Profile Products Global position State wise consumption Exports Demand Drivers Demand, Supply ,capacity utilization and

price trends Entry barriers Government Control Capacity clusters Government Policies Competition Cartel formation Interpretation of Demand & Supply Non price competition

GDP Contribution 1.3% Annual production - Increased from 29 MT (1982) to 219 MT (2009) Employment opportunities - 1, 40,000 people. No of Companies 46 No of Plants Large 148 (94% of total production) Small 365 Installed capacity - 252 million tonne per annum Per capita consumption - 156 kg (India) Carbon dioxide, emission - 5% of global emission FDI - US$ 1708.69 million (April 2000 March 2010) Demand Type - Cyclic in nature(peak in March and low in August)
Source:www.cma.in

 Ordinary Portland Cement (OPC): - 70% of the total consumption Portland Pozolona Cement (PPC): - 18% of the total Consumption Portland Blast Furnace Slag Cement (PBFSC): - 10% of total consumption White Cement: - 1% of total consumption Specialized Cement: - 1% of total consumption Oil Well Cement: Rapid Hardening Portland Cement Water Proof Cement

Source:www.cma.in

Position - 2nd largest Producer in the world Contribution - 7% of the world consumption Competitive Strength Technology & production Cost Exports - To over 30 countries

Source:www.cma.in

Source:www.cma.in

Exporting countries Nepal Sri Lanka South Africa Maldives Some Middle east and South east Asian countries Potential Strength for exports Locational advantage Large-scale limestone and coal deposits Adequate cement capacity World-class quality Latest technology

 Growth of Infrastructure and real estate sector Malls, Multiplexes, Shopping complexes The Governments focus on infrastructure spending Gram Sadak Yojana Highways Indira Aawas Yojana & Rajiv Aawas Yojana, rising - lowcost housing Rising income levels Hovering real estate market Announcement of special economic zones

Source:www.icra.in

Administrative The Mines and Minerals (Development and Regulation) Act,1957 The Mines Act, 1952 Approval from Government of India is required before sanctioning leases for cement grade limestone More power has been delegated to State Government

Cost of set up Capital cost of one ton of cement Rs. 3500 Capital cost of 1 Million tonne capacity Rs. 3500 Million.

Taxes and Duty It occupies around 30% of sale Price Excise - Rs. 408 per tonne Royalty on Limestone - Rs. 45-55 per tonne Royalty on Lignite - Rs. 50 per tonne Royalty on Non Coking Coal - Rs. 65-165

Factors that primarily control the cost of cement Coal Power tariffs Railway Freight Royalty

 Coal and limestone, are all bulky items that make transportation difficult and uneconomical Cement plants are located close to both, sources of raw materials and markets Cluster formation Trade-off between proximity to markets and proximity to raw materials

There are 8 clusters in India accounted for 81% of consumption

Source: RR Information and research

 Price and Distribution Controls (1940-1981) Sluggish growth. The installed capacity reached only 27.9 MT by the year 1980-81.

Partial Decontrol (1982-1988) The increase in the installed capacity to 59MT in 1988-89
Total Decontrol (1989) In the next two years, the industry enjoyed a boom in sales and profits

 Booming demand for cement, both in India and abroad, has attracted global majors to India In 2005-06, four of the top-5 cement companies in the world entered India through mergers, acquisitions Regional in nature Strong demand and better price realization Demand and supply expected to grow neck to neck

Source: RR Information and research

 Consolidation leading to reduction of players, and emergence of major players with an ability to influence the market process Cement industry is known to be prone to cartelisation worldwide
The MRTPC (Monopolies and Restrictive Trade Practice Commission)initiated a suo moto enquiry

CCI (Competition commission of India) to take close look

Source: RR Information and research

Source: RR Information and research

Source: RR Information and research

Price
D1 P
2

D
2

D
3

S1

S2

S3

P3 P1 D D
3 2

D1
Q1

Q2

Q3

Quantity

Emerging trends in competition Rising share of blended cement production Possibility of excess capacity Adequate availability of coal a major fuel A well connected logistic network major requisite Movement of cement through the bulk route Increasing pace of consolidation with entry of global cement majors Fall in cement exports, along with marginal cement imports into the country Vertical integration by cement companies

 Branding and greater expenditure on advertising Innovative packaging strengthening of their distribution networks as well as several customer-focused initiatives Integrating vertically by moving into the ready-mix concrete business in an attempt to retain their clients Regional players are moving out of their regions

Brands Ambuja cement Ultratech cement

Advertiser Ambuja cement Ultratech cement

% share(adv expenditure) 27 17

Birla plus
ACC J K Lakshmi Shree ultra red oxide cement J K Wall Putty Ramco Super Grade Lafarge concerato Dalmiya Vajram

Grasim Industries
The associated cement co. J K Lakshmi Shree cement J K Group Madras Cement Ltd Lafarge India Ltd Dalmiya cement

14
10 5 5 4 2 2 2

 www.cma.in www.Icra.in www.rrfinance.com