3. Second largest Cement
market
Dominated by private
players
Higher share of large
plants
Large concentration in
South and West
• With nearly 300 million tonne of cement production capacity, India is the second largest
cement producer in the world
• Of the total capacity, 98 per cent lies with the private sector and the rest with public sector
• 185 large cement plants together account for 97 per cent of the total installed capacity,
while 365 small plants account for the rest
• Of the total 185 large cement plants in India, 77 are located in the states of Andhra
Pradesh, Rajasthan and Tamil Nadu
Source: Planning Commission, Aranca Research
4. FY12
•
Production
capacity:
247 million
tonnes •
Growing demandRobust demand
Robust infrastructure growth •
during 12th Five Year Plan to drive
growth
•
Demand is expected to be
boosted by growth in real estate
sector
Advantage
India
Increasing investments
Long-term potential FY20E
Oligopoly market, where large
players have partial pricing control Production
capacity:
Low threat from substitutes 407 million
tonnes
Attractive opportunities
• Robust investments are being
made by the existing players to
expand their capacity
• Increasing presence of Tier II
cement players
• Use of alternate fuels to lower
production costs and emissions
• The engineering sector is delicensed;
• The North-East, which is witnessing
a construction boom, offers
attractive investment opportunities
• Due to policy support, there was
• Large planned investments inn into
infrastructure and housing is likelyto
boost demand for cement in thetal
coming years as wellthat period
Source: Edelweiss
Notes: FY20E - Estimated market size for 2020
5. Cement Industry
(FY13)
Large Cement Plants
• Cement plants: 185
• Installed capacity: 339.5 mtpa
• Cement production: 168.3 mtpa*
Mini And White Cement Plants
• Cement plants: 365
• Installed capacity: 11.1 mtpa
• Cement production: 6.0 mtpa*
Source: Cement Manufacturers’ Association (CMA),Planning Commission, Aranca Research
Note: mtpa - Million Tonnes Per Annum, * FY12 data
6. India is the 2nd largest cement producer as well as consumer in the world led by the enormous growth in the infrastructure
and construction sector for the last two decades
Top Cement Consumers in 2011 (million Top Cement Producer in 2011 (million
tonnes) tonnes)
2,048
2,058
229
72 65 58 56 56 50 49 48
222 66 66 64 63 56 56 52 49
Source: International Cement Review, Aranca Research
7. Cement production increased at a CAGR of 9.7 per cent to
272 million tonnes over FY06-13
As per the 12th Five Year Plan, production is expected to
reach 407 million tonnes by FY17
Production of Cement (million tonnes)
407
368
CAGR:10.0% 332
272 300
229247
207
182
142 156 168
Source: Department of Industrial Policy and Promotion,
Working group for 12th Five Year Plan, Aranca Research
Notes: E - Estimate, CAGR - Compound Annual Growth Rate
8. Domestic cement consumption is expected to reach 265
million tonnes in FY13 from 222 million tonnes in FY11
The consumption is further expected to increase at a CAGR
of10.2 per cent during FY11-17 and reach 398 million
tonnes
Domestic Cement Consumption (million tonnes)
398
CAGR:10.2%
324 359
265 293
222 242
FY11 FY12 FY13E FY14E FY15E FY16E FY17E
Source: Working group for 12th Five Year Plan, Aranca Research
Notes: E - Estimate, CAGR - Compound Annual Growth Rate
9. Cement production capacity reached 350 million tonnes in
FY13 from 323 million tonnes in FY11
Production capacity is expected to increase at a CAGR of
6.8 per cent during FY11-17 and reach 479 million tonnes
Cement Production Capacity (million tonnes)
479
441
CAGR:6.8% 405
373
350
336
323
FY11 FY12 FY13E FY14E FY15E FY16E FY17E
Source: Working group for 12th Five Year Plan, Aranca Research
Notes: E - Estimate, CAGR - Compound Annual Growth Rate
10. Cement capacity utilisation rate is expected to touch around
78 per cent in FY13 from 71 per cent in FY11
The utilisation rate is expected to further reach 85 per cent
by FY17
500
450
400
350
300
250
200
150
Cement capacity (million tonnes) and utilisation
rate (%)
90%
85%
80%
75%
70%
65%
60%
FY11 FY12 FY13E FY14E FY15E FY16E FY17E
Capacity -LHS Production-LHS Utilisation rate (%)
Source: Working group for 12th Five Year Plan, Aranca Research
Notes: E - Estimate, CAGR - Compound Annual Growth Rate
11. Currently, India has 185 large cement plants spread across
all states
Andhra Pradesh is the leading state with 37 large cement
plants, followed by Rajasthan and Tamil Nadu having 21 3
and 19 plants, respectively
3
21
12
10
11
2
2
5
3
1
11
11
10
5
37
19
1
4
8
1
5
Source: Working group for 12th Five Year Plan, Aranca Research
12. Cement
Industry
Installed capacity (2011)
South 126.9 mtpa
North 66.4 mtpa
East 43.5 mtpa
West 44.1 mtpa
Central 37.3 mtpa
Key markets
Tamil Nadu, Andhra
Pradesh and Karnataka
Rajasthan, Punjab,
Haryana and the NCR
West Bengal,
Chhattisgarh, Orissa and
Jharkhand
West Bengal,
Chhattisgarh, Orissa and
Jharkhand
Uttar Pradesh, Madhya
Pradesh
Source: Department of Industrial Policy and Promotion, Aranca Research
Note: mtpa - Million Tonnes Per Annum
13. Rajasthan has the highest installed capacity in North India, accounting for a 66.5 per cent share in capacity in the region in
2011
Chhattisgarh leads the Eastern region with a share of 32.6 per cent of total installed capacity in the region in 2011
Shares in Total Capacity in Northern
Region (2011)
0.8% 0.8%
4.5% Rajasthan
6.0%
Shares in Total Capacity in Eastern Region
(2011)
0.5%
2.3%
7.5% Assam
Meghalaya
7.2%
14.2%
66.5%
Himachal Pradesh 32.6%
19.5%
Punjab
Uttarakhand
Haryana
Jammu & Kashmir 16.8% 20.8%
Delhi
Bihar
Jharkhand
Orissa
West Bengal
Chhattisgard
Source: International Cement Review, Aranca Research
14. Andhra Pradesh has the highest installed capacity in South India (53.5 per cent share of total installed capacity)
Madhya Pradesh leads the Central region in installed capacity, while Gujarat leads the West
Shares in total capacity
in Southern region (2011)
0.5%
18.0%
53.5%
28.0%
Andhra Pradesh Tamil Nadu
Karnataka Kerala
Shares in total capacity
in Central region (2011)
34.4%
65.6%
Uttar Pradesh Madhya Pradesh
Shares in total capacity
in Western region (2011)
45.0%
55.0%
Gujarat Maharashtra
Source: International Cement Review, Aranca Research
15. Total demand for cement is expected to grow at a CAGR of 10.2 per cent to 265.9 million tonnes during FY08-13
Cement demand from the Eastern and Central regions during FY08-13 is expected to grow at a CAGR of 13.5 per cent
and 12.1 per cent, respectively.
All India (million tonnes)
265.9
CAGR: 10.2% 236.3
210.2
196.4
177.5
163.4
FY08 FY09 FY10 FY11F FY12F FY13F
Central (million tonnes)
42.0
38.2
CAGR: 12.1%
34.3
30.8
26.2
23.8
FY08 FY09 FY10 FY11F FY12F FY13F
East (million tonnes)
46.6
41.7
CAGR: 13.5%
37.3
33.0
28.0
24.7
FY08 FY09 FY10 FY11F FY12F FY13F
Source: International Cement Review, Aranca Research
16. Cement demand from Western, Northern and Southern regions is expected to grow at a CAGR of 8.8, 8.7 and 5.6 per
cent, respectively, during FY08-13
South (million tonnes)
63.9
62.1
CAGR: 5.6%
56.4
North (million tonnes)
48.6
CAGR: 8.7%
40.8
West (million tonnes)
51.0
49.8
CAGR: 8.8% 45.4
41.4
53.8
48.6
FY08 FY09
55.5
FY10 FY11F FY12F FY13F
38.3
35.1
33.6
FY08 FY09 FY10 FY11F FY12F FY13F
38.8
34.5
32.7
FY08 FY09 FY10 FY11F FY12F FY13F
Source: International Cement Review, Aranca Research
17. UltraTech Cement, a major player in India, accounted for 15.0 per cent of the total market share in terms of installed
capacity in 2011
It is a leading player in the Southern and Eastern regions, accounting for 50.6 and 52.1 per cent of total market share,
respectively, in terms of installed capacity in 2011
All India
10.0%
7.5%
15.0%
66.1% 1.4%
Ambuja Cement ACC
Ultratech Cement Jaypee Cement
Others
South
10.2%
5.9%
9.9%
50.6%
8.3%
7.1%
8.0%
India Cement Madras Cement
Ultratech Cement Chettinad Cement
Dalmia Cement ACC
Others
East
14.2%
6.2%
52.1% 12.1%
9.8%
5.5%
Lafarge India ACC
Ultratech OCL India Ltd
Ambuja Cement Others
Source: International Cement Review, Aranca Research
18. Jaypee Cement led the Central region in terms of installed capacity, with 33.5 per cent of the market share; the Western
region was dominated by UltraTech cement with 29.0 per cent of market share in 2011
Ambuja Cements accounted for 28.9 per cent of the total market share in terms of installed capacity in the Northern region
in 2011
North
2.5%
5.5%
7.3%
28.9%
11.1%
13.8%
16.6%
14.2%
Ambuja Cement Shree Cement
Others Ultratech Cement
J K Cement ACC
Jaypee Cement Birla Cement
Central
33.5%
42.1%
12.3%
12.1%
Jaypee Cement Ultratech Cement
ACC Others
West
29.0%
47.6%
10.9%
12.5%
Ultratech Cement Jaypee Cement
Ambuja Cement Others
Source: International Cement Review, Aranca Research
19. • Presence of small and mid-size cement players across regions is increasing, which helps
Increasing presence of
small and mid-size
cement players
Cost reduction through
the use of alternate
fuels **
Increasing sale of
blended cement
to diminish market concentration of industry leaders
• Small and mid-size players have been constantly increasing their installed capacity to
cater to increasing cement demand
• Major cement manufacturers in India are increasingly using alternate fuels, especially
bioenergy, to fire their kilns
• This is not only helping to reduce production costs of cement companies, but is also
proving effective in reducing emissions
• The proportionate sales of blended varieties of cement—Portland Pozzolana Cement
(PPC) and Portland Blast Furnace Slag Cement (PBFC)—has risen over the years
• During 2011, blended cement accounted for 75 per cent of total cement production in the
country
Notes: ** The Success Stories section includes cases of successful employment
of alternate fuels in cement production to reduce production costs
20. • Holcim, a Switzerland-based major cement company has plans for capacity expansion in
India through its subsidiary ACC cement
ACC
Ambuja Cements
Dalmia Cement
• The construction of the company’s new plant at Jamul, Chhattisgarh is under process.
This plant will increase ACC’s capacity to 35 million tonnes per annum (mtpa) from 30
mtpa in a phased manner by 2015
• Ambuja Cements is targeting an investment of USD370.4 million for capacity expansion in
Rajasthan and Northern India
• The proposed project in Rajasthan is expected to add 5 million tonnes (MT) to Ambuja
Cements’ existing production capacity
• Dalmia Cement is planning an investment of USD333.3 million to ramp up its
manufacturing capacity to 21 mtpa from the existing 17 mtpa over the next two years.
• Dalmia has plans to set up a 2.5 million tonne (MT) greenfield unit at Belgaum in
Karnataka. It also plans to scale up its two plants in North-East India for a total value of
USD239 million and USD9.2 million, respectively
Source: Aranca Research
21. • Heidelberg Cement, a Germany-based cement manufacturer has commissioned Phase-I
of its Jhansi grinding unit
Heidelberg Cement
Vicat Group
Amrit Cement
• The company has undertaken an investment worth USD 259.4 million for expanding its
capacity to 2.7 million tonnes (MT)
• Heidelberg aims to ramp up the operational capacity to 6 MT at its Damoh plant in Madhya
Pradesh
• Vicat Group, a France-based company plans to sell 4.5 MT of cement in India in FY 2013
• The company has recently commissioned a joint venture cement plant Vicat Sagar
Cement at Chattrasal, Karnataka, for a total value of USD333.3 million
• Vicat Sagar will have a 2.8 MT of capacity in the first phase
• Amrit Cement India Ltd (ACIL) has announced the launch of Amrit Cement in the North-
Eastern market.
• The company plans to achieve a production level of 5 million tonnes per annum by 2015-
16 through capacity expansion in North-Eastern Bihar and Nepal
Source: Aranca Research
22. • High - Huge capital investments required
present substantial barriers to entry and
achieving economies of scale
• Low - The Indian cement market
is oligopolistic in nature,
characterised by tacit collusion,
where large players partially
control supply for better price
discipline
• Low - Cement, practically,
has no substitutes
Positive
Positive Neutral
Market
Attractiveness
Positive Positive
• Moderate - Cement players have
to depend on the railways for
carriage outward and local coal
companies for fuel, although
diversification of freight options
and fuel sources is diminishing
the suppliers’ power
• Low - Substantial market
concentration among large
players ensures low bargaining
power of buyers
Source : Aranca Research
23. Housing Growth
• The Housing segment accounts for
a major portion of the total domestic
demand for cement in India
• Real estate market is expected to
grow at a CAGR of 17.2 per cent
over 2011-15 to USD126 billion
• Growing urbanisation, an increasing
number of households and higher
employment are primarily driving the
demand for housing
• Initiatives by the government are
expected to provide an impetus to
construction activity in rural and
semi-urban areas through large
infrastructure and housing
development projects respectively
Infrastructure Growth
• The government is strongly focused
on infrastructure development to
boost economic growth
• It plans to increase investment in
infrastructure to USD1 trillion in the
12th Five Year Plan (2012-17),
compared with USD514 billion
under the11th Five Year Plan
(2007-12)
• Infrastructure projects such as
Dedicated Freight Corridors as well
as new and upgraded airports and
ports are expected to further drive
construction activity
• The government intends to expand
the capacity of the railways and the
facilities for handling and storage to
ease the transportation of cement
and reduce transportation costs
Commercial Real Estate
Growth
• The government is strongly focused
on infrastructure development to
boost economic growth
• It plans to increase investment in
infrastructure to USD1 trillion in the
12th Five Year Plan (2012-17),
compared with USD514 billion
under the11th Five Year Plan
(2007-12)
• Infrastructure projects such as
Dedicated Freight Corridors as well
as new and upgraded airports and
ports are expected to further drive
construction activity
• The government intends to expand
the capacity of the railways and the
facilities for handling and storage to
ease the transportation of cement
and reduce transportation costs
Source : McKinsey Quarterly Report, Aranca Research
24. Demand for cement is highly correlated with cyclical
activities like construction and development
Housing sector accounts for 64 per cent of the total cement
demand
Real estate market is expected to grow at a CAGR of 17.2
per cent during 2011-15 to USD126 billion
The rapidly increasing real estate industry in India is
expected to push the demand for cement
Residential real estate demand is driven by rising
population and growing urbanisation
Rising income levels are leading to higher demand
for luxury projects
Demand for affordable housing is growing in order to
meet the demand from lower income groups
Commercial real estate demand will be driven by growth in
IT/ITeS sector and organised retail
Major cement demand drivers (FY12)
6% Housing sector
13%
Infrastructure
17%
64% Commercial &
Institutional
Industrial
Source: Aranca Research
25. Investment in infrastructure is the main growth driver for the cement industry
The Planning Commission estimates total infrastructure spending to be about of 10 per cent of the GDP during the 12th
Five-Year Plan (2012-17), up from 7.6 per cent during the previous five-year plan (2007-12)
India’s investment in infrastructure is estimated to double to about USD1 trillion during the 12th plan (2012-17) compared
to the previous plan
Infrastructure Spending As % Of GDP
12th Five year plan
11th Five year plan 7.6%
FY12 8.4%
FY11 7.9%
Infrastructure Spending in % during 11th
And 12th Five-year Plan
12th Plan 264.4
10.0%
233.5
206.0
181.2
157.4
11th Plan
101.6 101.9
FY10
FY09
FY08
10th Five year plan
75.7 89.5
7.5% 69.4
7.2%
6.4%
5.2%
Source: Working group for 12th Five Year Plan
Notes: Additional capacity creation estimates are based on increase in base lines, roads, housing and fiscal support
26. North
88%
82% 84%
FY11F FY12F FY13F
West
79% 77% 80%
FY11F FY12F FY13F
South
73%
67% 68%
FY11F FY12F FY13F
Central
90% 87%
85%
FY11F FY12F FY13F
East
91%
87%
81%
FY11F FY12F FY13F
All India
82%
78% 77%
FY11F FY12F FY13F
Source: CMA, Kotak Institutional Equities, Aranca Research
Note: F- Forecast
27. Total capacity of 336 million tonnes is estimated to have
been generated in FY12
The strong momentum in capacity addition is not surprising
given the sharp growth in construction, infrastructure and
real estate in Indian economy
Hence, the 12th Five Year Plan is estimated to have an
additional capacity requirement of 156.0 million tonnes by
FY17
Capacity creation as per the 12th Five Year Plan
(million tonnes)
38.7
35.5
31.9
23.6
12.8
13.5
FY12 FY13E FY14E FY15E FY16E FY17E
Source: Working group for 12th Five Year Plan
Notes: Additional capacity creation estimates are based on
increase in base lines, roads, housing and fiscal support,
E - Estimates
28. Company/Plant
Madras Cement's
Alathiyur plant
India Cements Ltd's
Dalavoi plant
UltraTech's Gujarat
Cement Works
Lafarge's Arasmeta
plant
Strategy
Use bioenergy through
burning of coffee husk
and cashew nut shells
Use Low Sulphur Heavy
Stock (LSHS) sludge as
alternate fuel
Use tyre chips and
rubber dust as alternate
fuel
Substitute 10% of coal
used in kilns with rice
husk
Benefits
Annual cost savings of USD1.7 million
Annual savings of USD6500 approx
Reduction of about 30,000 tonnes of
carbon emissions annually
Higher energy savings and lower
carbon emissions
Source: CMA, Aranca Research
29. UltraTech is India's largest exporter of cement clinker
spanning export markets in countries across the Indian
Ocean, Africa, Europe and the Middle East
UltraTech and its subsidiaries have a presence in five
countries through 11 integrated plants, one white cement
plant, one clinkerisation plant, 15 grinding units, two rail and
three coastal terminals, and 101 RMC plants
It has an annual capacity of 52 MT
Projects: Mumbai Metro, Bangalore Metro Rail, Kolkata
Revenue and Profit after Tax (PAT) in USD billion
CAGR: 23.5% 4.0 3.9
3.0
1.5
Metro Rail, Monorail, Coastal Gujarat Power
MILESTONES
1.4 1.4
1.1
0.2 0.3 0.2
0.3 0.5 0.5
0.2
• 2004 - Acquisition of L&T’s Cement Business: UltraTech
Cement Ltd
• 2006 - Narmada Cement Company Limited amalgamated
with UltraTech
• 2010 - Samruddhi Cement Limited amalgamated with
UltraTech Cement Limited
• 2012 - Acquisition of Adhunik Cement’s Meghalaya plant
FY07 FY08 FY09 FY10 FY11 FY12 FY13
Source: Company Website (www.grasim.com, Aranca Research
Notes: RMC - Ready-Mix Concrete
30. Ambuja Cements Ltd (ACL) is one of the leading cement
manufacturing companies in India.
The company, initially called Gujarat Ambuja Cements Ltd,
was founded by Narotam Sekhsaria in 1983
Ambuja Cements is the second largest cement
manufacturer in India, with nearly 10 per cent of the market
share of total installed capacity
Revenue (USD billion)
1.8
CAGR: 5.2%
1.6
1.5
1.8
1.4
1.4
It is the market leader in Northern India with 29 per cent of
the total installed capacity
MILESTONES
• 2010 - Started cement plant at Nalagarh, Himachal
Pradesh and Dadri, Uttar Pradesh with a capacity
of 1.5 million tonnes
• 2011 - Acquired 85 per cent stake in Nepal-based Dang
Cement
• 2012 - Expansion of Sankrail Grinding Unit, thereby
increasing the capacity from 1.5 mtpa to 2.4 mtpa
FY07 FY08 FY09 FY10 FY11 FY12
Source: Company Website, Aranca Research
Note: mtpa - Million Tonnes Per Annum
31. NE India: Cement demand
• The North Eastern (NE) region has
consistently been in cement deficit for
several years
• At present, cement demand in the NE is
about 5.2 mtpa
NE India: Cement supply
• Cement manufactured locally is inadequate
to meet the local demand for cement
• The deficit is met through cement
purchased from other parts of India
• High transportation costs cause the landed
costs of cement to increase considerably
NE India: Cement demand-supply gap
Deficit of 2.2 mtpa
5.2
3.0
Estimated Demand Available Supply
Source: Industry Sources, Aranca Research
Note: mtpa - Million Tonnes Per Annum
32. The Government has approved a package of fiscal incentives and other concessions for the North Eastern Region, namely
the North East Industrial and Investment Policy, 2007, effective from 1 April, 2007
The major policy and fiscal initiatives are expected to catalyse infrastructure and industrial development in the region,
spurring the demand for cement
NE States Projected GDP Growth at
Constant Prices
16.4%
13.7%
10.0%
XI 5-yr Plan XII 5-yr Plan XIII 5-yr Plan
NE States Projected Per Capita Income
Growth
15.2%
12.4%
8.6%
XI 5-yr Plan XII 5-yr Plan XIII 5-yr Plan
34. Indian Concrete Institute
Ocean Crest 79, Third Main Road, Gandhi Nagar, Adyar, Chennai - 600 020
Phone: 91-44-24912602
Fax: 91-44-24455148
E-mail: ici3@vsnl.in, ici4@airtelmail.in, vj6314@gmail.com
Website: www.indianconcreteinstitute.org
National Council for Cement and Building Materials
34th Milestone, Delhi-Mathura Road, Ballabgarh - 121 004 Haryana, India
Phone: 91-129-2242051/52/53/54/55/56; 4192222
Fax : 91-129-2242100; 2246175
E-mail: nccbm@vsnl.com; info@ncbindia.com
35. CMA: Cement Manufacturers' Association
GDP: Gross Domestic Product
GoI: Government of India
INR: Indian Rupee
MTPA: Million tonnes per annum
NE India: North-East India
FY: Indian financial year (April to March)
So FY10 implies April 2009 to March 2010
USD: US Dollar
Wherever applicable, numbers have been rounded off to the nearest whole number
36. Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)
Year INR equivalent of one USD Year INR equivalent of one USD
2004-05 44.95 2005 45.55
2005-06 44.28 2006 44.34
2006-07 45.28 2007 39.45
2007-08 40.24 2008 49.21
2008-09 45.91 2009 46.76
2009-10 47.41 2010 45.32
2010-11 45.57 2011 45.64
2011-12 47.94 2012 54.69
2012-13 54.31 2013 54.45
Average for the year
37. India Brand Equity Foundation (“IBEF”) engaged Aranca to prepare this presentation and the same has been prepared
by Aranca in consultation with IBEF.
All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The
same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium
by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in
any manner communicated to any third party except with the written approval of IBEF.
This presentation is for information purposes only. While due care has been taken during the compilation of this
presentation to ensure that the information is accurate to the best of Aranca and IBEF’s knowledge and belief, the
content is not to be construed in any manner whatsoever as a substitute for professional advice.
Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in
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