Cement Industry

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Industry Value Chain & Structure

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Market Size & Growth

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Industry Segment

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Competition

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Growth Drivers

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Issue & Concerns

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Indian Cement Industry

Industry Value Chain & Structure

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Industry Overview

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Industry Value Chain

Competition

Growth Drivers

Issues & Concerns

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Indian Cement Industry

Competition

Industry Overview 

India is the second largest producer of cement in the world after China

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Total Production capacity of 166 MNT

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CAGR of 7.6% (LAST 5 YEARS)

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Per capita consumption of 125 KG

Growth Drivers

Issues & Concerns

VALUE CHAIN Raw materials

crushed

Roller press

Grindin g mill

clinker

Clinker storage

storage

packagi ng

Limestone Hematite bauxite

Rotary klin

Clinker cooling

pre heater at 1200-1450 ºc

Cement mill

Add gypsum Dispatch to consumers

SCOPE FOR CEMENT INDUSTRY IN INDIA

•The Per Capita Consumption Of INDA Is Lower Than The World •Contribution is Rs. 33,677 Cr to the GDP approximately 0.72% of GDP

SOURCES:CMIE

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Indian Cement Industry

Competition

Growth Drivers

Industry Segmentation On the Basis of Packaging

cement

Bag cement

Bulk cement

97% usage

3% usage

Bulk Cement, is an alternative to bagged cement, which is of particular advantage to large consumers of cement.

Issues & Concerns

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Segmentation On the Basis Of type of Cement

Indian Cement Industry

Competition

Growth Drivers

Issues & Concerns

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Indian Cement Industry

Competition

Growth Drivers

Issues & Concerns

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Indian Cement Industry

Competition

Industry Segmentation 

52 large cement plants in India(93% installed capacity)

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Capacity expansion of large plants lead to increased installed capacity

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Rapid demand from urban housing sector, infrastructure a major driver.

SOURCES:CMA

Growth Drivers

Issues & Concerns

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Indian Cement Industry

Competition

Growth Drivers

Industry Segmentation 

Cement demand dependent upon housing sector

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Hike in real estate prices will not hit cement industry.

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India being a growing economy, new projects inevitable, hence no effect of rise in prices. SOURCES:CMA

Issues & Concerns

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Indian Cement Industry

Competition

Production Capacity

TOP 5 PLAYERS CONTRIBUTE 45% TO THE TOTAL PRODUCTION

SOURCES:CMA

Growth Drivers

Issues & Concerns

•Production has increased significantly over the years •Low import because of poor condition of port

The demand is greater than the supply & cement prices are rising rapidly

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Indian Cement Industry

Competition

Growth Drivers

Issues & Concerns

Michael Porter Analysis Threat to new entrant : high to moderate Large amount of capital and long gestation period is required to sustain in the long run. Goodwill is a deciding factor in the long run Access to limestone reserve also act as a significant entry barrier

Bargaining power of suppliers: high Licensing of coal & limestone is required. Shortage of coal & rising fuel price remain a concern.

Competitive rivalry: high to moderate Very little brand differentiation. The competition is intense with players resorting to expanding reach and achieving pan India presence.

Bargaining power of buyers: moderate sales volumes mostly depend upon the distribution reach of the company.

Threat of substitute: low There is no substitute product for construction.

Industry Value Chain & Structure

Market Size & Growth

Industry Drivers

Industry Segment

Indian Cement Industry

Competition

Growth Drivers

Issues & Concerns

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Budget Impact: Cement Price

Indian Cement Industry

Competition

Growth Drivers

Issues & Concerns

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Indian Cement Industry

Competition

Growth Drivers

Issues & Concerns

Mergers & Acquisition in Cement Industry

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THE CEMENT SECTOR CONTRIBUTING TO 7 %TO THE TOTAL DEAL VALUE IN INDIA

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HOLCIM INCREASED ITS HOLDING IN AMBUJA CEMENT FORM 22 PER CENT TO 56 PER CENT FOR INVESTMENT OF US$ 1.8 BILLION.

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HOLCIM INCREASED ITS STAKE IN ACC CEMENT WITH US $ 486 MILLION

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LEADING FOREIGN FUNDS LIKE FIDELITY, ABN AMRO, HSBC, NOMURA ASSET MANAGEMENT FUND AND EMERGING MARKET FUND HAVE BOUGHT 7.5 PER CENT IN INDIA CEMENTS (ICL) FOR US$ 148.19 MILLION.

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CIMPOR THE PORTUGESE CEMENT MAKER PAID US$ 75.76 MILLION FOR GRASIM INDUSTRIES

Industry Value Chain & Structure

Market Size & Growth

Industry Segment

Indian Cement Industry

Competition

Growth Drivers

ISSUES & CONCERNS 

Coal allocation

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Cartelization of prices

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Import duty on coal and pet coke

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High transportation cost

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Govt. banning exports

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Infrastructure development

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High tax and excise duty

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Lack of port handling capability

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Demand-supply mismatch

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VAT on cement and clinker is 12.5% where as steel 4% High royalty charges for limestone mining

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Lack of wagons and equipments

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Regional disequilibrium

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High attrition

Issues & Concerns