The document discusses the cement industry in India. It notes that India is the second largest cement producer globally, with over 360 million tonnes of annual production capacity as of 2014. Cement demand is driven primarily by the housing and infrastructure sectors. While cement consumption per capita remains low compared to global averages, continued economic growth is expected to drive further expansion of cement production capacity in India to meet rising demand. The industry employs over a million people directly and indirectly and contributes significantly to India's economy and development.

1. CEMENT INDUSTRY
IN
INDIAN ECONOMY
Dr.C.Muthuraja, M.A, M.Phil, PhD
Joint Secretary, Madurai Productivity Council
& Dean of Curriculum Development & Research
The American College, Madurai - 625 002, TAMIL NADU
(cmuthuraja@gmail.com) - (M-09486373765)
Compiled and Presented at 32nd
All India Cement Seminar on ‘The Cement Industry & The Market
Environment’ organized by Madurai Productivity Council in association with National Productivity Council,
New Delhi during 19-20 June 2015 at Chennai
SINCE 1881

2. INTRODUCTION
♦ Cement - an essential component of infrastructure
development -important input of construction
industry- for the country’s socioeconomic growth
♦ second most consumed material on the planet
♦ Providing employment to more than a million
people, directly or indirectly
♦ attracted huge investments, from both Indian and
foreign investors, making it the second largest in
the world
♦ currently in a turnaround phase, trying to achieve
global standards in production, safety, and energy-
efficiency
SINCE 1881

3. Background
♦ accounting for about 8% of the total global production
♦ total capacity of over 360 m tonnes (MT) as of financial
year ended 2013-14
♦ cyclical commodity with a high correlation with GDP
♦ The housing sector is the biggest demand driver of cement,
accounting for about 67% of the total consumption
♦ other major consumers of cement include infrastructure
(13%), commercial construction (11%) and industrial
construction (9%)
♦ grew at a commendable rate in the previous decade,
registering a compounded growth of about 8%
♦ per capita consumption of cement in India still remains
substantially low at about 192 kg when compared with the
world average which stands at about 365 kg (excluding
China)
♦ tremendous scope for growth in the in the long termSINCE 1881

4. The Role of Cement Industry in India
SINCE 1881
♦ The infra-development of the country is the demand driver
for the cement industry
♦ experiencing the entry of many foreign players in the
Indian market
♦ The growth rate of the production of cement during the
year 2006-07 was 9.1%
♦ The cement industry in India constitutes of 365 small
cement manufacturing units and 130 large cement
manufacturing units
♦ The total installed capability of the cement manufacturing
is 165 million tonnes per year
♦ The large manufacturing units accounts for 94% of the
total output of cement

5. Product & Competitors
♦ Cement is a bulk commodity and a low value product
♦ It is sold in 50 kg packs as OPC grade 33, 43, and 53
♦ It is used in all construction activities as a primary
constituent of concrete
♦ Due to similar raw material inputs and production
processes, there is no significant differentiation in the
cement produced across firms
♦ The Indian cement industry has a large number of
fragmented firms
♦ There is also a dearth of new players as incumbents have
already procured key raw material sources, like limestone
reserves on long-term leases
♦ Further, large firms are continuously consolidating by
acquiring smaller ones that find it difficult to attain
minimum efficient scale of production
SINCE 1881

6. Employment Opportunities
♦ The Indian Cement industry in India consists of organized
and the unorganized sector
♦ Organized sector constitutes the cement producing
industries while the main players of the unorganized sector
are the regional and local cement producing units in
various states across the state
♦ Job opportunities are available in organized and the
unorganized sector
♦ In most cases, one needs to have some type of expertise in
architecture in order to get a job in this sector
♦ There are many opportunities for site engineer, packaging
engineer, surveyor, geologist, contractor, supervisor and
other posts
SINCE 1881

7. Environmental Issues
♦ Greenhouse gas emissions from cement manufacturing
pose a serious environmental threat
♦ Currently, the cement industry generates 5% of India's
total carbon-dioxide emissions
♦ With stringent emission norms, the production process
needs to be made environmentally sustainable
♦ The cost of implementing new production processes that
help reduce emissions can be offset by trading certified
emission reductions (CERs)
♦ CERs are a component of national and international
emissions trading schemes, implemented through Clean
Development Mechanism (CDM) projects, in an attempt to
mitigate global warming
♦ Credits obtained through implementation of such projects
can be traded in international markets
SINCE 1881

8. Cement Industry - History
♦ Firstly in 1889 a Kolkata-based company started
manufacturing cement from Argillaceous
♦ Later the industry started getting the organized shape in
the early 1900's
♦ India Cement Company Ltd was established in 1914 in
Porbandar with a capacity of 10,000 tons and production
of 1000 tons installed
♦ The first initial thrust to the cement industry in India was
during the World War 1 and then the industry started
growing at a fast rate in terms of production,
manufacturing units, and installed capacity
♦ This particular stage in the history was referred to as the
Nascent Stage of Indian Cement Industry
♦ In 1927, Concrete Association of India was established to
create public awareness on the utility of cement as well as
SINCE 1881

9. Cement Industry - History
♦ The indigenous Indian cement Industry traces its history
back to 1914, at a time when the market was dominated by
imports
♦ In that first year the industry produced just 1000t of
cement, but over just 10 years this figure increased to
0.26Mt in 1924
♦ In the same 10-year bracket, India consumed a total of 2Mt
of cement, with around half imported
♦ However, the industry was fighting against poor public
perception surrounding not only domestic Indian cement,
but cements itself
♦ Many producers went out of business as a result of price-
wars between Indian producers who were aiming at a
bigger slice of the future marketSINCE 1881

10. Status of Indian Cement Industry
♦ The Industry recorded an exponential growth with the
introduction of partial decontrol in 1982 culminating in
total decontrol in 1989
♦ Largest Cement Producing Country in the World, next
only to China
♦ The capacity, which was 29 Mn.t in 1981-82, rose to 340
Mn.t at the end of FY12
♦ While it took 8 decades to reach the 1st 100 Mn.t capacity,
the 2nd 100 Mn.t was added in 11 years and the 3rd 100
mn.t was added in just 3 years
♦ The industry has around 65 companies having around 200
cement plants
♦ Industry is producing World class high quality& different
varieties of cement to suit a host of applications matching
the world's best in quality
SINCE 1881

11. Status of Indian Cement Industry
♦ Facing a chronic problem of insufficient availability of the main
fuel coal, driving the manufacturers to resort to use of
alternatives at steep cost
♦ Taxes and Government levies on cement are high compared to
countries in Asia pacific region
♦ branded as the highest polluter of environment, now meets the
pollution standards, and no longer a polluter today
♦ Contributes to environmental cleanliness by consuming
hazardous wastes like Fly Ash (around 30 Mn.t) from Thermal
Power Plants and the entire 8 Mn.t of granulated Slag produced
by Steel manufacturing units and also using alternate fuels and
raw materials
♦ using advanced and environment friendly technologies
♦ Implemented Waste Heat Recovery System for co-generation of
power in cement plants thereby reducing CO2 emission
SINCE 1881

12. Status of Indian Cement Industry
♦ As a part of CSR, the Cement Industry takes care of the social
needs not only of the employees in the field of Education,
Health, Environment ,Water Supply, Power but also adopts
several villages around the factories providing free drinking
water, electricity, medical and educational facilities
♦ Cement Industry employs approx 5 lakh people in direct and
indirect employment in the country and contributes approx. Rs.
32500-35000 crore annually to the national exchequer through
various taxes and levies
♦ Exports Cement/Clinker to around 30 countries across the globe
and earns precious foreign exchange.
♦ deserves due support from the Government by avoiding
imposition of high levies and duties, making available various
inputs like fuel, power, transport etc. at reasonable prices and in
required quantities and help its growth and improve
competitively both in domestic and international marketsSINCE 1881

13. Market Size
♦ expected to grow at a compound annual growth rate (CAGR) of
8.96 percent during the period 2014-2019. In India, the housing
sector is the biggest demand driver of cement, accounting for
about 67 per cent of the total consumption
♦ To meet the rise in demand, cement companies are expected to
add 56 million tonnes (MT) capacity over the next three years
♦ register a growth of eight per cent by next year end to 395 MT
from the current level of 366 MT. It may increase further to 421
MT by the end of 2017
♦ The country's per capita consumption stands at around 190 kg.
A total of 188 large cement plants together account for 97 per
cent of the total installed capacity in the country, while 365
small plants account for the rest. Of these large cement plants,
77 are located in the states of Andhra Pradesh, Rajasthan and
Tamil Nadu
♦ The top 20 cement companies account for almost 70 per cent of
the total cement production of the country
SINCE 1881

14. Investments
♦ According to data released by the Department of Industrial
Policy and Promotion (DIPP), cement and gypsum
products attracted foreign direct investment (FDI) worth
US$ 3,084.89 million between April 2000 and December
2014
♦ major investments in Indian cement industry are:
♦ Dalmia Cement (Bharat) Ltd has invested around Rs 2,000
crore (US$ 321.12 million) in expanding its business in
North East over the past two years
♦ The company currently has three manufacturing plants in
the region — one in Meghalaya and two in Assam.
♦ JSW Group plans to expand its cement production capacity
to 30 million tonnes per annum (MTPA) from 5 MTPA
now by setting up grinding units closer to its steel plants.SINCE 1881

15. Investments
♦ UltraTech Cement Ltd has charted out its next phase of
Greenfield expansion after a period of aggressive
acquisitions over the last two years
♦ Following its takeover of two cement plants owned by the
Jaypee group, UltraTech has plans to set up two Greenfield
grinding units in Bihar and West Bengal, according to Mr
O P Puranmalka, MD, UltraTech
♦ JSW Cement Ltd has planned to set up a 3 MTPA
clinkerisation plant at Chittapur in Karnataka at an
estimated cost of Rs 2,500 crore (US$ 401.55 million)
♦ Andhra Cements Ltd has commenced the commercial
production in the company's cement plants – Durga
Cement Works at Dachepalli, Guntur and Visakha Cement
Works at Visakhapatnam
SINCE 1881

16. Report on ‘Indian Cement Industry Outlook
 The Indian cement industry increased in value at a
compound annual growth rate (CAGR) of 13.14% during
the review period (2007–2011), and is projected to grow at
a CAGR of 10.64% over the forecast period (2012–2016)
 The Indian government invested US$500 billion on
infrastructure during the Eleventh Five-Year Plan (2007–
2012) and revealed plans to invest a further US$1 trillion
on infrastructure during the Twelfth Five-Year Plan
(2012–2017)
 Large township projects in the suburbs of India's leading
cities where IT zones are prominent are also generating
more demand for RMC. Upcoming infrastructure projects,
including energy, roads, ports and airport projects, across
India will continue to drive the growth of RMC in India
over the forecast period
SINCE 1881

17. Latest Developments
♦ expected to grow steadily in 2010-2011 and increase capacity
by another 50 million tons in spite of the recession and decrease
in demand from the housing sector
♦ project the sector to grow by 9 to 10% for the current financial
year provided India's GDP grows at 7%
♦ The major companies have made investments to increase the
production capacity in the past few months, heralding a positive
outlook for the industry
♦ The housing sector accounts for 50% of the demand for cement
and this trend is expected to continue in the near future
♦ The Indian Cement Industry with Modernization and technology
up-gradation has become a continuous process for industry
♦ At present international standards and benchmarks in the quality
of cement and building materials produced are met in India and
is able to compete international markets
SINCE 1881

18. Latest Developments
♦ Substantial technological improvements resulting in increased
capacity, reduction in cost of production of cement
♦ In 2003, a Cris Infac study mentioned that the cement industry
could had the capacity addition of approximately 50 MT by
2008, of which Greenfield expansions would contribute 40 MT
while debottlenecking of the plants and increase in blending
ratios would add another 10 MT, taking the total capacity of the
cement industry to around 180 MT
♦ The industry has a current capacity of 324 MTPA and operates
at 75-80 per cent utilisation
♦ The cement and gypsum products sector has attracted foreign
direct investments (FDI) worth US$ 2,625.90 million between
April 2000 to November 2012, according to the data published
by the Department of Industrial Policy and Promotion (DIPP)
SINCE 1881

19. Cement Industry - Future
♦ few are betting against continued capacity additions in the
short- to medium-term
♦ India Brand Equity Foundation (IBEF) reported that the
cement industry would increase production by around
71Mt/yr over the same time-frame to reach over 300Mt/yr
in 2014
♦ 12th Five-Year Plan, states that India will require a cement
capacity in the region of 480Mt/yr by the end of 2017. It
states that a further 150Mt/yr of capacity will be required
to accomplish this.
♦ ACC expects India to have a capacity of 500Mt/yr by 2020
♦ The government promises significant investment in
infrastructure, although bureaucracy has hampered such
investments in the past.SINCE 1881

20. Conclusion
♦ The Indian cement industry is large, growing and, with
consumption of just 185kg/capita/yr in 2011 (compared to
global average of ~300kg/capita/yr) the country itself has
the capacity to demand significantly more cement as it
develops
♦ However, cement producers are keen to maintain their
market share and so expand to secure future demand
♦ The cement industry is experiencing a boom on account of
the overall growth of the Indian economy primarily
because of increased industrial activity, flourishing real
estate business, growing construction activity, and
expanding investment in the infrastructure sector
SINCE 1881

21. SUMMARY
♦ consolidation over the coming years
♦ Producers that can differentiate their cement from others or can
make savings on production costs by their competitiveness
♦ Cement demand is closely linked to the overall economic
growth, particularly the housing and infrastructure sector
♦ Given the Narendra Modi’s government’s thrust on housing and
infrastructure development, cement demand is expected to pick
up in the coming times
♦ The weakness in the international crude oil prices and other
commodities should help bring costs under control and improve
profitability of the sector
♦ If inflation comes under control, a likely lowering of interest
rates would be a big positive for the cement sector
♦ Higher government spending on infrastructure, robust growth in
rural housing and rising per capita incomes are likely to augur
well for the cement industrySINCE 1881

22. ?????????
♦ QUESTIONS
♦ DOUBTS
♦ CLARIFICATIONS
♦ REMARKS (IF ANY)
SINCE 1881

23. WWW.THANKS.COM
THANKING YOU !?
SINCE 1881