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Cement

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Cement

November, 2011

Introduction

With 153 cement plants and a total installed capacity of around 209 million tonnes per annum (MTPA), taking both as of March 2009, the Indian cement industry is the second largest in the world. In 2008-09, total cement consumption in India stood at 178 million tonnes while exports of cement and clinker amounted to around 3 million tonnes. The cement industry holds a significant place in the national economy because of its strong linkages to various sectors such as construction, transportation, coal and power. The cement industry in India is also one of the major contributors to the exchequer by way of indirect taxes.

Even during the global economic slowdown in 2008-09, growth in cement demand remained robust at 8.4 per cent. In 2009-10 cement consumption has shot up, reporting, on an average, 12.5 per cent growth in consumption during the first eight months with the growth being fuelled by strong infrastructure spending, especially from the Government Sector.

India produces variety of cement based on different compositions such as Ordinary Portland cement, Portland Pozzolana, Portland Blast Furnace Slag cement, white cement and specialised cement. Cement in India is produced as per the Bureau of Indian Standards (BIS) specifications and the quality is comparable with the best in the world.

Some of the major players in the cement industry include Ultratech Cement, Gujarat Ambuja Cement Limited, JK Cements, ACC Cement, Century Cements, Madras Cements, Holcim and Lafarge to name a few.

Market Size

The Indian cement industry can be divided into five geographical zones—North, South, East, West and Central—based on localised differentiation in the consumer profile and supply-demand scenario.

Demand in the cement industry has seen wonderful growth on the back of infrastructure, residential and commercial projects. Cement production in India is anticipated to increase to 315-320 million tonne (MT) by end of this fiscal year from the current 300 MT. "The target was 290 MT by the end of this year, which we have already achieved. So, we expect the capacity to increase up to 320 MT by the year end," according to N A Viswanathan, Secretary General, Cement Manufacturers Association (CMA). CMA is targeting to achieve 550 MT capacity by 2020.

This industry has seen constant modernisation and implementation of latest technologies during past few years. About 93 per cent of the total capacity is based on eco-friendly dry process technology. Progressive liberalization and easing of foreign direct investments (FDI) norms in various sectors paved the way for growth in FDI, which led to growing demand for office space from multinational companies (MNCs) and other foreign investors. Total FDI in the cement sector between April 2000 and August 2010 stood at US$ 1.9 billion.