presentation of CP-I project on CEMENT INDUSTRY

1. Cement Industry In India
Presented by:-
Mansi Bhimani
(16F55)
Mahmmadjameerkhan I. Pathan (16M21)
Under the guidance
of:
Dr. R.P. Patel

2.  India, being the second largest cement producer in the
world after China with a total capacity of 151.2 Million
Tones (MT), has got a huge Cement Company.
 The cement industry in India is dominated by around 20
companies, which account for almost 70% of the total
cement production in India.
 The key drivers for cement demand are real estate sector,
infrastructure and industry expansion projects. Among
these real estate sector is the key driver of cement demand
The demand for cement is closely related to the growth in
the construction sector.

3.  To find out the growth rate of cement industry in
India.
 To study political, economic, social, technological,
environmental, and legal factor affected to cement
industry in India by doing PESTEL analysis.
 To study rivalry competitions power of supplier, power
of buyers , threat of substitutes , threat of new enters
by doing Porter’s five force analysis.
 To study the market share of major cement companies
in India.
 To study the distribution channels of Indian cement
industry.
 To study the financial positions of major cement
companies of India.

4.  The scope of the study lies in getting familiar
with the performance of the Indian cement sector
and its characteristics.
 The project has been prepared within the
boundaries of topics like basics of cement,
overview of the cement industry, the steps taken
up the government for the growth of the cement
sector, the challenges faced by the industry and
future outlook, financial analysis etc.

5.  DATA COLLECTION METHOD:
 Data has been collected through secondary sources.
 Like company's websites , broking sights, online
journals etc.
 Data Analysis:
 Data has been analyzed with the help of ratios and
percentages. For financial analysis company’s financial
statements have been studied and ratios are computed
out of it.

6.  The Role of Cement Industry in India GDP is
significant in the economic development of the
country. The cement industry in India is one of the
oldest sectors in India.
 The industry is driven by the immense growth in the
housing sector, the infrastructure development, and
construction of transportation systems.

7.  PRODUCT PROFILE OF INDUSTRY
 Ordinary Portland cement (OPC)
 Portland Pozolona Cement (PPC)
 Portland Blast Furnace Slag Cement (PBFSC)
 White Cement
 Specialized Cement
 Innovation Potential
 Continuous technological upgrading and assimilation
of latest technology has been going on in the cement
industry.
 Adoption of modern technology and equipment

8.  Economic Policy
 Controlling pollutions:
 Infrastructure development
 INDUSTRYAND TRADE POLICY
 Increased focus on infrastructure development led to
higher construction resulting in higher cement
imports and trade.
 Trade with neighboring countries .

9.  DEMAND DETERMINATION OF CEMENT
INDUSTRY
 Second largest cement producer
 Departmental and non-departmental enterprises - 21%
 Government and defense - 18%, Housing - 42 %
 INCOME
 Easy availability of finance
 PENETRATION

10. The four broad segments of the commercial
construction sector, retail, office space, hotels, and
civil structures.
PRICE
Price factors in general when the price of factors
namely labor and raw materials increases the cost
of production increases as a result the supply
decreases.
TECHNOLOGY
If Best Available Technologies can be adopted
LIFE CYCLE STAGE
Clay building products

11.  The housing sector is the biggest demand driver of cement,
accounting for about 67 per cent of the total consumption
in India. The other major consumers of cement include
infrastructure at 13 per cent, commercial construction at 11
per cent and industrial construction at 9 per cent.
 CEMENT SECTOR: THE KEY ISSUE:
 Hike in diesel prices, making transport cost (freight)
dearer. With low demand in over supply regime,
industry is unable to pass on the higher costs to end
user thereby keeping their margin under pressure or
voluntarily opt to keep volume low.

12.  TRENDS IN THE CEMENT INDUSTRY
 The metro rail projects in Mumbai, Bangalore and
Hyderabad.
Airports modernization across major cities will
also expand demand.
CUSTOMER SERVICE
Individual Home Builders, Masons an
Contractors, and Professionals
A separate team of experienced graduate civil
engineers .

13.  SEGMENTATION
 Trade customers
 Individual home builders
 Non trade (Industrial) customers
 POSITIONING
 Retail Customer
 DISTRIBUTION CHANNELS
 Carry And Forwarding Agents or warehouses
 Dealers/Distributors

14. Factors contribute to variation in prices:
Regional transportation cost
Variations in regional supply and demand
Difference in the intensity of competition amongst
local retailers and distributers
Company does provide discount in bulk purchases.
PROMOTION
Print Media
Out Door Media
Role Of Sales Personal In Promotion

15.  QUALITY AND TECHNOLOGY:
 Requirements for new technologies.
 Poor quality of coal.
 LOGISTICS MANAGEMENT
 Large component of the input cost for cement
 Ports, airports and highways

16.  ACC cement
 Gujarat Ambuja cement
 Binani cement
 Ultratech cement
 Birla cement
 NUMBER OF CEMENT COMPANIES
 93 Cement Companies
 MARKET SHARE OF VARIOUS COMPANIES:
 Between them the top 12 cement firms have around
70% of the domestic market.

17.  Ultratech cement 22% Binani cement 10%
 ACC 15% Birla corporation 7%
 Ambuja 13% Shree cement 6%
 Century industry 5% Madras cement 5%
 Lafarge 5% JK cement 4%
 Jaiprakash cement 4% Zuari 2%

18.  RATIO ANALYSIS:
 Ratio Analysis includes various ratios like Profitability
Ratio, leverage ratio, and many more ratios. Ratio
Analysis is defined as the systematic use of ratio to
interpret the financial statements.
 So the strengths and weaknesses of a firm, as well as its
historical performance and current financial condition
can be determined.

19.  A class of financial metrics that are used to assess a
business's ability to generate earnings as compared to
its expenses and other relevant costs incurred during a
specific period of time.
 Ratios are operating profit margin, gross profit
margin and net profit margin.

20.  EBIT/Net Sales=
0
5
10
15
20
25
30
Ambuja
ACC
Ultratech
Birla
2012
2013
2014
2015
2016

21.  Gross Profit/Net Sales = ____%.
0
2
4
6
8
10
12
14
16
18
20
Ambuja ACC Ultratech Birla
2012
2013
2014
2015
2016

22.  : Net Income/Net Sales = _____%.
0
2
4
6
8
10
12
14
16
Ambuja ACC Ultratech Birla
2012
2013
2014
2015
2016

23.  Any ratio used to calculate the financial leverage of a
company to get an idea of the company's methods of
financing or to measure its ability to meet financial
obligations.
 There are several different ratios, but the main factors
looked at include debt, equity, assets and interest
expenses.

24.  Long-term Debt/Long-term debt + Stockholder's
Equity = ___%
0
0.1
0.2
0.3
0.4
0.5
0.6
Ambuja ACC Ultratech Birla
2012
2013
2014
2015
2016

25.  EBIT/interest
0
5
10
15
20
25
30
Ambuja ACC Ultratech Birla
2012
2013
2014
2015
2016

26.  Rate of cash earning retention ratio:
0
10
20
30
40
50
60
70
80
90
100
Ambuja ACC Ultratech Birla
2012
2013
2014
2015
2016

27.  By doing DuPont Analysis one can evaluate power of a
firm.
 It shows the combined effect of three aspects –
operating efficiency, financing efficiency and
retention. It is a product of the assets turnover, gross
profit margin and operating leverage.

28. 0
5
10
15
20
25
30
Ambuja ACC Ultratech Birla
2012
2013
2014
2015
2016

29. 0
2
4
6
8
10
12
14
16
18
Ambuja ACC Ultratech Birla
2012
2013
2014
2015
2016

30.  Earnings per share= PAT- preference dividend / no. of
equity shares
0
10
20
30
40
50
60
70
80
90
100
Ambuja ACC Ultratech Birla
2012
2013
2014
2015
2016

31.  Dividend paid to ordinary shareholder / no. of equity
shareholder
0
5
10
15
20
25
30
35
Ambuja ACC Ultratech Birla
2012
2013
2014
2015
2016

32.  Market price per share / earning per share
0
5
10
15
20
25
30
35
40
45
Ambuja ACC Ultratech Birla
2012
2013
2014
2015
2016

33.  PESTEL ANALYSIS:
 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.

34.  SEZ Act to improve Infrastructural Development:
 Government participation
 Political stability
ECONOMIC:
 Growth in Construction Activity improving GDP
Growth
 Increase in Per Capita Income
 Rate hikes unlikely to slow down growth
 FDI Liberalization to enhance industry growth

35.  Shifting consumption pattern to fuel industry growth
 Creation of direct and indirect jobs each year
 Lifestyle and standard of living
TECHONOLOGICAL:
 New technology adopted by industry
 Advanced control systems with soft sensors
 Integrated computerized quality control systems
 Mines planning
 •Bulk analyzer
 Raw mix design and blending

36.  Easing environment norms:
 •Minimize those operations which adversely affect
the environment (air, water or land)
 Comply with applicable laws and regulations:
 •Air (Prevention & Control of Pollution) Act, 1986
 • The Environmental (Protection) Act 1986.
LEGAL:
 In India, the Department of Industrial Policy and
Promotion (DIPP), under the Ministry, is the nodal
agency for the development of cement industries, that
is, it is involved in monitoring their performance at
regular intervals and suggesting suitable policy
incentives, as per the requirement.

37.  Some of the rules and orders, administered by DIPP,
relating to the cement industry are:-
 •Cement Control Order, 1967
 •Cement Cess Rule, 1993
 •Cement (Quality Control) Order, 1995

38. PORTER’S FIVE FORCES MODEL FOR CEMENT INDUSTRY:
BARGAINING POWER OF
SUPPLIERS: HIGH
GOI exercise excessive control on
coal and power prices & supply. Govt.
authorities also control the
transportation sector.
BARGAINING POWER OF
SUPPLIERS: HIGH
GOI exercise excessive control on
coal and power prices & supply. Govt.
authorities also control the
transportation sector.
BARGAINING POWER OF
BUYERS: LOW
In the recent past the cement industry is
witnessing major change in purchase
quantity. Now the share of small
purchases i.e. retail purchases have been
rising whereas that of bulk purchases
has declined. Moreover with industry
operating at above 90% level increases
the bargaining power of manufacturers.
BARGAINING POWER OF
BUYERS: LOW
In the recent past the cement industry is
witnessing major change in purchase
quantity. Now the share of small
purchases i.e. retail purchases have been
rising whereas that of bulk purchases
has declined. Moreover with industry
operating at above 90% level increases
the bargaining power of manufacturers.
RIVALRY AMONG THE FIRMS: HIGH
Large numbers of players, overcapacity, High
degree of product homogeneity, high storage cost
and high exist barriers, creates intense rivalry
among the firms.
RIVALRY AMONG THE FIRMS: HIGH
Large numbers of players, overcapacity, High
degree of product homogeneity, high storage cost
and high exist barriers, creates intense rivalry
among the firms.
THREAT OF SUBSTITUTE: LOW
Use of bitumen in road construction and
engineering plastic in building creates
some concern for the industry.
THREAT OF SUBSTITUTE: LOW
Use of bitumen in road construction and
engineering plastic in building creates
some concern for the industry.
BARRIERS TO ENTRY: MEDIUM
TO HIGH
High capital investment, distribution
network and oversupplied market deters
new entrants. However technology and
manpower are easily available.
BARRIERS TO ENTRY: MEDIUM
TO HIGH
High capital investment, distribution
network and oversupplied market deters
new entrants. However technology and
manpower are easily available.

39.  STRENGTH:
 Growing Domestic cement consumption at approx. CAGR
of 8% in last 3 years
 Highly Capital Incentive so difficult for small entrant
 Not much restriction by govt.
 Market consolidation taking place
 WEAKNESS:
 High Oil Prices, Cost of Power increase production cost.
 Supply exceeds Production lead to competition in price.
 Low Quality as compared to international standard but
improving.

40.  High Mortgage Penetration -Low Interest Rates
 Easy loan availability for housing finance
 Increased investments in Infrastructure Increased
govt. outlay on BHARATNIRMAN, GOLDEN
QUADRILATERAL, and BRTS etc.
Threat:
 Further Hike in Oil Prices
 Use of plastic engineering in construction
 Subprime market loss may affect

41.  Future Outlook
 - Bright
 - Growth oriented policies
 Future business scenario of cement industry
 Managing Expectations
 HR Imperatives
FUTURISTIC SCENARIO OF THE INDUSRTY

42.  Cement Industry has progressed in India since last
decade .
 We expect that in the presence of global competitors
and a global market, Indian companies would be able
to acquire most of the share of this market following
sound business strata-gems as summarized below:
 The problem of up scaling and surviving competition
with multinational companies calls for Consolidation
and Globalization amongst all Indian cement players.

43.  The companies have to get a higher share of sales in
the market. This would require multi-product entities.
Indian Companies need to focus on products other
than just cement like RMC (Ready Mix Concrete), and
research new building materials that will create a
niche for them in the market.
 To serve as a truly global company, the operations of a
company can’t just be restricted to India.