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ë The cement industry is one of the main beneficiaries of
the infrastructure boom. With robust demand and
adequate supply, the industry has bright future.
ë The Indian Cement Industry with total capacity of 224
million tones is the second largest after China.
ë Cement industry is dominated by 20 companies who
account for over 70% of the market.
ë The overall outlook for the industry shows significant
growth on the back of robust demand from housing
construction, Phase-II of NHDP (National Highway
Development Project) and other infrastructure
development projects.
ë Domestic demand for cement has been increasing at a
fast pace in India. Cement consumption in India has
grow by over 22% in 2009-10 from 2007-08.
ë Outsiders (foreign players) eyeing India as a major
market to invest in the form of either merger or FDI
(Foreign Direct Investment). Cement industry has a
long way to go as Indian economy is poised to grow
because of being on verge of development.
ë Cement industry in India has also made tremendous
strides in technological up gradation and assimilation
of latest technology. Presently, 93 per cent of the total
capacity in the industry is based on modern and
environment-friendly dry process technology. The
induction of advanced technology has helped the
industry immensely to conserve energy and fuel and to
save materials substantially
ë The history of the cement industry in India dates back
to the 1889 when a Kolkata-based company started
manufacturing cement from ArgillaceousÔ
ë In 1914, India Cement Company Ltd was established
in Porbandar with a capacity of 10,000 tons and
production of 1000 installed.
ë The World War I gave the first initial thrust to the
cement industry in India and the industry started
growing at a fast rate in terms of
production, manufacturing units, and installed capacity.
This stage was referred to as the Nascent Stage of
Indian Cement Industry.
ë In 1927, Concrete Association of India was set up to
create public awareness on the utility of cement as well
as to propagate cement consumptionÔ
ë Cement industry, in any country, plays a major role in
the growth of the nation. Cement industry in India was
under full control and supervision of the government.
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 STRENGTH WEAKNESS
ë Cement demand has grown in ë Industry is highly regionalized
tandem with strong economic ë Increasing cost of production
growth;
ë Demand-Supply
ë Derived from:
gap,overcapacity.
[ Growth in housing sector (over
30%) key demand driver
[ Infrastructure projects like
ports, airports, power projects, dam
& irrigation projects
[ National Highway Development
Programme
[ Rise in industrial projects
[ Export potential
 OPPORTUNITIES
ë Increase in infrastructure
project
ë Technological changes
ë Increase in government
spending
THREATS
ë Rising input costs
ë Transportation cost is scaling
high
ë Government intervention to
adjust cement prices
‘ARGAINING POWER
OF SUPPLIER-HIGH
ë The seller¶s product
important input for the buyer
ë No substitutes
‘ARGAINING POWER
OF ‘UYER-LOW TO
MEDIUM
ë Retail sales constitute about
80 percent of the total sales
and the rest is institutional
sales.
ë The retail buyers don¶t have
any bargaining power while
the institutional buyers get a
discount of 5 to 10 percent as
they buy cement in bulk.
 THREAT OF NEW THREAT OF
ENTRANTS SU‘SITUTES
ë The high capital costs acts as There are no good substitutes
a major entry barrier for the for cement.
entry of new players.
ë The high freight costs make it
difficult to import cementÔ
ë due to logistics issues and
lack of port handling
capabilities, imports of
cement will remain negligible
and do not pose a threat to
domestic industry.
COMPITETIVE RIVALRY AMONG EXISTING
PLAYERS
ë Previously the rivalry was strong among the players, as the
industry was not consolidated
ë During the last few years the industry has become more
consolidated with the Top 3 players having a combined market
share of 49 percent in 2005-06 as compared to 32 percent in 1999-
2000.
ë The cement industry is going through its boom period
with full capacity utilization.
ë As per NCAER study, under high growth scenario, the
demand for cement (including exports) is expected to
increase to 244.82 million tonnes by 2010-11.
ë increasing rate of infrastructural development drives
more demand inspite of having high price of product. It
means the infrastructure( contacted housing )is using
the bulk of the
production.
ë Madras Cements Ltd is planning to invest US$ 178.4 million to
increase the manufacturing capacity of its Ariyalur plant in Tamil
Nadu to 4.5 MT from 2 MT by April 2011.
ë Surya Group plans to invest US$ 873.3 million in a new 5
million MT cement plan to be set up in Gujarat.
ë Anil Ambani-led Reliance Infrastructure is going to build up
cement plants with a total capacity of yearly 20 MT in the next 5
years. For this, the company will invest US$ 2.1 billion.
ë India Cements is going to set up 2 thermal power plants in Andhra
Pradesh and Tamil Nadu at a cost of US$ 104 billion.
ë Anil Ambani-led Reliance Cementation is also going to set up a 5
MT integrated cement plant in Maharashtra. It will invest US$
463.2 million for that.
ë Jaiprakash Associates plans to invest US$ 640 million to increase
its cement capacity.
ë Rungta Mines (RML) is also planning to invest US$ 123 million
for setting up a 1 MT cement plant in Orissa.
ë The cement industry is pushing for increased use of
cement in highway and road construction. The Ministry
of Road Transport and Highways has planned to invest
US$ 354 billion in road infrastructure by 2012.
ë Increased infrastructure spending has been a key focus
area. In the Union ‘udget 2010-11, US$ 37.4 billion
has been provided for infrastructure development.
ë The government has also increased budgetary
allocation for roads by 13 per cent to US$ 4.3 billion.
?