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Cement

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Cement

August, 2012

Introduction

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. India is the second largest producer of quality cement in the world.

The cement industry in India comprises 139 large cement plants and over 365 mini cement plants. Currently, there are 40 players in the industry across the country. 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.

The industry is involved in production of several types 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.

Indian cement majors - ACC Ltd, Shree Cement Ltd and Ultratech - have signed a cooperation pact to support low-carbon investments in India. The pact was signed in Geneva with member companies of the World Business Council (WBC) for Sustainable Development's Cement Sustainability Initiative and International Finance Corporation (IFC). Under the pact, a Low Carbon Technology Roadmap for the Indian cement industry is to be launched this year-end. The roadmap will outline a possible transition path for the cement industry to reduce its direct emissions by 18 per cent by 2050.

Market Size

The sector, cement and gypsum products attracted foreign direct investments (FDI) worth US$ 2,617.78 million between April 2000 to May 2012, according to the data published by the Department of Industrial Policy and Promotion (DIPP).

Cement sales increased by 14 per cent to 16.26 million tonnes (MT) in May 2012, as against 14.20 MT registered in the same period in 2011, as per the Cement Manufacturers Association (CMA). Installed cement production capacity of the country increased to 307.6 MT with the addition of 700,000 tonnes by Century Textiles.

Robust sales from industry majors indicate that India's cement sector is back on a double-digit growth trajectory. Surge in housing activities, especially in the semi-urban and rural regions helped the industry post better growth. The industry sold 20.25 MT of the building material during the month of May 2012.

"It is anticipated that the cement industry players will continue to increase their annual cement output in coming years and the country's cement production will grow at a compound annual growth rate (CAGR) of around 12 per cent during 2011-12 - 2013-14 to reach 303 MMT," according to a report titled 'Indian Cement Industry Forecast to 2012', by research firm RNCOS.

India's total installed capacity of cement stood at 320 million tonnes per annum (MTPA) with the addition of 30 MTPA fresh capacity during 2011. Around 25 MTPA new capacity is set to be added in 2012. "The demand for cement is expected to grow at 10 per cent over 2011," as per ACC's annual report.

Investments

India's construction sector is expected to grow at about 35 per cent between 2008-09 and 2012-13. The private sector is expected to contribute 44 per cent of the total projected spend of US$ 100 billion on roads and highways over the Twelfth Five Year Plan (2012-17) period. With the growth in the construction sector, the cement industry is also expected to witness momentum in investments into the sector.