Comprehensive study of indian cement sectorDocument Transcript
COMPREHENSIVE STUDY OF INDIAN CEMENT SECTORAuthor : Madhavi Dhole & SudeepPanickerArticle : COMPREHENSIVE STUDY OF INDIAN CEMENT SECTORINTRODUCTIONComprehensive study of a sector involves studying the basics of the sector like the product, itsfeatures, history, manufacturing process, components of cost of production, overview of theindustry, history of the industry, challenges faced, government policies and initiatives for theindustrial growth, demand supply situation and the future prospects. With 153 cement plantsand a total installed capacity of around 209 million tonnes per annum (MTPA) both as of March2009, the Indian cement industry is the second largest in the world, the largest being China,which produces over 1 billion tonnes of cement annually. During 2008-09, total cementconsumption in India stood at 178 million tonnes while exports of cement and clinker amountedto around 3 million tonnes. The industry occupies an important place in the national economybecause of its strong linkages to other sectors such as construction, transportation, coal andpower. Cement is a highly freight-sensitive product, given that it is a high-bulk, low-valuecommodity, The Indian cement market therefore is largely a regional one, which also meansthat the demand-supply dynamics may be different for the various regions and the country as awhole.OBJECTIVES OF THE STUDY To study the performance of the Indian cement industry To examine the factors influencing the demand for cement in India To study the government rules and policies with regards to the Indian Cement Sector. To get an idea of the challenges faced by the Indian cement sector and its future outlook. SCOPE OF THE STUDY The scope of the study lies in getting familiar with the performance of the Indian cementsector and its characteristics. The paper has been prepared within the boundaries of topics likebasics of cement, overview of the cement industry, the steps taken up the government for thegrowth of the cement sector, the challenges faced by the industry and future outlook. LIMITATIONS OF THE STUDY The study is purely based on the secondary data. All the limitations suffered by thesecondary data are applicable to this paper.
METHODOLOGY OF THE STUDY The secondary data was collected by- Reading various articles on the cement industry- Studying the annual reports of the cement manufacturing companies- Visiting various websites for latest news on the cement sectorHYPOTHESISH1- The cement industry is highly cyclical in nature and its performance largely depends onthe health of the economyH 0 - The nature of cement industry is not cyclicalThere is a high degree of correlation between the GDP growth and the growth in cementconsumption. This can be gauged by the fact that after experiencing robust growth from 1994 to1996, the sector was one of the worst affected due to economic slowdown during 1997 to 1999.The industry registered an impressive growth of 15 per cent during the 1999-2000 which wasmainly due to demand from housing sector which accounts for 60 per cent of cementconsumption, the rest accounted equally between infrastructure and industry/others. In India,cement consumption and sales follows a seasonal pattern with lean sales during the monsoonseason (July- September) and higher sales during October-March.H1 - The cement industry is one of the most energy-intensive sectors within the Indianeconomy.H 0 - The cement industry is not the most energy-intensive sectors in the Indian economy. The cement industry is one of the most energy-intensive sectors within the Indian economy.Clinker production is the most energy intensive step, accounting for nearly 75 per cent of theenergy used in cement production. In India, an estimated 90-95 per cent of the thermal energyrequirement in cement manufacturing is met by coal. The remaining is met by fuel oil and high-speed diesel oil. Generally, the cement industry in India on an average requires 90-105 units ofpower in the wet process, and 100-110 units of power in the dry process to produce one tonneof cement. The energy costs and cement freight costs are the two most important elements inthe cost structure of a cement company.
TYPES OF CEMENT AVAILABLE IN INDIAN MARKETSMost common types of cement available in the market:Product DifferentiationPortland CementPortland Cement is a blend of finely pulverized clinkers, manufactured by burning materialscontaining lime, alumina, iron and silica in pre-determined proportion at very high temperatures.Normally, gypsum or its derivatives are added during the grinding stages for set control.Types of Ordinary Portland Cements a) OPC 43 Grade b) OPC 53 Grade43 Grade Cement (OPC 43 Grade)Commonly used cement in all constructions including plain and reinforced cement concrete,brick and stone masonry, floors and plastering. It is also used in the finishing of all types ofbuildings, bridges, culverts, roads, water retaining structures, etc. What is more, it surpassesBIS Specifications (IS 8112-1989 for 43 grade OPC) on compressive strength levels.53 Grade CementThis is an Ordinary Portland Cement which surpasses the requirements of IS: 12269-53 Grade.It is produced from high quality clinker ground with high purity gypsum. 53 Grade OPC provideshigh strength and durability to structures because of its optimum particle size distribution,superior crystalline structure and balanced phase composition.Ordinary Portland cement (OPC): The standard, grey cement used for most purposes.Rapid Hardening Portland cement: Chemically very similar, but ground finer. Sets as slowly asOPC, but its gains quick strength more so after it sets.Sulphate Resisting Portland cement (SRPC): Cement used for underground work, particularlywith "aggressive" i.e. sulphate containing groundwater.High Alumina Cement (HAC) A special type of cement that develops rapid strength and possesses high chemical resistance.It can also be utilised for refractory concretes, e.g. in steelworks, using the white version. Aphenomenon known as "inversion occurs in HAC when it gets hot and w Raw materials used inthe manufacturers of Portland cement. The two main raw materials employed during themanufacturer of Portland cement are calcareous materials like limestone, chalk, shells or marland argillaceous materials like clay and shale (rich in silica).
Blended CementsFly-ash based Portland Pozzolana CementThis is a special blended cement, produced by inter-grinding higher strength Ordinary PortlandCement clinker with high quality processed fly ash - based on norms set by the companys R&Ddivision. This unique, value-added product has hydraulic binding properties not found in ordinarycements.Portland Slag CementThis is slag-based blended cement that imparts strength and durability to all structures. It ismanufactured by blending and inter-grinding OPC clinker and granulated slag in suitableproportions as per our norms of consistent quality. PSC has many superior performancecharacteristics which give it certain extra advantages when compared to Ordinary PortlandCement.THE ROLE OF INDIAN CEMENT INDUSTRY IN THE INDIAN ECONOMYThe Role of Cement Industry in India GDP is significant in the economic development of thecountry. The cement industry in India is one of the oldest sectors in India. The industry is drivenby the immense growth in the housing sector, the infrastructure development, and constructionof transportation systems. An increased outflow in infrastructure sector, by the government aswell as private builders, has raised a significant demand of cement in India. It is the key rawmaterial in construction industry. Also, it has highly influenced those bigger companies toparticipate in the growing sector. At least 125 plants set up by the big companies in India withabout 300 other small scale cement manufacturers, to fulfill the growing demand of cement.Being one of the vital industries, the cement industry contributes to the nationâ€™ssocioeconomic development. The sum total utilization of cement in a year indicates thecountryâ€™s economic growth.The demand of cement in year 2009-2010 is expected to increase by 50 million tons despite ofthe recession and decline in demand of housing sector. Against Indiaâ€™s GDP growth of 7%,the experts have estimated the cement sector to grow by 9 to 10 % in the current financial year.Major Indian cement manufacturers and exporters have all made huge investments in the lastfew months to increase their production capability. This heralds an optimistic outlook for cementindustry. The housing sector in India accounts for 50 % of the cementâ€™s demand. And thedemand is expected to continue. With the constant effort made by cement manufacturers andexporters, India has become the second largest cement producer in the world. Madras CementLtd., Associated Cement Company Ltd (ACC), Ambuja Cements Ltd, Grasim Industries Ltd, andJ.K Cement Ltd. are among few renowned names of the major Indian cement companies.
MEASURES TAKEN UP BY THE GOVERNMENT FOR THEDEVELOPMENT OF CEMENT INDUSTRYIn India, the foundation of a stable Indian cement industry was laid in 1914 when the IndianCement Company Ltd. manufactured cement at Porbundar in Gujarat. In the initial stages,particularly during the period before Independence, the growth of the sector had been very slow.The indigenous production of cement was not sufficient to meet the entire domestic demandand accordingly, the Government had to control its price and distribution statutorily. Also, thelarge quantities of cement had to be imported for meeting the deficit in the economy. However,with liberalisation and introduction of several policy reforms, the cement industry has beendecontrolled which gave impetus to its pace of growth. It has made rapid strides both incapacity/ production and process technology terms. Today, it is one of the most advanced andpioneering sectors in the country. Cement is a basic material input which facilitates thepromotional and developmental efforts, at a fast pace, in the areas of infrastructural set up andother construction related works. Since it is a decontrolled commodity, its production and pricesare largely governed by economic factors, like, demand and supply, cost of raw materials andother inputs, production as well as distribution costs.The Indian cement industry is extremely energy intensive and is the third largest user of coal inthe country. It is modern and uses latest technology, which is among the best in the world. Onlya small segment of industry is using old technology based on wet and semi-dry process. Also,the industry has tremendous potential for development as limestone of excellent quality is foundalmost throughout the country. In other words, it is experiencing a boom on account of overallgrowth of the Indian economy, cost control continuous technology upgradation, etc. This hasimmensely helped it to conserve energy and fuel as well as to save materials substantially.India is the second largest manufacturer of cement in the world. It is engaged in the productionof several varieties of cement such as Ordinary Portland Cement (OPC), Portland PozzolanaCement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, RapidHardening Portland Cement, Sulphate Resisting Portland Cement, White Cement, etc. They areproduced strictly as per the Bureau of Indian Standards (BIS) specifications and their quality iscomparable with the best in the world. At present, the Indian cement industry comprises 134large cement plants with an installed capacity of 173.08 million tonnes and more than 350operating mini cement plants with an estimated capacity of 11.10 million tonnes per annum,making a total installed capacity of 184.18 million tonnesGrowth in domestic cement demand is expected to remain strong, given the revival in thehousing markets, continued Government spending on the rural sector, and the gradual increasein the number of infrastructure projects being executed by the private sector. Thus, the trend indemand growth seen during the last five years is expected to continue over the medium term.Also, with Government targeting an over 8% GDP growth rate, cement demand should grow at8-10% over the next few years. The industry may be expected to add another 130-135 milliontonnes of cement capacity in phases over the next four years, that is, during the period 2009-10to 2012-13.
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