Cemen [Key Points 

| Financial Year '09 | Prospects | Sector Do's and

t
Dont's]

The Indian cement industry with a total capacity of about 200 m tonnes (MT) in

FY09 is the second largest market after China. Although consolidation has taken
place in the Indian cement industry with the top five players controlling almost
60% of the capacity, the balance capacity still remains pretty fragmented. 

Despite the fact that the Indian cement industry has clocked production of more
than 100 MT for the last five years, registering a growth of nearly 9% to 10%, the
per capita consumption of around 134 kgs compares poorly with the world
average of over 263 kgs, and more than 950 kgs in China. This, more than
anything, underlines the tremendous scope for growth in the Indian cement
industry in the long term. 

Cement, being a bulk commodity, is a freight intensive industry and transporting

cement over long distances can prove to be uneconomical. This has resulted in
cement being largely a regional play with the industry divided into five main
regions viz. north, south, west, east and the central region. While the southern
region always had excess capacity in the past owing to abundant availability of
limestone, the western and northern regions are the most lucrative markets on
account of higher income levels. However, with capacity addition taking place at a
slower rate as compared to growth in demand, recently the demand supply parity
had also been restored to some extent in the Southern region. Considering the
pace at which infrastructural activity is taking place in different regions, the players
have lined up expansion plans accordingly. 

Given the high potential for growth, quite a few foreign transnationals have been
eyeing the Indian markets and are planning to acquire domestic companies.
Already, while companies like Lafarge, Heidelberg and Italicementi have made a
couple of acquisitions, Holcim has acquired stake in domestic companies Ambuja
Cements and ACC and has increased its stake gradually to gain full control. After
acquiring stake in big companies, transnationals eyed median capacity producers.
Italcementi acquired 100% stake in Zuari Cement and 95% stake in Shree Vishnu.
Cimpor, the Portugese cement manufacturer, acquired Grasim’s stake (53.63%)
in Shree Dig Vijay. However, it must be noted that the transnationals will find the
going tough since cement is a game of volumes and with the median capacity of
fragmented players, the transnationals will have to acquire capacities piecemeal
and this route is fraught with a lot of uncertainties. The global players put together
account of quarter share of the domestic market. Further, turning around few of
the companies at a time when the cycle is at its peak would be a difficult task.
Considering the long term growth story, fair valuations, fragmented structure of
the industry and low gearing, an another wave of consolidation would not come as
a surprise.
 Key Points
Supply The demand-supply situation is tightly balanced with the latter
being marginally higher than the former. 

Demand Housing sector acts as the principal growth driver for cement.
However, in recent times, industrial and infrastructure sector
have also emerged as demand drivers for cement. 

Barriers to High capital costs and long gestation periods. Access to

entry limestone reserves (principal raw material for the manufacture of
cement) also acts as a significant entry barrier.

Bargaining Licensing of coal and limestone reserves, supply of power from

power of the state grid and availability of railways for transport are all
suppliers controlled by a single entity, which is the government. However,
nowadays producers are relying more on captive power, but the
shortage of coal and volatile fuel prices remain a concern. 

Bargaining Cement is a commodity business and sales volumes mostly

power of depend upon the distribution reach of the company. However,
customers things are changing and few brands have started commanding a
premium on account of better quality perception.

Competition Due to large number of players in the industry and very little
brand differentiation to speak of, the competition is intense with
players resorting to expanding reach and achieving pan India
presence.
TOP
 Financial Year '09
During FY09, the industry maintained volume growth of around 10% YoY. The
industry added nearly 30 MT in FY09 over the previous year taking the total
capacity to nearly 212 MTPA. India owing to its locational advantage has been
catering to the cement requirements of the Middle East and the South East Asian
nations. However, the exports were curtailed in FY09 in order to satisfy the
domestic demand and contain inflation. While demand growth stood at 10% YoY,
average industry cement realisations (average of price per bag of cement) were
higher by about 5% YoY. The growth in realisations slowed down as additional
capacities coming on stream eased the supply pressures. 

The overheated real estate sector has cooled off now. Considering the financial
turmoil witnessed globally, financial institutions have tightened their credit norms.
This cautious stance has led to a credit crunch and the same has impacted
upcoming projects. On account of general economic slowdown and these issues,
the demand for cement has moderated. However, stimulus packages announced
by the government and agricultural income gave a fillip to the demand for the
commodity. 

The industry volumes and realisations were higher during FY09 that boosted
topline growth. However, cost of operation did also witnessed northward
movement that exerted pressure on margins. The cement industry on an average
maintains two months inventory of fuel and such costs. The crude prices have
only started cooling off November 2008 onwards, the benefit of which should start
flowing in starting quarter ended March 2009 onwards. Smooth supply of state
grid power is another problem. To ensure smooth functioning of plants and lower
costs, industry has opted to set up captive power plants based on coal. This has
resulted in increase in demand for coal. But coal linkages for the industry are
poor. Recently the ratio has dropped below 50%. So the players either have to
purchase it from open market or import it. This has increased cost of operation.
The industry had lined up huge capex plans with that depreciation costs have
moved up. All of this dented profitability.
TOP
 Prospects
The industry is likely to maintain its growth momentum and continue growing at
around 8% to 9% in the medium to long term. Government initiatives in the
infrastructure sector and the housing sector are likely to be the main drivers of
growth for the industry. 

In the recent past, demand has surpassed supply, resulting in healthy cement
prices across the country. However, this scenario is likely to reverse as the
industry has lined up huge capacity expansion plans. With the growth in the
sector and waning demand supply gap, cement producers have lined up capacity
expansion plans either by brownfield or greenfiled expansion route. The fresh
capacities announced till date will add up 60 MT to the existing capacity (200
MT), and are expected to go on stream by FY10. As the capacities become
operational, which has started taking place, supply may once again outstrip
demand putting downward pressure on margins. Having said that, temporary
relief may be provided if there are delays in any of the proposed expansion
plans. 

While infrastructure spending has been a boon, there was also a strong cushion
from the steady growth of the construction sector (read housing). However,
recently the demand has slowed down as real estate and construction activities in
the urban areas have taken a back seat with economic slowdown. The
importance of the housing sector in cement demand can be gauged from the fact
that it consumes almost 60%-70% of the country’s cement. If this support wanes,
it would impact the growth in consumption of cement, leading to demand supply
mismatch. Also, the hike in prices of coal and petroleum products could impact
cement companies’ margins. 

In the budget, while the government refrained from cutting lowering the burden
of taxes and duties on cement, it imposed customs duty of 7.5% on RMC cement.
Imposition of 7.5% customs duty on concrete batching plants is likely to
negatively impact the ready mix concrete manufacturers. However, it won’t have
a severe impact as RMC constitutes not more than 5% of total cement
consumption. The government has increased budgetary allocation for roads
under NHDP. Further, with more incentives being spelled out for the
infrastructure and housing sector, cement manufacturers will continue to benefit.
The budget measures such as increasing excise duties have proved to be futile
and in the future too, we believe that it is the market dynamics that will determine
these variables. 

Good agricultural income has supported demand for the commodity despite
slowdown in real estate sector. Going forward, we believe the government’s
initiatives in the infrastructure and housing sectors are likely to be the main
drivers of growth for the industry in the long run.

Cement – Inputs
Limestone 
It is the main raw material required for production of cement. About 1.5 tonnes of
limestone is used in the manufacture of 1 tonne of cement. 

Cement grade limestone is located only in certain areas in the country leading to
 establishment of cement plants in clusters. Limestone is available in large
quantities in Rajasthan, Madhya Pradesh, Gujarat, Andhra Pradesh, Karnataka,
Tamil Nadu, and parts of Bihar. This has created pockets of cement production
called clusters. 

The skewed distribution of capacities coupled with transportation bottlenecks has

created pockets of surplus and deficit in the country. This has led to pricing
differentials across markets. Each unit has its mix of core, natural or distant
markets depending on price attractiveness of a market and the freight cost
involved in servicing that market. Madhya Pradesh, Rajasthan and Andhra
Pradesh are the main cement surplus states while Uttar Pradesh, West Bengal
and Kerala are the main cement deficit states. 

Coal 
Around 25 tonnes of coal are used to make 100 tonnes of cement. Coal forms
about 20% of the total operating cost. The industry uses about 5% of coal
produced in the country. Until recently, private ownership of coal mines was not
permitted in India and all purchases had to be made from government-owned coal
mines. 

The government and Cement Manufacturers Association (CMA) make allocation

of coal. The quantities are fixed after making assessments of likely production and
also based on past performance of the unit concerned. Units at a greater distance
suffer because of high transport costs and (in case of some units) delays in
receiving coal because of additional transhipment time (loss in transferring coal
from broad gauge to meter gauge wagons). 

Coal is abundantly available primarily in eastern Madhya Pradesh, Orissa, Bihar,

north Andhra Pradesh and eastern Maharashtra. The coal fields are inefficient
resulting in delays in coal availability. Since the quality of coal is poor (high ash
content) and inconsistent, this leads to problems of quality control for cement
plants. 

Sometimes, although coal is available, rail transport is not, which forces cement
manufacturers to transport coal using trucks, or purchase coal from neighbouring
consumers who have not used their coal allocation. To overcome these problems,
coastal based companies like Gujarat Ambuja import coal. However lack of
adequate port facilities hinders large scale import of coal into India. 

In February 1996, the mining sector was partially liberalised and cement
companies were allowed to set up captive coal mines. Until now, only ACC has
acquired a coal block, Lohar in Maharashtra for captive mining. 

Coal benefication is developing as a long term solution for the industry given the
continuos deterioration in coal quality coupled with inadequate availability.
Benefication involves setting up of washeries with which the ash content of the
coal can be reduced to the required level increasing the overall efficiency of the
kilns. 

Power 
Cement industry is power intensive and about 120 kwh of power is required to
produce one tonne of cement. The consumption is lower at around 90-100 kwh in
new and more efficient units like Gujarat Ambuja. Power accounts for 16% of total
operating costs. Availability of stable and continuous power supply is of critical
importance to the cement industry. Factories, particularly those in the South, have
 been experiencing erratic power supply. Also power costs are high in India and
growing at 10% annually. The industry is trying to insulate itself against this by
setting up captive thermal power plants while diesel generator sets are being used
as a stand by arrangement. 

Transportation 
Cement is highly freight intensive in nature. Every tonne of cement manufactured
involves the transportation of 1.6 tonnes of limestone, 0.25 tonnes of coal, 0.05
tonnes of gypsum and 1 tonne of the finished product. Freight accounts for about
18% of the total cost. The industry faces serious transportation constraints in
terms of timely availability of rail wagons. This has forced manufacturers to move
progressively larger quantities by road. Inspite of serious shortage of wagons, the
planned expenditure on this has been slashed by more than 40% under resource
constraints. The outlay has also been reduced on gauge conversion - thus limiting
carrying capacity and turnaround time of wagons. 

To overcome its resource crunch, the Railways is relying on 'Own your Wagon'
(OYW) and 'build operate lease transfer' (BOLT) schemes. It is clear that the
companies that have procured own wagons and leased the same to the railways
will be given priority in allotment of wagons. Companies like Grasim and ACC
have already invested in the OYW scheme. 

Gujarat Ambuja pioneered the concept of transportation by sea. It has taken the
advantage of its coast location and has constructed its own jetties at Kodinar,
Surat and New Bombay and has insulated itself from otherwise poor port facilities.
It uses these facilities and its own ships to move cement to markets in Gujarat and
Mumbai. It enjoys a significant cost advantage by using this route. 

The key infrastructure support for cement manufacturing which include power,
coal and railways accounting for 55-60% of the cost of manufacturing and selling
cement are controlled by the government. Not only the cost of these services
provided by the government has risen more than inflation (as measured by the
wholesale price index in the 1990's) but the quality of these services leaves a lot
to be desired. 

For example the reliability of power from State Electricity Boards (SEBs) is poor in
major cement producing states. States like Madhya Pradesh, Andhra Pradesh,
Rajasthan and Karnataka have power cuts of 35-40% for more than 6-8 months of
the year. Thus companies having low dependence on government for
infrastructure support have a competitive advantage.

Cement - Products
Limestone 
India produces 11 different varieties of cement. The major types of cement manufactured in India
are: 

Portland (grey) cement 

This is produced entirely from clinker and gypsum. It is the most common type of cement. 

Slag cement
This cheaper to produce as it uses less clinker. Slag cement uses 50% slag - a waste product of steel
plants and only 45% clinker. As a result it is possible to produce twice the amount of cement at almost
the same cost. 
Pozzolana cement
It is made up of 25% pozzolana and 20% fly ash. It is also cheaper to produce as it uses less clinker. 

White cement 
There is a negligible amount of white cement produced in the country, mainly because it is almost
three times more expensive than grey cement. It is mainly used as a filler between ceramic tiles or for
decorative purposes. Since more control is required for its raw materials, the ash content in cement
has to be negligible. As the coal available in India has high ash content, gas has to be used as a fuel
in the manufacture of white cement.
Sector structure/Market size

India is the world's second largest producer of cement after China, with cement companies adding nearly 11 million tonnes
(MT) capacity during April-September 2009, taking the total installed capacity to around 231 MT by September 2009.

With the boost given by the government to various infrastructure projects, road networks and housing facilities, growth in the
cement consumption is anticipated in the coming years. According to Jyotiraditya Scindia, Minister of State, Ministry of
Commerce and Industry, cement production could rise to 236.16 MT in FY11 and touch 262.61 MT in FY12.

With almost total capacity utilisation levels in the industry, cement despatches have maintained a 10 per cent growth rate. Total
despatches grew to 170 MT during 2007–08 as against 155 MT in 2006–07.

Moreover, cement despatches were 12.22 MT in October 2009, showing a growth of 9 per cent as compared to 11.21 MT in
October 2008. During October 2009, cement production was 12.37 MT, registering a growth of 6.54 per cent as compared to
11.61 MT in October 2008. Between April to October 2009, cement production totaled 89.59 MT while cement despatches
totaled 88.72 MT.

A few of the leading manufacturers are UltraTech/Grasim combine, Dalmia Cements, India Cements, Holcim etc.

Technological change

Continuous technological upgrading and assimilation of latest technology has been going on in the cement industry. Presently,
93 per cent of the total capacity in the industry is based on modern and environment-friendly dry process technology and only 7
per cent of the capacity is based on old wet and semi-dry process technology. There is tremendous scope for waste heat
recovery in cement plants and thereby reduction in emission level.

New Investments

 Dalmia Cement, South India’s second largest cement maker, will invest over US$ 652.6 million to add 10
MT capacity over the next 2-3 years.
 India Cements Ltd will invest US$ 104 billion to set up two thermal power plants in the southern states of
Tamil Nadu and Andhra Pradesh.
 Anil Ambani Group company Reliance Infrastructure will invest US$ 2.1 billion to set up cement plants with
a total capacity of 20 MT per annum over the next five years.
 Reliance Cementation, an Anil Dhirubhai Ambani Group (ADAG) company, plans to set up a 5 MT
integrated cement plant in Yavatmal district of Maharashtra at a cost of US$ 463.2 million.
 Jaiprakash Associates Ltd has inked a MoU with state-owned Assam Mineral Development Corporation
Limited (AMDC) for setting up a 2 MT per annum capacity cement plant at an estimated cost of US$
221.36 million.
 Iron ore mining firm Rungta Mines (RML), the flagship company of SR Rungta group, plans to set up a one
million tonne cement plant in Orissa with an investment of around US$ 123 million.

Mergers and Acquistions (M&As)

 Holcim strengthened its position in India by increasing its holding in Ambuja Cement from 22 per cent to 56
per cent through various open market transactions with an open offer for a total investment of US$ 1.8
billion. Moreover, it also increased its stake in ACC Cement with US$ 486 million, being the single largest
 acquirer in the cement sector.
 UltraTech Cement, a unit of conglomerate Aditya Birla Group, is absorbing sister unit Samruddhi Cement,
to form India's biggest cement firm.
 Leading foreign funds like Fidelity, ABN Amro, HSBC, Nomura Asset Management Fund and Emerging
Market Fund have together bought around 7.5 per cent in India's third-largest cement firm, India Cements
(ICL), for US$ 124.91 million.
 Cimpor, the Portugese cement maker, paid US$ 68.10 million for Grasim Industries' 53.63 per cent stake
in Shree Digvijay Cement.
 CRH Plc, the world's second biggest maker and distributor of building materials, acquired a 50 per cent
stake in My Home Industries Ltd for almost US$ 372.64 million.
 Vicat SA, a French cement maker acquired a 6.67 per cent stake in Hyderabad-based Sagar Cement for
US$ 14.35 million.

Government Initiatives

Government initiatives in the infrastructure sector, coupled with the housing sector boom and urban development, continue
being the main drivers of growth for the Indian cement industry.

 Increased infrastructure spending has been a key focus area over the last five years indicating good times
ahead for cement manufacturers.
 The government has increased budgetary allocation for roads under National Highways Development
Project (NHDP).
 Appointing a coal regulator is looked upon as a positive move as it will facilitate timely and proper
allocation of coal (a key raw material) blocks to the core sectors, cement being one of them.

Keeping in mind the global meltdown which is impacting the cement companies in India, the government re-imposed the
counter-veiling duty (CVD) and special CVD on imported cement in January. This is likely to provide a level playing field to
domestic companies.

Road Ahead

According to a report by the ICRA Industry Monitor, the installed capacity is expected to increase to 241 MTPA by FY 2010-
end. India's cement industry is likely to record an annual growth of 10 per cent in the coming years with higher domestic
demand resulting in increased capacity utilisation.

Moreover, according to the Centre for Monitoring Indian Economy (CMIE), cement production is expected to grow by 8.1 per
cent and demand for the same is likely to rise by a healthy 7-7.5 per cent in FY 2009-10.

Exchange rate used:

1 USD = 48.8 INR (as on September 2009)
1 USD = 47.5 INR (as on October 2009)
 
Cement Industry in India
India, being the second largest cement producer in the world after China with a total capacity of 151.2 Million Tones
(MT), has got a huge cement industry. With the government of India giving boost to various infrastructure projects,
housing facilities and road networks, the cement industry in India is currently growing at an enviable pace. More
growth in the Indian cement industry is expected in the coming years. It is also predicted that the cement production
in India would rise to 236.16 MT in FY11. It's also expected to rise to 262.61 MT in FY12.

The cement industry in India is dominated by around 20 companies, which account for almost 70% of the total
cement production in India. In the present year, the Indian cement companies have produced 11 MT cement during
April-September 2009. It took the total cement production in FY09 to 231 MT.

Industry Background
The history of the cement industry in India dates back to the 1889 when a Kolkata-based company started
manufacturing cement from Argillaceous. But the industry started getting the organized shape in the early 1900s. In
1914, India Cement Company Ltd was established in Porbandar with a capacity of 10,000 tons and production of
1000 installed. The World War I gave the first initial thrust to the cement industry in India and the industry started
growing at a fast rate in terms of production, manufacturing units, and installed capacity. This stage was referred to
as the Nascent Stage of Indian Cement Industry. In 1927, Concrete Association of India was set up to create public
awareness on the utility of cement as well as to propagate cement consumption.

The cement industry in India saw the price and distribution control system in the year 1956, established to ensure
fair price model for consumers as well as manufacturers. Later in 1977, government authorized new manufacturing
units (as well as existing units going for capacity enhancement) to put a higher price tag for their products. A couple
of years later, government introduced a three-tier pricing system with different pricing on cement produced in high,
medium and low cost plants.

Cement industry, in any country, plays a major role in the growth of the nation. Cement industry in India was under
full control and supervision of the government. However, it got relief at a large extent after the economic reform. But
government interference, especially in the pricing, is still evident in India. In spite of being the second largest cement
producer in the world, India falls in the list of lowest per capita consumption of cement with 125 kg. The reason
behind this is the poor rural people who mostly live in mud huts and cannot afford to have the commodity. Despite the
fact, the demand and supply of cement in India has grown up. In a fast developing economy like India, there is always
large possibility of expansion of cement industry.

Cement Industry in India

 Jobs in Cement Industry
 L & T Cement Plants
 ACC Ltd. Cement Plants
 CCI Cement Plants
 Export of Indian Cement
 Types of Cement in India
 Gujarat Ambuja Plants in India
 Top 10 Companies
 Top 10 Cement Companies
 Mangalam Cement
 J K Lakshmi Cement
 J K Cement
 Madras Cement
 India Cements
 Sanghi Industries
 Dalmia Cement
 ITD Cementation India
 Dalmia Cement Bharat
 Gujarat Ambuja Cements

Cement Production and Growth

Domestic demand plays a major role in the fast growth of cement industry in India. In fact the domestic demand of
cement has surpassed the economic growth rate of India. The cement consumption is expected to rise more than
22% by 2009-10 from 2007-08. In cement consumption, the state of Maharashtra leads the table with 12.18%
consumption, followed by Uttar Pradesh. In terms of cement production, Andhra Pradesh leads the list with 14.72% of
production, while Rajasthan remains at second position.

The production of cement in India grew at a rate of 9.1% during 2006-07 against the total production of 147.8 MT in
the previous fiscal year. During April to October 2008-09, the production of cement in India was 101.04 MT
comparing to 95.05 MT during the same period in the previous year. During October 2009, the total cement
production in India was 12.37 MT compared to a production of 11.61 MT in the same month in the previous year. The
cement companies are also increasing their productions due to the high market demand. The cement companies
have seen a net profit growth rate of 85%. With this huge success, the cement industry in India has contributed
almost 8% to India's economic development.

Technology Up-gradation

Cement industry in India is currently going through a technological change as a lot of upgradation and assimilation is
taking place. Currently, almost 93% of the total capacity is based entirely on the modern dry process, which is
considered as more environment-friendly. Only the rest 7% uses old wet and semi-dry process technology. There is
also a huge scope of waste heat recovery in the cement plants, which lead to reduction in the emission level and
hence improves the environment.

Cement Despatches

Cement industry in India has successfully maintained almost total capacity utilization levels,
which resulted in maintaining a 10% growth rate. In 2006-07, the total despatch was 155 MT,
which rose up to 170 MT in 2007-08. The month of October 2009 saw a cement despatch of
12.22 MT, which was almost 9% higher than the total cement despatch of 11.21 MT in the same
month in the previous year.

  2008-09 (Apr-Oct) (in MT) 2007-08 (Apr-Oct) in MT

Production 101.04 95.05

Despatches (Excluding Export) 100.24 94.33

Export 1.46 2.16

Capacity Utilization (%) 85 93

Major Players in Indian Cement Industry

There are a number of players prevailing in the cement industry in India. However, there are around 20 big names
that account for more than 70% of the total cement production in India. The total installed capacity is distributed over
around 129 plants, owned by 54 major companies across the nation.

Following are some of the major names in the Indian cement industry:

Company Production Installed Capacity

ACC 17,902 18,640

Gujarat Ambuja 15,094 14,860

 Ultratech 13,707 17,000

Grasim 14,649 14,115

India Cements 8,434 8,810

JK Group 6,174 6,680

Jaypee Group 6,316 6,531

Century 6,636 6,300

Madras Cements 4,550 5,470

Birla Corp. 5,150 5,113

Mergers and Acquisitions in Cement Industry in India

 UltraTech Cement is going to absorb its sister concern Samruddhi Cement to become biggest cement
company in India.
 World's leading foreign funds like HSBC, ABN Amro, Fidelity, Emerging Market Fund and Asset
Management Fund have together bought 7.5% of India Cements (ICL) at a cost of US$ 124.91 million.
 Cimpor, a Cement company of Portugal, has bought 53.63% stake that Grasim Industries had in Shree
Digvijay Cement.
 French cement company Vicat SA bought 6.67% share of Sagar Cement at a cost of US$ 14.35 million.
 Holcim now holds 56% stake of Ambuja Cement. Previously it held 22% of stake. The company utilized
various open market transactions to increase its stakes. It invested US$ 1.8 billion for that.

Recent Investments in the Indian Cement Industry

 In a recent announcement, the second largest cement company in South India, Dalmia Cement declared
that it's going to invest more than US$ 652.6 million in the next 2-3 years to add 10 MT capacity.
 Anil Ambani-led Reliance Infrastructure is going to build up cement plants with a total capacity of yearly
20 MT in the next 5 years. For this, the company will invest US$ 2.1 billion.
 India Cements is going to set up 2 thermal power plants in Andhra Pradesh and Tamil Nadu at a cost of
US$ 104 billion.
 Anil Ambani-led Reliance Cementation is also going to set up a 5 MT integrated cement plant in
Maharashtra. It will invest US$ 463.2 million for that.

Jaiprakash Associates Ltd has signed a MoU with Assam Mineral Development Corporation Limited to set up a 2 MT
cement plant. The estimated project cost is US$ 221.36 million. Cement is the preferred building material in
India. It is used extensively in household and industrial construction. Earlier, government sector used to
consume over 50% of the total cement sold in India, but in the last decade, its share has come down to
35%. Rural areas consume less than 23% of the total cement. Availability of cheaper building materials
for non-permanent structures affects the rural demand.

Demand for cement is linked to the economic activity in any country. Broadly, it can be categorized into
demand for housing construction (homes, offices etc.) and infrastructure creation (ports, roads, power
plants etc). The real driver of cement demand is creation of infrastructure, hence cement demand in
emerging economies is much higher than developed countries where the demand has reached a plateau.
In India too, the demand for cement will be affected by spending on infrastructure (including housing).

With the boost given by the government to various infrastructure projects, road network and housing
facilities, growth in the cement consumption is anticipated in the coming year. The favourable housing
finance environment is expected to fulfil the vast housing requirements, both in rural and urban areas.
The increase in infrastructure projects by the government coupled with the construction of the Golden
Quadrilateral and the North-South and East-West corridor projects have led to an increase in
consumption of cement. This increase is expected to continue in the future. The reduction in import duties
is not likely to affect the industry as the cement produced is at par with the international standards and the
prices are lower than those prevailing in international markets.


 Rungta Mines (RML) is also planning to invest US$ 123 million for setting up a 1 MT cement plant in
Orissa.

Name ACC Limited

Production 17,902
Installed Capacity 18,640
Net Profit (Quarter ended Sep 30, 2009) 41,550.89 lakhs
Name Gujarat Ambuja Cements Limited
Production 15,094
Installed Capacity 14,860
Net Profit (Quarter ended on Sep 30, 2009) 31,848 lakhs
Name Ultratech
Production 13,707
Installed Capacity 17,000
Net Profit (in 2008-09) 97,700 lakhs
Name Grasim
Production 14,649
Installed Capacity 14,115
Net Profit (in 2008-09) 1,64,800 lakhs
Name India Cements
Production 8,434
Installed Capacity 8,810
Net Profit (in 2008-09) 43,218 lakhs
Name JK Cement Ltd
Production 6,174
Installed Capacity 6,680
Net Profit (in 2008-09) 14,234.40 lakhs
Name Jaypee Group
Production 6,316
Installed Capacity 6,531
Name Century Cement
Production 6,636
Installed Capacity 6,300
Name Madras Cement
Production 4,550
Installed Capacity 5,457
Net Profit (in 2008-09) 49,081 lakhs
Name Birla Corp.
Production 5,150
Installed Capacity 5,113
Net Profit (in 2008-09) 9,061 lakhs