Indian

Cement
Industry
April - 08
 Indian Cement Industry

Indian Cement Industry on growth trajectory. . .

The Cement industry has continued its growth trajectory over the past seven years. Domestic cement
demand growth has surpassed the economic growth rate of the country for the past couple of years. Over
the past five years (FY03-07), cement demand has grown at a CAGR of 8.37% higher than the CAGR of
supply at 4.84%. Demand for cement in the country is expected to continue its buoyant ride on the back of
robust economic growth and infrastructure development in the country.

The key drivers for cement demand are real estate sector, infrastructure projects and industrial expansion
projects. Among these, real estate sector is the key driver and accounted for almost 55% of cement demand
in FY 07.

During the period FY 03 – 07, capacity additions in the country (30.6 mn tonnes) were at a slower rate
compared to demand growth leading to higher average capacity utilization rates from 81.3% in FY 03 to
93.8% in FY 07. This exerted pressure on average prices which have increased from Rs. 156 per bag in FY
03 to Rs. 216 per bag in FY 07. In December 2007, prices stood at Rs. 245 - Rs. 250 per bag.

Low capacity addition coupled with higher utilization rate also led to increase in proportion of blended
cements in product mix. Blended cement accounted for 68% of product mix in FY 07 as compared to 49% in
FY 03.

Cement is a bulky commodity and cannot be easily transported over long distances making it a regional
market place, with the nation being divided into five regions. Each region is characterised by its own
demand-supply dynamics. The Southern region dominated the cement consumption at 44.5 mn tonnes in
FY 07, accounting for about 30% of total domestic cement consumption. During FY 03-07, Southern region
has witnessed highest CAGR of cement demand at 10.4% followed by Northern and Eastern regions at
8.9% and 9%, respectively.

Over the past five years, cost of cement production has grown at a CAGR of 8.4%. The producers have
been able to pass on the hike in cost to consumers on the back of increased demand. Average realizations
have increased from Rs. 1,880 per tonne in FY 03 to Rs. 3,133 per tonne in FY 07, at a CAGR of 13.6%,
which has resulted in higher profit margins of the industry.

To reduce the cost of production, the industry is increasing its focus on captive power generation. Proportion
of cement production through captive power route has increased over the years. Also, cement movement by
rail has increased over the years.

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Market share of top five players in the industry has increased from 42% in FY 02 to 56% in FY 07. In FY 07,
Holcim group maintained its leadership position with market share of 22.6% followed by Aditya Vikram Birla
group at 19.4%.

Domestic Cement industry is highly insulated from global cement markets. Exports have been constant at
about 6% of total cement demand for past few years. With GoI intervention, making cement duty free,
cement is being imported from neighboring countries. However, 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.

Cement demand is expected to remain buoyant driven by boost in construction sector in the country. As per
estimates, investments of USD 25 bn would be required in urban housing, USD 450 bn would be required in
infrastructure related projects and industrial expansion projects would witness investments of USD 88 over
the next five years.

Estimates domestic cement demand to grow at a CAGR of approximately 10% for the next 5 years.
The current tight demand - supply situation is expected to extend upto end of calendar year 2008
owing to delays in capacity expansion programmes by various companies. Expect s prices
to remain firm till the end of CY2008 due to tight demand - supply situation and increase in input costs.
Thereafter, as new capacities come in, we may witness a softening in prices in some regions.

For in-depth analysis and view on the future o f this sector, please refer to the exhaustive Report
on Indian Cement Industry, April 2008.

You can contact us at info@bharatbook.com

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 Indian Cement Industry

Index of Contents
Section A
Topic No. Topics Topic No. Topics
Executive Summary 6 Cement Prices
1 Introduction 7 Cost Analysis
1.1 Overview 7.1 Power & Fuel Cost
1.2 Industry Snapshot 7.2 Freight and Forwarding Cost
2 Demand – Supply Analysis 7.3 Raw Material Cost
2.1 Demand Supply scenario – Overall 8 Market Competition & Consolidation
2.2 Demand Supply Scenario – Regionwise 8.1 Market share of major players
2.3 Detailed Regional Analysis 8.2 Industry Aggregates
2.4 Overall & Regionwise capacity 9 Outlook
utilisation Rate
9.1 Projected Demand-Supply scenario
3 Demand Drivers
9.2 Projected Demand-Supply situation -
3.1 Real Estate
Regionwise
3.2 Infrastructure
9.3 Industry concerns
3.3 Industrial Expansion Projects
10 SWOT Analysis
3.4 Demand Drivers - Regionwise
11 Company Profiles
4 Supply Dynamics
11.1 Associated Cement Company Ltd. (ACC)
4.1 Supply statistics
11.2 Ambuja Cements Ltd.
4.2 Blending dominates
11.3 Grasim Industries Ltd.
4.3 Projected Planned Capacity additions -
Regionwise 11.4 UltraTech Cement Ltd.
5 Cement Import 11.5 The India Cements Ltd.

Figures
Figure No. Particulars Figure No. Particulars
A-1 Per capita consumption A-25 Central - Statewise scenario
A-2 Major cement producing states A-26 Central - Position of top players in the region
A-3 Major cement consuming states A-27 Capacity utilisation Rate
A-4 Capacity Utilization A-28 Sectorwise Cement Demand
A-5 Trend of capacity addition A-29 Growing middle class
A-6 Regional statistics A-30 Construction component for different sectors
A-7 Regional scenario A-31 Infrastructure outlay - 11th five year plan
A-8 North - Overall scenario A-32 Bifurcation of investments planned in
A-9 North - Statewise scenario industrial sector
A-10 North - Position of top players in the region A-33 Product mix
A-11 Price trend in Delhi A-34 Regional product mix FY 07
A-12 South - Overall scenario A-35 Overall & regionwise product mix - FY 08
A-13 South - Statewise scenario A-36 Average yearly retail cement price per bag
A-14 South - Position of top players in the region A-37 Cost per unit - Industry Average
A-15 Price trend in Chennai A-38 Coal consumption & imports
A-16 West - Overall scenario A-39 Change in industrywide dispatch mix
A-17 West - Statewise scenario A-40 Trend of Cement dispatch mix
A-18 West - Position of top players in the region A-41 Regionwise distribution of proven reserves of
A-19 Price trend in Mumbai limestone in the country
A-20 East - Overall scenario A-42 Market share of major players FY 07
A-21 East - Statewise scenario A-43 Regional Scenario - Market share of top
five players
A-22 East - Position of top players in the region
A-44 Industry Average
A-23 Price trend in Kolkata
A-45 Growth rate: GDP and Cement Domestic
A-24 Central - Overall scenario Consumption

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 Indian Cement Industry

Section A
Tables
Tables No. Particulars Tables No. Particulars
A-1 Industry structure as on 31.03.2007 A-13 Projected capacity additions
A-2 Status of top 10 players’ (capacity wise) A-14 Import Cost structure
A-3 Cement demand statistics A-15 Cement statistics CY 06 - Countrywise
A-4 Companywise exports in FY 07 A-16 Cost comparison of grid and captive power
A-5 North - Inter-regional Cement Movement A-17 Captive Power Plants announced —
Regionwise
A-6 South - Inter-regional Cement Movement
A-18 Alternate fuel consumption
A-7 West - Inter-regional Cement Movement
A-19 Dispatch mode for cement companies (FY 07)
A-8 East - Inter-regional Cement Movement
A-20 Industry aggregates
A-9 Central - Inter-regional Cement Movement
A-21 Projected Capacity assuming delays
A-10 Inter-regional cement movement in FY 07
A-22 Projected Demand-Supply situation
A-11 Demand Drivers - Regionwise
A-23 Projected Demand-Supply situation -
A-12 Regionwise capacity additions Regionwise

Section B
Topic No. Topics Topic No. Topics
1 Cement Industry Basics 3 Key Statistics – Operational
1.1 Types of Cement 4 Capacity Expansion Projects by
1.2 Cement Manufacturing Process Major Companies
1.3 Industry Characteristics 5 Raw material costs & consumption
2 Key Statistics – Financial 6 Industry Developments

Figures
Figure No. Particulars

B-1 Types of Cements

B-2 Cement Manufacturing Process

Tables
Table No. Particulars Table No. Particulars
B-1 Contrywise Per Capita Consumption B-18 Companywise Product Mix
B-2 Duty Structure B-19 Overall Product Mix
B-3 Net Sales B-20 Cement Dispatch Mode
B-4 Operating Profit B-21 Companywise Dispatch Mix
B-5 Net Profit B-22 Average Cement prices
B-6 Operating Profit Margin B-23 Duty Structure
B-7 APAT Margin B-24 Companywise Dispatch
B-8 Interest Coverage Ratio B-25 Capacity Expansion Projects by major
B-9 Regionwise/Statewise capacity & production companies
B-10 Regionwise/Statewise cement consumption B-26 Limestone Cost
B-11 Statewise Surplus/Deficit scenario B-27 Gypsum Cost
B-12 Companywise Capacity B-28 Fly Ash Cost
B-13 Companywise Production B-29 Limestone consumption
B-14 Companywise Dispatch B-30 Coal consumption
B-15 (i) Total Export scenario (Cement) B-31 Power consumption
B-15 (ii) Total Export scenario (Clinker) B-32 Power consumption pattern
B-16 Companywise Exports B-33 Cost per tonne of cement produced
B-17 Regionwise Product Mix B-34 Industry Developments post H1 FY 07

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 Indian Cement Industry

The report elucidates facts on the Indian Cement industry, supplemented by the latest Statistics. Emphasis
is laid on the following topics to accomplish the report:

• Performance of the Cement industry over past seven years with evaluation of trends of capacity
addition, production and capacity utilisation.

• Evaluation of Overall demand supply scenario in the country covering trend of domestic consumption
and exports.

• Regional dynamics of industry depicted by detailed analysis of demand supply situation in the five
distinct regions in India.

• Influence of various cement demand driving sectors like real estate, infrastructure and industrial
projects covering regionwise demand drivers.

• Changing scenario of product mix - override of blended cements on OPC.

• Cost analysis with emphasis on power & fuel cost, RM cost, Freight cost and evaluation of average
cost of production, average realizations and margins of the industry.

• Perspective on regionwise future capacity addition, demand estimation and identification of

deficit/surplus regions in the country.

• Operating & financial performance of top players in the industry alongwith future outlook.

• Brief on peculiar characteristics of industry, types & applications of cement variants and cement
manufacturing process.

• Comprehensive database of companywise financial & operational statistics and regionwise key
operational statistics.

For an in-depth analysis and view on the future of this sector, please refer to the exhaustive Report
on Indian Cement Industry.

Price : Domestic Customers: Rs. 20,000 per copy

Overseas Customers: USD 1,000 per copy

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