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46 globalcementMAGAZINE February 2013
Peter Edwards, Global Cement Magazine
The Incredible Indian cement industry
Below - Figure 1: GDP/capita
(red)2 and cement production
data (blue)3 or India between
1990 and 2011. Both GDP/
capita and cement production
began to increase in the early
1990s amid economic liberali-
sation, but the ratio between
them is much higher than in
many other nations.
The Republic of India
occupies the bulk of
the Indian subcontinent,
the geographical region that
is also home to Bangladesh and
Pakistan in central southern Asia.
The worlds largest democracy1
and third largest economy in terms
of purchasing power parity, India is
the second most populous country
after China, a position also
held by its incredible
cement industry...
Many diverse populations have been attracted tothe ertile territories that constitute modern-day India over the millennia, combining to create a
unique modern culture. Peoples arriving rom parts
o modern Aghanistan, urkey and Arabia merged
with native Hindu cultures and the country ourished
as a trade cross-roads rom around 400 onwards,
with development o classical science, maths, art andwider culture.
In the early 16th Century the Mughal Dynasty
began ollowing invasion by central Asian warriors.
Te Mughal powers administered new administative
systems that encouraged market-based trade and
unied disperate groups through inclusive systems,
which enabled a period o increased political and
social stability.
At around the same time as the start o the Dynasty,
European explorers were developing staging posts
along the coast o modern India. By the turn o the
1800s, Great Britain had the largest inuence o the
colonial powers. Britain o-
cially ruled India rom 1858
to 1947, a period known
as the British Raj, that also
covered parts o modern-
day Pakistan, Myanmar and
Bangladesh.
In 1947 the Raj came to
an end when Britain passed
the Indian Independence
Act, which created the
states o India and Pakistan.
Tis arose due to constantpressure rom Indian na-
tionalists, who were led
in the the latter stages by
Mahatma Ghandi. Gandhi was amed or his policy
o non-violence and civil-disobedience to the ruling
British and is today known by Indians as the Father
o the Nation. oday, India is a key member o the
Commonwealth o Nations.
Economy
Indias economy is the third largest by GDP in terms opurchasing power parity but, with a very large popula-
tion, it ranks only 165th in GDP/capita terms.1 Gradual
de-centralisation o the economy since the early 1990s
has allowed the development o a more diverse market
economy that is increasingly driven by an educated
and business-minded middle class. Tis is highlighted
by Indias now world-amous telecomminications and
service sector, which has grown extensively over the
past decade.1
Increased variation has resulted in a reduction in
Indias agriculture dependency, although this sector
still supplies around 50% o the countrys income.
Manuacturing remains strong, representing more
than a quarter o output.
However, despite economic expansion and de-
velopment o its service sector, economic disparity
remains a severe problem or India. Almost a third o
Indians lived in poverty in 2011 and constant popula-
tion growth makes it hard to increase living standards.
For illustration, India welcomed its 1 billionth inhabit-
ant in 2000. In just 12 years since then the population
has increased to over 1.2 billion!
Cement industry - History4
Te indigenous Indian cement industry traces itshistory back to 1914, at a time when the market was
dominated by imports. In that rst year the industry
produced just 1000t o cement, but over just 10 years
0
20
400
600
800
1000
1200
1400
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
1600
0
50
100
150
200
250
GDP/capita(CurrentUS$)
Cementproduction(Mt)
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this gure increased to 0.26Mt in 1924. In the same 10-
year bracket, India consumed a total o 2Mt o cement,
with around hal imported.
From a modern perspective the need to expand the
industry is clear. However, the industry was ghting
against poor public perception surrounding not only
domestic Indian cement, but cement itsel. Many pro-
ducers went out o business as a result o price-wars
between Indian producers who were aiming at a bigger
slice o the uture market.
o end the uncertainty surrounding the industry
and to campaign or taris on imported cement, the
Indian Cement Manuacturers Association (ICMA)
was set up in 1925. Tis subsequently transormed into
two connected groups. Te modern Cement Manuac-
turers Association (CMA) was reormed in 1961.
Between 1925 and the early 1940s, the capacity
o the Indian cement industry gradually increased
to 1.8Mt in 1942, with imports dwindling to just
~1000t/yr over the same period. However, all was
not well with the industry, which, like many in-dustries across the world, suered due to the Great
Depression in the United States and the run-up to the
Second World War in Europe. o combat continued
price wars, Associated Cement Companies (ACC) was
ormed rom 11 competing rms in 1936.
In 1942 all o Indias cement capacity came under
the control o Deence or India rules as part o the war
eort. With up to 90% o cement heading directly to
deence purposes, the apparent private market shrank
by a actor o 10. Afer the conclusion o the Second
World War, during which capacity reached 3.2Mt/yr,
controls stayed in place. From 1945 to 1956 the gov-ernment regulated prices directly.
However, it became increasingly obvious that
regulated prices rom central government could not
provide the cement that the country was demanding.
Te controls were relaxed in steps, with a ree market
rom 1989 onwards. Te result o de-regulation was a
massive expansion o cement capacity, which has since
only accelerated as the country has developed and
opened up its economy.
Cement industry - Overview
oday, the Indian cement industy is very large, second
only to China in terms o installed capacity, and has
grown at a very ast pace in recent years. Te rate o
growth over the past 20 years has been phenomenal,
as shown by Figure 1.3 Since 1992 Indias cement
production has more than quadrupled rom around
50Mt/yr to 220Mt/yr in 2011.
Although the Indian cement industry has some
multinational cement giants, like Holcim and La-
arge, which have interests such as ACC, Ambuja
Cement and Laarge Birla Cement, the Indian ce-
ment industry is broadly home-grown.5 Ultratech
Cement, the countrys largest rm in terms o ce-
ment capacity, holds around 22% o the domesticmarket, with ACC (50%-owned by Holcim) and
Ambuja (50%-owned by Holcim) having 15% and 13%
shares respectively.
Many o the remaining dozen top players are
Indian and are (in order o diminishing market share);
Jaiprakash Associates (10%), Te India Cements Ltd
(7%), Shree Cements (6%), Century extiles and
Industries (5%), Madras Cements (5%), Laarge (5%),
Birla Cement (4%) and Binani Cement (4%).
Between them the top 12 cement rms have around
70% o the domestic market.6 Around 100 smaller
players produce and grind cement on a wide range o
scales but are ofen conned to small areas.
Cement industry - Sustainability
Te Indian cement industry, though large, is also
one o the most thermally ecient, according to
the World Business
Council or Sustain-
able Developments
(WBCSD) Cement
Sustainability Initia-
tives (CSI) Getting the
Numbers Right (GNR)data programme.7
In 2010, the most
recent year or which
data is available, India
perormed very avour-
ably in terms o specic
energy consumption per tonne o clinker produced,
with an average 3130MJ/t across the 50% o cement
capacity that the GNR programme received data on.
Brazil and China, which also have rapidly-developing
large cement industries, perormed slightly less well.7
In all three cases, it is the recent expansion o theindustry in that nation that provides this thermal e-
ciency, a consequence o modern plants simply being
more ecient than older ones. Te comparison with
the EU27 group o countries (and the USA to a greater
extent), both o which have older industries, is clear.
In the specic case o India, the eciency o the
new capacity is enhanced by the work o dedicated
plant engineers who seek to maximise the eciency o
the equipment in ront o them. Te act that (expen-
sive oreign) coal is the dominant uel or the cement
industry acts as a strong driver towards eciency. Coal
is also a reliable and stable kiln uel, which means that
Indian kilns can be very nely tuned and hence can be
made more ecient than i a less reliable or variable/
alternative uel mix were to be used.
When it comes to CO2 emissions per tonne o
clinker, India perorms
less well, making 837kg/t
o clinker.7 Tis is close
to the global average but
behind those industries
that have successully
implemented alternative
uel substitution such as
Germany. See page 18or more on alternative
uels in the Indian ce-
ment industry,
Above - Figure 2: Specic
energy consumption
(MJ/t o clinker) or diferent
countries and world regions
in 2010.7 India had the low-
est such energy requirement
o any major cementindustry in that year.
INDIA
globalcementMAGAZINE February 2013 47
0
500
1000
1500
2000
2500
3000
3500
4000
Specifcenergyconsumption(MJ/tclinker)
4500
EU27USA ChinaBrazilGermany IndiaWORLD
EU27USAChina Brazil GermanyIndia WORLD
100
200
300
400
500
600
700
800
900
1000
0
SpecifcCO2emissions(kg/tclinker)
Below - Figure 3: SpecicCO2 emissions (kg/t o clink-
er) or diferent countries and
world regions in 2010.7
NOTE: GNR values are re-
ported voluntarily by industry
participants and so do not
represent actual averages.
Coverage by region/country:
Brazil = 71%, China = 5%,
EU27 = 96%, Germany 96%,
India = 50%, USA = 77%,
World = 25%.7
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INDIA
16,70
32,67
23,189
41,107
155,164,89
9,66,133
80,144
79,150
14,62,100,116191,198
83,200,148,114,140,137,153,154,168
59,60,61,64,78,
122,123,170,194
36,65,77,147201,84,177,149
3,19,57,136,179
108,145166,152
115,132,143
103,182
128,169
7,109
186
185
192
199124
178
127
131
130
183
117
162
159101
174
195
197
157,161
102104175
158188
98
25
42
43
171
156
163 106
97
38
71
82
34
10
INDIA
ArabianSea
NEW DELHI
Pakis
tan
Mumbai 73
Bhopal
Hyderabad
Kerala
Shimla 18,180
Pakis
tan
Aghanistan
48 globalcementMAGAZINE February 2013
1. ACC, 1.2Mt/yr.
2. ACC, 0.9Mt/yr.
3. ACC, 3.7Mt/yr.
4. ACC, 0.5Mt/yr. (Grinding)
5. ACC, 4.4Mt/yr.
6. ACC, 1.58Mt/yr.
7. ACC,1.1Mt/yr. (Grinding)
8. ACC, 2.7Mt/yr.
9. ACC, 1.5Mt/yr.
10. ACC, 1.1Mt/yr.
11. ACC, 1.0Mt/yr. (Grinding)12. ACC, 1.6Mt/yr.
13. ACC, 3.0Mt/yr.
14. ACC, 5.8Mt/yr.
15. Adhunik Cement (Dalmia Bharat Enterprises), 1.5Mt/yr.
16. Ambuja Cements, 5.5Mt/yr.
17. Ambuja Cements, 2.9Mt/yr.
18. Ambuja Cements, 0.5Mt/yr. (Grinding).
19. Ambuja Cements, 4.5Mt/yr.
20. Ambuja Cements, 1.5Mt/yr (Grinding).
21. Ambuja Cements, 1.6Mt/yr.
22. Ambuja Cements, 1.0Mt/yr. (Grinding).
23. Ambuja Cements, 12.Mt/yr (Grinding).
24. Ambuja Cements, 1.50Mt/yr.
25. Ambuja Cements, 1.8Mt/yr.
26. Ambuja Cements,1.0Mt/yr. (Grinding).
27. Ambuja Cements, 2.5Mt/yr. (Grinding).28.Ambuja Cements,1.5Mt/yr. (Grinding).
29. Amrit Cement Industries Limited, 1.0Mt/yr.
30. Andhra Cements (Jaypee Group), 0.9Mt/yr.
31. Andhra Cements (Jaypee Group), 0.6Mt/yr. (Grinding).
32. Anjani Portland Cement, 1.30Mt/yr.
33. Asian Concretes & Cements, 1.30Mt/yr.
34. Bagalkot Cement & Industries, 0.30Mt/yr.
35. Barak Valley Cement, Barak Cement, 0.33Mt/yr.
36. Bharathi Cement Corporation, 5.0Mt/yr.
37. Bhavya Cements, 1.4Mt/yr.
38. Bheema Cements, 0.9Mt/yr.
39. Bhilai Jaypee Cement.
40. Bhilai Jaypee Cement, 2.2Mt/yr. (Grinding).
41. Binani Cement, 4.9Mt/yr.
42. Binani Cement, 1.4Mt/yr. (Grinding).43. Birla Corp., 2.5Mt/yr.
44. Birla Corp., 1.7Mt/yr.
45. Birla Corp., 1.6Mt/yr (Grinding).
46. Birla Corp., 0.6Mt/yr. (Grinding).
47. Bokaro Jaypee Cement, 2.1Mt/yr. (Grinding).
48. Burnpur Cement, 0.3Mt/yr.
49. Burnpur Cement, 0.3Mt/yr.
50. Calcom Cement India, 2.1Mt/yr.
51. Cement Corporation o India, 0.2Mt/yr.
52. Cement Corporation o India, 0.24Mt/yr.
53. Cement Corporation o India, 1.0Mt/yr.
54. Cement Manuacturing Co., 0.6Mt/yr.
55. Century Textiles & Industries, 2.1Mt/yr.
56. Century Textiles & Industries, 3.8Mt/yr.
57. Century Textiles & Industries, 1.9Mt/yr.
58. Century Textiles & Industries, 1.0Mt/yr.59. Chettinad Cement Corp., 5.5Mt /yr.
60. Chettinad Cement Corp., 4.3Mt /yr.
61. Chettinad Cement Corp., 1.7Mt /yr.
62. Chettinad Cement Corp., 2.0Mt /yr.
63. Dalmia Bharat Enterprises, 2.5Mt /yr.
64. Dalmia Bharat Enterprises, 4.0Mt/yr.
65. Dalmia Bharat Enterprises, 2.5Mt/yr.
66. DCM Shriram Consolidated, 0.4Mt/yr.
67. Deccan Cements, 1.79Mt/yr.
68. Encore Cement & Additives, 0.40Mt/yr. (Grinding).
69. Green Valley Industries, 1.0Mt/yr.
70. Gujarat Sidhee Cement, 1.2Mt/yr.
71. HeidelbergCement India, 0.6Mt/yr.
72. HeidelbergCement India,1.0Mt/yr.
73. HeidelbergCement India, 1.0Mt/yr. (Grinding).74. HeidelbergCement India, 0.5Mt/yr. (Grinding).
75. Hills Cement Company, 1.0Mt/yr.
76. The India Cements, 1.1Mt/yr. (Grinding).
77. The India Cements, 1.4Mt/yr.
78. The India Cements, 1.85Mt/yr.
79. The India Cements, 2.8Mt/yr.
80.The India Cements, 1.1Mt/yr. (Grinding).
81. The India Cements, 0.86Mt/yr. (Grinding).
82. The India Cements, 2.1Mt/yr.
83. The India Cements, 3.5Mt/yr.
84. The India Cements, 0.73Mt/yr.
85. Jaiprakash Associates, 2.5Mt/yr. (Grinding).
86. Jaiprakash Associates, 0.5Mt/yr.
87. Jaiprakash Associates, 1.0Mt/yr. (Grinding).
88. Jaiprakash Associates, 2.2Mt/yr.89. Jaiprakash Associates, 2.4Mt/yr.
90. Jaiprakash Associates, 2.0Mt/yr.
91. Jaiprakash Associates, 1.5Mt/yr. (Grinding).
92. Jaiprakash Associates, 3.2Mt/yr.
93. Jaiprakash Associates, 1.2Mt/yr. (Grinding).
94. Jaiprakash Associates, 0.6Mt/yr. (Grinding).
95. Jaiprakash Associates, 2.0Mt/yr.
96. Jaiprakash Associates, 1.0Mt/yr. (Grinding).
97. Jaiprakash Associates, 2.4Mt/yr. (Grinding).
98. Jammu & Kashmir Cements, 0.4Mt/yr.
99. Jaypee Cement, 1.0Mt/yr.
100. Jaypee Cement, 0.60Mt/yr.
101. JK Cement, 0.47Mt/yr.
102. JK Cement, 0.75Mt/yr.
103. JK Cement, 3.0Mt/yr.
104. JK Cement, 3.3Mt/yr.105. JK Lakshmi Cement,
0.6Mt/yr. (Grinding).
106. JK Lakshmi Cement,
0.6Mt/yr. (Grinding).
107. JK Lakshmi Cement, 4.2Mt/yr.
108. JSW Cement, 4.5Mt/yr.
109. JSW Cement, 0.70Mt/yr.
110. JUD Cement, 0.50Mt/yr.
111. Kalyanpur Cements, 1.0Mt/yr.
112. The KCP, 0.7Mt/yr.
113. The KCP, 1.52Mt/yr.
114. Keerthi Industries, 0.6Mt/yr.
115. Kesoram Industries, 1.5Mt/yr.
116. Kesoram Industries, 5.8Mt/yr.
117. Khyber Industries, 0.4Mt/yr.118. Laarge India, 1.6Mt/yr.
119. Laarge India, 4.6Mt/yr. (Grinding).
120. Laarge India, 1.0Mt/yr. (Grinding).
121. Laarge India, 0.6Mt/yr.
122. Madras Cement, 3.1Mt/yr.
123. Madras Cement, 4.0Mt/yr.
124. Madras Cement, 0.5Mt/yr. (Grinding).
125. Madras Cement, 3.65Mt/yr.
126. Madras Cement, 1.0Mt/yr.
127. Madras Cement, 0.29Mt/yr.
128. Madras Cement, 1.5Mt/yr.
129. Madras Cement, 0.50Mt/yr. (Grinding).
130. Malabar Cement, 0.20Mt/yr. (Grinding).
131. Malabar Cement, 0.42Mt/yr.
132. Mancherial Cement, 0.3Mt/yr.
133. Managalam Cement, 1Mt/yr.134. Megha Technical & Engineers, 0.5Mt/yr.
135. Meghalaya Cements Limited, 0.5Mt/yr
136. Murli Industries, 3.0Mt/yr.
137. My Home Industries, 3.2Mt/yr.
138. My Home Industries, 2.0Mt/yr (Grinding).
139. NCL Industries, 1.0Mt/yr. (Grinding).
140. NCL Industries, 2.0Mt/yr.
141. OCL India, 1.4Mt/yr. (Grinding).
142. OCL India, 4.0Mt/yr.
143. Orient Cement, 3.0Mt/yr.
144. Orient Cement, 2.0Mt/yr. (Grinding).
145. Panyam Cement & Minerals, 1.4Mt/yr.
146. Parasakti Cement Industries,1.7Mt/yr.
147. Penna Cement Industries, 2.0Mt /yr.
148. Penna Cement Industries, 1.2Mt /yr.149. Penna Cement Industries, 1.8Mt/yr.
150. Penna Cement Industries, 2.0Mt/yr.
151. Prism Cement, 6.1Mt/yr.
152. Rain Cements, 2.2Mt/yr.
81,129
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globalcementMAGAZINE February 2013 49
6,40
21,24,33
21,90
26,93,160
17,53,55,184,193
39,4456,151
30,37,112,146,167
31,68,138,
139,173
99,113,125
121
172
166
190
118
126142 119
120
111
187
141
13,46
96
181176
20
105
5
2753
91
74
95
35
28
48
87
86
1
4,11
47,49
15,29,54,69,75110,134,135
2
72
85,94
88,92
50,51
45,196
22,58
76
Bangladesh
Nepal
Myanm
ar
Kolkata
250km
China
China
Bhutan
China
Bay o
Bengal
153. Rain Cements, 1.0Mt/yr.
154. Sagar Cements, 2.7Mt/yr.
155. Sanghi Industries, 3.0Mt/yr.
156. Saurashtra Cement, 1.5Mt/yr.
157. Shree Cement, 3.0Mt/yr
158. Shree Cement, 1.50Mt/yr. (Grinding).
159. Shree Cement, 3.0Mt/yr. (Grinding).
160. Shree Cement, 1.8Mt/yr. (Grinding).
161. Shree Cement, 3.0Mt/yr.
162.Shree Cement, 1.2Mt/yr. (Grinding).
163. Shree Digvijay Cement, 1.3Mt/yr.164. Sparta Cements & Inra, 1.0Mt/yr.
165. Sree Jayajothi Cements, 3.2Mt/yr.
166. Sri Chakra Cements, 0.3Mt/yr. (Grinding).
167. Sri Chakra Cements, 0.7Mt/yr.
168. Sri Lalita Cement Industries, 1.0Mt/yr.
169. Tamilnadu Cements Corp, 0.4Mt/yr.
170. Tamilnadu Cements Corp, 0.5Mt/yr.
171. Tata Chemicals, 0.44Mt/yr.
172. Toshali Cement, 0.24Mt/yr.
173. Toshali Cement, 0.15Mt/yr. (Grinding).
174. Trinetra Cement Limited, 1.8Mt/yr.
175. Ultratech Cement, 5.0Mt/yr.
176. Ultratech Cement, 1.3Mt/yr.
177. Ultratech Cement, 5.6Mt/yr.
178. Ultratech Cement, 1.1Mt/yr. (Grinding).
179. Ultratech Cement, 3.6Mt/yr.
180. Ultratech Cement, 1.8Mt/yr. (Grinding).181. Ultratech Cement, 1.3Mt/yr. (Grinding).
182. Ultratech Cement, 1.3Mt/yr. (Grinding).
183. Ultratech Cement, 5.8Mt/yr.
184. Ultratech Cement, 1.9Mt/yr.
185. Ultratech Cement, 1.8Mt/yr.
186. Ultratech Cement, 0.5Mt/yr.
187. Ultratech Cement, 1.0Mt/yr. (Grinding).
188. Ultratech Cement, 3.10Mt/yr.
189. Ultratech Cement, 0.70Mt/yr. (Grinding).
190. Ultratech Cement, 1.3Mt/yr. (Grinding).
191. Ultratech Cement, 3.2Mt/yr.
192. Ultratech Cement, 0.4Mt/yr. (Grinding).
193. Ultratech Cement, 2.5Mt/yr.
194. Ultratech Cement, 1.4Mt/yr.
195. Ultratech Cement, 3.0Mt/yr.
196. Ultratech Cement, 1.2Mt/yr.
197. Ultratech Cement, 0.6Mt/yr.198. Vicat Sagar Cement, 2.8Mt/yr.
199. Zuari Cement, 1.0Mt/yr. (Grinding).
200. Zuari Cement,1.4Mt/yr.
201. Zuari Cement, 3.80Mt/yr.
GDP (PPP) (2011)1 US$4.42bn
GDP/capita (2011 est.)1 US$3700
Population (July 2012)1 1205.1m
Area1 3,287,263km2
Integrated plants5 146
Integrated capacity5 302Mt/yr
Grinding plants5 55
Grinding capacity5 63.5Mt/yr
TOTAL CAPACITY5 365.5Mt/yr
Cement industry - Consumption by use
Between 2006 and 2011 inclusive cement consump-
tion in India was dominated by residential real-estate
construction to the tune o 63%.6 Te second largest
type o use over the period was inrastructure, which
accounted or 20% o all cement used, ollowed by
commercial real-estate construction (13%) and indus-
trial construction (4%).
Left - Figure 4: Map o India
with major cities, cement
acilities and neighbouring
territories and
areas o water. 5
Left - Figure 5: Breakdown
o cement use by sector
or 2006 - 2011.6Residential
63%
Industrial
4%
13%
Commercial
Infrastructure
20%
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Cement industry - Events in 2012 8-9
Te Indian cement industry grew by 4.4% in 20118
and throughout 2012 signicant cement capacity
continued to come on stream in India.Numerous new
projects were announced or mooted throughout the
year, despite January 2012 reports that the industry
was operating at as low as 65% o capacity.9 At the time
cement companyies blamed a decrease in government
inrastructure spending in major cities.
In February 2012 Fitch Ratings announced that
it had downgraded its outlook or the Indian cement
industry to negative, with a growth orecast o 2-5%
in 2012. While large by the standards o some cement
industries around the world, such a level would rep-
resent disappointment relative to recent
growth rates in India. Despite this, the
same month JK Cements announced
plans to double its capacity to 9Mt/yr by
31 March 2013. It expects another new
plant to commission by autumn 2013.
Also in February 2012, DalmiaCement Bharat Ltd expanded by pur-
chasing a 50% stake in Calcom Cement
India, a local producer in Assam that
commissioned later that year. Addi-
tionally, German-based vertical roller
mill producer Loesche GmbH held its
rst Round able in India between 28
February 2012 and 1 March 2012.
In March 2012 various Indian ce-
ment producers were able to report
improved nancial perormances or the three months
to the end o 2011, among them ACC, JK LakshmiCement, Kakatiya Cement Sugar & Industries, Chet-
tinad Cement and Ambuja Cement. Several producers
identied higher selling prices as a driver or improved
revenues and hence prots but were also keen to point
out that uel costs were on an upward trend, a theme
that would become common through the rest o 2012.
Chettinad Cement announced the imminent
commissioning o its new US$184m, 2.5Mt/yr plant
in Karnataka at the start o March 2012 and also an-
nounced a US$305m expansion in Andhra Pradesh
as part o plans to expand its capacity to 7.5Mt/yr in
both states.
April 2012 saw the announcement o the Indian
Union Budget or 2012-2013. Tis was seen by many
at the time as a mixed bag or cement producers,
promising increased inrastructure spending but also
increased taxes and taris on cement that would in-
crease consumer prices. Coupled to increases in rail
reight costs, that came into eect on 6 March 2012,
the budget was seen as broadly neutral rom the per-
spective o cement.
Also in April 2012 the Cement Manuacturers
Association (CMA) called or urgent action to reduce
the aorementioned rail costs. It warned that prices to
consumers would rise i the rates or reight were not
eased, which could, in turn, dampen demand.
ACC inormed the industry that it intended to
increase its capacity by setting up a 4Mt/yr cement
plant at Jamul in Chattisgarh as well as grinding units
at Sindri and Kharagpur. It announced the planned
closure o its existing Jamul plant at the same time.Laarge also announced its intention to purchase ur-
ther Indian assets in the uture, although it did not
speciy any targets at the time.
A number o rst quarter results were reported
by the industry in May 2012. ACC saw an increase o
19% in its income, Ultratech saw a 19% improvement
in prot due to higher sales but Ambuja Cements re-
ported a all in its net prot despite higher sales.
May saw a warning that despatches in India could
decline over the middle part o 2012, according to the
Cement Stockists and Dealers Association o Bombay.
It warned that power and reight costs could rise by
as much as 13% through the remainder o the year.
Te month also saw a ne in Himachal Pradesh or
Jaiprakash Associates or environmental violations.
INDIA
50 globalcementMAGAZINE February 2013
Below: Construction o the
My Home Industries cement
plant at Mulakalapalli, Andhra
Pradesh started in 2009. It
eatures a state-o-the-art
vertical roller mill rom
Loesche or the manuacture
o blended cements.Source: P Sreedhar, entrant
in the 2013 Global Cement
Photography Competition.
-20
-15
-10
-5
0
5
10
15
Dec2011
Jan2012
Feb2012
Mar2012
Apr2012
May2012
Jun2012
Jul2012
Aug2012
Sep2012
Oct2012
20
Month-on-monthch
ange(%)
AllIndiacementprice
(INR/50kg)
240
250
260
270
280
290
300
310Right - Figure 6: Cement
prices in India in Indian
Rupees, December 2011 to
October 2012 and month-on-
month change (%).10 Prices
rose signicantly relativeto 2011 during the rst 10
months o 2012.
INR 1 = US$0.0186
US$1 = INR53.65
(Conversion accurate as at
26 January 2013)
Mean price o 50kg bag over
period o graph:
INR288 = US$5.36.
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6/8
INDIA
52 globalcementMAGAZINE February 2013
Further mixed nancial reports came in in June
2012, with Shree Cement reporting a 74% increase in
net prot, much o which it attributed to better use
o its capacity as well as expanded capacity. However,
the company warned that its 30% production in-
crease, rom 25.7Mt to 33.5Mt in the 12 months to 31
March 2012, would be very hard to repeat in the 2013
scal year. June 2012 also saw in principle agreements
or JK Cement and Shivashankar Minerals to build
plants in two separate states.
Cement industry - US$1.1bn fne rom CCI
With relatively high barriers to entry, captive custom-
ers, relatively little product dierentiation and no
materials that can properly substitute or cement, the
industry is inherently prone to low competition. Tis
can lead to cartel-like practices or ull-blown collusion
between rival producers.
With this in mind, the most signicant news or
the Indian cement industry in 2012 also came in June,
when 11 cement manuacturing companies werened a collective US$1.1bn or alleged price-xing
by the Competition Commission o India (CCI).11
In one o the largest ever nes o its kind, the author-
ity named ACC and Ambuja Cements, Ultratech
Cement, Jaiprakash Associates, India Cements,
Madras Cements and the local unit o Frances Laarge
among 11 major producers.
Te commission has ound that the cement com-
panies have not utilised the available capacity, so as
to reduce supplies and raise prices in times o higher
demand, said the CCI in its judgement at the time. It
said that the penalty on each company would amountto 50% o their prot or the nancial years 2009-10
and 2010-11, although each company has so ar main-
tained that it was not guilty o any unair practice.
ACC was ned US$201m and Ambuja was told
to pay US$204m. Indias largest producer, Ultratech
Cement, has to pay US$206m, while Laarges Indian
unit will have to shell out US$84m. Jaiprakash Associ-
ates has been ned US$232m.
On 21 June 2012 the CCI said that the cement
companies action o limiting supplies to the market
through an anti-competitive agreement was not
only detrimental to consumers but also to the econ-
omy, as the building material is a critical input or
inrastructure projects. Te regulator asked the com-
panies to pay the ne within 90 days. However, the
companies challenged the regulators orders in the
Competition Appellate ribunal, a quasi-judicial body
and can appeal to Indias Supreme Court.
In response to the initial complaints, Ultratech said
that it had not indulged in any cartelisation. In Zurich
Holcim said that it would, Contest the allegations and
ndings against (ACC and Ambuja) in the order and
will pursue all available legal steps to deend their re-
spective positions.
In Paris Laarge said, We will see the detailed re-
port and decide the suitable actions to take. Laarge
has a strict policy to comply with competition laws.
Cement industry - More expansion9
Even as the CCI ruling was made, cement companies
continued to announce development plans or new
capacity in India, the consequence o a constant desire
by cement company boards to maintain a companys
market share in a market with increasing demand.
In June and July 2012, India Cements was given the
environmental go-ahead to expand at two sites, Murli
Industries was investigating sites or a 3Mt/yr plant
in Karnataka and Ultratech secured a limestone mine
expansion in Gujarat. ACC was reportedly talking
about a US$900m, 5Mt/yr clinker-making complex
in Andhra Pradesh with a total cement capacityo 8Mt/yr!
By August 2012, the Indian government attempted
to get in on the industrys expansion by restarting the
sale o six cement plants that had previously been
closed by the Cement Corporation o India over 10
years beore. Advertised as ready-made capacity the
sale has not yet attracted any bidders as ar as Global
Cementcan ascertain, presumably due to the relative
age o the plants and commitments
to new capacity by the major play-
ers. Projects announced at the same
time included two plants being
planned by Emmami Cement and
ABGs announcement o two new
plants or 2014.
However, it was becoming clear
come August, 2012 that uel was
playing an increasingly important
role in plant protability. Birla
Corp. said that higher coal and
reight prices caused a 24% drop
in protability year-on-year in the
quarter ending 30 June 2012 and
Ultratech was threatened with a loss
o coal reserves by Coal India.Te uel situation worsened
in September and October 2012
as diesel price rises urther
Below: Ultratech CementsAditya Cement Works
in Rajasthan.
Source: Rajesh Kumar,
entrant in the 2012
Global Cement
Photography Competition.
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INDIA
54 globalcementMAGAZINE February 2013
contributed to a sudden 15% reight cost increase by
the All India Motor ransport Congress. Cement pro-
ducers claimed that they would be unable to absorb
the increases, which, or many, aected raw material
movement and coal supplies as well as distribution.
At the same time three cement companies lost al-
located coal reserves afer an inter-ministerial panel
recommended cancellation o a number o blocks.
ACC also came under re rom locals near to its plant
in Orissa, when they accused it o mismanagement o
its y-ash stocks.Good news in the autumn came rom Shree
Cement, which continued with its run o sky-high
prot increases, this time an unlikely-to-be-repeated
539% year-on-year increase. Shree did not com-
ment on the cause o the disparity but it is thought
likely that the year-ago period eatured a large non-
operating cost.
Ultratech restated its intent to enlarge its cement
capacity in September 2012, with the announcement
that it aimed to hit 62Mt/yr by April 2013. Ultratech
chairman Kumar Mangalam Birla acknowleged that
the short-term sector remained challenging. At the
time Ultratech was in talks with debt-laden Jaiprakash
Associates regarding the acquisition o the latters
plants in west and southern India.
A plethora o Indian cement results in the October
and November 2012 issues oGlobal Cement Magazine
showed a mixture o prots and losses. Mangalam
Cement saw a 135% improvement in its net prot, al-
beit to just US$4.9m, whereas Anjani Portland Cement
reported a 62% year-on-year drop or the quarter end-
ing 30 June 2012. HeidelbergCement India reported a
turn around rom a loss in 2011 to a prot in 2012,
as did Everest Industries, which produces a variety o
cement-based materials.Te results contined in the third quarter o 2012,
with Ambuja Cement reporting a 77% year-on-
year improvement in its net prot or the quarter.
Ultratech Cements prot nearly doubled
over the same timerame, afer it recorded
a strong pick-up in demand.
Meanwhile Shree Cement was putting
its money where its mouth was by order-
ing a number o vertical roller mills rom
Germanys Gebr. Peier. Te mills will
be installed at the companys Rajasthan
plant as part o an eighth production line
at the acility. November 2012 also saw a
cement dealers strike in Kerala.
In December 2012 India Cements
reported on plans to expand one o its
plants in amilnadu with a 3Mt/yr ad-
dition. In Bengal, Ultratech and ACC
received permits to proceed with in-
vestments at Hooghly and Kharagpur
respectively. JK Lakshmi announced
plans to invest US$365m in its expan-
sion plans and announced that work on
its Durg, Chhattisgarh, plant would startin early 2013. JSW Cement announced
the commissioning o more grinding capacity or
March 2013.
Financial reports saw Jaiprakash Associates cement
interests save an otherwise poor perormance or the
quarter to 30 September 2012 and Mangalam Cement
reported a net prot o US$5.2m or same period.
So ar in 2013 the busy Indian cement industry
shows ew signs o slowing down. Irelands CRH has
been linked to Shree Jayajothi Cements and it was re-
ported that McNally Bharat had won its rst ever EPC
contract in the cement sector rom ACC.
Cement industry - Future orecasts
Given the rampant growth o the Indian cement in-
dustry, ew are betting against continued capacity
additions in the short- to medium-term. Te extent
o capacity addition, however, and whether or not de-
mand will rise to match it more closely than at present,
is up or debate.
In November 2012 the India Brand Equity Founda-
tion (IBEF) said that it expected double-digit growth
in the cement industry or the 2013 and 2014 scal
years, which end on 31 March 2013 and 31 March
2014 respectively.12 It reported that the cement indus-
try would increase production by around 71Mt/yr over
the same time-rame to reach over 300Mt/yr in 2014.
Meanwhile, the Indian Governments 12th
Five-Year Plan, which runs or 2013 to 2017, states that
India will require a cement capacity in the region o
480Mt/yr by the end o 2017.12 It states that a urther
150Mt/yr o capacity will be required to accomplish
this. Separately, ACC expects India to have a capacity
o 500Mt/yr by 2020.13
Tis represents more than twice the cement that
India currently consumes in a year and so it is worth
asking, i this capacity is reached, what will the ca-pacity utilisation rate be? Te government promises
signicant investment in inrastructure, although bu-
reaucracy has hampered such investments in the past.
Above: IBAU Hamburg
delivered a road-mobile
ship unloader to Sanghi Indus-
tries or its Mumbai Cement
Terminal in 2012.
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8/8
Land acquisition is a big issue, said H
M Bangur, chairman and managing direc-
tor o north-based Shree Cement, in August
2012. No state government is providing
land to set up units. Greeneld expansion
is tough.
Sunil Singhania, equity head at Reliance
Mutual Fund, said, Capacity creation in
India is very dicult because there is no
land (in some places) and no limestone de-
posits at others. Several cement companies
have written down assets. I believe capac-
ity additions going orward will not be as
aggressive as in the past. Expansion will be
slower than demand growth.
With prices remaining low due to overcapacity and
low demand, the potential or uture collusion between
producers and the diculty o setting up new capacity,
it is possible that producers, under pressure to meet
the expectations placed on them by the Five-Year Plan,
will see increased pressure on margins in the next ewyears, especially i uel prices continue to rise.
In the midst o this, smaller companies are likely
to suer more than most, possibly making them ac-
quisition targets or better-equipped multinationals.
Indeed, in January 2013 Prism Cement, one o Indias
smaller cement producers, actually reported a net
loss or the quarter to 31 December 2012.14 It cited
low demand, high uel costs and increased electricity
prices. How long can such producers continue as the
Ultratechs, ACCs and Ambujas o this world keep add-
ing new capacity?
An academic report carried out or the CompetitionCommision o India in 2012 hints at this possibility o
uture consolidation in the industry.6 Te study ound
that, despite capacity utilisation alling across all ce-
ment producers in India rom 2006 to 2011, it was
those with the smallest market share that experienced
by ar the worst reduction. Binani Cement, or exam-
ple, recorded utilisation rates o only around 55-60%.
Conversely mega-players like Ultratech have been
more stable, with rates o 80-95%. In January 2013
India Ratings reported that smaller businesses were
less likely to benet rom the expected improvement
in the industry.15
A major reason behind this phenomenon is rising
uel costs, which have hit producers rom two direc-
tions in the past year. Firstly, demand or power in
India is high and domestic uels are dedicated predom-
inantly to electrical generation. Industrial companies
are orced, in many cases, to import costly oreign uel,
which must be shipped inland to be used. A second
eect o increased uel prices is that cement is more
costly to tranport once it has lef the actory.
Due to their size allowing greater economies o
scale, larger cement companies are better positioned
to import uel on a large scale and are more likely to
have exible vehicle eets to respond as demand uc-tuates in dierent areas. Another crucial dierence
between the larger and smaller companies is that larger
players are more likely to have a pan-Indian presence.
Tis enables them to ride-out periods o diculty in
one area while maximising margins elsewhere. Local
producers do not have this luxury. Tey do not even
have the option to move into supplying bagged cement
because 98% o cement in India is sold in bags.13
Smaller local producers are less well equipped to
deal with expansion and their relative size will gradu-ally diminish compared to the top 12 producers. As
this happens, it is likely that they will become the ac-
quisition targets o the larger rms.
Cement industry - Conclusion
Te Indian cement industry is large, growing and,
with consumption o just 185kg/capita/yr in 201113
(compared to global average o ~300kg/capita/yr) the
country itsel has the capacity to demand signicantly
more cement as it develops.
However, the industry is at a tricky point in its
development. Capacity is way ahead o actual con-sumption yet producers, keen to not be lef behind,
expand to secure uture demand. Producers in this
situation should bear in mind the Indian cement
industry o the early 20th Century, when companies
expanded, lowered prices and, in many cases, went out
o business. Some have cautioned against rapid capac-
ity addition in the coming years.16
It is oreseeable that the Indian cement industry
will see consolidation over the coming years. Produc-
ers that can dierentiate their cement rom others or
can make savings on production costs by, or example,
using alternative uels, will be able to take advantage
o increasing demand while remaining ahead o
their competitors.
Reerences
1. CIA World Factbook, India, https://www.cia.gov/library/publica-
tions/the-world-actbook/geos/in.html.
2. World Bank Indicators website, GDP per capita (current US$),
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD.
3. United States Geological Survey, Various Reports, http://minerals.
usgs.gov/minerals/pubs/country/asia.html#in.
4. Cement Manuacturers Association website, Historical Develop-
ment,http://www.cmaindia.org/portal/static/DynamicHistory.aspx
5.Global Cement Directory 2013,PRo Publications International Ltd.,Epsom, UK, November 2012.
6-16. See online article, http://www.globalcement.com/articles.
INDIA
globalcementMAGAZINE February 2013 55
6065
70
75
80
85
90
95
100
Amountocement(Mt)
200
250
300
350
400
150
2011
2012
2013
2014
2015
2016
50
55
Capacityutilisationrate(%)
Left - Figure 7: An ACC report
orecasts increasing capacity
(red), production (blue) and
capacity utilisation (green) in
2013 - 2016.13