Indian Cement Industry

http://www.chinaccm.com 2008-11-6 16:7

Published:     April 2008
Price (USD):  $1000 /single user PDF licence

Report Summary

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. The growth rate of cement demand over the past five years at 8.37 % was higher than the rate of growth of supply at 4.84% as also the rate of growth of capacity addition during the same period. 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% in FY 07.

During the period FY 03 ¨C 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% to 93.8% during the same period. This has 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 production 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 growth 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%. Also, 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 been reflected in higher profit margins of the industry.
To reduce the cost of production, the industry has focused 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.

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 captured a 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, investment of USD 25 bn is required in urban housing, USD 450 bn will be required in infrastructure related projects and industrial expansion projects would witness investments of USD 88 over the next five years.

Report Outline

1 Introduction
1.1Overview
1.2Industry snapshot

2 Demand ¨C Supply Analysis
2.1Demand Supply scenario - Overall
2.2Demand Supply scenario - Regionwise
2.3Detailed Regional analysis
2.4Overall & Regionwise Capacity Utilisation Rate

3 Demand Drivers
3.1Real Estate
3.2Infrastructure
3.3Industrial Expansion projects
3.4Demand Drivers - Regionwise

4 Supply Dynamics
4.1Past supply Statistics
4.2Blending Dominate
4.3 Projected Capacity additions - Regionwise

5 Cement Import

6 Cement Prices

7 Cost Analysis
7.1 Power & fuel cost
7.2Freight & Forwarding Expense
7.3Raw Material Cost

8 Market Competition & consolidation
8.1Market Share of major players
8.2 Industry Aggregates

9 Outlook
9.1Overall projected Demand-Supply situation
9.2Regionwise projected Demand-Supply situation
9.3 Concerns for the Industry

10 SWOT Analysis

11 Company Profiles
11.1Associated Cement Company Ltd. (ACC)
11.2Ambuja Cements Ltd.
11.3Grasim Industries Ltd.
11.4UltraTech Cement Ltd.
11.5The India Cements Ltd.

Annexures

1 Cement Industry Basics
1.1Types of Cement
1.2Cement Manufacturing Process
1.3Industry Characteristics

2 Key Statistics ¨C Financial
3 Key Statistics ¨C Operational
4 Capacity Expansion Projects by Major Companies
5 Raw material costs & consumption
6 Industry Developments
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