TransGraph Consulting Pvt. Ltd. is a leader in market analysis and price risk management services. It has grown significantly since being established in 2003. It provides decision-enabling reports and consulting services to help clients with commodity and currency trading. Its expertise includes price forecasting, risk analysis, supply chain assessment, and customized software solutions. The company is led by Chairman and MD Nagaraj Meda, who has experience as a commodity and currency trader. TransGraph aims to be a world-class consulting firm through its knowledgeable research team and efficient service delivery.

1. Report on Indian Cement Industry
External Guide
Mr. Vempati Karthik
(Assistant Vice President - Non Agri Dept.)
SUBMITTED BY:
Yamini Bakshi (Enrollment No. R590210024)
An Internship Report Submitted in Partial Fulfillment of Requirements
For
MBA Energy Trading
Batch 2010-2012
University of Petroleum and Energy Studies
Internal Guide:

2. Acknowledgment

3. Table of Contents

4. Company Profile
TransGraph Consulting Pvt Ltd. is a leader in 'Market Analysis & Price Outlook' and 'Price
Risk Management' services, tracking commodity and currency markets worldwide and
providing knowledge based decision enabling services to clients spread across the globe.
TransGraph Consulting has paved its way forward for the last Six years. Trans Graph
established in the year 2003 in Hyderabad. Trans Graph has made a remarkable growth and
penetrated the market as one of the Mentor’s in the field of Research and Consultancy
through “Market Analysis & Price Outlook” and Price Risk Management Services, tracking
the Commodity and Forex business worldwide successfully and providing the convenience in
the decision making to its clients spread across the globe.
TransGraph’s strength and expertise lie in the areas of Price Analysis and Forecasting,
Statistical Analysis & Econometric Modeling, Risk Analysis, Quantification and Mitigation,
Value Chain Assessment, Trading Advisory, Procurement and Supply Chain Metrics, and
Risk Management Software solutions. TransGraph Consulting Pvt. Ltd. expertise in the form
of 'Trading Consultancy' would enable its clients to take reliable decisions on the ‘timing of
purchase’ or ‘timing of buy / sell’ in their trades.
The service is aimed to cater ‘market analysis and ‘price forecasting’ needs of the trading /
procurement departments of a company. The service delivery is primarily through decision
enabling market mentor reports and through the telephonic interaction with its research team.
TransGraph Consulting through its Business Consulting service offerings can assist the
corporate decision-making process and strategy formulation aimed at achieving operational
efficiencies and for long run strategy development.
TransGraph Consulting Private Limited is promoted by Mr. Nagaraj Meda, currently the
chairman and Managing Director of the company. Mr. Meda started his career as a
commodity and currency derivatives trader and graduated to the level of portfolio manager.

5. Achievements of TransGraph
• Successfully applying forecasting methodology ‘Mapping the market thought’ to
various commodities from crude derivatives to vegetable oils.
• TransGraph has created the service delivery mode in such a way that the forecast gets
implemented with its unique methodology of institutionalizing the decision making
process at client’s place.
• TransGraph are credited for its innovative hedging models through which it has
pioneered the change management in sourcing function at various manufacturing and
FMCG companies. It’s simple to understand and practical hedging models have
transformed the purchase departments from ‘hand to mouth’ buying to ‘strategic buying’.
‘Strategic buying’ involves spatial, temporal and exposure management dimensions.
• TransGraph renders these knowledge-based services with India cost advantage.
Vision of Trans Graph
The vision of the Trans Graph consulting is to create a world-class business, with rich
knowledge resources and efficient servicing abilities to cater to the needs of market
participants in the commodities, derivatives and agri-business segments.
Key Factors of TransGraph
Diversified skill set analyst team with focused research efforts striving to provide decision
enabling research support and analytical, practical solutions and strategies for the clients. The
competency of our consulting team can be summarized in three dimensions. Enabling to gain
in-depth understanding on varied business process and critical drivers of performance.
• Capabilities in:
• Price analysis& forecasting.
• Statistical analysis & econometrics modelling.
• Value chain assessment.
• Demand analysis & forecasting.
• Procurement & supply chain.

6. • Risk analysis, qualification & mitigation plans.
• Flair with technology & devising customized software solutions.
• Trading advice & portfolio management.
• Diversified Skilful Human Resources & Positive Attitude:
• Best academic qualification.
• Vibrant work exposure.
• Active interaction & servicing.
• Shouldering of the challenging responsibilities.
• Intensive & interaction training.
• Open mindedness to learn.

7. Executive summary

8. Research Methodology
The research methodology can be descriptive research as well as exploratory research.
a) Descriptive research tells some understanding of the nature of the problem and deals
with the who, what, where, when, how…but not the why? In this report I have tried to
understand the economic indicators & has featured out their impacts .
b) Exploratory research helps to diagnose a situation and discover the new ideas. In this
report I have tried to forecast data with the help of correlation & regression model & then
with reference to it analysis has been done. So overall, In this project both descriptive and
exploratory research have done.
Data Collection research data will be collected and data can be two types:-
• Primary data will be collected through the discussions, observation case-studies,
diaries, critical incidents, portfolios etc. In this report technique of discussion is been used
mainly, I have consulted experts from this field
• Mr. Saurabh Ritesh , (Trans Graph)
o He guided me regarding the basic outline of this project, the economy at
International level & also the analysis part. Also the major factors which are
actually reliable for study the economy of any country. He also told me that
how I can relate my project with my field.
• Mrs. K. Deepa (M.A. Economics)
o She guided me regarding the basic concepts of the economy. She also shared
me the constraints of using economic indicators & what factors necessary for
future analysis
• Secondary data: will be collected from the published journal, books and research
paper, from the various websites, magazine, etc. or any other source which has been
collected by third party.

9. INTRODUCTION
India is the second fastest growing economy in the world after China. Various industries are
contributing for this growth. They are Agriculture, Infrastructure, Energy & Power, Banking
& Finance and service sector. In India, Construction is the second largest economic activity
after agriculture and is poised for continuous growth due to industrialization, urbanization
and economic development with expectations of improved living standards of people in
India. It accounts for nearly 65 percent of the total investment in infrastructure, employs 33
million people approximately and accounts for 6-8 percent of GDP. The Construction
industry is primarily driven by Government of India investment on core infrastructure
projects and creation of urban infrastructure, industrial capital expenditure by corporate
sector and development activities of real estate or housing sector in urban as well as rural
areas.
The Indian economy is booming, with rates of Gross Domestic Product (GDP) growth
exceeding an average of ~7% every year since 2003/04. This ongoing growth is due to
rapidly developing services and manufacturing sectors, increasing consumer demand (largely
driven by increased spending by India’s middle class) and government commitments to
rejuvenate the agricultural sector and improve the economic conditions of India’s rural
population. The production of industrial machinery has also been on the rise – and the
increasing flow of goods has spurred increases in rail, road and port traffic, necessitating
further infrastructure improvements.
As per the Tweflth Five Year Plan, Rs. 41 lakh crores worth of investment is planned to flow
into India’s infrastructure during this five year plan. Construction projects account for a
substantial portion of the proposed investments, making the E&C sector one of the biggest
beneficiaries of the infrastructure boom in India. The regulatory environment is relaxing to
encourage further foreign direct investment (FDI).

10. Projected Investment in infrastructure during the Twelfth five year plan:
Particulars FY12 FY13 FY14 FY15 FY16 FY17 Total
GDP at FY07
Prices (Rs. Cr.)
6314265 6882549 7501978 8177156 8913100 9715280 41190063
Infrastructure
Investment as
% of GDP
8.37% 9.00% 9.50% 9.90% 10.30% 10.70% 9.95%
Infrastructure
Investment (Rs
in Current
Prices)
721781 888572 1073470 1280315 1524526 1812581 6579463
Growth drivers in construction industry
Growth in Infrastructure
1. Approximately 10 lakh crores is to be spent in the next five years on infrastructure. While
50% investments in infrastructure will be done by the government through cash contracts,
the remaining will be either pure private investments or PPP projects.
2. In the total investment on Infrastructure, minimum 45 % is towards construction and 20 %
spend will be for modernization of the construction industry.
Growth in Building sector
1. Industrial sector sees a steady growth and contributes to the construction sector in the
non-residential segment.
2. IT growth would continue to create a demand for commercial facilities. STPs and SEZ's
are being built by real estate developers.
3. Hospitality and Tourism industry is driving the demand for hotels and resorts.
4. Retail growth on account of increasing consumer disposable incomes is driving the
demand for commercial area development on a large scale.
Growth in Housing
1. The current trend in real estate market is that after making investments in land the project

11. construction is mainly retail financed.
2. The real estate developers traditionally employed contractors for construction of projects.
Several large contractors are transitioning towards becoming real estate developers as
well.
Industry segmentation
Construction sector can be broadly classified into 2 sub-segments:
1. Real estate (Residential, Commercial/Corporate, Industrial and Special Economic Zones
(SEZs))
2. Infrastructure (Transportation, Urban development, Rural development, Utilities)

12. Figure1: Construction Industry Structure
Indian Real Estate Sector
The real estate and construction sectors are playing a crucial role in the development of
India's core infrastructure. The real estate industry's growth is depends on the developments
in the retail, hospitality and entertainment (hotels, resorts, cinema theatres), hospitals, schools
and IT enabled services. It has greater prominence in India with the liberalization of
economy, increase in business opportunities and labour migration.
The Government of India has allowed FDI up to 100 percent in the automatic route in
townships, housing, built-up infrastructure and construction development projects to increase
investment, generate economic activity, and create new employment opportunities. The
Union Budget 2012-13 shown more importance on accelerating the pace of investment in
infrastructure, as this is critical for sustain and accelerating an overall growth.
Major Projects in Real estate sector in India
 Mumbai based Wadhwa Group to invest Rs 9-10 billion to develop 1.6 million sq. ft. Of
office space in Bandra Kurla Complex, Mumbai. The project will consist of two office
towers and is due to be completed by 2014.
 Bangalore-based Embassy Property Developments is in talks with global financial
services group, JP Morgan to raise Rs. 500 crore for two projects – premium villa project
and a IT-cum-residential development on Bellary Road.
 Kochi-base Asten Realtors has proposed to invest Rs 1,000 crore in the next three years in
various projects in central Kerala.
 Avalon Group has made the initiative to start up Rs 200 crore project named "Avalon
Regal Court" in Bhiwadi, Rajasthan. The project is being planned on tweleve-acre space
consisting of eight hundred housing units and is expected to be completed over the next
three years.
Driving Forces
 Growth in the economy.
 India's emergence as an attractive offshore destination and availability of pool of highly

13. skilled technicians and engineers.
 Developments of large captive units of major players include GE, Prudential, HSBC,
Bank of America, Standard Chartered and American Express.
 Rise in disposable income and growing middle class, increasing the demand for quality
residential real estate and real estate as an investment.
 Entry of professional players equipped with expertise in real estate development.
 Relaxation of legal rulings and processes by the governing bodies encouraging
investments in real estate.
 Improvement in infrastructure facilities.
Infrastructure Sector in India
Performance of core industries
Sector weight 2007-08 2008-09 2009-10 2010-11 2011-12 Apr-Nov
2011-12
Apr-Nov
2012-13
Jan
2012
Jan
2013
Coal 4.38 6.3 8 8.1 -0.2 1.2 -4 6.7 7.7 2.3
Crude oil 5.22 0.4 -1.8 0.5 11.9 1 2.9 -0.5 -2 -0.2
Natural gas 1.71 2.1 1.3 44.6 10 -8.9 -8.5 -13.1 -10.4 -16.8
Refinery products 5.94 6.5 3 -0.4 3 3.1 4.4 7.2 -4.6 10.5
Fertilisers 1.25 -7.9 -3.9 12.7 0 0.4 -0.7 -3.3 4 -9.1
Steel 6.68 6.8 1.9 6 13.2 7 8.9 3.4 4.5 9.4
cement 2.41 8.1 7.2 10.5 4.5 6.7 4.8 6.7 10.9 -6.6
electricity 10.32 6.3 2.7 6.2 5.6 8.1 9.4 4.6 3.2 5.9
Overall index 37.9 5.2 2.8 6.6 6.6 4.4 4.8 3.5 2.2 3.9
Source: Press Information Bureau, Government of India Ministry of Commerce & Industry.

14. Industries which support the infrastructure are crude oil, petroleum, refinery products, coal,
electricity, cement and finished steel having weight of 37.9 % in the index of Industrial
Production(IIP) and shown the cumulative growth rate of 3.9 % in Jan 2013 increased from
2.2 % in Jan 2012. The most affected sector whose growth hampered adversely in FY13 (Jan
2013) was natural gas with a growth rate of -16.8 % (FY12 -10.4 %) followed by crude oil
with growth rate of -0.2 % (Jan 2012 -2.0%), Cement -6.6% (Jan 2012 10.9 %) and Coal 2.3
% (Jan 2012 7.7 %), Fertilizers with growth rate of -9.1 % (Jan 2012 4.0%) and remaining
sectors shown the growth moderately. These include Refinery Products 10.5 % (Jan 2012
-4.6%), steel with growth rate of 9.4% (Jan 2012 .5 %), Electricity with growth rate of 5.9 %
(Jan 2012 3.2).
Cement production registered to growth of (-) 6.6 % in January 2013 against its 10.9 %
growth in January 2012. The cumulative growth of cement production was 6.7 % during Apr
– Jan 2012-13 compared to its 4.8 % growth during the same period of 2011-12.
The manufacturing industry growth depends on the inputs from these core industries
especially on electricity. Therefore it is of utmost importance to amplify core sectors
production. Indian Government taking much future plan of actions immediately and quickly
towards it. The union budget for 2012-13 has given full exemption from basic customs duty
to fuels such as natural gas, liquefied natural gas; steam coal and uranium concentrate
imported for power generation. Viability gap funding has been extended to capital investment
in fertilizer industry, oil and gas storage and pipeline facilities for supporting the scheme of
public private partnership (PPP).
The Union Budget 2013-14 give more impetus to infrastructure sector -
 Infrastructure Debt Funds (IDF) to be encouraged.
 IIFCL to offer credit enhancement.
 Infrastructure tax-free bond of 50,000 crore in 2013-14.
 Build roads in North Eastern states and connect them to Myanmar with assistance from
WB & ADB.

15.  Raising corpus of Rural Infrastructure Development Fund (RIDF) to 20,000 crore and
5,000 crore to NABARD to finance construction for warehousing.
 Window to Panchayats to finance construction of go downs.
Roads
 3000 kms of road projects in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Uttar
Pradesh will be awarded in the first six months of 2013-14.
 Target of covering length of 8,800 kms under National Highway Development
Programme (NHDP) during FY13. Allocation of the Road Transport and Highways
Ministry enhanced by 14% to Rs.253.6 billion.
Ports
 Two new major ports will be established in Sagar, West Bengal and in Andhra Pradesh.
 A new outer harbour to be developed in the VOC port at Thoothukkudi, Tamil Nadu
through PPP at an estimated cost of 7,500 crore.
Source: Twelfth Five Year Plan (2012-2017)
Planned Infrastructure Investments
India's economy has been growing at a rapid pace, and to maintain the momentum of its

16. growth, the Government has strengthened its focus on infrastructure development in the
country. It has increased its infrastructure spend as a percentage of the country's GDP from
5.15 % during the Tenth Five Year Plan (2002-2007) to 7.55 % during the Eleventh Five Year
Plan (2007-2012). This is expected to increase to over 9.00 % during the Twelfth Five Year
Plan (2012-2017). The Government plans to double its investment in infrastructure to INR
40.9 trillion during the Twelfth Five Year Plan from INR 20.5 trillion during the Eleventh
Five Year Plan period, as compared to planned infrastructure investments of INR 8.7 trillion
during the Tenth Five Year Plan period. It should however be noted that actual investments
during the Tenth Five Year Plan period had met the target, and that of the Eleventh Plan
period may realize 80 % of the target.
The telecom sector has been witnessing increasing investment over the past 10 years. During
the Twelfth Plan Period, almost 25 % of investments are expected to be invested in this
sector. While the roads & bridges sector has remained flat (17%) as a percentage of the
overall pie, the telecom sector is expected to witness a CAGR of ~10 % from 2002 to 2017.
Another sector, which has gained increasing prominence is the oil and gas segment – with the
Government's spend on the sector expected to increase from 3.5 % of its total infrastructure
spend during the Tenth plan to 6.4% in the Twelfth Plan.
The Planning commission has targeted an ambitious investment of Rs. 65 lack crores for the
12th
five year plan. To achieve the target infrastructure investment has to be raised to 10% of

17. GDP from current 8%. The average growth rate of India’s gross domestic savings has been
over 30% in past 4-5 years.
Roads & Highways
India has the world's second - largest road network, comprising a total length of 4.2 million
km, and accounting for 87 % passenger traffic. Total investment in the Twelfth Five Year Plan
is estimated to be 9,14,536 crores. The National Highway Development Programme (NHDP)
has planned a high expenditure. It seeks to award 29,000 km of roads from FY 2011 to FY
2015 – out of this, 7,300 km were awarded in FY12. (PPP mode) Till August 2011, 247 PPP
projects were awarded under NHDP.
Railways
Indian Railways network spans over 64,000 route km, making it the world's third largest rail
network in terms of size besides being the largest passenger carrier and the fourth – largest
rail freight carrier globally. In the Twelfth Five Year Plan total investment is estimated to be
6,43,379 crores (including MRTS). Rail projects in India have been typically the domain of
the public sector. However, based on the success of PPP in other infrastructure sectors, the
Indian Railways has begun to take steps to explore the PPP route. Mass Rapid Transit System
(MRTS) is expected to comprise major portion of total planned investments in coming years.
During the Twelfth Plan period, private sector spending is expected in MRTS systems in
cities such as Mumbai, Bangalore, Hyderabad and Kolkata. The Indian Railways is also
expected to initiate PPP projects to maintain & develop railway stations. It has identified 22
stations across India that will be modernized into world – class facilities.
Ports
India has 13 major ports and around 200 non-major ports, accounting for 95 % of the
country's total trade in terms of volume, and round 70 % in terms of value. During 2006 – 11,
cargo traffic at Indian ports increased at a CAGR of 7.98 % from 8.7 million tons to 883
million tons. In the Twelfth Five Year Plan total investment is estimated to be 1,97,781
crores. The National Maritime Development Programme seeks to add 230 million tonnes per
annum in capacity in 10 years. To achieve this, the Ministry of Shipping (MoS) plans to
award 24 capacity expansion projects at major ports. These projects include a mega container
terminal at Chennai port and a mechanized berth at Vishakhapatnam. However, the only

18. project that has been awarded so far is the Jawaharlal Nehru Port Trust Terminal.
Airports
India has a total of 136 airports with 9 owned by the Airport Authority of India. During 2007–
11, passenger and freight traffic at Indian airports increased at a CAGR of 10.44 % & 10.9 %,
respectively, despite global slowdown. In the Twelfth Five Year plan total investment is
estimated to be 87,714 crores. With prospects for growth in tier II and tier III cities looking
bright, the Ministry of Civil Aviation (MoCA) has approved new Greenfield airports. The
Navi Mumbai airport is to be the largest Greenfield airport in terms of cost and capacity, and
is expected to be bid out this year. The nodal agency CIDCO is in the process of finalizing
the bid mechanism. However, feasibility of such large projects continues to be a concern.
Infrastructure linkages are also immensely important, since provision of adequate road, rail
and water transport facilities will be critical for the success of large scale airport development
plans.
Power
India's total installed power generation capacity stood at 2,11,766.22 MW as on 31-01-2013.
Robust economic growth and enhanced industrial activity has significantly increased the
demand for power in the country, leading to as much as 12 % peak hour power shortages.
This makes a compelling case for further large scale investments in the sector. In the Twelfth
Five Year plan total investment is estimated to be 15,01,666 crores. With the announcement
of 14 Ultra mega power projects (UMPPs). Out of these, four (Ssn, Mundra, Krishna Patnam
and Tilaiya) have already been awarded to private players.
Oil & Gas
India's oil & gas sector continues to grow steadily, boosted by enhanced investments,
increased production and rise in private participation. In the next five years, planned
additions include 60.3 MMTPA of refinery capacity. 7.05 MMTPA of new LNG terminals. In
the Twelfth Five Year plan total investment to be 1,48,993 crores. Projects include an 18
MMTPA refinery being setup by Indian Oil Corporation and a cracker unit of 5 MMTPA
capacity by Reliance Industries Limited in Jamngar.

19. Infrastructure Performance: (Growth in %)
Sector FY 08 FY 09 FY 10 FY 11 FY12(April-Dec
Power 6.3 2.5 6.8 5.7 9.3
Railway revenue-earning freight traffic 9 4.9 6.6 3.6 4.7
Cargo handled at major ports 12 2.2 5.7 1.6 0.4
Civil Aviation
Export Cargo handled 7.5 3.4 10.4 13.4 -1.1
Import cargo handled 19.7 -5.7 7.9 20.6 1.4
Passengers handled international
terminals
11.9 3.8 5.7 11.5 7.2
Passengers handled at domestic
terminals
20.6 -12.1 14.5 16.1 17.5
Telecommunication
Cell phone connections 38.3 80.9 47.3 18 -51
Roads *
NHAI 164.6 30.9 21.4 -33.3 8.9
NH(o) & BRDB 12.5 17.3 4 -6.8 -36.5
Source: Ministry of Statistics and Programme Implementation (MOSPI) and D&B Research
* Indicates Widening to four lanes & two lanes and strengthening of existing weak pavement
only.
Notes: NH(O) stands for National Highways Organization and BRDB for the Border Roads
Development Board
The Infrastructure sector during FY 2012 for the period April to December noted a moderate
growth. The growth rate of power sector during FY 2012 was higher than the growth of FY
11. Railway sector has also shown slight growth in revenue from freight traffic. Civil aviation
passengers handled at domestic terminals grew marginally while passengers at international
terminals as well as export import cargo handled declined severely. In road sector up
gradation of highways by NH (O) & BRDB depicted a negative growth.
Raw materials, equipment and technology

20. Construction materials and equipment sector accounts for approximately 8.6% of India's GDP
and accounts for nearly two-third of the total construction cost on an average. The share of
construction materials in project costs ranges from 40-60% and the corresponding cost for
construction equipment ranges from 5 to 25%. Construction component comprises nearly 60-
80 % of project cost of infrastructure projects like roads, housing etc. In projects like power
plants, industrial plants, etc. The share, though lower, is critical. Construction materials and
equipment sector comprises of various sub-industries such as:
 Cement
 Steel
 Paints & Chemicals
 Petroleum Products and resins
 Fixtures & fittings
 Aggregates such as concrete and asphalt
 Timber
 Tiles and ceramics
 Aluminium, Glass & Plastics.
Since most of the materials are either manufactured locally, in cottage or small scale industry,
data available for quantifying the exact nature of linkages with construction is not very
accurate. On the other hand, linkages of products such as paints and petro-products would
again be difficult due to their stronger linkages with other sectors. Where as in case of cement
and steel, almost 100% of cement production is consumed in construction and 40 – 60% of
steel production goes into construction.
Urban Construction Strategies -
Large size precast piers are used in the construction of flyovers over existing roads or
other utility services that are too important to be closed or dismantled for the construction
work of the flyovers. These massive precast structures are erected at site with large capacity
cranes that are themselves not to restrict the flow of traffic. In addition, the Indian Society of

21. Trench less Technology (INDSTT) introduced the trench – less pipe laying technology to
assist in interruption free construction in urban environments. Besides project design,
development, implementation and monitoring are gradually getting transferred to the
computers by consultants, project owners and contractors. Some leading corporate agencies
are planning initiatives for web – enabled design, control and monitoring of construction
projects.
Nanotechnology in Cement Industry -
Nanotechnology can play a significant role in the construction industry and stands at eighth
position in terms of most significant areas of applications in nanotechnology.
Nanoengineering of cement based materials can result in outstanding or smart properties.
Introduction of nanotechnology in cement industry has the potential to address some of the
challenges such as CO2 emissions, poor crack resistance, long curing time, low tensile
strength, high water absorption, low durability and many other mechanical performances. A
remarkable improvement in the mechanical properties and durability of cementitious
materials can be observed with incorporation of nanomaterials such as nno-SiO2, ZnO2,
Al2O3, TiO2, carbon nanotubes, nano-days, carbon nanofibers and other nanomaterials.
Demand Drivers of Construction Materials Industry:
Government initiatives in the infrastructure sector, coupled with the housing sector
boom and urban development, continue being the main drivers of growth for the Indian
construction materials industry.
• Individual Housing Demand – Primary drivers -
◦ Efforts by the government to boost the demand for houses in the below Rs
20-lakh category in stimulus packages.
◦ Decrease of land prices and steel prices
◦ Increase in minimum support price (MSP)
◦ Increase in pay for workers under the flagship rural job guarantee scheme.
◦ Implementation of debt waiver scheme.
◦ Implementation of the Sixth Pay Commission.
• Huge infrastructure investment planned for Twelfth Five Year Plan (2012-17)
amounting to Rs. 56.32 lakh crores is also expected to drive the demand for

22. construction material industry.
Construction Equipment – Success Factors
1. Ability to introduce India specific products that include low priced multipurpose
equipment to attract new customers and to increase mechanisation in important areas
adding features to products that make suitable for use in India and launching new
applications and products for missing applications.
2. Ability to capture exports opportunities in areas such as engineering and design
services that leverage the India's technical prowess
3. Quality, delivery and pricing of after – sales service.
4. Ability to provide end-to-end services including equipment selection, financing,
maintenance, training and repairs.
5. Introduction of newer services such as rentals and financings to catalyse latent
demand particularly from rural areas and small towns.
6. Strengthening of dealer and channel network to address buyer fragmentation
following the trend of sub – contracting and geographic expansion of demand.
Construction Equipment – Risk Factors
1. Competition from low-cost producers.
2. Tax burden and anomalies- India has one of the highest indirect taxes on construction
equipment.
3. Dependence on import for certain critical components.
4. Volatility of steel prices impacting production costs.
Benefits of the construction industry to the society-
1. Absorbs rural labour and unskilled workers (in addition to semi-skilled and skilled)
2. Provides opportunity for seasonal employment thereby supplementing worker's
income from farming.
3. Permits large-scale participation of women workers.
4. Development of Infrastructure, thereby sustaining the growth of economy.

23. Indian cement industry
Cement industry plays a crucial role in the development of the infrastructure in any country.
Due to the various construction activities undertaken by the central government, state
governments, public sector and other organizations to meet the needs of the massive
population in the country generate huge demand for cement. And also provision for housing
is the first and foremost requirement of every household and, therefore, market demand of
cement for private consumption is increasing constantly. According to the Ministry, the
liberalization process provided the much desired demand to the cement industry and, the
growth was quite visible leading to noticeable growth in terms of 100 million tonnes capacity
addition during the decade 1999 to 2009.
Key points -
• Cement Industry is now the second largest cement producer in the world after china.
• 183 large cement plants and more than 360 mini cement plants
• 328 million tonnes a year installed capacity.
• 97 percent of the installed capacity is accounted for by large producers (~42)
• 21 top companies control 90 percent of the market.
• 40 percent of the market is controlled by two groups, Holcim and Aditya Birla
Group.
Invention of Cement -
Ever since the civilizations first started to build, the world has sought a man – made bonding
material that would bind stones into a solid formed mass. During the palcolithic age, men
were used to enjoy the adequate shelters provided by nature. The bronze age has witnessed
the use of building materials from the clay based mixture and air handling lime. The
Egyptians advanced to the discovery of lime & gypsum mortar as a binding agent for
building such structures as the pyramids. The Greeks have made further improvements and
finally, the Romans have developed the cement that produced structures of remarkable
durability. The secret of roman success in making cement was traced to the mixing of slaked

24. lime with pozzolona, volcanic ash from Mount Vesuvius. The cement produced on this
process was capable of hardening under the water. This art was somehow lost during the
middle age periods.
In the 18th
century, big efforts were started in Europe to understand why some lines have
hydraulic properties. John smeaton concentrated his work in this field and he made the first
modern concrete by adding pebbles as a coarse aggregate along with mixing powered brick
into the cement in the year 1759. A number of discoveries have followed. It was in the year
1817 louis ricat has conducted the work as the hydraulic nature of the lime – volcanic ash
mixture. He was the first person to accurately determine the proportions of lime stone and
silica required to make the mix of cement. Finally, in the year 1824, joseph aspdin patented
the basic process of slower setting cement. He addressed this as Portland cement due to the
fact that in appearance and hardness, it resembled the upper Jurassic rock found in the region
of Portland in southern England.
Global Production of Cement
The world combined cement production all over the world accounted for 3.78 billion tonnes
in the year 2012 (3.60 billion tonnes in 2011). Out of which, china has contributed

25. substantially to the world production. China and India virtually have reached the stage of self
– sufficiency related to production of cement.
Global Top Consumers –
China leads the way in cement consumption and production around the world due to the large
scale developments and infrastructure build-up projects that the Chinese government is
undertaking. Some of the slowdowns in production are due to dramatic downward demand
shifts in the residential housing markets of the United States and Europe. However, public
projects are keeping the total cement production around the world on the rise. It is interesting
to note that production is concentrated in developing nations. With the exception of the US,
Japan and Spain, all other nations are still in a developing phase. While the majority of the
production is locally consumed, a good chunk of the cement produced is exported. This
means that come production has shifted to these nations – whether it is because of cheaper
labour, less strict environmental regulations, or subsidies.
Export of Cement Globally-
Indian cement accounts for not more than 0.2% of total world cement exports. The sector's
relatively insulated from international markets. Given by bulky nature of the commodity and
inadequacy of transport infrastructure in the country, international trade has been limited to
neighbouring states in small quantities. Even that mini scale volume of exports took a beating
after the south East Asian crisis, though the situation has improved gradually and the export
of cement (total) increased considerably to 3.61 million tonnes in 2010-11 from 2.69 million
tonnes in 2009-10. Exports of cement in 2010-11 were mainly to Nepal (49%), Sri Lanka
(26%), Iraq (5%), Egypt & Maldives (3 % each).
Import of Cement-
Cement imports in 2010-11 decreased sharply to 1.1 million tonnes from 2.11 million tonnes
in 2009-10. Main suppliers in 2010-11 were Pakistan (54%), Bangladesh (26%) and China
(16%).
Porters Five Forces -
Porter's five forces provide a competitive framework that allows us to better understand the
different dimensions that govern market competition.
Porter's five forces are:
1. Internal Rivalry
2. Threat of substitutes

26. 3. Buyer's bargaining power
4. Supplier bargaining power and
5. Entry and exit barriers
Rivalry within the cement industry is moderate. The structure of the market tends to be
oligopolistic in different regions around the world. In other words only a few firms control
the market in many different countries. This is due to the high fixed cost. This creates a
highly concentrated firm environment with limited rivalry. On the other hand, cement
products are not differentiated. This means that competition between existing firms can get
intense. When consumers do not bare a cost by switching from one firm to another (low
switching costs) and when the product lacks differentiation, this creates haven for
competition and intense rivalry. The combinations of the above factors result in moderate
rivalry within the global cement industry.
The second force is the threat of substitutes. Lack of substitutes – other products that are not
within the same industry but can be used instead. This means that the industry does not face a
credible threat of competition. This represents the reality of cement industry. No product
exists to date that can substitute effectively for cement. While construction firms can useless
cement in exchange for using other materials that have some cementitious quality, that
substitution effect is negligible on the market price of cement. An industry is only threatened
if another industry produces a similar product or if consumers of that product can decrease
the ratio of their use of that product and use another product (minimal partial substitution).
Both of these choices are virtually non – existent to cement consumers, hence the threat of
substitutes is very low.
Buyer bargaining power – Pure buyer power exists when only one buyer exists in the market
(monopsony). In this case power is entirely in the hands of the buyer. In the cement industry,
facts suggest that this effect is minimal. The power of consumers is limited due to the lack of
substitutes, the small number of cement firms (oligopoly), and the inelastic demand that
consumers have for the product. Buyers are said to be powerful if they are highly
concentrated, purchase a large amount of the product, or if there is product standardisation.
The last effect exists but its impact is weak because of persistent shortages in the cement
market. Given the fact that the buyers in the cement market lack the characteristics that give

27. them power over producing firms, the competitive level of the industry judged through this
force is very low. Firms have an easier time setting price while buyers act generally as price
takers.
Suppliers if powerful can extract some of the profits that producing firms are making off of
consumers by raising the prices of raw materials. In the inputs market for the cement
industry, suppliers are concentrated - but buyers are also concentrated. This means that initial
bargaining is practically on equal footing. Suppliers of cement industry are divided into two
categories – 1.Suppliers of transportation and 2.Suppliers of raw materials (clinker). Cement
manufacturers have argued that price hikes in the cement industry are due to increases in the
price of both transportation and raw materials. This means that suppliers are powerful enough
to force new process to the cement industry. However, the weakness of the final product. In
general suppliers are powerful if there is a credible forward integration threat (suppliers can
buy producing firms), suppliers are concentrated (no switching opportunity), the cost is
prohibitive to switch suppliers, and if a supplier can rally up the final consumer. In this case
of cement the power of suppliers comes from their concentration regionally and from the high
cost in switching between suppliers. It is not easy for a cement firm to buy clinker from china
and ship it to India or vice versa. This means that local raw material production must be
utilized and that local or regional suppliers have high barraging power.
High barriers to entry mean that firms already in the industry do not fear outside competition.
That means rivalry amongst firms is not intense. In fact incentives for intra-industry
cooperation or backhanded collusions such as cartels are highly plausible. Barriers to exit on
the other hand means that firms already in the market are locked in. This can result from the
firm's inability to sell the assets if it decides to leave the industry. Barriers to entry and exit
can be seen in four different ways. First, government creates barriers by limiting the number
of licenses it sells for production. Cement is energy intensive as wee as highly polluting;
therefore entry to such a market has to be highly regulated in the eyes of many governments.
Second, patents create entry barriers. Patents on new production methods or machines create
difficulties for firms to enter. However, the cement industry is not a patent dependent
industry, unlike other industries such as pharmaceuticals. Third, assets needed to produce
cement cannot be easily utilized for another industry (the cement industry is highly asset
specific). This means that if a firm decides to enter into the market it must realize that a cease

28. in its production will be very costly. Finally, economies of scale can prevent entry. For
cement firms, neutralizing the high fixed costs require minimum efficient scale of production
that creates a strong barrier to entry. Overall, the cement industry has high barriers to entry
and high barriers to exit.
Note: The above diagram explains Porter's five competitive forces as they relate to the
cement industry. "E" represents the force has an effect on the cement industry in intensifying
rivalry, "O" represents that it plays an opposing role, and "N" represents the force has neutral
or no relevance to the industry.
Rivalry is moderate, the effect of substitutes is weak, buyer power is minimal, supplier power

29. is high, and entry/exit barriers are both high. In essence, the vertical supply chain has pricing
power over final consumers, whereas the horizontal dimension of competition is lacking due
to lack of the possibility of differentiated advantages in production. Inelastic demand
neutralizes the consumer power associated with product standardization, whereas proximity
of raw materials to production sites generates regional cement clusters.
Evaluation of cement industry:
Era Year Remarks about capacity, Growth, Consumption
Dominant
Imports
1914-1924 Cement consumption was around 2 million tonnes during this period
of 10 years; 50 % was through imports. Production in the year 1914
was 10,000 tonnes and in 1924 production was around 0.26 million
tonnes a year against capacity of half million tonne.
Struggle and
Survival
1924-1941 Indigenous production went from 3.66 lakh tones in 1925 to 18.30
lakh tonne in 1941. Imports contributed to less than 7 % of total
cement consumption during 1924-1942.
Price in Control 1942-1951 Production stepped up from 1.8 million tonnes in 1942 to 3.28
million tonnes in 1951. Imports dwindled to less than 2 % of total
consumption.
Planning and
Control
1951-1982 Growth in cement capacity but not at requisite pace. Capacity was
29.26 million tonnes in 1981-82.
Partial Decontrol 1982-88 Quantum jump in capacity and production during 1982-88. (57.47
Million tonnes in 1987-88) Cement became surplus from 1987
onwards.
Total Decontrol March
1989
onwards
During the period 2009-10 capacity rose to 236 million tonnes.
The industry structure changed over the years. During the year 1914-24 most of the
requirement was met through imports before indigenous production started. Subsequently
Government played a major role in Planning & Control. After the industry was decontrolled
the capacity grew manifold and by the end of 2009 the annual capacity was around 219 MT.
The selling strategy of firms and the buying behaviour of customers also saw a major change.

30. Cement from being a pure commodity dependent on price alone is being recognized as a
product who’s pricing and demand could be varied through various marketing promotions.
Brands started emerging after total decontrol in the year 1989 and certain brands started
commanding premium due to quality perceptions. Therefore positioning of cement brands in
the customers minds play a vital role.
Globalization of Indian Cement Industry
The Globalization of Indian Cement Industry has helped the industry to restructure itself to
cope up with the alterations in the global economic and trading system. The Indian cement
industry is one of the oldest industries. It has been catering to India's cement requirements
since its emergence during the British Raj in India. Though the majority of the players in the
Indian cement industry were private sector organizations, the industry was highly regulated.
With the rapid growth rate of the Indian economy after the 1990s, the infrastructural
developments within the country has been tremendous. The increase in the construction
activities has led to the increase in the demand for updated quality building materials and
other allied products. Cement being one of the major elements in the construction work, there
is a growth in the cement industry in India. The consumption of cement has increased in India
by nearly 7.5%. With the globalization of Indian cement industry many foreign cement
manufacturers are engaging themselves in agreements and deals with their India counter parts
to have a share of the growth.
Globalization of Indian Cement Industry includes several foreign companies engaging in
mergers and acquisitions of Indian cement companies, like
• Heidelberg Cement - Indorama Cement Ltd. Heidelberg Cement Company entered
into an agreement for a 50% joint venture with the Indorama Cement Ltd., situated in
Mumbai, originally possessed by the Indorama S P Lohia Group. Heidelberg Cement
Company is the leading German cement manufacturing company. The Heidelberg
Cement was set up in 1873 and has a long and prosperous history. Being one of the
best in the world the Heidelberg Cement Company has its bases in different countries.
The Heidelberg Cement Company has two manufacturing units in India. A grinding
plant in Mumbai and a cement terminal near Mumbai harbor. A clinker plant is
coming up in the state of Gujarat
• Holcim Cement - Gujarat Ambuja Cements (GACL) Holcim Cement signed an
agreement of 14.8% take over with the Gujarat Ambuja Cements (GACL). With new
products, skilled personnel, superb management, and an outstanding market strategy

31. gives this tie up good edge over the other competitors. Holcim Cement Company is
among the leading cement manufacturing and supplying companies in the world. It is
one of the major employers in the world; having a work force of 90,000.The Holcim
Cement Company has units in excess of 70 countries all over the world.
• Italcementi cement - Zuari Cement Limited Italcementi Cement Company with the
help of the Cements Français, a subsidiary for its global activities, has acquired shares
of the famous Indian cement manufacturer - Zuari Cement Limited. The acquisition
was of 50% shareholding and the deal was of about 100 million Euros. Italcementi
Cement is the 5th largest cement manufacturing company in the world. The
production capacity of the Italcementi cement company is about 70 million tons in a
year. With the construction boom in India the company looks for a stable future. In
2001 the Italcementi cement entered the Indian market scenario. It took over the plant
of the Zuari Cement Limited in Andhra Pradesh in southern India. The joint venture
earned revenues of around 100 million Euros and an operating profit of 4 million
Euros.
• Lafarge India is the subsidiary of the Lafarge Cement Company of France. It was
established in 1999 in India with the acquisition of the Tisco and the Raymond cement plants.
Lafarge Cement presently has three cement manufacturing units in India. One of them is in
Jharkhand which is used for the purpose of grinding and the other two are in Chhattisgarh
used for manufacturing. The Lafarge Cement Company was set up in the year 1833 by Leon
Pavin. Lafarge Cement Company situated in France is the leading cement producing
company in the world. It has plans for increasing the cement production through
technological innovations and maximization of the capacity of the plant. It has a large
network of distributors in the eastern part of India. The Lafarge Cement Company is
presently producing nearly 5.5 million tons of cement for the Indian cement market.
Structure of the indian cement industry
• It is a fragmented industry. There are 59 cement companies in India, operating 183
large and 365 mini plants, where majority of the production of cement (90%) in the country is
by large plants (40).
• One of the other defining features of the Indian cement industry is that the location of
limestone reserves in select states has resulted in it’s evolving in the form of clusters.

32. • Since cement is a high bulk and low value commodity, competition is also localized
because the cost of transportation of cement to distant markets often results in the product
being uncompetitive in those markets.
• Another distinguishing characteristic comes from it being cyclical in nature as the
market and consumption is closely linked to the economic and climatic cycles. In India,
cement production is normally at its peak in the month of March while it is at its lowest in the
month of August and September. The cyclical nature of this industry has meant that only
large players are able to withstand the downturn in demand due to their economies of scale,
operational efficiencies, centrally controlled distribution systems and geographical
diversification.
Cement Capacity, Production and Utilization in India -
In India, after the adaption of price decontrol policy for cement industry, it has been showing
phenomenal growth since early 1980's. In 1950-51 the capacity was 3.28 MT. And surged to a
capacity of 296.48 MT in 2010-11. Similarly, production of cement increased from 2.20 MT
in 1950-51 to 216.28 MT in 2010-11. Capacity utilization, which was 92 % during 1955 -56,
gradually decreased to 66.83 % in 1980 – 81 and later it took reverse direction in the eighties
and started increasing slowly. The capacity utilization in the year 2010-11 and 2011-12 is
73% and 75% respectively.
The industry saw significant capacity additions during the year 2008 to 2012. Overall,
Cement demands not been able to keep pace with the additional supply in the market.
Although the pace of capacity additions has slowed down considerably, the demand-supply
mismatch that has already been created in certain regions may continue for few quarters
thereby affecting cement prices and realizations
Types of cement
The types of cement in India have increased over the years with the advancement in research,
development and technology. The Indian cement industry is witnessing a boom as a result of
which the production of different kinds of cement in India has also increased.
Ordinary Portland cement (OPC) -
This type of cement is manufactured in the form of different grades, the most common in
India being Grade-53, Grade-43, and Grade-33. OPC is manufactured by burning siliceous
materials like limestone at 1400 Degree Celsius and thereafter grinding it with gypsum. OPC
gives enough comprehensive strength after soaking in water for 3 days, 7 days, and 28 days.

33. This is suitable for all types of modern civil engineering construction.
Portland Blast Furnace Slag Cement -
Blast furnace slag, which is a waste product of the pig iron furnace, can be used to produce
slag cement. However, blast furnace slag does not have cementitious properties if it is cooled
slowly and ground finely; hence, it is cooled quickly or quenched and subsequently ground to
acquire cementitious properties. The quenching process is called "granulation", and the slag
is known as granulated blast furnace slag. Granulated blast furnace slag is mixed with lime or
OPC clinker and ground to form slag cement. Portland blast furnace slag cement (PBFSC) is
the most widely used slag cement, and contains 25-65 percent of slag, 5-6 percent of gypsum
and Portland cement clinker. Apart from having OPC properties, PBFSC has other properties
such as lower heat of hydration and higher sulphate resistance. Super sulphate cement,
another type of slag cement, is prepared by grinding granulated slag, anhydrite and clinker in
the proportion of 70:15:15. This cement is more sulphate-resistant than PBFSC or SRC.
Portland Pozzolana Cement (PPC) -
It is greyish in colour and made by grinding of lime stone and clay. Burning of lime stone and
clay at very high temperature and cooling the resultant product is called clinker, grinding the
clinker with of gypsum in ball mill to a finally ground powder. This is known as Portland
cement. This cement is produced by adding 10 – 25 % pozzolanic materials to the OPC
clinker then grinding together. PPC is manufactured by blending pozzolanic materials, OPC
clinker, and gypsum either grinding them together or separately. Today PPC is widely in
demand for industrial and residential buildings, roads, dams, and machine foundations.
Rapid Hardening Portland cement (RHPC) -
RHPC is a type of cement that is used for special purposes when a faster rate of early high
strength is required. RHPC has a higher rate of strength development than the Normal
Portland Cement. This type of cement gives the desired strength in 3,7 and 28 days, if soaked
in water. But sometimes cement is required high strength in 24 hours as is given by ordinary
Portland cement at 3 days. This sets and hardens much quickly than ordinary Portland
cement.
Low Heat cement -
This type of cement is used for larger mass concrete works in dams, piers etc. It is necessary
to have a much lower heat of hydration, so that chances of developing contraction cracks are
minimized. This can be done either by adding some pozzolanic material and granulated blast
furnace slag to the cement while grinding or by changing the chemical composition of the

34. cement.
Hydrophobic Cement -
It is obtained by adding water repellent firm forming substance such as Stearic Acid and
Oleic Acid by grinding Portland Cement Clinker. This type of cement reduces wetting ability
of cement grains. Hence it impact more time for mixing transporting compacting & finishing
etc.
White Cement -
White Cement has registered growth in production and sale in India in the last few years. The
white cement sector has been growing at the rate of 11 % per year. This has given the Indian
cement industry a major boost. White cement is Portland cement made from specially
selected raw materials, usually pure chalk and white clay, containing very small quantities of
iron oxides and manganese oxides. The chemical complexes formed with iron oxide present
in the cement raw meal give OPC cement its grey colour. However, if the proportion of iron
oxides is reduced to less than 0.4 percent, cement becomes white in colour. Iron oxide
improves the burning of raw meal. It can be used in all types of construction where OPC is
used. However, its usage is limited, as it is more expensive than OPC.
Sulphate Resistance Portland cement -
Sulphate Resisting Portland Cement (SRPC) is type of Portland cement in which the quantity
of tricalcium aluminates is less than 5 % of C3A. It can be used for purposes wherever PPC,
Slag cement, and OPC are used. The use of Portland Sulphate Resisting Cement has proved
beneficial, particularly in conditions where there is a risk of damage to the concrete from
sulphate attack. SRPC is recommended in places where the concrete is in contact with the
soil, ground water, exposed to seacoast, and sea water. In all these conditions, the concrete is
exposed to attack from sulphate that is present in excessive amounts, which damage the
structure.
Quick Setting Cement -
The percentage of gypsum added is reduced, which accelerate the setting action of this
cement is very fast. This type of cement is used for the underwater construction where
pumping is involved.
Oil Well Cement (OWC) -
As the name suggests, is used for the grouting of the oil wells, also known as the cementing
of the oil wells. This is done for both, the off-shore and on-shore oil wells. As the number of

35. oil wells in India is increasing steadily, the sales of Oil Well Cement have also increased. This
has boosted the India cement industry to a large extent.OWC is manufactured from the
clinker of Portland cement and also from cements that have been hydraulically blended.
OWC can resist high pressure as well as very high temperatures. OWC sets very slowly
because it has organic retarders which prevent it from setting too fast.
Clinker Cement -
The cement industry in India is highly technologically intensive and as a result, the quantity
of clinker cement that is produced in India is of a very high grade and is often considered
among the best in the world. The production of clinker cement requires a lot of energy
because it needs to be manufactured at the temperature of round 1400-1450 degree celsius.
Expansive Cement/ Shrinkage Compensated Cement -
Concrete prepared from Portland cement or blended cement shrinks on setting and hardening.
Cement should expand on setting and hardening when it is used for pre – stressed, pre-
fabricated concrete products and as a grout for filling cracks. This cement is prepared by
increasing the proportion of gypsum and aluminous cement clinker to Portland cement
clinker while grinding.
Super high strength cement -
This type of cement is required for urgent repairs of important concrete structures like
foundation pillars. It is prepared in jet mills by finely grinding portland cement clinker with
higher proportion of tricalcium silicate.

36. Trends in Variety wise cement production -
Production of different varieties of cement as a percentage to total is as given -
The type of cement that is manufactured in huge quantity is the Portland Pozzolona Cement
(PPC) which accounts for about 61% of the total cement manufactured.
Ready Mix Concrete (RMC) -
RMC is a mixture of cement, aggregate, water and other ingredients, which are weighed and
batched at a centrally located plant and directly placed at the construction site without
undergoing any further treatment. The operations are carried in factory like conditions and
are completely automated. Hence, RMC is a value-added, semi-finished product and results
in superior quality concrete.

37. Factors Delaying Entry/Growth of RMC in India -
• RMC is highly mechanized activity and entails initial high cost especially due to
import of basic equipment and machinery.
• Smaller size of construction in unorganized sector highly competitive and cost
conscious.
• Availability of abundant cheap labour for making and transporting concrete.
• Differential taxation between RMC and SMC. Especially before 1997 when excise
duty @16 % also existed.
Advantages -
• Assured and Uniform Quality of concrete.
• Speedier construction through mechanised operations
• Need for ordering and storing cement, aggregates and sand on site totally eliminated
• Lower labour and supervisory costs
• Minimisation of cement wastage through bulk handling and storage.
• Cleaner working environment.
• Eco-friendly product
Manufacturing Technology Status -
Raw material Preparation Process – Currently mining is generally done with semi-
mechanized methods. Computerized mine lining is now being used by few modern plants.
Most of the crushing operation is performed with multistage crushers of small capacity. New
plants are now shifting to single stage impact crushers. Transportation of the material from
the mines is generally with dumpers. Some of the plants are now shifting to belt conveyors
using in pit crushing. Grinding technology has progressed from the use of open circuit ball
mills to close circuit ball mills with high efficiency separators and improved mill internals.
Vertical roller mills have now firmly established themselves for these operations. Use of
computerized on line X-ray analyzers for raw mix optimization has become an essential
feature for modern plants.
Burning Process – All plants commissioned after 1970 have been on dry process kilns. From

38. conventional 4-stage pre heater kiln system the current trend has been towards New
Suspension Pre heater (NSP) kilns with pre calcinatory having 5-stge pre heater systems. Of
the total capacity 44 % is accounted by NSPO kilns, 25 % by SP kilns, and 16 % by long wet
process kilns and balance by other. Most of the modern plants have now adopted
computerized kiln control system with few of them having gone for expert systems.
Clinker Grinding – Currently most of the plants are using lose circuit ball mills for cement
grinding with mechanical separators. Many are shifting to high efficiency separators,
improved mill internals and modified flow control diaphragms.
Present Status of Technology of Indian Cement Industry -
Pre 1970 Plants 1970-90 Plants 1990 onwards
Plants
Global Technology
Mining & Material
Handling
Conventional Conventional Computer aided and
surface miners
Computer aided and
surface miners
Crushing Two stage Two stage Two stage in-pit
crushing& conveying
In-pit crushing &
conveying
Limestone
Conveying
Dumpers/
Ropeway/
Tippers
Belt conveyors Belt conveyors,
Pipe conveyors
Pipe conveyors
Belt conveyors
Grinding Ball mills with /
without
Conventional
classifier
Ball mills,
VRM's,
Roller presses
with
static/dynamic
classifier
Ball mills with
improved classifier,
VRM's, Roll presses,
with conventional
and dynamic
classifier
Ball mill with
improved classifier,
VRM's, roll presses,
horo mills with
dynamic classifier
Pyro processing Wet
- single channel
burner
Wet
Semi dry
Dry
- 4 stage pre
heater
-conventional
cooler
Dry
-5/6 stage pre heater
-high efficiency
cooler
-multi channel burner
-co-generation of
power
Dry
-5/6 stage pre heater
- High efficiency
cooler
- Multi channel
burner
-lownox calciner

39. - single channel
burner
-co processing of
WDF
-co-generation of
power
-co-processing of
WDF
-low NO x/SO2
emission
technologies
Blending &
Storage
Pre-blending
Batch blending
silos
pre-blending -continuous blending
-multi chamber silos
-continuous
blending
-multi hamper
silos dome silos
Packing &
Dispatch
Bag Bag Bag/Bulk Bulk
Palletizing & Shrink
Wrapping
Process Control Relay logic/
Hard Wired
Fuzzy logic
control
System
Micro processor
based DDC
Neurofuzzy expert
system
Micro processor
based DDC
Neurofuzzy expert
system
Plant size, TPD 300-600 600-3000 3000-12000 6000-12000
Inputs of Cement -
• Lime stone
• Coal
• Power
• Transportation
Lime stone – It is the basic raw material for producing cement. Approximately 1.5 – 1.6
tonnes of lime stone are required for making one tonnes of cement. Generally limestone is
available of an average size of about six inches and after feeding into the crusher its sizes is
reduced into small chips of half an inch. Since, the plants near limestone deposits pay less
transportation cost than others; the location of cement plant is determined by the location of

40. limestone mines. The total limestone deposit in the country is estimated to more than 90
billion tonnes, with Andhra Pradesh enjoying the largest share of 34%, followed by
Karnataka (13%), Gujarat (13%), Madhya Pradesh (8%) and Rajasthan (6.5 %).
Coal – In the manufacturing of cement coal is important input as it has a dual function. It is a
fuel and raw material and the consumption of coal in a typically dry process system ranges
from 20-25 % of clinker production. This means for per ton clinker produced 0.20-0.25 ton of
coal is consumed. The cement industry consumes about 10 million tonnes of coal annually
and is the fourth largest user of coal after steel, power and railways. Since coalfields like
Bharat Coking Coal Limited (BCCL), Central Coalfields Limited (CCL) supply poor quality
coal, the industry has to blend high-grade coal with it. However, non-coking coal and
petroleum coke attracts a customs duty of 5%, which increases the cost of production in the
sector.
Power – Cement industry consumes about 5.5 billion units of electricity annually with one
tonne of cement requiring approximately 120-130 units of electricity. Since state
governments supply electricity in India and since different states have different tariff
structure, the power tariffs vary according to the location of the plant and on the production
process. Most of the cement producing states such as Andhra Pradesh, Madhya Pradesh,
Gujarat experience power cuts to the tonnes of 25-30 % every year causing substantial
production loss.
Transportation – Transportation influences cement production directly as both its input
materials and output have to be transported to and from the plants. Cement is mostly packed
in paper bags now. It is then transported either by rail or road. Road transportation beyond
200 kms is not economical therefore about 55 % cement is carried by the railways. Due to the
inadequate of wagons there is a need to encourage transportation through sea. Today, 70 % of
the cement movement worldwide is by sea compared to 1 % in India.

41. Cement manufacturing process:

43. There are two general processes for producing clinker and cement in India – a dry process
and a wet process. In general, the dry process is much more energy efficient than the wet
process, and the semi-wet somewhat more energy efficient than the semi-dry process. The
semi-dry process has never played an important role in Indian cement production. Over the
last decade, increased preference is being given to the energy efficient dry process technology
so as to obtain a cost advantage in a competitive market. Moreover, since the initiation of the
decontrol process, many manufactures have switched over from the wet technology to the dry
technology by making suitable modifications in plants. Due to new, even more efficient
technologies, the wet process is expected to be completely phased out in the near future. In
1960, around 94% of the plants in India used wet process kilns. These kilns have been phased
out over the past 46 years and at present, 97 % of the kilns are dry process, 2 % are wet, and
only 1 % are semi-dry process.dry process kilns are typically larger, with capacities in India
ranging from 300-8,000 tonnes per day or tpd. While capacities in semi-dry kilns range from
600-1200 tpd, capacities in wet process kilns range from 200-750 tpd.
Process Wise Capacity in Indian Cement Industry (%)

44. Dry Process – In dry process production, limestone is crushed to a uniform and usable size,
blended with certain additives such as bauxite, iron ore and discharged on to a vertical roller
mill where the raw materials are ground to fine powder. An electrostatic precipitator deducts
the raw mill gases and collects the raw meal for a series of further stages of blending. The
homogenized raw meal thus extracted is pumped to the top of pre heater by air lift pumps. In
the pre heaters the material is heated to 750 degree celsius. Subsequently, the raw meal
undergoes a process of calcinations in a pre calcinatory. The remaining calcinations and
clinkerization reactions are completed in the kiln where the temperature is raised to 1,450 –
1,500 degree celsius. The clinker formed is cooled and conveyed to the clinker silo from
where it is extracted and transported to the cement mills for producing cement. For producing
OPC, clinker and gypsum are used and for producing PPC, clinker, gypsum and fly ash are
used.
Wet Process – The wet process differs mainly in the preparation of raw meal where water is
added to raw materials to produce slurry. The chemical composition is corrected and the
slurry is then pumped to the kiln where evaporation of moisture, preheating, calcinations and
sintering reaction takes place. The clinker is cooled and transported, as in the ase of other
plant, with suitable conveyors to cement mills for grinding. The wet process is more energy
intensive. And thus becomes expensive when power and energy prices are high.
Major players in the india:
TOTAL SALES for the year 2013 = Rs. 73600.81 Cr

45. HHI = 1211.415
HHI indicates moderate concentration that implies the size of the firm in relationship to the
overall cement industry in India is medium.

46. Value chain of the Cement Industry –
Source: IMaCS analysis; *Ready Mix Concrete
Sourcin
g
Cementitious
Materials
(mineral
components)
Others
(sand,
Gravel,
Stone,
Recycled
Aggregates
Processing
Ceme
nt &
Allied
Aggre
gates
Manufact
uring
Cement
RMC*
Clinker
Morter
Asphalt
Concrete
Transactional
Channel
Selling
Direct Sales
Traders
Wholesalers
Retailers
End
User
s
Contractors
Masons/Self
Builders
Civil Engineers
Applications
Infrastructure
Housing
Commercial/
Industrial

47. Regional Analysis -
Cement being largely a regional play with the industry divided into five main regions
(Eastern, Southern, Western, Northern and Central) with very high mount of freight charges.
These high charges re due to the bulky nature and low value commodity, transporting it over
long distances will require high technology products and it will be uneconomical. As it is
freight intensive industry, the segment is completely domestic driven and exports account for
very negligible percent of the total cement off take.
12%
41%
13%
13%
Region-wise Capacity - 2010-11
Eastern Region
Southern Region
Western Region
Central Region
6%
3%
79%
4%
1%
1%
6%
Northern Region - Capacity - 2010-11
Mahayana/Haryana
Punjab
Rajasthan
Himachal Pradesh
Delhi
Jammu & Kashmir
Uttarakhand

48. 1%6%
3%
12%
22%
16%
40%
Eastern Region - Capacity - 2010-11
Assam
Meghalaya
Bihar
Jharkhand
Odisha
West Bengal
Chattisgarh
49%
36%
15%
1%
Southern Region-Capacity-2010-11
Andhra Pradesh
Tamil Nadu
Karnataka
Kerala

49. 61%
39%
Western Region - Capacity - 2010-11
Gujarat
Maharashtra
27%
73%
Central Region - Capacity - 2010-11
Uttar Pradesh
Madhya Pradesh

50. Southern region in the country is the biggest contributor in cement production with installed
capacity of 96.56 MT. India has total capacity of 238.40 MT (excluding the ACC Ltd, having
annual installed capacity 27.08 MT. and Ambuja Cements Ltd having annual installed
capacity of 25 MT.) As of 2010-11 comprised of Northern region 51.56 MT, Eastern Region
29.14 MT, Western Region 30.52 MT and Central Region 30.61 MT. Rajasthan, Andhra
Pradesh, Tamil Nadu, Madhya Pradesh and Gujarat are the prominent cement industry
contributor states. The western and northern regions re generally has more demand than
availability.
Region wise break down of Capacity and Utilization -
Region 2006-07 2007-08 2008-09 2009-10 2010-11
Capacity (million tonnes)
North 33.77 47.47 50.27 48.77 51.56
East 25.34 28.98 31.28 27.09 29.14
South 54.1 61.81 79.5 92.11 96.56
West 29.27 32.17 32.72 28.62 30.52
Central 25.3 27.64 27.64 26.01 30.61
Grand Total 167.78 198.07 221.41 222.6 238.4
Regional Capacity as % of Total
North 20.13% 23.97% 22.70% 21.91% 21.63%
East 15.10% 14.63% 14.13% 12.17% 12.22%
South 32.24% 31.21% 35.91% 41.38% 40.50%
West 17.45% 16.24% 14.78% 12.86% 12.80%
Central 15.08% 13.95% 12.48% 11.68% 12.84%
All India 100.00% 100.00% 100.00% 100.00% 100.00%
Growth Capacity (Y-o-Y)
North 23% 6% -3% 5%
East 13% 7% -15% 7%
South 12% 22% 14% 5%
West 9% 2% -14% 6%

51. Central 8% 0% -6% 15%
All India 15% 11% 1% 7%
Region wise Utilization (%)
North 95% 77% 82% 70% 74%
East 87% 82% 83% 79% 79%
South 93% 88% 75% 64% 61%
West 93% 89% 87% 73% 71%
Central 95% 91% 94% 96% 86%
All India 93% 85% 82% 72% 71%
Region 2006-07 2010-11
Capacity Production Consumption Surplus Capacity Production Consumption Surplus
North 33.77 32.09 29.52 2.57 51.56 37.94 26.82 11.12
East 25.34 22.08 23.98 -1.9 29.14 23.16 28.11 -4.95
South 54.1 50.15 43.88 6.27 96.56 59.95 36.06 23.89
West 29.27 27.28 28.25 -0.97 30.52 21.71 31.35 -9.64
Central 25.3 24.04 22.41 1.63 30.61 26.24 27.38 -1.14
Total 167.78 155.64 148.04 7.6 238.4 169 149.72 19.28
There exist regional surplus/shortages in the Indian cement industry. South India leads in both
cement production & consumption followed by North India. The oversupply is largely in the
southern and northern regions and there is a supply shortage in eastern & western regions.
There is significant inter-regional movement of cement, which plays a crucial role in the
regional demand supply dynamics. Most of the cement movement across regions takes place
from north to central, south to west, central to north and central to east.
Cement Market Division in India -
Limestone is the basic raw material needed for the manufacturing of cement. In India,
limestone is found in abundance. The total limestone reserves in India are estimated to be
approximately 95,623,07 million metric tonnes (MMT), of which about 32 % of total reserves
are found in state of Andhra Pradesh itself. Cement industry is the largest consumer of

52. limestone in India, accounting for over 70-80% of total limestone that is mined out. For
making cement, limestone with a minimum CaO content of 44% is necessary. Typically 1.4-
1.5 million tonnes of limestone is required for producing 1 MT of clinker. Thus for a 1.0
MMT cement plant, assured availability of cement grade limestone reserves of the order of
50-60 MMT in the close vicinity is vital.
The Cement industry is fragmented into five different regions because of the following
reasons:
• Bulky nature of cement and limestone (key ingredient in manufacturing cement)
makes it very hard to transport over long distances.
• High freight costs involved in transportation of these commodities.
• A cement plant is generally located near limestone deposits and cement produced in a
particular region is mainly consumed in that region.

54. Place of concentration of large cement plants & their Capacity –
The following table gives company wise Annual Installed Capacities
Company Plant No. of
Plants
Annual installed
Capacity
(million tonnes)
ACC Ltd. Chaibasa, Chanda, Jamul, Kymore, Lakheri,
Thondebhavi, Madukkarai, Sindri, Wadi I & II,
Gagal I & II, Damodr cement works, Tikaria (G),
Bargarh cement works, Kudithini.
17 28.68
Birla Corp, Ltd Birla Vikas & Satna, Birla Cement & Chanderia,
Durgpur (G), Rae Bareli (G), Durga Hitech (G)
7 5.78
CCI Ltd. Adilbad, Akaltara, Bokajan, Charkhi-Dadri,
Kurkunta, Mandhar, Neemuch, Rajban, Tandur,
Delhi (G)
10 3.85
Andhra Cements Vizag (G), Nadikude–Durga Cement 2 1.42
J.K. Group Nimbaher, Mangrot, Gotn, Muddapur, Lakshmi
Cement, Lakshmi cement – Kalol (G)
6 12.27
Century Textiles Century Cement, Maihar Cement, Manikgarh
Cement
3 7.8
India Cement Sankarnagar, Sankaridurg, Chilamkur Works,
Dalavoi, Visaka Cement, Yerraguntla, Raasi
Cement, Vallur(G), Parli(G), Trinetra Cement
10 15.85
Tamilnadu Cement Alangulam, Ariyalur 2 0.9
Madras Cements Ramasamyaraja Nagar, Jayantipuram, Alathiyur
works I & II, Ariylur, Uthiramerur(G),Salem(G),
Kolaghat(G)
7 12.72
Mehta Group Saurashtra Cement, Gujarat Sidhee Cement 2 2.7
HMP Cements Ltd Porbandar, Shahabad 2 0.67
Ultra Tech Cements
Ltd
Rajashree, Hotgi(G), Vikram, Aditya I & II,
Rawan, Reddipalyam, CW, JCW(G), HCW,
22 48.75

55. Gujarat, APCW-I & II, Jafrabad, Magdalla(G),
Ratnagiri(G), ARCW(G), Bhatindia(G),
WBCW(G), Dadri(G), Panipat(G), Ginigera(G),
Kotputli, Aligarh(G)
Ambuja Cements Ltd. Ambuja Cement, Gajambuja Cement, Ambuja
Cement – Himachal Pradesh, Ropar(G),
Rabriyawas, Bhatindia (G), Maratha Cement,
Ambuja cement Roorkee(G), Bhatapara,
Sankrail(G), Magdella(G), Farakka (G)
13 27.35
Jaypee Cement Ltd. Jaypee Rewa, Bela, Sadva Khurd (G), Ayodhya
(G), Dalla, Wanakbori (G), Roorkee(G), Bagheri,
Bhilai Jaypee
13 22.95
Kesoram Industries Kesoram Cement, Vasvadatta Cement 2 7.25
Mangalam Cement Mangalam Cement, Neer Shree Cement 2 2
Orient Paper
Industries
Orient Cement, Orient Cement-Jalgoan(G) 2 5
Penna Cement Penna Tadippatri I & II, Penna Ganeshpahad,
Penna-Boyareddypalli Ltd. Penna - Tandur
4 6.5
Prism Cement Prism Cement I & II 1 5.6
Lafarge India(P) Ltd. Arasmeta, Sonadh, Jojobera(G), Mejia(G) 4 6.55
Malabar Cements Malabar Cements, Malabar Cements(G) 2 0.62
Binani Cement Binani Cement Sirohi, Binani Cement Sikar(G) 2 6.25
Rain cements Ltd. Rain Comdt. Unit I, Rain Comdt. Unit LN-1 &
LN-2
2 4
KCP Ltd. KCP Ltd – Macherla, Maktyala 2 2.35
OCL India Ltd OCL India-Rajgangpur, OCL India-Kapilas(G) 2 5.35
Dalmia Cements Dalmia-Dalmiapuram, Kadapa, Ariyur 3 9
Cement Manu Co.
Ltd
Cement Manu Co. Ltd, Megha T&E(p) Ltd(G) 2 1.27
Chettinad Cement Chettinad – Karur, Karikkali, Ariyalur 3 10.5

56. Zuari Cement Ltd Zuari Cement, Sri Vishnu Cement 2 3.4
Heidelberg Cement
Ltd
HCIL- Ammansandra, Damoh, Jhansi(G),
Dolvi(G)
4 3.1
Shree Cement Shri-Beawar, Ras, Khushkhera(G), Suratgarh(G),
Roorkee(G), Jaipur(G)
6 13.39
Others* Shree Digvijay-Sikka, Khyber Lnds. (P) Ltd,
Lemos Cement, Kistna, Bagalkot Cement & Ind.
Ltd, J&K Ltd, Kalyanpur Cement, KCP Ltd,
Mawmiuh Cherra, Panyam Cements, Sone Valley,
Meghalaya Cements Ltd, Shriram Cements,
Sanghi Industries Ltd, My home Industries,
Meghalaya Cements Ltd, Anjani Portland
Cements
12 11.29
Grand Total 171 294.43
Source: Indian Minerals Year Book-2011, Part-II, 50th
edition. * In addition, the following
plants produced white cement – (1) Grasim Industries Ltd, Kharia, Khangar, Jodhpur district,
Rajasthan (560000 tpy). (2).J.K. White cement works, Gotan, Nagapur district, Rajasthan
(400000 tpy) and (3). Travancore Cements Ltd, muhmma, Alappuzha districu, Kerala (30,000
tpy).
Capacity Trends Region-wise in India -

57. New/Expansion Projects -
1. Chettinad Cement has been expanding its plants, with new plants in North Karnataka
and Andhra Pradesh. The company's expansion will increase production capacity from
11.5 MTPA to an estimated 15 MTPA by 2015. The company plans to construct an
integrated cement unit with production capacity of 3.5 MTPA in Guntur District, as
well as a 2 MTPA grinding unit in Visakhapatnam and also it is planning to open a 2.5
MTPA cement plant in Karnataka and a grinding unit in Sholapur, Maharashtra.
2. Ambuja Cement plans to invest Rs. 2000 crore to enhance its cement capacities in

58. Rajasthan and northern region and it will add 5 MT capacity to the total cement
production of India.
3. Dalmia Cement plans to invest Rs 1800 crore to increase the company's cement
manufacturing capacity over the next 2 years. The company also plans to set up a 2.5
MT Greenfield unit in Karnataka.
4. Heidelberg Cement has commissioned Phase-I of its Jhansi grinding unit. The
company currently executing its Rs 1400 crore expansion with the capacity of 2.7
MT. The company also aims to accelerate the operational capacity at its Dmoh plant
in Madhya Pradesh to 6 MT.
5. India cements is planning to expand capacity at its Rajasthan unit, with possible
investment of Rs 650-700 crore. The present capacity of the plant is 1.3 MT and the
company is planning to add one more line with similar capacity. India Cement's
current manufacturing capacity is 15.5 MT with plants in Tamil Nadu, Andhra
Pradesh and Rajasthan.
6. Vicat Group is likely to sell 4.5 million tonnes of cement in India. Apart from the
newly-commissioned Rs 1800 crore joint venture cement plant, Vicat-Sagar Cement
at Chattrasal, Gulbarga district of Karnataka, Vicat owns 51 percent stake in Bharati
Cement.
7. Amrit Cement India Ltd (ACIL) is launching Amrut Cement in North-Eastern market
with production of 5 MT by 2015 through capacity addition i North-East and adding
fresh capacities in Nepal and Bihar.
8. Jindal Steel & Power is planning a cement manufacturing project in Chhattisgarh with
capacity of 2 MTPA and total estimated cost of Rs 6050 millions.
9. Shree Vinayak Cement Company belonging to the Sandhu group of companies is
planning to expand its grinding unit in Dhanbad, Jharkhand with the cost of Rs 70
millions.
10. Abhijeet Cement is planning an integrated cement project – Cement (2MTPA) and
Captive power project (50 MW) in Madhya Pradesh.
11. Gulbarga Cement (Zuari cement group) is planning an integrated cement project –
OPC/PPC/PSC cement plant (3.2 MTPA), Clinker plant (2 MTPA) and Coal bsed
captive power plant with total estimated cost of Rs 16000 millions.

59. Production Region-wise Trends in India -
The Indian cement industry currently supplies all most all the cementitious material
requirements of the Indian market from its manufacturing plants within India. Cementitious
materials include all types of cement and other materials sold to supplement cement concrete.
In 2012, the Industry
• 183 large cement plants, over 365 mini cement plants and 42 players in the
industry.
• Current Capacity 324 MTPA and operates at 75-80 percent utilization.

60. Consumption Region-wise Trends in India -
Per Capita Consumption -
Indian cement industry an attractive investment destination with the combination of a
lower per capita consumption and a faster growth rate. The Indian cement Industry has
registered a production of more than 100 million tonnes since 2001-02. Despite having high
demand in India. Per capita cement consumption is very low, where the world average is 396
kg, in India being the country of young population has a huge potential and its ushering social
& economic base will improve the domestic consumption.

63. Despite higher cement prices realized occasionally, the margins continue to be under severe
pressure particularly over the last couple of years due to steep hike in cost of all major inputs
like raw material, fuel, power and freight, which together account for around 70 percent of
the cost of production
Projects -
1. The public works Department (PWD) is to execute road development projects across
Kerala in the next 3 years. The cost of the project is estimated to be Rs 10,600 crore
and involves construction of phase – II of the Kerala state Transport project worth Rs
2,005 crore, Rs 3500 crore thiruvananthapuram model road development project
involving seven cities and construction of 1,204 KM network worth Rs 5,100 crore.
2. Godrej properties is going to launch a commercial project at Bandra – Kurla Complex
in Mumbai, the project involves construction of a commercial building at cost of Rs
2,000 – 2,500 crore and will be spread across 1.3 million square feet. Godrej
properties expect to complete the construction of the building by 2015.
3. The Union government cleaned 3000 km of new projects to the country's six prime
states. The projects will be executed at Gujarat, Maharashtra, Madhya Pradesh, Uttar
Pradesh and two north eastern states.
4. The Union government has sanctioned the construction of strategic border roads in the
Indo-China region. The project involves construction of 27 strategic border roads at a
cost of Rs 1937 crore.
5. The central government has approved Rs 820 crore for developing road networks in
Assam. The project is being implemented under the Pradhan Mantry Gram Sadak
Yogna (PMGSY) and involves construction of 689 KM of roads and 347 bridges.
6. The states of Andhra Pradesh and West Bengal are all set to get two new port projects.
The new ports will add capacity of 100 MT.

64. Demand and supply scenario of cement industry
Demand sources
The demand for cement in India has been influenced mainly by the Housing,
Infrastructure, Irrigation, Roads and Defence. The following diagram shows the contribution
of the important demand driven factors:
Demand from residential housing sector:
Housing demand accounts for 53% of total cement demand and 90% of total real estate
demand. Housing demand has supported the cement industry even in times of low
infrastructure or industrial demand.
The growth in the residential real estate market in India has been largely driven by rising
disposable incomes, a rapidly growing middle class, low interest rates, fiscal incentives on
both interest and principal payments for housing loans and heightened customer expectations,
as well as increased urbanisation.
A large proportion of the demand for houses, especially in urban centres such as Mumbai,
Housing 53.00%
Infrastructure 15.00%
Irrigation 23.00%
Roads 5.00%Defense 4.00%
Sector wise Demand Contribution

65. Bangalore, Delhi (Gurgaon, Noida), Hyderabad and Pune, is likely to come from high-rise
residential buildings. Since this is a fairly new segment, the growth of the high-rise segment
will be faster as compared to the growth of the urban housing segment. The reasons for the
construction of high rise apartment buildings are the lack of space in cities and proximity to
offices and IT parks.
• Growth Drivers
o Favourable demography and higher disposable income
o Continued growth in population and change in population profile.
o Decrease in number of people per household with breakdown of the joint family
system into nuclear families.
o Fiscal incentives provided by Government and easy availability of finance.
o Growth in Tourism.
Demand from infrastructure sector:
The Indian economy is all set to grow at a pace of over 7% in the current fiscal. Increased
emphasis on infrastructure development made it achievable. Infrastructure has been
witnessing extraordinary growth across all sectors such as roads, railways, irrigation, power,
water supply urban infrastructure, ports and airports. However, in order to achieve this kind
of growth on a sustainable basis, a further impetus is required to be given to the Infrastructure
development in the country. GOI, recognizing this fact has planned to spend around INR
73,793 crores on infrastructure development for the next five year.
Out of total proposed expenditure, a construction activity are expected to account for more
than 50% of total investment and is expected to be the biggest beneficiary of the surge in
infrastructure investment over the next five years.
This would imply a construction opportunity will more in the next 5 years. In light of such
huge expenditure on construction activities, the demand for cement from infrastructure sector
is expected to grow.
Demand from industrial and commercial sector:
Commercial construction comprises construction of office space, hotels, hospitals, schools,
stadiums etc. In India, most of the investment in this segment is driven by office space

66. construction. Within office space construction activity, almost 70-75 per cent of the demand
comes from IT/BPO/call centres. The other key demand drivers include banking and financial
services, FMCG and telecom.
This dependency on IT/ITES is expected to continue due to India’s emergence as a preferred
outsourcing destination, despite China and Russia also emerging as strong contenders. The
industrial and commercial sector comprises of all the major industrial set ups, commercial
offices, IT & ITES parks and organized retail formats.
The increase in disposable incomes, demographic changes (such as the increasing number of
working women, who spend more, the rising number of nuclear families and higher income
levels within the urban population), the change in the perception of branded products, the
growth in retail malls, the entry of international players and the availability of cheap finance
will drive the growth in organized retail.
We expect cement consumption from this sector to register a CAGR of 9-10% driven by
large-scale construction activities.
Details of PPP projects by Sector-
Sector Projects in Pipeline Projects Under Implementation
No. of Projects Projet Cost
(Rs. Cr)
No.of Projects Project Cost(Rs. Cr)
Roads 167 115822 133 102775
Ports 47 35902 50 62058
Airports 7 4120 3 19277
Railways 53 90312 5 5217
Power 34 62032 15 29448
Urban
Infrastructure
65 45708 69 18690
Other 31 22534 17 3575
Total 404 376430 292 241040
Overall Demand
Driven by a strong residential housing demand, growing industrial and commercial activities
and the continued momentum in infrastructure investment, the cement consumption is
expected to witness a CAGR of more than 10% in line with the economic growth because of

67. the strong co-relation with GDP and the increased activity in the construction sector. We
further believe that due to huge expenditure by GOI on infrastructure the proportionate
demand from infrastructure sector will move northwards and we expect the total share of
cement demand from infrastructure will increase in coming years.
Demand-Supply mismatch:
Though India is the second largest cement manufacturer, it is among the lowest cement
consuming countries. In India per capita cement consumption is 156 kg, which is far below
the world average of approximately 396 kg. Hence, the cement industry has been in a surplus
position since a long time.
There exist regional surplus/shortages in the Indian cement industry. The oversupply is
largely in the Southern and Northern regions. By contrast, there is a supply shortage in
Eastern and Western regions. There is significant inter-regional movement of cement, which
plays a crucial role in the regional demand-supply dynamics. Most of the cement movement
across regions takes place from North to Central, South to West, Central to North, and
Central to East.
Factors influence cement demand-

69. Factors affecting cement supply:

70. Major players and their performances
ACC Ltd -
ACC limited is a partner company of Holcim group and it is the best cement company and
largest producer of cement in India. Also, ACC limited is a major player in the area of ready mix
concrete company. ACC limited has substantially held the market leadership and they achieved the
sales volume of 24.11 MT cement in the year 2012. Company's headquarter is located in Mumbai and
has 16 cement manufacturing plants within the country with 21 sales offices and several zone offices
employing more than 9000 people. The Mumbai based company is also the largest user of limestone
for its high volume operations in the field of mining.
UltraTech Cement -
Ultratech Cement is Indi's largest cement company. Part of the Aditya Birla Group the
company has annual capacity of 72 million tonnes. The company has an employee strength of
133000 employees makes it one of the best employees in India. The employees belong to 42
nationalities from 36 countries. The company sells it's white cement under the brand name of
Birla White. The company the biggest manufacturer of cements in India and 15 the biggest in
the world.
Dec'08 Dec'09 Dec'10 Dec'11 Dec'12
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
16.28%
19.80%
12.23%
10.66%
9.57%
ACC Ltd
Profitability Trend

71. Ambuja Cements -
Ambuja Cement a company founded in 1983 by NarotamSekhsaria and Suresh
Neotia. The company has five integrated cement plants and eight grinding units across the
country. The company is also a part of the Halcim Group and has a capacity to produce about
27 MT of cement per annum and is a benchmark for cement industries in India. The company
has three captive terminals on the west coast to timely deliver the order of the customers.
Mar'08 Mar'09 Mar'10 Mar'11 Mar'12
0.00%
5.00%
10.00%
15.00%
20.00%
UltraTech Cement
Profitability Trend
Dec'08 Dec'09 Dec'10 Dec'11 Dec'12
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Ambuja Cement
Profitability Trend

72. Shree Cement -
Shree cement is a well known company in the area of cement manufacturing. The
beawar, Rajasthan based company is one of the biggest producers of cement in North India.
The company has plants located in baewar, Ras, Suratgarh and Khsuhkhera and other places.
The company has a different strategy, it sells its brands under different brand names such as
Shree Ultra, Bangur and Rockstrong. The capacity of the company is around 13.5 MTPA.
Shree cement also has 560 MW of installed power capacity, providing a steady stream of cash
flows. Presently the company is planning to expand further at a similarly aggressive pace in
present regions of operations and new regions.
Prism Cement -
Prism cement plant is located at Mankhari in Satna district, which is largest solitary
kiln cement plant in the country. Company has earned the respect of investors and potential
growth in cement manufacturing made one of the top cement manufactures in the country.
The company produces excellent quality of cement and thus is a premium price segment
company. The company is ISO certified and every product manufactured by the company
carries the BIS certification. The quality of the cement produced makes it a preferred choice
in high-rise buildings, bridges, pipes, poles and manufacturing AC sheets.
Mar'08 Mar'09 Mar'10 Mar'11 Mar'12
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Shree Cement
Profitability Trend

73. India Cements -
India cement is one of the oldest cement manufacturers in India and was established
in 1996 with first plant setup in 1940 in Sankarnagar, Tamil Nadu. Since then it has setup
total 9 plants with a capacity to produce about 14 million tons of cement per annum. With
regional offices in all southern states and 3 plants in Tamil Nadu and 4 in Andhra Pradesh, the
company is the largest producer of cement in South India.
Mar'08 Mar'09 Mar'10 Mar'11 MAr'12
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
India Cement
Profitability Trend
Jun'08 Mar'09 Mar'10 Mar'11 Mar'12
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Prism Cement
Profitability Trend

74. Madras Cement -
Madras Cements Limited is launched in 1961 and part of Ramco group, the company
started production in 1962. The company has a plant at Alathiyur, Tamil Nadu. which is said
to be the most modern plant in the country due to its 30.50 lakh tons per annum. The
company is also one of the largest wind energy producers in the country. This has helped
them to have an image of eco-friendly Company. Madras Cement has been very aggressive
with capacity additions in the last few years, its cement capacities increased to 12.5 MTPA
with a marginal capacity in East India. While the company is not much efficient in terms of
costs, it enjoys a very strong brand franchise in the south, leading to higher realizations than
most of the pan-India players operating in the south region. Unlike many of its peers, the
company primarily focuses on the retail or individual house builder demand.
J.K.Cement -
JK cement is among the top cement manufactures in India. It started the cement
manufacturing in the year 1975 at Nimbahera in Rjasthan, since then it has total 4 grey
cement plants with a capacity to produce 7.5 MTPA. JK cement is second largest white
cement manufacturers after UltraTech with a capacity of 3 lacks tons per annum. The
company is one of the major exporters of white cement to countries like South Africa,
Nigeria, Singapore, Bahrain, Bangladesh, Sri Lanka, Kenya, UAE and Nepal. The company
has reserves of limestone to meet their requirements for the next 40 years.
Mar'08 Mar'09 Mar'10 Mar'11 Mar'12
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Madras Cement
Profitability Trend

75. Chettinad Cement -
Chettinad Cement Corporation limited is established in 1962 to cater to growing
demand of cement in the country. The total cement manufacturing capacity of the company is
11 MTPA at its four units at Puliyur, Karikkali and Ariyalur in Tamil Nadu and Chincholi
Taluk in Karnataka. It has its own captive power plants to cater its own plants.
Mar'08 Mar'09 Mar'10 Mar'11 Mar'12
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
J K Cement
Profitability Trend
Mar'08 Mar'09 Mar'10 Mar'11 Mar'12
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
Chettinad Cement
Profitability Trend

76. Mangalam Cement –
Mangalam Cement is established in 1976 by Shri B.K.Birla and having commenced cement
production in 1981. Being a part of B.K. Birla group of companies has emerged as a leading
integrated manufacturer of world class cement in North India.
If we look at all the above companies’ performance, we can see that UltraTech Cement, Shree
Cement, India Cement, Madras Cement, J.K.Cement and Chettinad Cement are performing
well in comparison with other companies. There is an increase in profitability trend when
compared with the profits in the year 2012 and 2011. Where there is a decrease or moderate
growth in profitability trend for all the remaining companies when compared with the profits
in the year 2012 and 2011.
Indicator 2005 2006 2007 2008 2009 2010 2011
Sales growth of cement companies 15.6 18.5 41.5 18.6 12.4 12.9 11.6
PAT growth of cement companies 327.3 42.3 163.2 20.8 -12.4 14.7 -40.4
PAT margin of cement companies 6.5 9.6 17.8 17.8 14 14.3 7.4
Source: CMIE database.
Profitability of cement sector has considerably eroded in the last two years with a moderation
in demand, low capacity utilization and increase in wages. As per the above table, rate of
growth of profit after tax turned negative in 2010-11 and as percentage to income, this ratio
declined from a peak of 17.8% in 2006-08 to 7.4% in 2010-11.
Mar'08 Mar'09 Mar'10 Mar'11 Mar'12
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Mangalam Cement
Profitability Trend

77. Cost analysis
The energy costs and cement freight costs are the two most important elements in the cost
structure of a cement company. While, the share of power and freight costs has increased
marginally in its share of total operating costs. The share of costs on account of material and
other (repair and maintenance, employees and selling) expenses have more or less remained
stable.
Limestone- Due to limited resources of limestone, there are talks with National Council for
cement and Building Materials (NCCBM) for R&D of Geopolymeric Cement which require
some chemical bonding instead of Lime to avoid paucity of lime and soil erosion.
Fly Ash & Slag- To reduce consumption of limestone and to conserve it, substitutes are being
used like substitution of clinker by using fly ash and blast furnace slag. Utilization of fly ash
procured from power plants and slag generated from steel plants reduces dust emission by
9800 tones/annum and CO2 emission by 33.6 million tones/annum. Concerns have been
raised for depriving to use own fly ash being produced by captive power plants of cement
industry as cement industries are compelled to supply 20% of their own fly ash to

78. manufacturers of fly ash bricks, tiles etc.
Fuels- To conserve fossil fuel energy resources and minimize the adverse impact of global
warming, co-processing of industrial waste like paint sludge, refinery sludge, plastic waste
and tire chip, red-mud and other than industrial waste like rice husk and cow dunk are being
used by cement manufacturers.
Power- Cement industry has vast untapped potential for co-generation of power by waste heat
recovery as 30-40% of total heat input is released as waste heat from exit gases. It is
estimated that 4.4 MW of electricity can be generated from 1MTPA capacity plant by waste
heat recovery.
Coal- Government has to take necessary steps to sufficient allocation of coal linkages through
fuel supply agreement (FSA) to cement manufacturers so as to avoid use of pet coke as
subsidiary and resorting to import of coal/pet coke. Presently two indigenous coal suppliers
of cement industries – Coal India Ltd. and Singareni Colleries Co. Ltd. are supplying only
48% of total requirement due to this FSA and linkage procedure of Ministry of Coal, obliging
cement manufacturers to source their fuel requirements from various other avenues.
Fuel Requirements and Alternate Sources of Energy
Fuel
Coal continues to be the main fuel for the Indian cement industry and will remain so in the
near future as well. The industry is mainly using coal from various coalfields in the country.
It is also procuring coal through open market and direct imports. Lignite from deposits in
Gujarat and Rajasthan is also being used by cement plants. Pet coke has also been
successfully utilized by some cement plants, mainly in Gujarat, Rajasthan and MP, thereby
substituting main fossil and conventional fuel coal up to 100% in some plants. In the recent
past, waste derived fuels including hazardous combustible wastes have also been tried due to
economic pressures in cement manufacturing process owing to tough competition in domestic
and global markets as well as ecological reasons on account of waste disposal and co-
processing in cement rotary kilns being most effective mode of waste treatment.
Use of Industrial Wastes
• Cement plants in India utilized about 19% of fly ash generated by power plants and
100% of granulated slag generated by steel plants.
• Recycling of Industrial wastes in manufacture of cement is highest in Japan followed
by India.

79. Use of Alternate Fuels
• Use of hazardous and refuse derived combustibles and Municipal Solid Waste (MSW)
as fuel is common in countries like Canada, EU, Japan and Korea, but regulations do not yet
permit in India.
• CPCB is actively engaged in plant level trials in respect of wastes viz. used tyres,
refinery sludge, paint sludge, Effluent Treatment Plant (ETP) sludge and Toluene Di-
Isocyanite (TDI) tar waste from petroleum industries and in formulation of guidelines for use
of these wastes as fuel by cement industry.
Prices -
Cement price is not uniform throughout the country and varies from region to region. Price of
cement also depends on the distribution channel – whether it is sent directly to the project
customer or through the dealers outlets. Segmentation enables the marketer to different
market segments with separate price points rather than serve the entire market with one price
point. Amongst the constituent materials of concrete consumers are generally sensitive to
change in cement price. When prices of building materials increase there is a strong
resentment amongst the constructional professionals when price of cement rise. Predicting
change in prices of cement is difficult as supply and demand of cement in a particular region
greatly influences price. Input materials that go into the manufacture of cement are mainly
controlled by the government and hence there is no scope for negotiation. Continuous supply
of power and coal has been a constant challenge. For manufacture of 100 tonnes of cement
about 25 tonnes of coal is required. Coal which is normally imported from other countries
due to its high calorific value is dependent on rupee depreciation. Coal prices procured from
government through relevant agencies are volatile. Most importantly pricing decisions has to
be taken by taking into account the competitors reaction to change in cement price.

81. All India prices at Rs 294/bag declined by ~Rs 4/bag or -1.3 percent m-o-m in March. Sharp
decline seen in south India (-3.2 percent m-o-m) & central region (-2.8 percent m-o-m)
followed by east (-1 percent m-o-m).
The regional variations in the Indian market has resulted in the cement prices cross regions
witnessing movement within a band, with no appreciable increase in any region. Differences
in regional demand supply situation have translated into price differences across regions.
Prices are lower in southern regions (Hyderabad) where there is normally a supply surplus.
However, prices are higher in Eastern (Kolkata) and western (Mumbai) regions where
shortages exist.
The cement companies are expected to continue facing the problem of rising manufacturing
costs, as thus do not have control on the external cost elements such as energy and freight
charges. Whereas earnings of the cement industry on an aggregate may improve, there may
be selected players in the industry (viz. ACC Ltd, Ambuja cements, Ultratech Cement) show
a relatively higher growth in earnings. This would include players, who increasingly focus on
enhancing operating efficiency, have high economies of scale, are not dependent on few
regional markets, have good distribution logistics & possess a good brand name (viz. ACC
Ltd, Ambuja cements, Ultratech Cement).
Poor operating leverage and realization per bag of cement sold is likely to hit operating
margin and the cost per tonne. Large pan India companies may show weaker growth rate in
both revenue and profit when compared with the past performance. Regional players, where
shipment distances are relatively less, may fare better.
Government Policies:
Government policies have affected the growth of cement plants in India in various stages.
The control on cement for a long time and then partial decontrol and then total decontrol has
contributed to the gradual opening up of the market for cement producers. The stages of
growth of the cement industry can be best described in the following stages:
• Price and Distribution Controls (1940-1981)
During the Second World War, cement was declared as an essential commodity under the
Defence of India Rules and was brought under price and distribution controls which resulted
in sluggish growth. The installed capacity reached only 27.9 MT by the year 1980-81.

82. • Partial Decontrol (1982-1988)
In February 1982, partial decontrol was announced. Under this scheme, levy cement quota
was fixed for the units and the balance could be sold in the open market. This resulted in
extensive modernization and expansion drive, which can be seen from the increase in the
installed capacity to 59MT in 1988-89 in comparison with the figure of a mere 27.9MT in
1980-81, an increase of almost 111%.
• Total Decontrol (1989)
In the year 1989, total decontrol of the cement industry was announced. By decontrolling the
cement industry, the government relaxed the forces of demand and supply. In the next two
years, the industry enjoyed a boom in sales and profits. By 1992, the pace of overall
economic liberalization had peaked; ironically, however, the economy slipped into recession
taking the cement industry down with it. For 1992-93, the industry remained stagnant with no
addition to existing capacity.
Government controls
The prices that primarily control the price of cement are coal, power tariffs, railway, freight,
royalty and cess on limestone. Interestingly, government controls all of these prices.
Excise duty structure
Cement is highly taxed commodity in India (30 %) compared to 19 % in China and
almost negligible in Thailand. Excise duty on cement is currently being levied at mixed rates
i.e. Ad valorem (on transaction value) plus specific (specific rate to be charged on the basis of
MRP) and There is no import duty for import of cement into the country. This tax anomaly
puts domestic manufacturers at a disadvantage.
Excise duty rates during Budget 2011-12
Sl.No. Mini Cement Plant Duty Rate
1 All goods leared in packaged form -
(i) Of retail sale price not exceeding Rs. 190 per 50 kg bag
or of per tonne equivalent retail sale pricce not exceeding
Rs. 3800.
(ii) Of retail sale price exceeding Rs. 190 per 50 kg bag or
of per tonne equivalent retail sale price exceeding Rs. 3800.
10% ad valorem
10% ad valorem + Rs. 30 per

83. (iii) All goods other than those cleared in packaged form.
MT
10% ad valorem
2 All goods cleared in packaged form -
(iv) Of retail sale price not exceeding Rs. 190 per 50 kg bag
or of per tonne equivalent retail sale price not exceeding Rs.
3800.
(v) Of retail sale price exceeding Rs. 190 per 50 kg bag or of
per tonne equivalent retail sale price not exceeding Rs.
3800.
(vi) All goods other than those cleared in packaged form.
10% ad valorem + Rs. 80 per
MT
10% ad valorem + Rs. 160 per
MT
10% ad valorem
3 Cement Clinker 10% ad valorem + Rs. 200 per
MT
VAT – The rate of VAT charged on cement is 12.5 % even up to 15 % in some of the states on
cement and clinker.
The Total government levies and taxes, which include Royalty on limestone, Royalty
on Coal, Electricity duty, sales tax etc. Average tax on cement in the Asia-Pacific region is
just 11.4 % with the highest levy of 20 % being in Sri Lanka.
Sl.No. Item Rs./tonne of cement
1 Average Excise Duty 490
2 VAT 500
3 Royalty & Cess on Limestone 84
4 Royalty on Coal 33
5 Electricity Duty 23

84. 6 Others including clean energy cess on Fuel 30
Total 1160
Findings-
• The cement manufacturing process may be divided into three classes’ i.e. wet process,
semi-dry/semi wet process and dry process. The old cement plants are based on wet
process but the new plants invariably adopt the dry process except in rare cases where
the raw materials characteristics may decide for wet or semi dry process. The dry
process is very much superior in terms of fuel economy. Due to this single main factor
a number of older wet process plants are getting converted to dry process. All new
capacity to be added in future is likely to be of dry process and even some of the
existing units may also change the process to become competitive. As such, the share
of cement capacity using dry process would further increase in future. The induction
of advanced technology has helped the industry immensely to conserve energy and
fuel and to save materials substantially.
• Indian cement industry has also acquired technical capability to produce different
types of cement like Ordinary Portland Cement (OPC), Portland Pozzolana Cement
(PPC), Portland Blast Furnace Slag Cement (PBFS), Oil well Cement, Sulphate
Resisting Portland Cement, White cement etc.
• Selling and distribution of cement was under Government control since August 1942.
In February 1982 the Government allowed partial decontrol of cement and the same
was in force till February 1989. Since then, under total decontrol announced by the
Government in 1989, cement factories are free of any control on sale and distribution
of cement.
• The cement industry in India has grown from an installed capacity of 5 MTPA at the
end of First 5-year Plan (1951-56) to an installed capacity of about 320 MTPA in
2012.
• The structure of the market in cement sector tends to be generally dominated by large
plants. Some major global players like Holcim (212 MT), La’Farage (199MT),
Heidelberg (112MT), Italcementi (81 MT) and Cemex (97 MT) together account for
nearly 25 percent of the global capacity.

85. • Indian cement industry is dominated by 20 companies which account for over 70 % of
the market. The major players like ACC, Ultra Tech and Ambuja Cements have been
quite successful in meeting the demand and supply of cement.
• Cement industry’s overall capacity utilization has not been very satisfactory although
there are few ups and downs in the past few years.
• The factors contributing towards low capacity utilization include:
o Poor quality coal with up to 45% ash content and irregular supply.
o Power cuts, power tripping and unstable supply voltage.
o Transportation bottlenecks in transporting cement and coal over.
o Transportation bottlenecks in transporting cement and coal over long
distances.
o Lack of operational experience and trained manpower with the newly
emerging large size plants to absorb and adopt the technological
developments.
o Lack of proper plant maintenance system.
• With the free sale and distribution of cement, the cement producers now experience a
different market situation and the industry is now subjected to increased competitions
with respect to availability of high quality cement. This means lower cost of
production, increased production efficiency, use of most modern technology for
energy efficiency and quality cement production.
• Absorption and adaption of technology depends to a great extent on the research &
development activities of the licensees. The major R&D organizations devoted to
cement industry in India are National Council for Cement and Building Materials
(NCCBM), Central Research Station (CRS) of ACC Limited, Dalmia Institute of
Scientific and Industrial Research (DISIR).
• The demand for cement in India has been influenced mainly by the housing,
infrastructure and irrigation etc.
• Opportunities and Concerns -
o The government of India plans to increase its investment in infrastructure to
US $ 1 trillion in the twelfth five year plan.
o More than 500 SEZ proposals.

86. o Infrastructure projects in the pipeline such as dedicated freight corridors,
development of new industrial cities under the Delhi – Mumbai industrial
corridor, National investment & manufacturing zones under the national
manufacturing policy, up gradation of existing and the new ports & airports.
o Growth in Tourism sector fuelling the increase in the construction of hotels in
the country.
o Upcoming industrial clusters & infrastructure development in emerging tier –
II & tier – III cities.
o The growing population and increased Urbanization in the country.
• Rich raw material reserve, world class technology adoption together with healthy
domestic demand gives Indian cement industry the cushion for further improvement.
• Cement is highly taxed commodity in India; there is no import duty for import of
cement into the country.
Inadequate railway infrastructure – Due to cement being bulky in nature, transportation of
cement is always difficult. Distribution expenses is the fourth largest cost component &
accounts for 13 % of the total cost of the industry. Cement carried by the railways fell 11.8 %
to 7.52 MT in August, 2012 from 8.53 MT in the year 2012 earlier, amid on increase in
freight fares of as much as 24 %. For cement transportation over long distances, railway
infrastructure is considered more cost efficient over road. But inadequate railway
infrastructure forces all cement players to heavily depend on roads. The increased transport
cost affects competitiveness of the industry. But shortages in covered wagons in Indian
railways forces cement manufacturers to opt for expensive road transport.
Cement & Clinker Dispatches by Rail
Year Cement Clinker Cement & Clinker combined
2010 - 11 35.00% 50.00% 37.00%
2009 - 10 36.00% 50.00% 38.00%
2008 - 09 38.00% 56.00% 40.00%
2007 - 08 38.00% 57.00% 41.00%

87. Major Concerns
• Railway -
o Non-availability of wagons not only throw into disarray, the dispatch plans
and affect production of cement, it also obliges rake availability a consistent
problem.
o Frequent shifting of priorities of rakes by railways to various sectors i.e.,
fertilizers, food grains and power resulting in substantial despatch losses to the
cement companies as it is not possible for them to shift their mode of transport
frequency.
o Inadequate infrastructure facilities at terminals like platform, double line,
access road etc.
o Railways policy circulars, issued from time to time in a bid to increase the
turnaround of wagons, have not only created for the cement plants operational
problems both at loading and unloading points but have also made them liable
to pay penalties, wharf age and demurrage charges.
• Inadequate use of concrete in road development – In India most of the roads have
been used to develop surfaced road and only 2 % of the total road length in the
country is made of concrete but concrete roads have average life cycle of 50 years and
helps to save fuel consumption up to the level of 15 %. In order to develop cost
effective environment friendly roads government should encourage the use of fly-ash
based cements for road development. This kind of initiative will result in a gainful
deployment of waste pollutant like fly - ash in one hand and boost the domestic
cement industry on the other.

88. Recommendations-
• All manufacturers should Endeavor to set up and strengthen R&D infrastructure
particularly aimed at absorbing /adapting/developing newer technologies for better
energy efficiency, quality enhanced and optimum operating efficiency. The co-
ordination between the R&D plans of the licensor and those of the licensees should be
clearly established.
• All the concerned cement plants should Endeavor to set up computerized kiln and mill
simulations which have revolutionized the operators training in these areas for gaining
or improving operating knowledge at lower cost, lesser time and practically no risk.
To start with, use of these simulators may be taken-up on a centralized basis.
• Cement industry should be provided with access to inputs, particularly coal, pet coke
and gypsum at nil rates of customs duty and differences in tax treatment need to be
removed to offer a level playing field to domestic production imports. The import of
duty of cement should also have a duty.
• Cement industry being energy intensive, the energy conservation and alternate
cheaper, renewable and environment friendly sources of energy have assumed greater
importance for improving productivity. Some of the major challenges that are going to
face by the cement industry are quality of the raw materials like coal, fuel, fly ash and
inconsistent power supply.
• The application of nanotechnology to cement and concrete is expected to result in
development of Eco-friendly, high performance cements / binders and concrete with
improved durability characteristics. It would also help in achieving the goal of
sustainable development.
• To sustain the level of competitiveness, government needs to provide level playing
field in terms of
o Improved Infrastructure
o Lower Taxes
o Ensure quality coal

89. o Consistent power supply
o Exploring export market
Conclusions
Despite apprehensions about the impact of inflation and a slowdown in industrial production
and overall economic scenario, the outlook for the cement sector remains positive in respect
of growth in demand in the foreseeable future. Infrastructure and housing are still moving
apace. However what is of concern to the industry are staggering rise in input costs and
pressures to cap selling prices at the same time. Unless the industry is able to recover cost
increases, through suitable adjustments in selling prices through rational economic
considerations, the cement industry will be under pressure.
A large number of foreign players are also expected to enter the cement sector in the next 10
years, owing to the profit margins, constant demand, and right valuation. Consolidation of the
cement sector too will take place and cement plants producing less than 1 million tonnes will
find it difficult to survive in this market. Cement companies will go for global listings either
through the FCCB route or the GDR routes.
The industry experts project the sector to grow by 9 to 10% for the current financial year
provided India's GDP grows at 7%. With help from the government in terms of friendlier
laws, lower taxation, and more infrastructures spending, the sector will grow and will take
India’s economy forward along with it.
In the present scenario of hectic competition it has been seen that the biggest player in the
market remains big and does not allow other companies to rise. The cement industry is
expected to grow steadily in the near future. In the analysis it has been seen that the ACC
LTD and Ambuja Cements are over shadowing all other companies in terms of performance.
So recommendations to other companies will include increasing their customer base and
decrease their cost of productions and improve their performance with respect to sales,
financial prudence and capacity utilization.
Indian companies would have to identify the threat from global cement players entering the
market and find demand for the product in neighbouring countries and continents. Smaller
companies should consolidate their businesses to survive in the market, which will be
dominated by larger players.

90. 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 produce high quality cement and in the cheapest and most efficient manner possible, new
technologies have to be adapted. New technologies have to be introduced and implemented
across various plants and factories for enhanced control and efficient production of the
product. Process automation has to be employed to create high quality products.
To gain a high visibility in the market and pose stiff competition to most multinational
brands, research is going to be the key. Research to develop newer, cheaper and more
efficient technologies for creating cement and other products. Niche products like cement
with fragrance, pre-collared plasters can also be developed for increased consumption.
The main opportunities which can drive the demand in the coming years are the expected
improvement in the economy and corporate spending. This could lead to a pick up in the
demand from institutional clients. Also with the general elections slated in FY14. The
government may dole out higher benefits to the low and middle income groups. The increase
in the disposable income of these groups might trickle down to higher housing demand in
FY14-15. The per capita consumption of cement at ~156kg is significantly lower than the
world (396kg) and china’s average (1390kg). Thus, in the next 3-5 years, the thrust of the
government on infrastructure construction along with rising real-estate penetration could lead
India to be one of the most lucrative cement markets in the world.
Furthermore, since the demand could not grow in sync with the high pace of capacity
addition over FY06-11. The industry is plagued by an over capacity situation, in a moderate
growth phase, the pricing power of the players vying for a higher market share. This
combined with escalating raw material and fuel costs leads to a decline in profitability for the
incumbents.
With the pace of infrastructure development in the overall economy expected to increase over
the next 3 to 5 years, the rising institutional mix will also increase the penetration of RMC,
which has a very high penetration rate in the developed world.
Another trend, which might play out over the years is raising “inorganic activity”. The large
global or domestic players might look to grow through the inorganic route given the lengthy
process of acquiring land and other environmental clearances required to setup Greenfield

91. plants. However, this is not going to be easy, since most of the smaller players have strong
profitability and would only sell at a high premium to the replacement costs. Many global
players are very small players in India and hence they may use this route to establish their
presence on one of the largest and fastest growing markets.

92. References