cement industry
TRANSCRIPT
Cost And Management AccountingPGDM Semester- 1
Batch 2014-2016
TITLE: Cost Structure and Pricing of Cement Industry Group- 1
CEMENT INDUSTRY
INDUSTRY OVERVIEW
The cement industry of any nation plays an important role in its development through the construction of infrastructure
Presently, India is the second largest producer of cement in the world
The cement sector in India is expected to witness positive growth in the coming years
Cement production increased at a CAGR of 9.7% to 272 million tonnes over FY06-13
As per 12th Five Year Plan, production is expected to reach 407 million tonnes by FY17
CHARACTERISTICS
An industry with low labor intensity- The cement industry has become a process industry using a
limited amount of skilled labor.
An energy intensive industry- Each tonne of cement produced requires 60 to 130
kilograms of fuel oil or its equivalent, depending on the cement variety and the process used, and about 110 KWh of electricity.
A heavy product- Land transportation costs are significant and it used to be
said that cement could not be economically hauled beyond 200 or at most 300 km.
A mature product- Demand for cement increased considerably in the 20th
century, reflecting the development of industry and growing urbanization.
MAJOR PLAYERS
Market
share is 43%.
Market share is 25%.
Market
share is 12%.
Market
share is 7%.
Others Market share is 13%.
PRODUCT RANGE
Ordinary Portland Cement (OPC)- OPC, popularly known as grey cement, has 95%
clinker and 5% of gypsum and other materials. It accounts for 70% of the total consumption.
Portland Pozolona Cement (PPC)- PPC has 80% clinker, 15% pozolona and 5% gypsum
and accounts for 18% of the total cement consumption.
Portland Blast Furnace Slag Cement (PBFSC)- PBFSC consists of 45% clinker, 50% blast furnace slag
and 5% gypsum and accounts for 10% of the total cement consumed.
White Cement- Basically, it is OPC: clinker using fuel oil (instead of
coal) and with iron oxide content below 0.4% to ensure whiteness.
COST SHEET
COST SHEET OF ACC LIMITEDFor the year ended 31st march 2013
Mar-13 Mar-12 Mar-11 Particular Amount (in rs.) Amount (in rs) Amount (in rs)
Raw material Limestock 3607.32 4141.18 4788.24chawk 346.87 398.19 460.4clay 69.37 79.63 92.08slag 2913.6 3424.44 3867.43PRIME COST 6937.16 7963.82 9208.17Power and fuel cost 65.19 91.33 98.69employee cost 666.15 853.65 1024.61other manufacturing expenses 68.8 73.35 75.36WORK COST 7737.3 8982.15 10407.37
Administrative expenses 466.22 561.66 575.34
COST OF PRODUCTION 8203.52 9543.81 10982.71selling expenses 635.1 804.51 937.56COST OF SALES 8838.62 10348.32 11920.27Profit 1136.23 1157.65 1092.25
SALES 10458.92 12035.44 13339.54
REGULATIONS AFFECTING CEMENT INDUSTRY
Clean Air Act- This serves to protect public health and to regulate
emissions of hazardous air pollutants.
NESHAP Rule- The Environmental Protection Agency proposed
another rule to regulate some emissions. These rules would impact cement manufacturing plants.
Fallout From Regulation- If cement production goes overseas as a result of such
regulation, to countries where cement plants have higher levels of emissions, the result will be a net increase in global pollution.