to set up a 1.5
MT clinker and grinding unit in Rajasthan. Moreover, in June 2010,
Shree Cement signed an MOU with the Karnataka government to invest
US$ 423.6 million for setting up a cement unit and a power plant.
• Jaypee Associates plans to invest US$ 640 million to increase its cement
capacity.

• 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.
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4.3 EXPORTS:-
• During 2007-08, the export of cement from India touched the 2.16
million tonnes mark. However during 2008-09, the cement export from
India stood at 1.46 million tonnes.
• In spite of seeing fall during 2008-09, the export segment of the industry
is expected to grow again on account of various infrastructure projects
that are being taken up all over the world. India has an immense
potential to tap markets of Middle East and South East Asia
• The negative ACGR (Annual Compound Exponential Growth Rate) of -
5.52% in control period has seen ACGR of 35.35% in decontrolled and
opened up economy
4.4 FDI AND CONTRIBUTION TO THE GDP:-
• The industry occupies an important place in the national economy
because of its strong linkages to other sectors such as construction,
transportation, coal and power.
• The cement industry is one of the major contributors to the exchequer by
way of indirect taxes.
• 100% FDI is permitted in the cement industry.
• It contributes approximately 1.3% of GDP and the industry is employing
over 0.14 million people

23
CHAPTER 5
REGIONAL DISTRIBUTION

24
5.1 PLAYERS IN CEMENT INDUSTRY:-
 MAJOR PLAYERS IN THE INDIAN CEMENT INDUSTRY:-
SR. NO. Companies Capacity
MTPA
2012
No. of
Cement
Plants
1. Ultratech Cement Ltd 48.75 22
2. ACC Ltd. 30.08 14
3. Ambuja Cements Ltd 28.00 13
4. Jaiprakash Associates
Ltd.
24.50 14
5. India Cements Ltd. (The) 15.33 09
6. Madras Cement Ltd 14.44 08
7. Shree Cement Ltd. 13.50 06
8. Chettinad Cement
Corporation Ltd.
11.50 03
9. Dalmia Bharat
Enterprises Ltd.
09.00 03
10. Century Textiles and
Industries Ltd.
07.80 03
11. Lafarge India Pvt. Ltd. 07.75 04

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12. J.K. Cement Ltd. 07.47 04
13. Kesoram Industries Ltd. 07.25 02
14. Penna Cement
Industries Ltd.
07.00 04
15. Birla Corporation Ltd. 06.46 07
16. Binani Cement Ltd. 06.25 02
17. Zuari Cement Ltd. 06.20 03
18. Prism Cement Limited 06.10 02
19. OCL India Ltd. 05.35 02
20. JK Lakshmi Cement Ltd. 05.30 03
21. My Home Industries 05.20 02
22. JSW Cement 05.20 02
23. Orient Cement 05.00 02
24. Bharathi Cement 05.00 01
Source : Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012 : 3rd Edition

STATE-WISE MAJOR CEMENT PLANTS AND CAPACITIES AT A
GLANCE:-
26
Sr.
No.
States
No. of
Plants
2010
Capacity
MTPA
2010
No. of
Plants
2012
Capacity
MTPA
2012
1. Andhra
Pradesh
33 55.92 44 79.45
2. Assam 1 0.20 4 2.73
3. Bihar 1 1.15 1 1.00
4. Chhattisgarh 9 12.81 10 16.11
5. Delhi 1 0.50 1 0.50
6. Gujarat 15 27.37 14 27.49
7. Haryana 3 2.97 4 3.52
8. Himachal
pradesh
6 11.20 7 13.04
9. Jammu &
Kashmir
1 0.40 2 0.76
10. Jharkhand 3 5.18 4 8.6
11. Karnataka 13 23.61 13 24.4
12. Kerala 2 0.62 2 0.62
13. Madhya
Pradesh
11 21.88 10 26.16

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14. Maharashtra 9 16.40 10 23.00
15. Meghalaya 4 1.86 8 6.77
16. Odhisa 4 7.55 5 7.79
17. Punjab 3 4.75 3 4.75
18. Rajasthan 20 41.45 21 45.62
19. Tamil Nadu 19 32.88 20 32.89
20. Uttar Pradesh 9 12.14 11 13.83
21. Uttarakhand 3 4.00 13 4.00
22. West Bengal 8 7.73 9 9.61
 MAJOR PLAYERS IN THE NORTH:-
TOTAL SALES for the year 2012 = Rs. 33589.02 Cr.
Name of the
Company
Net Sales
in Cr.
(2012)
Percentage
(%)
ACC 7,942.66 23.64659642
Ambuja Cem. 7,040.70 20.96131414
Birla Corpn. 1,790.19 5.329688095
J K Cements 1,664.42 4.955250257

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JK Lakshmi
Cem.
1,223.90 3.643750249
Shree Cement 2,716.46 8.08734521
UltraTech
Cem.
6,385.50 19.0106767
ACC, 23.65
UltraTech Cem., 19.01
Market Share
Ambuja Cem., 20.96
Birla Corpn., 5.33
J K Cements, 4.96
Shree Cement, 8.09
JK Lakshmi Cem., 3.64
others, 14.37
ACC
Ambuja Cem.
Birla Corpn.
J K Cements
JK Lakshmi Cem.
Shree Cement
UltraTech Cem.
others

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 MAJOR PLAYERS IN SOUTH:-
TOTAL SALES for the year 2012 = Rs. 11266.01 Cr
Name of the
company
Net Sales
in
Cr.(2012)
Percentage
(%)
Andhra
Cements
369.36 3.278534281
Chettinad
Cement
1,137.67 10.09825129
Dalmia
Cement
1,758.68 15.61049564
India Cements 3,358.34 29.8094889
Madras
Cement
2,530.90 22.46491881
Rain
Commodities
1,111.01 9.861610277
zuari Cements 438.72 3.894191466

Market Share
30
Andhra Cements,
3.28
Chettinad Cement,
10.09
Dalmia Cement,
15.61
India Cements,
29.81
zuari Cements, 3.89
Rain Commodities,
Madras Cement,
22.46
9.86
others, 4.98
Andhra Cements
Chettinad Cement
Dalmia Cement
India Cements
Madras Cement
Rain Commodities
zuari Cements
others

31
CHAPTER 6
FOUR P’S
6.1 Product:-
 Ordinary Portland Cement (OPC):-
OPC, popularly known as grey cement, has 95% clinker and 5% of
gypsum and other materials. It accounts for 70% of the total
consumption. White cement is a variation of OPC and is used for
decorative purposes like rendering of walls, flooring etc. It contains a very
low proportion of iron oxide.
 Portland Pozzolona Cement (PPC):-
PPC has 80% clinker, 15% Pozzolona and 5% gypsum and accounts for
18% of the total cement consumption. Pozzolona has siliceous and
aluminous materials that do not possess cementing properties but
develop these properties in the presence of water. It is cheaply
manufactured because it uses fly ash/burnt clay/coal waste as the main
ingredient. It has a lower heat of hydration, which helps in preventing
cracks where large volumes are being cast.
 Portland Blast Furnace Slag Cement (PBFSC):-
PBFSC consists of 45% clinker, 50% blast furnace slag and 5% gypsum
and accounts for 10% of the total cement consumed. It has a heat of
hydration even lower than PPC and is generally used in construction of
dams and similar massive constructions.

32
 White Cement:-
OPC: clinker using fuel oil (instead of coal) and with iron oxide content
below 0.4% to ensure whiteness. Special cooling technique is used. It is
used to enhance aesthetic value, in tiles and for flooring. White cement is
much more expensive than grey cement.
 Specialized Cement:-
Oil Well Cement: is made from clinker with special additives to prevent
any porosity. Rapid Hardening Portland cement: It is similar to OPC,
except that it is ground much finer, so that on casting, the compressible
strength increases rapidly. Water Proof Cement: OPC, with small portion
of calcium stearate or non-saponifibale oil to impart waterproofing
properties.
6.2 PRICE:-
For all the commodities Prices are generally decided by demand supply gap,
which largely prevails in cement industry too. Cement as a product doesn’t has
much differentiation. The cement provided by various companies is more or
less the same, so there is not much difference in the pricing of cement by
various companies. Due to various advertising and marketing strategy the
cement companies have been able to categorize themselves into three
categories i.e. A, B & C. The price difference between various categories is 2 Rs
to 4 Rs Per bag. Prices of cement are decided not only on the basis of
manufacturing cost but it also includes logistic cost & government levies.
Cement companies are offering cement at FOR basis (Supplying at doorstep), so
logistic cost plays a vital role and in order to reduce the logistic cost cement
companies prefer to supply cement to nearby regions or they keep higher prices

in far off places. Cement price fluctuation are cyclic in nature. According to the
demand prices generally fall into four categories.
Apr- June (High demand High price) – During the period of April to June the
Demand is generally higher as compared to other months, as no festivals fall
during this period. As this is prefix period to monsoon season, pre-monsoon
demand also picks up the demand during this period. Due to greater demand
the prices are also higher as compared to other months. Prices during this
period generally fall in range of 305 Rs per bag to 310 Rs per bag.
July – Sept (Low demand Low price) – During the period of July to September
the demand is relatively low due to monsoon season and festivals like
Janmashtami. Major construction activities is at hold due to monsoon and
retail demand is also low as farmers are busy with farming activities & labours
are also diverted towards farming activities. As the demand is low, prices
remains under pressure during this period. Prices generally range from 220 Rs
per bag to 250 Rs per bag.
Oct – Dec ( Moderate demand Moderate price) – Period from October to
December is the period of moderate demand as the demand picks up a little
after monsoon season but due to Major festival of Diwali demand again slows
down. Due to moderate demand the prices also remain in mid range. The
prices range from 240 Rs per bag to 260 Rs per bag.
Jan – March (High demand High price) – Period from January to March is
period of high demand as this is the last quarter of financial year and there is
no major festival other than holi which normally falls during last fortnight of
March. Due to financial year end all government contractors’ speed up their
activities to ensure the completion of work before year end. Due to high
33

demand the prices generally remain high. Prices fall in the range of 305 Rs per
bag to 310 Rs per bag.
34
6.3 PLACE:-
Place plays an integral role in cement industry as logistic cost is 3% to 5% of
the total cost for retail customer, so it is very important for cement companies
to have a well planned and wide spread network. For this purpose cement
companies opens dumps at strategic locations so they can ensure timely and
cost effective delivery to the network and customers. Dumps are the store
houses owned by company where they transfer their stock from manufacturing
unit. Companies also appoint efficient C & F agents to provide best services.
Companies appoint big distributor and dealers which in turn
appoint small retailers to increase reach upto each and every corner of the
center. By using this well planned distribution system the companies distribute
their product form the manufacturing unit to the dumps, where according to
customer’s/ dealer’s need order are placed and such orders are executed
promptly. In certain cases, where the requirement is huge or order is from
nearby place companies execute the orders from the manufacturing unit itself.
To ensure customers delight and to have competitive edge over competitors,
companies try to have best distribution system in place.
6.4 PROMOTION:-
As cement was a commodity there was not much differentiation between
brands but after decontrolling of cement industry, cement companies started
building brand image. In order to create brand image, promotion played a very
important role. Initially they started by creating specific logos and design for
their bags. Gradually they moved to advertising means like wall painting,
newspaper advertisement, television and radio. As these medium were used by
all the cement companies, so in order to differentiate their product a need for

other innovative means of promotion was also required. They stared
distributing gift articles like pens, key chains, pocket diaries, tea coasters, wall
clock, table pieces, pen stands, calendars, annual diaries for dealers and
customers. They started offering gold scheme, domestic and foreign tours,
scholarship programme for dealer’s kids etc.In order to increase brand’s
visibility and to attract customer’s attention companies started various
activities by decorating dealer’s shop with various posters, stickers, danglers,
dealer board, and decorative gates outside dealers shop during festivals etc.
Companies also arranged meetings and conferences for influencers like
engineers and masons and provided them various gift articles after the meeting
and also after regular intervals to ensure continuous recall of their brand. Few
companies have started increasing their presence at national level, so to
increase their visibility at national level they started sponsoring various events
like Indian Premier League, television reality shows and other television
programs. With help of such intensive promotional activities companies have
been able to create a unique identity for themselves, which in turn helped them
to increase their market share and gain a competitive edge over the
competitors. As a result of this the customers also became aware about cement
as a brand rather than a commodity.
35
Challenges and problems of cement industry:-
Cement is generally considered as commodity and has little scope of
differentiation, so like other commodities cement industry also has its own
challenges.

36
Distribution System:-
Distribution system is heart of cement companies. Effective distribution is the
only means through which a company can get a competitive edge over other
players in the market. Effective distribution not only increases companies profit
but also helps in increasing customer satisfaction. Normally cement companies
use two modes of transportation i.e road and rail but few companies also use
sea transportation for distribution.
Fig 1 Distribution of Cement from Plant to the Customer
Distributor, Dealer, retailers and the C&F agents play most important role in
distribution channel. Companies identify reputed traders preferably dealing in
building materials or allied products and appoint them as a distributor/
Dealer. These distributor/ dealer sell cement to consumer as well as small
retailers. Dealers sell it directly to the builders who are big customers. Retailers
are small traders who have set up retail counters in various corner of the city

and sell directly to the consumers. Retailers have two type of customer base
which are builders who are large customers as well as small consumers which
includes contractors, individual house builders etc. Companies higher godown
nearby big markets and stock huge amount of material in those godowns. C&F
agents are appointed to redistribute material from the godown to dealers,
distributors, retailers & customers. This is a traditional means of distribution
wherein the material is transferred from plant to Godowns with C&F, from
where it is redistributed to dealers & retailers which in turn is sold to the
customer. To expand their market reach apart from the traditional means
companies have also started setting up separate grinding and packing units at
strategic locations.
37
Grinding unit: -
Companies transfer their clinker in bulk from plant to grinding units. At these
units the clinker is grinded and distributed to nearby market. Companies
distribute the product through the same channel of C&F, Dealer and retailer or
at times even cater it directly to customer.
Packing plants: -
Companies transfer loose cement from plant to packing units. At these units
the loose cement is packed into proper bags and distributed to nearby market.
Companies distribute the product through the same channel of C&F, Dealer
and retailer or at times even cater it directly to customer. Generally companies
use two means to distribute their product which is road and rail, but few
companies also use sea to distribute their product. Depending on the distance
and quantity of cement to be transported suitable mode of transport is
adopted. Say for instance road transport is preferred for shorter distance and
transportation by rail is preferred for longer distance as it becomes more
economical. Companies having manufacturing facilities nearby ports use Sea

as a mode of transportation to distribute their products. As a product, cement
offered by various companies is more or less similar so the companies can
differentiate their product by providing prompt deliveries through effective
distribution system. Effective distribution channel not only gives competitive
edge over others but also helps to reduce damage and transit loss. Distribution
strategy followed would in turn determine segmentation, pricing, customer
behavior and customer decisions. Thus having an effective distribution system
is one of the biggest challenges for the cement industry.
38

39
CHAPTER 7
SWOT ANALYSIS OF CEMENT INDUSTRY
7.1 Strengths:-
 Second largest in the world in terms of capacity: In India there are
approximately 200 large and 300 mini plants with installed capacity of
360 million tonnes.
 Low cost of production: due to the easy availability of raw materials and
cheap labour.
7.2 Weakness:-
 Effect of global recession on real estate: The real estate prices are
stabilizing and facing steady slowdown especially in metros. There are
approximately twenty thousand completed flats without occupancy in
Ahmadabad. There has been drastic reduction in property prices due to
reduced demand and increased supply.
 Demand-Supply gap, overcapacity: The capacity additions distort the
demand-supply equilibrium in the industry thereby affecting profitability.
 Increasing cost of production due to increase in coal prices.
 High Interest rates on housing: The re-pricing of the interest rates in the
last four years from 7% to 12% has resulted in the slowdown in
residential property market.
7.3 Opportunities:-
 Strong growth of economy in the long run: Indian economy has been one
of the stars of global economics in the recent years

 Increase in infrastructure projects: Infrastructure accounts for 35% of
cement consumption in India. And with increase in government focus on
infrastructure spending, such as roads, highways and airports, the
cement demand is likely to grow in future.
 Growing middle class: There has been increase in the purchasing power
of emerging middle-class with rise in salaries and wages, which results in
rising demand for better quality of life that further necessitates
infrastructure development and hence increases the demand for cement.
 Technological changes: The Cement industry has made tremendous
strides in technological up gradation and assimilation of latest
technology. At present ninety three per cent of the total capacity in the
industry is based on modern and environment-friendly dry process
technology and only seven per cent of the capacity is based on old wet
and semi-dry process technology. The induction of advanced technology
has helped the industry immensely to conserve energy and fuel and to
save materials substantially and hence reduce the cost of production.
40
 Government’s emphasis on the Infrastructure.
 Heavy demand of housing and other sectors in which Cement is to be
treated as raw material
 Foreign direct Investment in the Retail and other Sector may surge
demand of Cement in coming years.
7.4 Threats:
 Imports from Pakistan affecting markets in Northern India: In 2007,
130000 MT in 2008, 173000 MT of cement was exported to India. This
was done to keep the price of cement under check.
 Excess overcapacity can hurt margins, as well as prices.
 Government’s Foreign Direct Investment Policy in favor of investment in
the industry by foreign giants.
 The demand supply mismatch arising out of burst of new capacity
additions (and not majorly out of lack of normal demand growth) has

constricted the capacity utilization levels of the industry for the last two
years in particular. Given the resilient nature of the economy, India has
been able to achieve reasonable GDP growth of 5 % in FY 12 which is
expected to increase to 6 % to 6.5 % in FY 13 is expected to translate into
a demand growth of 8% to 10% over the next few years. While demand
for cement grew by 6.6% in FY 12, there are already encouraging signs of
a pick-up in demand with demand spurting by over 10% in the last
quarter of FY 12. It is therefore expected capacity utilization to gradually
increase over the next 3 years with parity between supply and demand
being restored by then. While this being the overall scenario, there are
still pockets of high demand growth in certain regions of the country and
Industry is already moving significant quantities of cement to the
Eastern markets as far as Assam & Nepal to optimize capacity utilization,
given the overall surplus. Industry’s attempts in the short run will be
towards striking an optimum balance between volumes and profitability
and achieve best results.
 The availability of power from the State Electricity Boards is another area
of concern with acute shortages in power availability in Tamil Nadu and
Andhra Pradesh.
 Availability of indigenous coal from the nationalized coal companies and
the quality of supplies is another area of concern. This problem has
however been mitigated to a large extent due to the coal linkages
obtained during the last two years to cater to the requirements of the
recent capacity expansions in Andhra Pradesh. The Industry imports
coal to meet its cement plants' requirements thereby adequately
addressing the quantity, quality and cost aspects. Mining rights obtained
in Indonesia should fructify with infrastructure of roads and bridges
under completion to ensure timely coal supplies.
41

42
CHAPTER 8
PESTEL ANALYSIS OF CEMENT INDUSTRY
Pestel analysis is a useful tool for understanding the big picture of operating
and takes advantage of opportunities. Pest analysis includes political,
environmental, social and technological factors which affects both the
companies as well as industry.
8.1 POLITICAL
The price of cement is primarily controlled by the coal rates, power tariffs,
railway tariffs, freight, royalty and cess on limestone. Interestingly, government
controls all of these prices. Government is also one of the biggest consumers of
the cement in the country. Most state governments, in order to attract
investments in their respective states, offer fiscal incentives in the form of sales
tax exemptions/deferrals. States like Haryana offer a freeze on power tariff for
5 years, while Gujarat offers exemption from electric duty.
8.2 ECONOMIC
The industry is on the boom, with a lot of government infrastructure and
housing projects under construction. The export segment of the industry is
expected to grow again on account of various infrastructure projects that are
being taken up all over the world and numerous outstanding cement plants
coming up in near future in the country.
8.3 SOCIAL
The cement industry in India consists of both the organized sector and the
unorganized sector. Organized sector comprises of the well-known cement
manufacturing companies while the main players of the unorganized sector are
the regional and local cement-producing units in various states across the

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.
43
8.4 TECHNOLOGY
The Government of India plans to study and possibly acquire new technologies
from the cement industry of world. The government is discussing technology
transfer in the field of energy conservation and environment protection to help
improve efficiency of the Indian cement industry. Cement industry has made
tremendous strides in technological up-gradation and assimilation of latest
technology. At present 93% of the total capacity in the industry is based on
modern and environment-friendly dry process technology.

44
CHAPTER 13
PORTER’S FIVE FORCES FRAMEWORK

45
CHAPTER 13
Conclusion
It can be concluded that given the sustained growth in the housing
sector, the government's emphasis on infrastructure (both at the national and
the state level) and increased global demand, the prospect for India's cement
industry is exceedingly promising. The dynamics of Indian cement industry is
undergoing a gradual shift. From an oversupply situation not long ago, a phase
has come where demand growth is outstripping supply. While tracing the
growth of the industry in different policy regimes, it became observable that the
industry has matured with the help of all indicators of performance, such as
size, production, capacity utilization, consumption and exports, after its
decontrol in 1989-90. Technology of production and quality of product too has
advanced a lot along with decrease in regional concentration. Another
significant trend which the industry has witnessed is of greater consolidation of
power by larger players through mergers and acquisitions and entry of foreign
majors in the ever growing market. This growth and development of the
industry is all the more evident in recent years especially after 1999-2000. All
the above mentioned trends in the Indian cement industry have only
contributed to the growing competitiveness between the firms and his has
resulted into improved efficiencies in procurement, manufacturing,
transportation and logistics. With the infrastructure sector poised to be being
prioritized by the Government, the demand for cement would be only
increasing in the times to come. Hence the outlook for the Indian cement sector
looks bright for corporate houses that can handle their brand repute and work
upon tight revenue margins by gaining from high volume sales.

46
CHAPTER 14
REFERENCES
 Building material and construction- B.C.PUNAMIA
 Websites.
 www.google.com .
 http://www.ibef.org.
 http://en.wikipedia.org/wiki/Cement.s
 https://www.equitymaster.com
 Source : Labour and Industrial Chronical, Survey of Cement Industry &

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