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.
China accounts for nearlyGlobal 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 marketsconsumption is primarily in the world with a driven by the emerging consumption CAGR of ~markets, generating ~ 70% 10% (2005-10). of the demand.
Cement industry contributed 0.78% to GDP in 2009-2010.Demand expected to grow at 10% per annum in foreseeable futureon the back of 8% GDP growth54 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 is300 MT
Installed capacity was 236 MT in 2009–2010 and has increasedat 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$ 15.7billion in 2009–2010.The Cement Manufacturers’ Association of India (CMA) estimatesthe industry manpower at about 140,000 as on 31 March 2009.
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 forInfrastructure cement.Opportunity: - • Industries like chemicals and plastics, textiles, metallic, Commercial non-metallic and mineral projects are operating at fullStructures and capacity. Expansions in these sectors are likely to Corporate increase cement demand. Projects: -
Porter’s Five Forces Framework Threat of New Entrants (High) Rivalry Bargaining among Bargaining Power of existing Power of BuyerSuppliers (Low) players (Low) (High) Threat of Substitute products (Low)
SPELT Analysiso 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 livingPolitical: - 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
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.
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
2.Demand Supply PositionTrend in cement capacity utilization: 100% in 2007 Export ban in 2008
Regional surplus or shortages .Per capita cement consumptionDemand Sources Housing 20% Sector Industrial Sector 20% 60% Infrastructur e Sector
Very energy intensive2nd largest producer of with 3rd largest user of quality cement coal in the country. Current ScenarioHigh industry potential because limestone of excellent quality is Uses best technology available across the in the world. country.
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
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 lastleg of capacity expansion.o Housing sector accounting for 60-70% consumption expects AAGR of230% between 03-07 and 08-12 FY.o 12th Five Year plan suggest 1 billion$ investment in Infrastructuredirectly benefitting companies with larger installed capacitieso Recommendations for the sector can be: • Expansion of customer base. • Minimization of production costs. • Improved financial decision and capacity utilization.