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Cement

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Cement

May, 2012

Introduction

India is the second largest producer of quality cement in the world. Cement is one of the core industries which plays a vital role in the growth and expansion of a nation. The industry occupies an important place in the Indian economy because of its strong linkages to other sectors such as construction, transportation, coal and power. The cement industry is also one of the major contributors to the exchequer by way of indirect taxes.

Indian Cement Industry is engaged in the production of several varieties of cement such as Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement, etc. They are produced strictly as per the Bureau of Indian Standards (BIS) specifications and their quality is comparable with the best in the world.

The cement industry in India comprises 139 large cement plants and over 365 mini cement plants. The initiatives provided by the Government of India to various infrastructure projects, road network and housing activities will provide required stimulus towards growth of cement industry in India.

Currently, the top players-UltraTech, ACC, Ambuja Cements, Jaiprakash Associates, India Cements-and Shree Cement, collectively control more than half of the cement market in the country. There are 40 players in the industry across the country.

The cement industry in India is experiencing a boom on account of overall growth in the economy. The demand for cement, being a derived one, depends mainly on the industrial activities, real estate business, construction activities and investment in the infrastructure sector. India is experiencing growth in all these areas and hence the cement market is moving ahead in spite of the world-wide economic recession.

Market Size

India's cement industry has performed better in 2011-12 (FY12), on back of robust demand revival in the second half of the financial year. The 330 MT industry grew by 6.4 per cent in 2011-12 as against less than 5 per cent in 2010-11. The industry sold 223.02 MT of the building material, compared with 209.5 MT in FY11. The cement production, too, rose to 223.6 MT against 210.5 MT in FY11.

The cement production increased from 137.16 million tonnes (MT) in April 2010 - January 2011 to 145.00 in April 2011 - January 2012. While cement despatches increased from 136.18 MT in April 2010 - January 2011 to 143.96 MT in April 2011 - January 2012, according to data provided by the Cement Manufacturers' Association (CMA).

In addition, the eight key infrastructure industries posted a seven-month high growth of 6.8 per cent in February 2012, largely driven by robust performance in cement, electricity and coal. Cement output continued to post double-digit growth for the fourth consecutive month at 10.8 per cent. This was much higher than the 6.5 per cent growth seen in the same month last year. The cumulative cement output growth during April-February 2012 stood at 6.4 per cent (as against 4.3 per cent).

Investments

The Cement and Gypsum products sector attracted foreign direct investments (FDI) worth US$ 2,614.05 million between April 2000 to March 2012, according to the data published by Department of Industrial Policy and Promotion (DIPP).

  • Shriram Group, a Rs 50,000 crore (US$ 8.96 billion) diversified Chennai-headquartered conglomerate, is firming up a strategic plan to consolidate its presence in the cement sector. Shriram EPC, a publicly held company of Shriram Group, has recently entered the cement sector by acquiring majority stake in Andhra Pradesh-based cement manufacturer, Sree Jayajothi Cements Ltd
  • Karnataka's State High Level Clearance Committee (SHLCC) has cleared a total of 31 projects worth over Rs 146,656 crore (US$ 26.28 billion). Among the projects cleared, Kalyani Steel received approval for its Rs 12,000 crore (US$ 2.15 billion) carbon alloy steel project and JK Cement's Ltd for its Rs 2,327 crore (US$ 417.03 million) new cement plant
  • ACC, owned by Switzerland-based Holcim Group, will invest Rs 3,300 crore (US$ 591.40 million) over three years to increase its capacity by 16 per cent, to 35 million tonnes per annum (MTPA) from 30 MTPA. ACC will set up cement production facility of four MTPA and a 2.79 MTPA clinker production facility at Jamul in Chattisgarh. Two grinding facilities will also come up at Sindri in Jharkhand and Kharagpur in West Bengal
  • The India Cements Ltd, one of the country's leading companies in the sector, plans to invest around Rs 750 crore (US$ 134.41 million) in one of its factories in Tamil Nadu (TN). The proposed investment is to expand the annual capacity of this plant to 2 MT
  • Swiss cement major, Holcim's India arm has beaten domestic giant UltraTech, during 2011-12. Holcim's reported a growth of 8.3 per cent in 2011-12, while UltraTech Cement showed a growth of 3.5 per cent in its sales
  • Aditya Birla Group's UltraTech Cement, India's largest cement maker, is in talks to acquire a large limestone mine in Mozambique for about Rs 1,500 crore (US$ 268.82 million)
  • Kajaria Ceramics has agreed to form a joint venture (JV) with Vennar Ceramics, a wholly- owned subsidiary of Anjani Portland Cement, to manufacture wall tiles. The venture will set up a unit at Kaikalur in Andhra Pradesh. The JV referred as Vennar Ceramics Ltd, will mark the entry of Kajarias into South India with a manufacturing facility