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Project Report

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Cement Industries
Submitted to: Dr. Meeta Joshi Submitted by: Mayank Bhimani

I would also like to express my deepest sense of gratitude to Dr. S.C. REDDY DIRECTOR OF MARWADI EDUCATION EOUNDATION S GROUP OF INSTITUTIONS, for providing me an opportunity to undertake this project work. I would like to thank Mrs.Meeta Joshi of the Faculty of Management. I thank the entire faculty for their support and guidance and those who have extended their help to me in completing this research project successfully.

Place: Date:

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Mr. Mayank Bhimani

Table of Contents
Introduction of Cement Indusries ............................................................................................................ 6 History of Cement Industries ................................................................................................................... 8 Vision .................................................................................................................................................... 12 Mission.................................................................................................................................................. 13 Present Status ....................................................................................................................................... 16 Cement Machinery ................................................................................................................................ 19 OUR CEMENT PRODUCT ........................................................................................................................ 21 Our Cement Bags................................................................................................................................... 22 BULK TRANSPORTATION ........................................................................................................................ 24 EXPORT OF CEMENT .............................................................................................................................. 26 TARGET AND PRODUCTION ................................................................................................................... 29 QUALITY CONTROL AND ASSURANCE .................................................................................................... 33 CONSUMPTION PATTERN ...................................................................................................................... 41 Environmental ....................................................................................................................................... 43 Porter s five forces Model .............................................................................................................. 47

Cost Structure ....................................................................................................................................... 49 Major Country Players ........................................................................................................................... 53 Cost effective analytical solutions for the modern cement industry ....................................................... 56 Swot Analysis ........................................................................................................................................ 58 Strengths........................................................................................................................................... 58 Weaknesses ...................................................................................................................................... 59 Opportunities.................................................................................................................................... 59 Threats .............................................................................................................................................. 59 Bibliography .......................................................................................................................................... 62

Introduction of Cement Indusries Cement Industry originated in India when the first plant commenced production in 1914 in Probandar, Gujarat. The industry has since been growing at a steady pace, but in the initial stage, particularly during the period before Independence, the growth had been very slow. Since indigenous production was not sufficient to meet the entire domestic demand, the Government had to control its price and distribution statutorily. Large quantities of cement had to be imported for meeting the deficit. The industry was partially decontrolled in 1982 and this gave impetus to its pace of growth. Installed capacity more than doubled during the period 198090. It increased from 27 million tonnes in 1980-81 to 62 million tonnes in 1989-90. Encouraged by the positive response of the industry to the policy liberalisation in the cement industry, Government decontrolled the industry fully on 1st March 1989. With the Industrial Policy Statement made by the Government on 24th July 1991, the cement industry stands delicensed. It has also been listed as a priority industry in Schedule III of the Industry Policy Statement making it eligible for automatic approval for foreign investment upto 51 per cent and also for technical collaboration on normal terms of payment of royalty and lumpsum know-how fee. Indian cement industry has thus been one of the pioneering industries in introducing policy reforms. After the liberalisation measures and globalisation of Indian economy, the cement industry has been growing rapidly at an average rate of 8 per cent except for a short period in 1991-92 when the industry faced demand recession. The country is now the second largest producer of cement in the world. India has also started exporting large quantities of cement and clinker.

History of Cement Industries


In the 18th century a big effort started in Europe to understand why some limes possess hydraulic properties. John Smeaton often referred to as "father of civil engineering in England" concentrated his work in this field. The French Engineer Louis Vicat, inspired by the work of Smeaton and Parker, began a study of hydraulic limes in 1812 (published in 1818 as "Recherches experimentales sur les chaux de construction". He reported that in the absence of naturally occurring argillaceous components in limestone, quality hydraulic limes could be prepared by the calcination of fixed ratios of clay proportioned with quicklime. In 1818 an English patent was granted to Maurice Leger for "Improvement method of making lime" (Leger used Vicat's method). In 1822, the production of "British Cement" had been started by James Frost at Swanscombe based on a patent for "a new cement or artificial stone". The invention of Portland Cement is generally credited to Joseph Aspedin, an English Bricklayer in 1824. It involves a double kilning such as was described by Vicat. In 1838 a young chemical engineer, Isaac Johnson, burned the cement raw material at high temperature until the mass was nearly vitrified producing the modern Portland Cement. The German Chemist Wilhelm Michaelis proposed the establishment of cement standards in 1875. The earliest kiln is one of William Aspedin's bottle kilns from Robins & Aspedin factory at Northfleet.

The earliest bottle or dome kilns were open kilns with tapered chimney to increase the draft. They were burned in a batch rather than in a continuous fashion and were charged with alternating layers of raw feed and solid fuel. The chamber kiln was an improved design developed and patented by Mr. Johnson. The combustion gases from the kiln dried the raw material so that when the kiln was burned out a new charge of dried material is immediately ready for use. The time and heat losses resulting from drawing the clinker, recharging the kiln, and then heating it again led to the design of shaft kiln with continuous burning of the materials, one of the main problem of the new kiln operation was the difficulty of obtaining an even clinker burning, as some of the product would be greatly under-burnt and others be much more heavily clinkered. In 1898 Atlas Portland cement company according to Lewis improved the design by using what is called a rotary kiln, this improvement was a big revolution in the cement industry because the new kiln could produce 200 cement barrels per day compared to a shaft kiln which produced only 40 to max 80 barrels per day; in addition to quick improvement in this new design regarding the mixing, grinding equipments for raw material, grinding equipments for coal, belt conveyor using mix kind of fuel such as natural gas (1904, Iola Portland cement, Iola Kansas). In practice, the operation with the first generation of rotary kiln (Ransone kiln) was very difficult due to problem of maintaining a sufficient and uniform kiln temperature with excessive balling of raw feed and sticking on the Frederick lining. In 1899 Atlas Cement Company improved the technology of the rotary kiln and fuel economy by replacing fuel oil with powdered coal dust. Furthermore, modifications to the kiln were made by addition of two auxiliary clinker coolers, in which the first hot discharged clinker was received as it fell from the kiln and air flowing over it was heated and helped to ignite the coal dust in the rotary kiln. The new clinker produced from the new kiln technology was different than the old clinker especially from the setting time (much faster setting time). The French chemist Pierre Giron solved this problem by adding gypsum to the cement in order to control the setting time.
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After 1900 there was rapid growth in both rotary kiln and auxiliary equipment technology in the United States. Coal grinding mills were developed and coal burning in cement kilns became the predominant combustion process in the industry. All the equipments related to cement production crusher, raw mill, belt conveyors, bucked elevators were improved. Improvement in the following fields pertaining to cement manufacturing from material science technology has been an ongoing process for 200 years.

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Vision
The new millennium will bring with it new challenges and greater opportunities. The 21st century will most certainly see the unfolding of a period of extraordinary possibilities and incredible developments bringing about more fundamental changes in the global economy than the last 200 years. The successful corporates will be those who equip themselves to meet the challenges and convert opportunities into winning strategies. If we are to keep pace, it is imperative that we learn to successfully tread the global pathway. In this journey, clarity of vision, a readiness to cultivate a global mindset, effectiveness, harnessing of human resources to enhance job and knowledge skills of employees, a strong accent on R & D and innovation and a move away from selling, to innovative marketing in recognition of the fact that the Customer is truly King, are some of the strategies that will help corporates to survive and succeed. However it must be remembered that it is not enough to adopt a set of values and just leave them in place. In order to move with the changing times, values and ideas must be ceaselessly re-examined so as to ensure that they are in tune with the organisation's goals. The India Cements Limited is committed to contribute its might in making the 21st century an "Indian Century".

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Mission
Aiming High: We should be one of the largest Cement Companies in the Country. Our growth in size will be through continuous review of potentials of the existing manufacturing resources, strategic acquisitions and expansions Core Competency: Cement will be our mainstay. However, we shall venture into related fields which afford purposeful synergy. Quality Quest: Product quality, consistency and customer service will be pursued as an act of faith throughout the organisation. Pursuit Of Excellence: The growing size of our business permit us to have an R & D set up of our own. We shall continuously challenge methods, systems, operating parameters. We shall constantly review our manufacturing systems to upgrade quality and value of products. Human Resources: We consider people as our valuable Assets. Our HRD Systems will be totally proactive and tuned to provide excellent working environment and transparent organisational culture for creativity, innovation and participation. Value Addition:

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ICL will continuously strive to enhance its value to its customers, ShareHolders and Employees. Community Welfare: As the organization grows, as a good Corporate Citizen, we shall be sensitive to the welfare and development needs of the Society around us.

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Present Status
Installed Capacity
In the cement industry there are two sectors one consisting of large plants and the other consisting of mini cement plants. A factory with an installed capacity exceeding 2,97,000 tonnes per annum (900 tonnes per day) is a large plant and with capacity upto and including 2,97,000 tonnes is a mini cement plant. At present, there are 120 large plants and about 300 mini cement plants. Since mini cement plants are scattered all over the country with a number of associations representing different types of processes, sizes etc. and some of them are even tiny units, it has not been possible to obtain correct data of this sector. The present installed capacity of large plants is 112.01 million tonnes and the estimated capacity of mini cement plants is 9 million tonnes. There is only one Central Public Sector Undertaking in the cement sector, i.e. Cement Corporation of India, which has 10 units. There are 10 large cement plants owned by various State Governments. The break-up of installed capacity of large and mini cement plants is given below: Public Sector Plants No. of plants Installed capacity (In million tonnes)

Cement Corporation of India Others owned by State Governments Private Sector plants Total Mini cement plants

10 10 100 120 300

3.85 5.27 102.89 112.01* 9.00

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Grand total

121.01*

includes the capacity of 2.41 million tonnes of closed units The cement industry is concentrated mainly in those States, where there are large deposits of limestone, which is the main raw material for cement. Nearly 82 per cement of the capacity of large plants is located in seven States. The distribution of capacity in respect of large cement plants among these States as on 31st March, 2000 is as under:

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Cement Machinery
Keeping pace with the growth of the cement industry, the Indian cement machinery industry has also grown substantially during the last few years. The Indian cement industry machinery manufacturer are now capable of manufacturing and supplying complete plant for cement based on dry process and pre-calcination technology for capacities upto 7500 TPD. At present, there are eighteen units in the organised sector manufacturing either complete plants or components of cement machinery. The major producers are M/s. L&T, M/s. Krupp Industries, M/s. Fuller India Ltd. And M/s. CIMMCO. All these manufacturers have technical collaboration with world leaders in cement machinery. Many of the Indian manufactures have adopted the latest technology in the machinery produced by them. Leading world manufacturers have introduced advanced technologies like vertical roller mill for grinding of raw materials and coal instead of ball mills, pyroprocessing systems with 5-6 stage cyclones, pre-heater and pre-calcinator, high efficient fans and separators, etc. The Industry has also adopted further automation and process control systems in the cement plants manufactured by them in order to upgrade the capability at par with other world leaders in cement industry.

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OUR CEMENT PRODUCT


CN currently produces four types of Cement. These types of cement are conforming to Lebanese, European and American Norms and Standards as shown in the correlation table below

Conform to Product PA-S 42.5 Show me "Typical Analysis Report" P 42.5 Show me "Typical Analysis Report" P 42.5 BTNa, RMS Show me "Typical Analysis Report" NL 53
(Lebanese Norms)

EN 197
(European Norms)

ASTM
(American Standards)

Remarks

TYPE I (SM) PA-S 42.5 CEM II/A-S The four types of (ASTM C 595) cement are certified according Type I to NL53 by IRI (ASTM C 150) Type II (ASTM C 150) Type V The Portland Cement CEM I 42.5 N & CEM I (ASTM C 150) 52.5 N are certified Type II according to EN 197 by VDZ (ASTM C 150) Germany. Type V (ASTM C 150)

P 42.5

CEM I 42.5 N

P 42.5 BTNa, CEM I 42.5 N RMS

P 52.5 BTNa, RMS Show me "Typical Analysis Report" PA-L 42.5 Show me "Typical Analysis Report"

P 52.5 BTNa, CEM I 52.5 N RMS

PA-L 42.5

CEM II/A-L

---

---

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Our Cement Bags


We are printing on our bags some information that help using and handling our product. Our cement bags are designed according to the region where our product is sold to enable its traceability and follow-up. The table below shows difference in cement bags:

Product PA-S 42.5 P 42.5 P 42.5 BTNa RMS P 52.5 BTNa RMS PA-L 42.5

Region Lebanon Show me the bag N/A N/A Show me the bag Show me the bag Syria N/A Show me the bag N/A N/A N/A Iraq Show me the bag N/A Show me the bag N/A Show me the bag

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BULK TRANSPORTATION
In all the advanced countries and even in many developing countries bulk transportation of cement is very popular. In advanced countries, transportation of bulk and Ready-Mixed Concrete accounts for about 90% of the total production. In India a beginning has been made by setting up a pilot project for bulk transportation and distribution of cement at Kalamboli, Bombay. The project is being established with the assistance of the World Bank. This has been commissioned in November 1997. A technical study has been conducted for similar projects in large consumption centres like Calcutta and Delhi to cater to the plants located in Bilaspur cluster of Madhya Pradesh for Calcutta and Rajasthan plants for Delhi. There is also very good scope for bulk transportation for coastal shipping in the Western and Eastern Regions. One cement plant located in Gujarat has already been engaged in bulk transportation through bulk carriers acquired by them for supply in the Western Region. Other cement plants are also proposing to enter bulk transportation for both exports as well as for distribution within the country. There is good scope for foreign investment in the country for development of bulk transportation.

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EXPORT OF CEMENT

The country had been facing acute shortage of cement till a few years back and it had to importcement till the middle of 1980 s for meeting the gap in demand and supply. However, after a number of liberalisation measures taken by Government, the position was totally reversed and the country started exporting cement. The export of cement and clinker are mainly to Bangladesh, Nepal, Sri Lanka, Maldives, Mauritius, Africa, Scychelles, Burma, UAE, Singapore etc. Export of cement and clinker from 1991-92 onwards is as follows:

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Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000

Total export of Cement & Clinker (In Million Tonnes) 0.36 1.18 2.85 3.17 2.38 2.7 4.40 3.51 3.14

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TARGET AND PRODUCTION


During the 8th Plan period (1992-97), cement industry has recorded an average growth rate of 7.4per cent. In 1996-97, actual production was 76.22 million tonnes against a target of 76 million tonnes. The growth rate achieved was 9.46 per cent. In 1997-98, the target set was 81 million tonnes. The industry has been able to meet its target with a production of 83.16 million tonnes with a growth rate of 9.11%. In 1998-99 the industry has achieved production of 87.91 million tonnes with a growth rate of 5.70%, inspite of a sluggish market throughout the year. In 1999-2000, actual production was 100.45 million tonnes against a target of 94 million tonnes. The growth rate achieved was 15%. A statement showing the growth of the cement industry, both in terms of capacity and production during the various Five Year Plan is given below:
(Million Tonnes) Installed capacity Five Year Plan PrePlan I Plan (195156) II Plan (195661) III Plan (196166) At the end of the year 195051 195556 196061 196566 Target Achievement* Target Cement Production Achievement* Avg. annual growth thr Plans (%)

5.31

3.28 5.02

4.80

2.20 4.60

16.00

9.30

13.00

7.97

14.70

15.00

12.00

13.00

10.97

7.53

There were Annual Plans for 1966-67, 67-68 and 68-69

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IV Plan (196974) V Plan (197479) VI Plan (197985) VII Plan (198590) Annual Plans

197374 197879 198485 198990

Not fixed 23.50

19.76

18.00

14.66

4.70

22.58

20.80

19.42

6.50

43.00

42.00

32.50

30.13

11.00

62.00

61.55

45.00

45.41

10.10

199091 199192

64.36 66.56 70.19 76.96 83.79 95.76 105.25 110.51 118.97

49.00 55.00 56.00 59.00 61.50 68.00 76.00 81.00 90.00

48.90 53.61 54.08 57.96 62.35 69.63 76.22 83.16 87.91

7.70 9.60 0.90 7.20 7.60 11.60 9.46 9.11 5.70

VIII Plan

199293 199394 199495 199596 199697

IX Plan

199798 199899

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19992000

121.01

94.00

100.45

15.33

Includes mini cement plants In the Northern region, the major consumer is Uttar Pradesh with a highest growth rate of 31%. In the Eastern region, the major consumer is West Bengal, but the highest growth rate of 38% has been achieved by North Eastern States. In the Western region, although Madhya Pradesh is the highest producer of cement, the total consumption is highest in Maharashtra with a consumption of 12.29 million tonnes during the year 1999-2000 with the growth rate of 19%. In the Southern region, while the highest consumption takes place in Tamil Nadu followed by Andhra Pradesh, Karnataka and Kerala, the growth rate in consumption has increased by 21% in Andhra Pradesh, 17% in Kerala, 14% and 11% in Karnataka and Tamil Nadu respectively.

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QUALITY CONTROL AND ASSURANCE


In order to ensure quality, effective control has to be exercised throughout the process of production. The control procedures cover all aspects of cement manufacture from quarry operation, handling, mixing and grinding to packing. In order to achieve quality assurance, most of the cement plants have established facilities for sophisticated controls. Some of the important controls introduced in the cement industry as follows: -

Computerised mine planning and deposit evaluation to enable optimum use of raw material Online X-ray fluorescence spectrometer for raw material control and raw mix design. Better aided instrumentation and process measurements using X-ray analysis, gas anaysers, temperature and pressure measuring devices, etc. Centralised kiln control system in conjunction with expert control systems for process and operation control. Continuous monitoring of quality in production by plants as well as by the certifying agency, namely, Bureau of Indian Standards (BIS) under compulsory Certification Scheme.

BIS certification is compulsory for all varieties and grades of cement under the Cement (Quality Control) Order, 1962 issued under the Essential Commodities Act, 1955. Since the Indian cement industry recognises that ISO-9000 quality system is extremely important for quality assurance, reliability and competitiveness, about 45 cement plants have already secured ISO-9000 Certification. The Total Quality Management (TQM) concept has also been adopted by more than 70 cement plants. Besides, some leading companies have acquired TPM (Total Productive Maintenance) accreditation. Some manufacturers are going ahead for world class rating, e.g. WCM (World Class Manufacturing) or ERP (Enterprise Resource Planning) to be at par with Best Practices anywhere in the world. India produces different varieties and grades of cement, namely, Ordinary Portland Cement (OPC) (33,43,53 grades), Portland Pozzolana Cement (PPC), Portland
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Blast Furnace Slag Cement (PBFSC) and many other varieties. Some of these varieties are used for special applications, e.g. blended cement helps in resisting certain chemical agents, sulphate resisting cement can be used in places where concentration of sulphate is more, a low heat cement is used for mass concreting work like dams, barrages and deep foundations. All these varieties of cement have been covered by Indian Standard Specifications. These are given below: -

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Indian Standard Specifications

Ordinary Portland Cement (OPC) Portland Cements 53 Grade Portland Pozzolana Cement (PPC) 43 Grade

33 Grade

IS:269 IS:8112 IS:12269 IS:1489 IS:455 IS:6452

Portland Blast Furnace Slag Cement (PBFS) High Alumina Cement for Structural Use Rapid Hardening Portland Cement High Strength Ordinary Oil Well Cement Sulphate Resistant Portland Cement Low Heat Portland Cement White Portland Cement Hydrophobic Cement Masonary Cement Super Sulphate Cement Foreign specifications to which cement can be supplied

IS:8229 IS:12330 IS:12600 IS:8042 IS:8043 IS:3466 IS:6909 BS-12 ASTM-150, 595 ISO-9002 Importers Specifications

Railway Concrete Sleepers

IRST-40

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CN laboratory is ISO 9001:2000 certified


It is divided into four sections: 1. 2. 3. 4. Quality control Chemical laboratory Physical laboratory Concrete laboratory

1. Quality control: Our quality control laboratory is operating 24 hours a day with three rotating shifts. Its main mission is to control the raw material, raw meal, kiln feed, clinker and cement production on hourly basis and report directly to the production departments in order to minimize the standard deviation of the results during production, which leads to minimize the percentage of the non-conforming product. 2. Chemical laboratory: CN has the most advanced technology for research and analysis such as XRF & XRD (with a Claiss machine) from ARL, microscope with all the accessories (sample preparation, polish, software) etc... In addition the laboratory is equipped to perform the wet analysis for the ASTM C114 and EN 196-2. An oven up to 2000 C was also installed to control the burnability of the raw material and to evaluate the raw mix variation. 3. Physical laboratory: The physical laboratory is divided into 2 sections. One section is for European tests, and the second is for the American (ASTM) tests. The environmental condition of both sections is controlled with continuous measurement to fulfill the requirements of both standards. 4. Concrete laboratory:

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This laboratory is well equipped to control the quality of the aggregates and sand and to detect the influence of the concrete component on the concrete quality. In addition this concrete laboratory is available to support CN customers and other interested parties.

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Quality Management System


CN is certified ISO 9001:2000. This Certification has been awarded since 2003 by the "German Research Institute of the Cement Industry (VDZ)" - www.vdzonline.de the leader in certification, research and development in the European cement industry. CN certified Quality Management System is applied all over the organization's operations and locations, starting with the production line and ending up by the support activities, the sales office and the head office. QMS is a set of interrelated or interacting elements which direct and control an organization with regard to quality. Our full scope Quality Management System was built according to the ISO 9001:2000 Standards. We have established our QMS elements by: Identifying all main operations and their interactions Setting and documenting the proper methodologies according to related Norms and Standards Setting objectives, indicators and targets at all levels The aim of establishing a Quality Management System in our organization is to manage the activities in a systematic approach and to continually improve its effectiveness in accordance with the requirements of international standards taking into consideration our customers needs. Our QMS helps our Employees to: Better understanding of what to do and how to do Ability to meet work requirements Ability to adjust processes when results are not meeting requirements
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Our Quality Policy takes into consideration the compliance with international Norms and Standards with high focus on our customer satisfaction by preserving our consistency in the produced cement quality on a timely manner at competitive prices. For this purpose we: Continuously identify our customer requirements; Aim to fully comply with these customer requirements; Continuously improve the effectiveness of our Quality Management System built according to ISO9001:2008 Standard; Continuously provide a consistent cement quality according to National & International Norms & Standards by implementing the Quality Control Plan for sampling, testing Furthermore, We have set our Quality Objectives as being the following: Minimize product non-conformities, Rapidly respond to customer complaints, and eliminate repetitive accepted complaints Carry out improvement actions whenever needed, Reduce the number of accidents by ameliorating the work condition and improving Employee awareness and implementing a Safety Management System in the Organization

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CONSUMPTION PATTERN
Although India is one of the leading manufacturers of cement, its per capita consumption is one of the lowest in the world. In 1997 the per capita consumption in India, was 82 kg as against the world average of 256 kg. Paradoxically, the consumption was even less than that of Sri Lanka where India is exporting cement. The per capita consumption in Sri Lanka was 97 kg in 1997. In China, the consumption was 390 kg. Statements showing per capita cement consumption in India and the world as under: Year 1995 1996 1997 India 72 78 82 World 252 256 256

Keeping in view the projected GDP growth rate of 7 per cent in the Ninth Five Year Plan (1997-2002) and emphasis of Government on improving the rural housing facilities and stepping up infrastructure development, the per capita consumption is likely to grow considerably in the coming years.

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Environmental
We at CN hold our environmental performance as a key indicator in the company's development and continuing success. The company recognizes the need for continual improvement in all aspects of its business, but in particular in its environmental performance. As with any other international companies in this sector, sustainability is a must for our survival. With this in mind, Cimenterie Nationale SAL commits itself to the following objectives: v Comply with relevant National Environmental Standards and Legislation as a minimum v Commit to use the State of the Art Technology for cleaner production and emissions reduction v Redefine and implement a coherent CSR Policy and communicate it appropriately v Conservation of natural resources through production optimizaiton, increase the use of additives and maximize recycling and minimize wastes where applicable and rehabilitaiton of exploited areas. v Continuously improve the effectiveness of our Environmental Management System built according to ISO 14001 standards. v Commit to raise the environmental awareness of employees by their participation in the Environmental Management System.

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In this regard, we work with the local community and are sensitive to their environmental needs in order to be recognized as good neighbours; furthermore, we closely work with regulatory authorities to promote and implement relevant national and international initiatives. Top management is highly committed in this respect since more than 10 years during which about 20 million US$ were invested for improving and ameliorating the environmental work conditions in the plant and in the surroundings. Getting the EMS ISO 14001 in the year 2005, gave an added value to what we have been doing environmentally. Continual environmental awareness of all CN staff at different levels was mainly the first challenge we took when building our EMS due to the importance of their involvement in complying with the environmental policy and related procedures/processes within the Environmental Management System. The provided staff training are mainly conducted internally by our qualified personnel, or externally conducted by professional trainers in specialized local or foreign companies.

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Porter's Five Forces Analysis

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Porter s five forces Model of Competition are as follows: Rivalry among competing sellers Potential newentrants Substitute products Competitive pressures from supplier - seller relations: Bargaining power Competitive pressures from seller buyer relations: Bargaining power.

Threat of New Entrants


High capital costs (Rs.3500/tonne), long gestation periods, established distribution network and access to lime reserves act as high entry barriers

Threat of Substitutes
Bitumen in road and plastic in engineering offer some competition

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Bargaining power of Suppliers

Licensing of coal and limestone reserves, supply of power and transport are under monopolistic control leading to high bargaining power

Inter Firm rivalry


Large no of players, little product cost reductions differentiation, overcapacity, frequent

Bargaining power of Buyers


Not much bargaining power with buyers as cement purchase depends on distribution network. With increase in retail cement share, branded products command a premium

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Cost Structure
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Cost Structure

Other operating cost Raw materials Other manufacturing Power and fuel Employee cost Outward freight

Raw material cost The basic raw material required for manufacturing cement is limestone. Cement manufacturing units are primarily located near limestone reserves to avoid high transportation costs. The major clusters of cement manufacturing in India are Satna and Bilaspur in Madhya Pradesh, Chandrapur in Maharashtra, Gulbarga in Karnataka, Yerraguntla and Nalgonda in Andhra Pradesh, and Chandoria in MP and Rajasthan. Thus, it becomes very important for companies to plan their new capacities near limestone reserves to save upon the transportation costs. Power and fuel cost The cement industry is one of the most energy-intensive sector within the Indian economy. Clinker production is the most energy intensive step, accounting for
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nearly 75% of the energy used in cement production. In India, an estimated 9094% of the thermal energy requirement in cement manufacturing is met by coal. The remaining is met by fuel oil and high-speed diesel oil. For each kg. of clinker, the cement industry on an average requires 800 K. Cal of coal for dry process and 1350 K. Cal. of coal for wet process. Over the years, there has been deterioration in the quality of coal. In particular, the ash content has increased implying lower calorific values for coal, and improper and inefficient burning, etc. Coal consumption thus increased resulting in higher fuel and transportation costs. In order to reduce these problems, the cement industry started implementing coal washeries which reduce the ash content of the coal at the mine itself. Generally, the cement industry in India on an average requires 90-105 units of power in the wet process, and 100-110 units of power in the dry process to produce one tonne of cement. Freight cost Freight cost would normally depend on the mix of transportation through roads and railways. Increase and decrease in freight costs also depends on the petrol and diesel prices prevalent in the market. With the recent Supreme Court ruling on overloading of trucks, companies have increased the proportion of transportation from roads to railways. In order to control the freight costs, companies strategically try to locate plants close to both raw materials as well as markets. Companies have gone ahead with the split location units by setting up the grinding units closer to the markets, whereas the clinker units are set up near limestone reserves.

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Moreover, for exports of cement, ocean freight rates have also increased in the last year, thereby increasing the freight cost for exporting companies.

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Major Country Players

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China leads the way in cement consumption and production around the world due to thelarge scale developments and infrastructure buildup projects that the Chinesegovernment isundertaking. According to 2007 estimates the Chinese productionhovers around 50% of worldtotal while the second closest rival India hovers around 6%. Table 1 details production of the top ten nations. In addition toshowing the production in the years 2006 and 2007 in columns 2and 3, we have calculated in the fourth column the percent of market share of each country in theyear 2007 by dividing the amount produced in each country by the world total. In column five,we calculate the percent increase in local production, whereas in column six we calculate thepercent increase in world share (2006-2007). Some rounding errors are expected as the worldtotal has been rounded. It is worthy to note that Thailand was very close to making it on the tableas its production nears that of Brazil and may exceed it in future years. Egypt on the other hand produces about 1.1% of the world s total.

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Cost effective analytical solutions for the modern cement industry


Recent advances in X-ray instrumentation and related analytical techniques have been very beneficial for the cement industry.

Both X-ray fluorescence for total elemental/oxide analysis and X-ray diffraction for mineral/phase analysis are becoming routine tools in the cement industry and are revealing their full potential in supplying vital information to the process and quality control systems. Technical innovations in XRF and XRD have resulted in more autonomous and integrated instruments such that the cement analysis is more advanced and complete. For example, quantitative information about the free lime and clinker phases in conjunction with the total chemical analysis can now be achieved within a few minutes. A case study dealing with the clinker phase analysis will be presented.

Additionally a study on the reduction of the production cost achieved by using the different analytical solutions available for the cement industry will be presented. Emphasis will be made on cost-effective instruments that provide prioritized information for optimum process and quality control as well as environmental issues.

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Swot Analysis
Strength Weaknes ses

S T
Threats

W O
Opportunities

Strengths
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The cement industry has many strengths to be considered. Cement is, literally, the building block of the construction industry. Almost every building constructed relies on cement for its foundation. The cement business is a $10 billion industry, measured by annual cement shipments. There is also a strong reputation behind the cement industry. Cement is a solid material and consumers rarely have complaints about the product. Regional distribution plants have also made cement widely available to any type of buyer.

Weaknesses
o

The cement industry is not without its drawbacks. The cement industry relies on construction jobs to create a profit. But the cement industry heavily relies on weather. About two-thirds of cement production takes place between May and October. Cement producers often use the winter months to produce and stockpile cement, to meet demand. Another weakness is the cost of transport; the cost of transporting cement is high and this keeps cement from being profitable over long distances. In other words, shipping cement costs more than the profit from selling it.

Opportunities
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The cement industries has opportunities as well. One such opportunity is the cement industry's efficiency. The cement industry has recently streamlined its production efforts, using dry manufacturing instead of wet, which is heavier and more time-consuming. The cement industry has also invested about $6 billion in expansion efforts to meet unmet cement needs. Projections show that by 2012, the cement industry will have 25 percent more production capabilities.

Threats
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The nature of the economy have uncovered a number of threats to the cement industry. The cement industry greatly relies on construction.
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The current economy has lessened the number of construction jobs, which in turn hurts the cement industry. The cement industry controls the majority of the United States market, but not all of it. About 11.5 metric tons of cement are imported annually to support the unmet need. If other countries can produce and ship cement for a reduced price, the U.S. cement industry is in danger. The U.S. government is also attempting to regulate the cement industry's waste. The Environmental Protection Agency has introduced regulations for the cement industry to cut down emissions.

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Bibliography

v Business Opportunitywww.hktdc.com
v v v v v www.aet.org www.hoovers.com www.kimberly-clark.com www.tomorrow-web.com

Cement Industry SWOT Analysis | eHow.com

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