cement industry report
TRANSCRIPT
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EXECUTIVE SUMMARY
In the race to become the most economic superpower, China has generally outperformed
India, and with exception of telecom & IT, India has had trouble slaying the Chinese dragon.
But now we can add another sector to the Indian success story, i.e., Cement. In last ten years,
this sector has recorded a CAGR of 8%, against the world cement industry average of 3.5%
and China’s cement industry growth rate of 7.2%. Today this industry not only outshines that
of developed countries such as US and Japan but also has become the second largest cement
producer in the world after China.
The cement industry has continued its growth trajectory over the past ten years. Domestic
cement demand growth has surpassed the economic growth rate for the past three years.
Cement demand in the country grows at roughly 1.5 times the GDP growth rate. The industry
had a turnover of around US$ 7.8 billion in 2003-04 and according to CRISIL is expected to
grow at a CAGR of around 7 per cent in the next five years.
The key drivers for cement demand are real estate sector, infrastructure and industry
expansion projects. Among these real estate sector is the key driver of cement demand. The
demand for cement is closely related to the growth in the construction sector. Consequently,
cement demand has been posting a healthy growth rate of around 8 per cent since 1997-98,
propelled by the increased thrust on infrastructure development, and the higher demand from
the housing sector and industrial projects.
Cement is bulky commodity and cannot be easily transported over long distances making it a
regional market place, with the nation being divided into five regions. Each region is
characterized by its own demand-supply dynamics. Over the past few years the cost of
cement production has grown at a CAGR of 8.4%.
With increase in infrastructure development activity with projects such as state and national
highways, and global demand has led Indian cement industry to increase their production
capacity. This inturn has attracted the top cement companies in the world to enter the Indian
market and take the advantage of growth in demand.
The cement sector continues to emphasize on cost cutting through enhanced productivity,reduction in energy costs and logistic expenses.
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The government has considered spending more than US $500 billion on infrastructure in the
11th five year plan. Apart from this railways, urban infrastructure, ports, airports, IT sector,
organized retailing, malls and multiplexes will be the main sectors driving the demand of
cement in the country. So we can see that cement industry is moving towards both challenges
and opportunities poised by the presence of domestic and global players in the Indian market.
This trend is likely to continue in the coming years.
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1.1 SECTOR ANALYSIS
Indian Economy grew by 5.4 per cent in 2001-02, which is considered to be one of the
highest growth rates in the world for the year. This growth is supported by a growth rate of
5.7 per cent in agriculture and allied sectors, 3.3 percent in industry and 6.5 per cent in
services.
Overall agricultural output is estimated to increase by nearly 7 per cent in 2001-02. Food
grains production is expected to rise to 209 million tons compared with 196 million tons in
2000-01. Prospects of agricultural production in 2001-02 are considered to be bright as a
result of normal monsoon and relatively favorable distribution of rainfall over time and
regions.
While the Indian industry sector grew by 3.3 per cent, with in industry sector segments like
construction showed a lower growth in 2000-01, there was marked improvement in the
growth rates of manufacturing (from 4.2 per cent in 1999-00 to 6.7 per cent in 2000-01) and
mining and quarrying (from 2 per cent to 3.3 per cent during the same period). The growth
rate of electricity, gas and water supply remained almost invariant at around 6.2 per cent for
both 1999-2000 and 2000-01. During 1993-94 to 1999-2000 the service sector had achieved
consistently high growth rates in the range of 7.1 per cent to 10.5 per cent. But for the first
time in 2000-01, the growth rate of the service sector declined to 4.8 per cent due to poor
performance by financial sector, trade hotels and restaurants, and community and social
services.
Agriculture
The agriculture sector, for so long the mainstay of the Indian Economy, now accounts for
only about 20 per cent of GDP, yet employs over 50 per cent of the population. For some
years after independence, India depended on foreign aid to meet its food needs, but in the last
35 years, food production has risen steadily, mainly due to the increase in irrigated areas and
widespread use of high-yield seeds, fertilizers, and pesticides. The Country has large grain
stockpiles (around 45 million tons) and is a net exporter of food grains.
Cash crops, especially tea and coffee, are the major export earners. India is the world's
largest producer of tea, with annual production of around 470 million tons, of which 200
million tons is exported. India also holds around 30 per cent of the world spice market, with
exports around 120,000 tons per year.
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With a view to strengthening the sector, building infrastructure for handling, transportation,
and storage of food grains has been granted "infrastructure status" and will be eligible for a
tax holiday. Further, processors of food and vegetables are exempt from excise duty.
Manufacturing Sector
After a decade of reforms, the manufacturing sector is now gearing up to meet challenges for
the new millennium. Investment in Indian companies reached record levels by 1994 and
many multinationals decided to set up shop in India to take advantage of the improved
financial climate. In an effort to provide a further boost to the industrial manufacturing
sector, Foreign Direct Investment (FDI) has been permitted through the automatic route for
almost all the industries with certain restrictions. Structural reforms have been undertaken in
the excise duty regime with a view to introduce a single rate and simplify the procedures and
rules. Indian subsidiaries of multinationals have been permitted to pay royalty to the parent
company for license of international brands, etc. Over the period 1992-93 to 1999-2000, the
manufacturing sector has recorded an average annual growth rate of 6.3 per cent and in 2001-
02; it recorded a growth of 2.8 per cent.
Companies in the manufacturing sector have consolidated around their area of core
competence by tying up with foreign companies to acquire new technologies, managementexpertise, and access to foreign markets. The cost benefits associated with manufacturing in
India, has positioned India as a preferred destination for manufacturing and sourcing for
global markets.
Financial Sector
An extensive financial and banking sector supports the rapidly expanding Indian Economy.
India boasts of a wide and sophisticated banking network. The sector also has a number of
national and state level financial institutions. These include foreign and institutional
investors, investment funds, equipment leasing companies, venture capital funds, etc. Further,
the Country has a well-established stock market, comprising 23 stock exchanges, with over
9,000 listed companies. Total market capitalization, on the two dominant stock exchanges,
the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), stood at Rs.
6,926 billion and Rs. 7,604 billion respectively, at the end of December 2000. The Indian
capital markets are rapidly moving towards a market that is modern in terms of infrastructure
as well as international best practices such as derivative trading with stock index futures,
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addition to the list of compulsory Demat trading and rolling settlement in certain specified
shares, commencement of internet based trading, etc.
The last year witnessed several Indian companies, mobilizing resources by tapping the world
market through the ADR/GDR route. So as to improve the liquidity in the ADR/GDR market
and to give opportunity to Indian shareholders to divest their shareholding in the ADR/GDR
market abroad, measures such as two-way fungibility in ADR/GDR issues of Indian
companies has been introduced and sponsorship of ADR/ GDR offerings against existing
shareholding. In addition to the above, 26 per cent foreign equity has been allowed in the
insurance sector and investment and divestment by venture capital funds and companies
registered with SEBI has been simplified.
FII inflows were USD 2.34 billion (January 2001 to June 2001) compared to USD 1.5 billion
for 2000, showing an upward trend despite depressed stock market indices. Net cumulative
FII inflows crossed USD 14 billion (June 2001).
Services Sector
The main thrust to industrial growth has come from the services sector. Services contribute to
41 per cent of the GDP. Rapidly, the quality and complexity of the type of services being
marketed is on the rise to match worldwide standards. Whether it is financial services,
software services or accounting services, this sector is highly professional and provides a
major impetus to the Economy . Interestingly, this sector is populated with a range of players
who cater to a niche market.
India is fast becoming a major force in the Information Technology sector. According to the
National Association of Software and Service Companies (NASSCOM), over 185 Fortune
500 companies use Indian software services. The world's software giants such as Microsoft,
Hughes and Computer Associates who have made substantial investments in India are
increasingly tapping this potential. A number of multi-nationals have leveraged the relative
cost advantage and highly skilled manpower base available in India, and have established
shared services and call centers in India to cater to their worldwide needs.
The software industry was one of the fastest growing sectors in the last decade with a
compound annual growth rate exceeding 50 per cent. Software service exports increased
from US$ 4.02 billion in 1999-2000 to US$ 6.3 billion in 2000-01, thereby registering agrowth of 57 per cent. India's success in the software sector can be largely attributed to the
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industry's ability to cultivate superior knowledge through intensive R&D efforts and the
expertise in applying the knowledge in commercially viable technologies.
1.2 Contribution of Manufacturing Sector towards the Indian Economy
An estimated 100.9 million people were employed in 41.8 million establishments in India,
growing at 2.78 percent and 4.69 percent, respectively from 1998-2005, shows the official
Economic Census for 2005. Non-farm sector continued to be the principal source of
employment, employing 90 million people, compared to 10.9 million in agriculture sector,
said the census released here Thursday.
“Retail and manufacturing establishments continue to be the key employment providers in
India,” said S.K. Nath, director general of the Central Statistical Organisation (CSO), which
compiled the census.
“It is a significant pointer that India has a great deal of potential for growth in these two
sectors,” he said.
Manufacturing sector employed 25.5 million people or 25.25 percent of the total workforce,
followed by 25.1 million or 24.91 percent, respectively for retail trade sector, showed the
survey.
This was the fifth in the series of the economic censuses conducted by CSO, an agency under
the ministry of statistics and programme implementation. The first census of its kind was
launched in 1977.
“This census gives us a complete picture of India’s economic situation. We must interpret the
data intelligently. There has been a rapid growth in small-scale industries,” said Statistics and
Programme Implementation Secretary Pranob Sen.
Following are some of the key census findings:
• 100.90 million People employed in 41.83 establishments in India.
• 41.83 million Establishments, 25.54 million in rural and 16.29 million in urban areas,
operated in 2005.
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• 39.61 million Establishments under private ownership.
• 26.96 million Units were own establishments, without hired workers.
• 35.75 million Non-agricultural establishments engaged 89.99 million workers, while
agriculture sector’s 6.08 million units had 10.91 million workers.• Employment growth rate at 2.78 percent between 1998 and 2005.
• Males accounted for 78.3 million of the workforce; women accounted for 20.2
million, children 2.4 million.
• Manufacturing sector was the largest employer (25.5 million people); the retail sector
came next (25.1 million people); farming was third (9.2 million people).
• 95 percent establishments had 1-5 workers; 3.42 percent had 6-9 workers; only 1.51
percent employed 10 or more workers.
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2.1 INDUSTRY BACKGROUND
Pre Independence
The first endeavor to manufacture cement dates back to 1889 when a Calcutta basedcompany endeavored to manufacture cement from Argillaceous (kankar).
But the first endeavor to manufacture cement in an organized way commenced in Madras.
South India Industries Limited began manufacture of Portland cement in 1904.But the effort
did not succeed and the company had to halt production.
Finally it was in 1914 that the first licensed cement manufacturing unit was set up by India
Cement Company Ltd at Porbandar, Gujarat with an available capacity of 10,000 tons and
production of 1000 installed. The First World War gave the impetus to the cement industry
still in its initial stages. The following decade saw tremendous progress in terms of
manufacturing units, installed capacity and production. This phase is also referred to as the
Nascent Stage of Indian Cement Industry.
During the earlier years, production of cement exceeded the demand. Society had a biased
opinion against the cement manufactured in India, which further led to reduction in demand.
The government intervened by giving protection to the Industry and by encouraging
cooperation among the manufacturers.
In 1927, the Concrete Association of India was formed with the twin goals of creating a
positive awareness among the public of the utility of cement and to propagate cement
consumption.
Post Independence
The growth rate of cement was slow around the period after independence due to various
factors like low prices, slow growth in additional capacity and rising cost. The government
intervened several times to boost the industry, by increasing prices and providing financial
incentives. But it had little impact on the industry.
In 1956, the price and distribution control system was set up to ensure fair prices for both the
manufacturers and consumers across the country and to reduce regional imbalances and reach
self sufficiency.
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Period of Restriction (1969-1982)
The cement industry in India was severely restrained by the government during this period.
Government hold over the industry was through both direct and indirect means. Government
intervened directly by exercising authority over production, capacity and distribution of
cement and it intervened indirectly through price control.
In 1977 the government authorized higher prices for cement manufactured by new units or
through capacity increase in existing units. But still the growth rate was below par.
In 1979 the government introduced a three tier price system. Prices were different for cement
produced in low, medium and high cost plants.
However the price control did not have the desired effect. Rise in input cost, reduced profit
margins meant the manufacturers could not allocate funds for increase in capacity.
Partial Control (1982-1989)
To give impetus to the cement industry, the Government of India introduced a quota system
in 1982.A quota of 66.60% was imposed for sales to Government and small real estate
developers. For new units and sick units a lower quota at 50% was affected. The remaining
33.40% was allowed to be sold in the open market.
These changes had a desired effect on the industry. Profitability of the manufacturers
increased substantially, but the rising input cost was a cause for concern.
Post Liberalization
In 1989 the cement industry was given complete freedom, to gear it up to meet the challenges
of free market competition due to the impending policy of liberalization. In 1991 the industry
was de licensed.
This resulted in an accelerated growth for the industry and availability of state of the art
technology for modernization. Most of the major players invested heavily for capacity
expansion.
To maximize the opportunity available in the form of global markets, the industry laid greater
focus on exports. The role of the government has been extremely crucial in the growth of the
industry.
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Cement is one of the core industries which plays a vital role in the growth and expansion of a
nation. It is basically a mixture of compounds, consisting mainly of silicates and aluminates
of calcium, formed out of calcium oxide, silica, aluminium oxide and iron oxide. The demand
for cement depends primarily on the pace of activities in the business, financial, real estate
and infrastructure sectors of the economy. Cement is considered preferred building material
and is used worldwide for all construction works such as housing and industrial construction,
as well as for creation of infrastructures like ports, roads, power plants, etc. Indian cement
industry is globally competitive because the industry has witnessed healthy trends such as
cost control and continuous technology upgradation.
2.2 CURRENT SCENARIO
The Indian cement industry is the second largest producer of quality cement. 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 IndianStandards (BIS) specifications and their quality is comparable with the best in the world.
The Indian cement industry is the second largest in the world. It comprises of 140 large and
more than 365 mini cement plants. The industry's capacity at the beginning of the year 2009-
10 was 217.80 million tonnes. During 2008-09, total cement consumption in India stood at
178 million tonnes while exports of cement and clinker amounted to around 3 million tonnes.
The industry occupies an important place in the national 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.
Cement production during April to January 2009-10 was 130.67 million tonnes as compared
to 115.52 million tonnes during the same period for the year 2008-09. Despatches were
estimated at 129.97 million tonnes during April to January 2009-10 whereas during the same
period for the year 2008-09, it stood at 115.07 million tonnes.
Over the last few years, the Indian cement industry witnessed strong growth, with demandreporting a compounded annual growth rate (CAGR) of 9.3% and capacity addition a CAGR
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of 5.6% between 2004-05 and 2008-09. The main factors prompting this growth in demand
include the real estate boom during 2004-08, increased investments in infrastructure by both
the private sector and Government, and higher Governmental spending under various social
programmes. With demand growth being buoyant and capacity addition limited, the industry
posted capacity utilisation levels of around 93% during the last five years. Improved prices in
conjunction with volume growth led to the domestic cement industry reporting robust growth
in turnover and profitability during the period 2005-09.
2.3 Consumption Growth during 2008-09
Even during the economic slowdown in 2008-09, growth in cement demand remained at a
healthy 8.4%. In the current fiscal (2009-10) cement consumption has shot up, reporting, on
an average, 12.5% growth in consumption during the first eight months with the growth
being aided by strong infrastructure spending, especially from the govt sector. The trends in
all-India consumption and the growth in consumption in the major cement-consuming States
over the last five years are presented in below table:
Growth in Cement Demand
Figures in Million Tonnes
2008-09 Apr-Nov 09
Domestic Consumption 178 100
Year-on-Year Growth (%) 8.4 12.5
Source: Cement Manufacturers Association (CMA), ICRA Research
TABLE 2.1
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2.4 Key Drivers of Cement Industry
• Buoyant real estate market
•
Increase in infrastructure spending
• Various governmental programmes like National Rural Employment Guarantee
• Low-cost housing in urban and rural areas under schemes like Jawaharlal Nehru
National Urban Renewal Mission (JNNURM) and Indira Aawas Yojana
2.5 Globalization of Indian Cement Industry
The Globalization of Indian Cement Industry has helped the industry to restructure itself to
cope up with the alterations in the global economic and trading system. The Indian cement
industry is one of the oldest industries. It has been catering to India's cement requirements
since its emergence during the British Raj in India. Though the majority of the players in the
Indian cement industry were private sector organizations, the industry was highly regulated.
With the rapid growth rate of the Indian economy after the 1990s, the infrastructuraldevelopments within the country has been tremendous. The increase in the construction
activities has led to the increase in the demand for updated quality building materials and
other allied products. Cement being one of the major elements in the construction work, there
is a growth in the cement industry in India. The consumption of cement has increased in
India by nearly 7.5%. With the globalization of Indian cement industry many foreign cement
manufacturers are engaging themselves in agreements and deals with their India counter parts
to have a share of the growth.
Globalization of Indian Cement Industry includes several foreign companies engaging in
mergers and acquisitions of Indian cement companies, like
• Heidelberg Cement - Indorama Cement Ltd. Heidelberg Cement Company entered
into an agreement for a 50% joint venture with the Indorama Cement Ltd., situated in
Mumbai, originally possessed by the Indorama S P Lohia Group. Heidelberg Cement
Company is the leading German cement manufacturing company. The Heidelberg
Cement was set up in 1873 and has a long and prosperous history. Being one of the
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best in the world the Heidelberg Cement Company has its bases in different countries.
The Heidelberg Cement Company has two manufacturing units in India. A grinding
plant in Mumbai and a cement terminal near Mumbai harbor. A clinker plant is
coming up in the state on Gujarat
• Holcim Cement - Gujarat Ambuja Cements (GACL) Holcim Cement signed an
agreement of 14.8% take over with the Gujarat Ambuja Cements (GACL). With new
products, skilled personnel, superb management, and a outstanding market strategy
gives this tie up good edge over the other competitors. Holcim Cement Company is
among the leading cement manufacturing and supplying companies in the world. It is
one of the major employers in the world; having a work force of 90,000.The Holcim
Cement Company has units in excess of 70 countries all over the world.
• Italcementi cement - Zuari Cement Limited Italcementi Cement Company with the
help of the Ciments Français, a subsidiary for its global activities, has acquired shares
of the famous Indian cement manufacturer - Zuari Cement Limited. The acquisition
was of 50% shareholding and the deal was of about 100 million Euros. Italcementi
Cement is the 5th largest cement manufacturing company in the world. The
production capacity of the Italcementi cement company is about 70 million tons in a
year. With the construction boom in India the company looks for a stable future. In
2001 the Italcementi cement entered the Indian market scenario. It took over the plant
of the Zuari Cement Limited in Andhra Pradesh in southern India. The joint venture
earned revenues of around 100 million Euros and an operating profit of 4 million
Euros.
• Lafarge India is the subsidiary of the Lafarge Cement Company of France. It was
established in 1999 in India with the acquisition of the Tisco and the Raymond
cement plants. Lafarge Cement presently has three cement manufacturing units in
India. One of them is in Jharkhand which is used for the purpose of grinding and the
other two are in Chhattisgarh used for manufacturing. The Lafarge Cement Company
was set up in the year 1833 by Leon Pavin. Lafarge Cement Company situated in
France is the leading cement producing company in the world. It has plans for
increasing the cement production through technological innovations and
maximization of the capacity of the plant. It has a large network of distributors in the
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eastern part of India. The Lafarge Cement Company is presently producing nearly 5.5
million tons of cement for the Indian cement market.
2.6 STRUCTURE OF THE INDIAN CEMENT INDUSTRY
• It is a fragmented industry. There are 56 cement companies in India, operating 124
large and 300 mini plants, where majority of the production of cement (94%) in the
country is by large plants.
• One of the other defining features of the Indian cement industry is that the location of
limestone reserves in select states has resulted in it’s evolving in the form of clusters.
• Since cement is a high bulk and low value commodity, competition is also localized
because the cost of transportation of cement to distant markets often results in the
product being uncompetitive in those markets.
• Another distinguishing characteristic comes from it being cyclical in nature as the
market and consumption is closely linked to the economic and climatic cycles. In
India, cement production is normally at its peak in the month of March while it is at
its lowest in the month of August and September. The cyclical nature of this industry
has meant that only large players are able to withstand the downturn in demand due
to their economies of scale, operational efficiencies, centrally controlled distribution
systems and geographical diversification.
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3.1 OBJECTIVES OF THE STUDY
•To analyze the evolution of cement industry.
• To compare the global market with Indian cement industry.
• To estimate the level and analyze the trends in market concentration in the cement
industry.
• To assess the profitability, liquidity and other financial ratios of the firms when
compared to the industry.
• To find out the efficiency and economic size of cement manufacturing firms.
3.2 METHODOLOGY OF THE STUDY
• No field work in collection of primary data for the study and the study is going to be
descriptive and analytical.
• Secondary information is obtained by the medium of internet, journals, articles and
magazines.
• The five companies have been chosen based on market share, production capacity and
net profits for the previous years.
3.3 SOURCES OF DATA
Only secondary data was collected from the internet, company websites, magazines and
various articles. Capitaline databases have been the main source of information for company
analysis.
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3.4 LIMITATIONS OF THE STUDY:
• The study is limited to the top five cement companies in India.
• Only three years’ data is used for comparing the performance of these companies.
• The financial ratios used for analysis of performance of each company are limited.
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4.1 SWOT ANALYSIS
a) Strengths:
Second largest in the world in terms of capacity: In India there are approximately 124
large and 300 mini plants with installed capacity of 200 million tonnes.
Low cost of production: due to the easy availability of raw materials and cheap labour.
b) Weakness:
Effect of global recession on real estate: The real estate prices are stabilizing and facing
steady slowdown especially in metros. There are approximately one hundred thousand
completed flats without occupancy in Bangalore. There has been drastic reduction in property
prices due to reduced demand and increased supply.
Demand-Supply gap, overcapacity: The capacity additions distort the demand-supply
equilibrium in the industry thereby affecting profitability.
Increasing cost of production due to increase in coal prices.
High Interest rates on housing: The re-pricing of the interest rates in the last four years
from 7% to 12% has resulted in the slowdown in residential property market.
c) Opportunities:
Strong growth of economy in the long run: Indian economy has been one of the stars of
global economics in the recent years, growing 9.2% in 2007 and 9.6% in 2006. However,
India is facing tough economic times in 2008.
Increase in infrastructure projects: Infrastructure accounts for 35% of cement
consumption in India. And with increase in government focus on infrastructure spending,
such as roads, highways and airports, the cement demand is likely to grow in future.
Growing middle class: There has been increase in the purchasing power of emerging
middle-class with rise in salaries and wages, which results in rising demand for better quality
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of life that further necessitates infrastructure development and hence increases the demand
for cement.
Technological changes: The Cement industry has made tremendous strides in technological
up gradation and assimilation of latest technology. At present ninety three per cent of the
total capacity in the industry is based on modern and environment-friendly dry process
technology and only seven per cent of the capacity is based on old wet and semi-dry process
technology. The induction of advanced technology has helped the industry immensely to
conserve energy and fuel and to save materials substantially and hence reduce the cost of
production.
d) Threats:
Imports from Pakistan affecting markets in Northern India: In 2007, 130000 tonnes in
2008, 173000 Metric tones of cement was exported to India. This was done to keep the price
of cement under check.
Excess overcapacity can hurt margins, as well as prices.
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4.2 PORTER’S FIVE FORCES
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A HHI index above 0.18 (above 1,800) indicates high concentration
MAJOR PLAYERS IN THE NORTH:
TOTAL SALES for the year 2009 = Rs. 33589.02 Cr
Name of the
Company
Net Sales in
Cr. (2009)
Percentage
(%)
ACC 7,942.66 23.64659642
Ambuja Cem. 7,040.70 20.96131414
Birla Corpn. 1,790.19 5.329688095J K Cements 1,664.42 4.955250257
JK Lakshmi Cem. 1,223.90 3.643750249
Shree Cement 2,716.46 8.08734521
UltraTech Cem. 6,385.50 19.0106767TABLE 4.1
GRAPH 4.2
HHI = 0.149173
HHI indicates moderate concentration that implies the size of the firm in relationship to the
overall cement industry in North is medium.
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MAJOR PLAYERS IN SOUTH:
TOTAL SALES for the year 2009 = Rs. 11266.01 Cr
Name of the
company
Net Sales in
Cr.(2009)
Percentage (%)
Andhra Cements 369.36 3.278534281
Chettinad Cement 1,137.67 10.09825129
Dalmia Cement 1,758.68 15.61049564
India Cements 3,358.34 29.8094889
Madras Cement 2,530.90 22.46491881
Rain Commodities 1,111.01 9.861610277
zuari Cements 438.72 3.894191466TABLE 4.2
GRAPH 4.2
HHI = 0.186167
HHI indicates moderate concentration that implies the size of the firm in relationship to the
overall cement industry in South is medium.
4.4 Life Cycle Analysis
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Andhra Cements,
3.28Chettinad
Cement, 10.09
Dalmia Cement,
15.61
India Cements,
29.81
Madras Cement,
22.46
Rain Commodities,
9.86
zuari Cements,
3.89others,
4.98
Market Share
Andhra Cements
Chettinad Cement
Dalmia Cement
India Cements
Madras Cement
Rain Commodities
zuari Cements
others
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Cement is a typical cyclical industry, characterized by the boom-and bust syndrome. A huge
potential market and rapid growth in the early stages lead to a surge in interest and a flurry of
research. The projected growth rates point to a lucrative market. The buoyant markets and
huge profits raked in by players tempt more players into the market. Capacities increase in
excess of demand and a glut in capacity is created. Competition increases, prices fall and
margins come under pressure. Capacity addition comes to a halt; weaker players shut shop or
sell off to larger ones. Demand catches up and the cycle is repeated all over again. Perhaps,
of all the cyclical industries, the Indian cement industry exhibits this boom-and-bust cycle
most visibly. Buoyed by booming economy with amplified demand for enhanced
infrastructure housing & commercial space, we believe the cement industry is showing the
boom, at present.
COMPOSITION OF CEMENT
Cement is a mixture of limestone, clay, silica and gypsum. It is a fine powder which when
mixed with water sets to a hard mass as a result of hydration of the constituent compounds. It
is the most commonly used construction material.
DIFFERENT TYPES OF CEMENT
There are different varieties of cement based on different compositions according to specific
end uses namely Ordinary Portland Cement, Portland Pozolona Cement, Portland Blast
Furnace Slag Cement, White Cement and Specialized Cement. The basic difference lies in
the percentage of clinker used.
• 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. White cement is a variation
of OPC and is used for decorative purposes like rendering of walls, flooring etc. It
contains a very low proportion of iron oxide.
• Portland Pozolona Cement (PPC):
PPC has 80% clinker, 15% pozolona and 5% gypsum and accounts for 18% of the
total cement consumption. Pozolona has siliceous and aluminous materials that do not
possess cementing properties but develop these properties in the presence of water. It
is cheaply manufactured because it uses fly ash/burnt clay/coal waste as the main
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(average of 2,880 tpd). While capacities in semi-dry kilns range from 600-1,200 tpd (average
521tpd), capacities in wet process kilns range from 200-750 tpd (average 425 tpd).
FIG 4.3
DRY PROCESS
In dry process production, limestone is crushed to a uniform and usable size, blended with
certain additives (such as iron ore and bauxite) and discharged on to a vertical roller mill
where the raw materials are ground to fine powder. An electrostatic precipitator dedusts the
raw mill gases and collects the raw meal for a series of further stages of blending. The
homogenized raw meal thus extracted is pumped to the top of a preheater by air lift pumps. In
the preheaters the material is heated to 750°C. Subsequently, the raw meal undergoes a
process of 25alcinations in a precalcinator (in which the carbonates present are reduced fed to
the kiln. The remaining 25alcinations and clinkerization reactions are completed in the kiln
where the temperature is raised to 1,450-1,500°C. The clinker formed is cooled and conveyed
to the clinker silo from where it is extracted and transported to the cement mills for producing
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TAX STRUCTURE
The Indian Cement industry is one of the highest taxed one. At the price level of Rs. 200 per
bag, total tax burden, as a percentage of ex-factory realization works out to 45%. The cement
industry has been continuously representing to the Government for more rational tax regime.
The Central Government in its budget presented on 28th February 2007, for the first time,
announced a dual excise duty structure for cement industry. Excise duty was increased to Rs.
600 per MT on cement with Retail Sale Price (RSP) exceeding Rs. 190. per bag and Rs. 350
per MT for cement with RSP of Rs.190 per bag and below as against specific excise duty of
Rs. 400 per MT so far. This dual structure not only enhanced taxation burden further on the
industry but also complicated its effective implementation. Government, however, having
realized difficulty of the industry and the consequent burden to the consumer, has
subsequently revised the structure w.e.f. 31st May 2007. It has now levied an advalorem duty
of 12% on cement with. RSP exceeding Rs. 190 per bag while retaining specific duty of Rs.
350 per MT on cement sold Rs. 190 per bag and below.
4.7 INDUSTRY STRUCTURE AND NATURE OF COMPETITION
INSTALLED CAPACITY
India is the world’s second largest cement producing country after China. The industry is
characterized by a high degree of fragmentation that has created intense competitive pressure
on price realizations. Spread across the length and breadth of the country, there are
approximately 130 large cement plants owned by around 52 companies and 365 mini-cement
plants with an installed capacity of around 172.08mtpa as on June 2007. Large cement plants
accounted for 94% of the total installed capacity in India.
CAPACITY CLUSTERS
Cement and its raw materials namely coal and limestone, are all bulky items that make
transportation difficult and uneconomical. Given this, cement plants are located close to both,
sources of raw materials and markets. Most of limestone deposits in India are located in
Madhya Pradesh, Rajasthan, Andhra Pradesh, Maharashtra and Gujarat, leading to
concentration of cement units in these states. This has resulted in ‘clusters’. There are eight
such clusters in the country and account for 81% of the cement capacity. There is a trade-off
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between proximity to markets and proximity to raw materials due to which some cement
plants have been set up near big markets despite lack of raw materials.
GRAPH 4.5
GRAPH 4.6
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4.8 COST ANALYSIS
The energy costs and cement freight costs are the two most important elements in the cost
structure of a cement company. While, the share of energy costs has increased marginally,
freight cost has experienced a decline in its share of total operating costs. The share of other costs (such as stores & spares, manufacturing overheads, and administrative expenses) has
declined. The share of costs on account of material, repair and maintenance, employees and
selling expenses have more or less remained stable.
GRAPH 4.7
Power & Fuel
The cement industry is one of the most energy-intensive sectors within the Indian economy.
Clinker production is the most energy intensive step, accounting for nearly 75% of the energy
used in cement production. In India, an estimated 90-94% of the thermal energy requirement
in cement manufacturing is met by coal. The remaining is met by fuel oil and high-speed
diesel oil. Despite recent increase in coal prices the industry has been able to control the
expenditure on this account by investing in captive power plants – freeing themselves from
the tariff hike by SEB and reducing the energy consumption required to produce a tonne of
cement. However, Government is planning to phase out supplies of subsidized coal to
cement, steel and paper industry. The proposed decision if implemented could result in cost
escalation of almost 30-40%, as the prices of coal under auction system are 30-40% higher
than the notified prices.
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COAL
Coal is an important input in cement manufacture and accounts for 15-20% of the total cost.
Coal serves a dual role in cement manufacture. Firstly, the heat value in coal provides the
thermal energy required for the operation of the kiln. Secondly, the mineral content in coal
(basically, silica content) acts as a constituent in clinker. Cement accounts for around 4.5% of
India's coal demand.
Consumption of coal for production of cement has not increased proportionately with cement
production because of the switch to the dry process; efficiency improvements in cement kilns
and the increased use of fly ash produced in power plants and granulated slag produced in
blast furnaces of steel plants in the production of cement. However, over the years, there has
been deterioration in the quality of coal. In particular, the ash content has increased implying
lower calorific values for coal, and improper and inefficient burning, etc. Therefore, coal
consumption has started to increase, resulting in higher fuel and transportation costs. In order
to reduce these problems, the cement industry started implementing coal washeries, which
reduce the ash content of the coal at the mine itself. Cement companies are also resorting to
importing coal, or using alternative fuel such as lignite or petcoke.
POWER
Cement is a power intensive industry requiring on an average 90-105 units of power in the
wet process, and 100-110 units of power in the dry process to produce one tonne of cement
produced. Significantly power accounts for 15-20% of the variable cost of cement
manufacturing. Cement manufacturing consumes power mainly for three purposes: raw meal
grinding, kiln rotation and clinker grinding. Each stage accounts for roughly one third of the
total power consumption. A dry process plant typically has an average connected load of 15
MW. Based on the present installed capacity of 172 mtpa of cement, the total industry
requirement is roughly 2520 MW. This is just around 2% of India's total current power
generating capacity.
However, with the increase in the frequency of power cuts and rising power tariffs, many
cement companies are meeting 60-100% of their power requirement through captive
facilities. The captive power generation capacity of cement plants is presently estimated at
around 1,800 MW. During FY2005, roughly 43% of the total domestic cement production
was undertaken using captive power as against only 21% in FY1995. Thus, the share of
cement production using captive power has only increased over the years.
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cement, the CaO content of limestone should be a minimum of 44%. Typically, 1.4-1.5
tonnes of limestone are required per tonne of clinker. Thus, for a 1 million tone cement plant,
assured availability of cement grade limestone reserves of the order of 50-60 mt in the close
vicinity is important.
As on 31 March 2006, the country's estimated gross reserves of cement grade limestone stand
at 97430 mn.t. Out of total limestone reserves, over 45% of the inventory of cement grade
limestone is in the Southern region, followed by the Northern region with 21.84%, the
Western region with 12.34% and the Eastern region with 15.82% and rest 3.64% with central
region. Andhra Pradesh has the privilege of possessing about 31% of the country's total
proved equilanet reserves of limestone.
GRAPH 4.8
B) GYPSUM
Gypsum is used as a retarding agent. Ground clinker, on contact with water, tends to set
instantaneously because of the very fast reaction between tri-calcium alluminate and water.In the presence of gypsum, the desired setting time can be achieved. Gypsum is added to the
extent of 5% during the clinker grinding stage. Gypsum is naturally available in abundance in
Rajasthan, Gujarat and Tamilnadu.
C) GRANULATED BLAST FURNACE SLAG (GBFS)
The other raw materials that are also used in the manufacture of cement are blast furnace slag
(a waste product obtained from iron-smelting furnaces) and flyash (leftover ash from a
thermal power station). Limestone contains about 52% of lime and about 80% of this lime is
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lost during ignition of the raw materials. Similarly, Clay contributes about 57% silica of
which about 25% is lost during ignition.
GBFS is obtained by granulation of slag obtained as a by-product during the manufacture of
steel. It is a complex calcium aluminum silicate and has latent hydraulic properties. That is
why it is used in the manufacture of Portland blast furnace slag cement.
4.9 TECHNOLOGICAL ANALYSIS
Modernization and technology up-gradation is a continuous process for any growing industry
and is equally true for the cement industry. The Indian cement industry today is by and large
comparable to the best in the world in respect of quality standards, fuel & power
consumption, environmental norms, use of latest technology and capacity. The productivity
parameters are now nearing the theoretical bests and alternate means, like alternate fuels and
raw materials have to be found to ensure further improvement in productivity and reduce
production costs.
Cement industry being energy intensive, the energy conservation and alternate cheaper,
renewable and environmentally friendly sources of energy have assumed greater importance
for improving productivity. The major challenges confronting the industry today are raging
insecurity in indigenous fuel availability, perennial constraints like higher ash content, erratic
variations in quality of indigenous coal and inconsistent power supply with unpredicted
power cuts. Keeping these challenges in view, the efforts by the industry towards energy
conservation and finding alternate cheaper, renewable and environmentally friendly sources
of energy are given utmost importance.
Review of Technological Status
Process Profile
The Cement Industry today comprises mostly of Dry Suspension Preheater and Dry-
Precalciner plants and a few old wet process and semi-dry process plants. Till late 70’s the
Cement Industry had a major share of production through the inefficient wet process
technology. The scenario changed to more efficient large size dry process technology since
early eighties. In the year 1950, there were, only 33 kilns out of which 32 were based on wet
process and only one based on semi-dry process. Today, there are 162 kilns in operation outof which 128 are based on dry process, 26 on wet process and 8 on semi-dry process.
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Kiln Capacity and Size
The economic unit capacity for cement plants in India till early sixties was about 300 TPD. In
mid sixties this was standardized at around 600 TPD for both wet and dry process plants.
About a decade later, i.e. from mid seventies, the new plants installed were of 1200 TPD
capacity. The advent of precalciner technology in mid eighties provided an opportunity to the
industry to modernize and increase the capacity of existing dry process plants, to convert
plants from wet to dry process as well as to set up large capacity plants incorporating the
latest technological advancements. This led to installation of single line kilns of 3000 TPD (1
MTPA) capacity and more. The present trend indicates the preference of still larger kilns of
about 6000 TPD capacity and above. Already there are nine kilns of 8000 tpd capacity in
operation and three kilns of capacity 10000 – 12000 TPD are under installation. The green-
field plants being installed now are based on most advanced and the best available
technology.
Average annual installed capacity per plant in India is about 1.2 MTPA as against more than
2.1 MTPA in Japan. This is due to blend of small and large plants coming up at various
stages and still operating in India as against smaller plants having been decommissioned in
Japan.
Present Status of Technology
A comparison of the status of the modernization in equipment and also the technologies
absorbed or implemented by the Indian cement industry along with status of Global
Technology is as under:
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For rational exploitation of the raw material source, a systematic mine plan is developed by
cement plants. Computer-aided techniques for raw material deposit assessment to arrive at
proper extraction sequence of mining blocks, keeping in view the blending operational
requirements, are envisaged and put to use in number of units.
Crushing
Mobile crushers have come in use in some of the newer plants, keeping in view the split
location of limestone deposits and long conveying distances. The mobile crushing plant is
stationed at the mine itself and raw material is crushed at the recovery site.
Grinding
Vertical Roller Mills (VRM) has given the real breakthrough in the area of grinding. The
VRM draws 20-30 % less electrical energy as compared to the corresponding ball mill
system, apart from its ability to give much higher drying capacity. These mills can accept
larger feed size and hence mostly be used with single stage crushing. VRMs are now being
used in clinker and slag grinding and also as pre-grinder to existing grinding installations.
Another breakthrough that has come with the application of high pressure grinding rolls
(HPGR) has been widely adopted in Indian cement industry. The HPGR is being used as pre-grinder for upgrading the existing ball mill systems. Such installations could achieve an
increase in capacity upto 200% and savings in power consumption to the extent of 30 to 40%
as compared to ball mills.
High efficiency separators are now widely used for better classification of product and help
in increasing the mill capacity besides reducing the specific power consumption. The new
classifier designs include two stage separation integrating primary and secondary separation.
High efficiency separators are also used now with VRM’s for further improvement in their
performance.
A new mill system called Horizontal roller mill has been developed which is capable of
producing uniform raw meal and have advantages in processing raw materials containing
higher percentage of quartz.
4.10 Fuel Requirements and Alternate Sources of Energy
Fuel
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Coal continues to be the main fuel for the Indian cement industry and will remain so in the
near future as well. The industry is mainly using coal from various coalfields in the country.
It is also procuring coal through open market and direct imports. Lignite from deposits in
Gujarat and Rajasthan is also being used by cement plants. Pet coke has also been
successfully utilized by some cement plants, mainly in Gujarat, Rajasthan and MP, thereby
substituting main fossil and conventional fuel coal upto 100% in some plants. In the recent
past, waste derived fuels including hazardous combustible wastes have also been tried due to
economic pressures in cement manufacturing process owing to tough competition in
domestic and global markets as well as ecological reasons on account of waste disposal and
co-processing in cement rotary kilns being most effective mode of waste treatment.
Use of Industrial Wastes
• Cement plants in India utilized about 19% of flyash generated by power plants and
100% of granulated slag generated by steel plants (year 2005-06), as compared to
almost 100% flyash and 84% of granulated slag in the Japanese cement industry.
• Recycling of Industrial wastes in manufacture of cement is highest in Japan followed
by India.
Use of Alternate Fuels
• Use of hazardous and refuse derived combustibles and Municipal Solid Waste
(MSW) as fuel is common in countries like Canada, EU, Japan and Korea, but
regulations do not yet permit in India.
• CPCB is actively engaged in plant level trials in respect of wastes viz. used tyres,
refinery sludge, paint sludge, Effluent Treatment Plant (ETP) sludge and Toluene Di-
Isocyanite (TDI) tar waste from petroleum industries and in formulation of guidelines
for use of these wastes as fuel by cement industry.
Energy Management
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The industry’s average consumption in 2005-06 was 725 kcal/kg clinker thermal energy and
82 kWh/t cement electrical energy. It is expected that the industry’s average thermal energy
consumption by the end of Year 2011-12 will come down to about 710 kcal/kg clinker and
the average electrical energy consumption will come down to 78 kWh/t cement.
The improvements in energy performance of cement plants in the recent past have been
possible largely due to:
• Retrofitting and adoption of energy efficient equipment
• Better operational control and Optimization
• Upgradation of process control and instrumentation facilities
• Better monitoring and Management Information System
4.11 DEMAND AND SUPPLY SCENARIO OF CEMENT INDUSTRY
DEMAND SOURCES
Cement demand in the country emanates from three major sources viz. Housing Sector
accounts for 60% of total cement demand, infrastructure projects 20% and industrial projects
20%.
GRAPH 4.9
DEMAND FROM RESIDENTIAL HOUSING SECTOR
Housing demand accounts for 60% of total cement demand and 90% of total real estate
demand. Housing demand has supported the cement industry even in times of lowinfrastructure or industrial demand.
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The growth in the residential real estate market in India has been largely driven by rising
disposable incomes, a rapidly growing middle class, low interest rates, fiscal incentives on
both interest and principal payments for housing loans and heightened customer expectations,
as well as increased urbanisation and nuclearisation.
A large proportion of the demand for houses, especially in urban centres such as Mumbai,
Bangalore, Delhi (Gurgaon, Noida) and Pune, is likely to come from high-rise residential
buildings. Since this is a fairly new segment, the growth of the highrise segment will be faster
as compared to the growth of the urban housing segment. The reasons for the construction of
high rise apartment buildings are the lack of space in cities and proximity to offices and IT
parks.
• Growth Drivers
o Favourable demography and higher disposable income
o Nuclear families and urbanization
DEMAND FROM INDUSTRIAL AND COMMERCIAL SECTOR
Commercial construction comprises construction of office space, hotels, hospitals, schools,
stadiums etc. In India, most of the investment in this segment is driven by office space
construction. Within office space construction activity, almost 70-75 per cent of the demand
comes from IT/BPO/call centres. The other key demand drivers include banking and
financial services, FMCG and telecom.
This dependency on IT/ITES is expected to continue due to India’s emergence as a preferred
outsourcing destination, despite China and Russia also emerging as strong contenders. The
industrial and commercial sector comprises of all the major industrial set ups, commercial
offices, IT & ITES parks and organized retail formats.
The growth in the sector will translate into substantially higher demand for commercial
space, adding to the overall investment in construction activities. CRIS INFAC, believes the
growth in IT/ITES is likely to translate into construction investments of Rs 148 billion (118
million sq ft) by 2007-08 as compared with investments of Rs 74 billion (61 million sq ft) in
the last 3 years. The investments are based on the manpower/workspace requirement in the
sector.
Retail boom to result in construction investments of Rs 112 billion over the next 5 years
CRIS INFAC, estimates that retail spending in India in fiscal 2005 was Rs. 9.9 trillion, of
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Overall Demand
Driven by a strong residential housing demand, growing industrial and commercial activities
and the continued momentum in infrastructure investment, the cement consumption is
expected to witness a CAGR of more than 12% in line with the economic growth because of
the strong co-relation with GDP and the increased activity in the construction sector. We
further believe that due to huge expenditure by GOI on infrastructure the proportionate
demand from infrastructure sector will move northwards and we expect the total share of
cement demand from infrastructure to be close to 25% in 2010. However, proportionate
demand from housing sector will move southwards and will come down to around 55% while
remaining 20% will be from commercial sector.
DEMAND-SUPPLY MISMATCH
Though India is the second largest cement manufacturer, it is among the lowest cement
consuming countries. In India per capita cement consumption is 122 kg, which is far below
the world average of approximately 320 kg. Hence, the cement industry has been in a surplus
position since a long time.
There exist regional surplus/shortages in the Indian cement industry. The oversupply is
largely in the Southern and Northern regions. By contrast, there is a supply shortage in
Eastern and Western regions. There is significant inter-regional movement of cement, which
plays a crucial role in the regional demand-supply dynamics. Most of the cement movement
across regions takes place from North to Central (3.35 mt), South to West (5.20 mt), Central
to North (2.45 mt), and Central to East (2.51 mt).
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GRAPH 4.10
4.12 RISK & CONCERNS
1) RISING INPUT COSTS
• POWER & FUEL
Prices and Quantity are regulated and are revised upwards regularly. Further, given
the shortage of energy future de-regulation of coal sector could be a risk factor.
Adding to this, electricity prices are also witnessing pressure.
• TRANSPORTATION COST
Rising fuel cost resulting in higher road and rail transportation cost.
2) Lower than expected growth in demand
Any lower than anticipated cement demand growth will result in overcapacity in the industry,
thereby prices may head southwards. This will significantly affect earnings of cements
manufacturers.
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synonymous with cement and enjoys a high level of equity in the Indian market. It is the only
cement company that figures in the list of Consumer SuperBrands of India.
CORPORATE GOVERNANCE
The importance of Corporate Governance has always been recognised in ACC. Much before
Corporate Governance guidelines became applicable and mandatory for listed companies;
ACC had systems in place for effective strategic planning and processes, risk management,
human resources development and succession planning. The Audit Committee in ACC was
constituted as far back as in 1986. The Shareholders-Investors Grievance Committee was
formed way back in 1962 and the Compensation Committee was convened since 1993. The
Company’s core values are based on integrity, respect for the law and strict compliance
thereof, emphasis on product quality and a caring spirit. Corporate Governance therefore in
ACC is a way of life.
ACC is a professionally managed Company with a majority of its Directors being
Independent Directors. The Board of Directors has always consisted of persons who are
professionals in their respective fields and with unquestionable integrity and reputation. The
role, responsibility and accountability of the Board of Directors is clearly defined. Members
of the Board have full freedom to express their views on matters placed before them for deliberation and consideration.
It is the continuous endeavour of the Board of Directors to achieve the highest standards of
Corporate Governance through the adoption of a strategic planning process, succession
planning for attracting, motivating and energizing human resources, identification of major
risks and the way and means to manage such risks, an effective communication policy and
integrity of Company’s internal control systems. The Board of Directors are also constantly
looking at ways and means to ensure that the most effective use is made of the scarce
resources at its disposal and that the management and employees have the freedom to take
the Company forward within the framework of effective accountability.
The Annual Reports, press releases and other communication have always made full
disclosures on various facets of importance to the stakeholders, particularly with regard to
information relating to financial matters, company’s operations/performance, stock
movements etc.
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89. The company got necessary approvals for setting up another cement plant with 1 million
tonne capacity per annum at Himachal Pradesh in the year 1991. The Company undertook
bulk cement transportation, by sea, to the major markets of Mumbai, Surat and other deficit
zones on the West Coast. Transportation was to be carried out by three specially designed
ships during the year 1992. During the year 1994, the company's Muller location 1.5 million
tonne cement project with clinkeriation facility at site in H.P and grinding facility both at Suli
& Ropar in Punjab was bespoken. In 1997, Kodinar plant of the company was originated its
commercial production with an enhanced capacity.
Ambuja Cements had set up a $20 million clinker Grinding unit in Sri Lanka in the year
1998. In the year of 2000 cement giants Larsen & Tubro (L&T) and Gujarat Ambuja
Cements entered a unique agreement to reduce transportation costs in dispatching bulk
cement in Gujarat and also in the same year the company has entered into an annual contract
with a Soinhalese firm, Mahaveli Marine Cement, to supply around 2.5 lakh tonnes of
cement. The company has kick started its operations in Sri Lanka with help of a cement
terminal in the port of Galle, in the south of the island country, which was started by the
company. The commercial production of Maratha Cement Works plant of the company was
started in the year 2002, a new 2-million tonne Greenfield cement plant at Chandrapur,
Maharashtra has started its commercial production on June of the year and the merger of Ambuja Cement Rajasthan with the company was happened in the same year. Again in the
year 2004, the company merged Ambuja Cement Rajasthan with itself.
In the last decade the company has grown tenfold. The first company in India introduced the
concept of bulk cement movement by the sea transport. The company's most distinctive
attribute, however, is its approach to the business. Ambuja follows a unique homegrown
philosophy for successful survival. Ambuja is the most profitable cement company in India,
and one of the lowest cost producers of cement in the world.
The company's most distinctive attribute, however, is its approach to the business. Ambuja
follows a unique homegrown philosophy of giving people the authority to set their own
targets, and the freedom to achieve their goals. This simple vision has created an environment
where there are no limits to excellence, no limits to efficiency, and has proved to be a
powerful engine of growth for the company.
As a result, Ambuja is the most profitable cement company in India, and one of the lowest
cost producer of cement in the world.
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Company Strengths
J K Cement enjoys certain vital advantages that have helped them in becoming one of the
leading names in the field of cement manufacturing in India and abroad. First the company
has proximity to huge reserves of premium quality limestone, as essential ingredient for
cement manufacturing. Based on certain studies undertaken, it is estimated that the limestone
reserves of the company are sufficient to support the planned production capacity for
approximately 40 years.
Second the company has an extensive marketing network for grey and white cement both
within and outside India. The company's distribution network for grey cement consist of
more than 40 feeder depots, serviced by seven regional sales office located at Delhi, Haryana,
Uttar Pradesh, Punjab, Gujarat, Madhya Pradesh and Rajasthan. J K cement's white cement
distribution network comprises of 20 feeder depots and 13 regional offices. Besides, the
company also has a total of more than 4000 retail stores, 22 sales promoters and four
handling agents.
J K Cement Production Plants
The company has three major production plants located in the states of Rajasthan and
Gujarat. The first plant of J K Cement was set up in Nimbahera, Rajasthan in the year 1975
with an initial capacity of 0.3 million ton per annum. With the incorporation of newer
technology and modern equipment, the production capacity was enhanced to 2.8 million ton
per annum. The Gotan unit located at Gujarat which manufacturers white cement started
production commercially in 1984 with a production capacity of 0.05 million ton per annum.
Currently the unit has a capacity utilization of around 75% and an operating profit of 30%
consistently. The unit has ISO-9001:2000 QMS, ISO-14001:1998 EMS and OHSAS-
18001:2005 recognition.
J K Cement Products
The major products of J K Cement are grey and white cement. The grey cement produced by
the company Ordinary Portland cement or OPC and Portland Pozzolana Cement or PCC. The
OPC range of products has three grades which are differentiated by their compressive
strength, they consist of 43-grade, 53-grade and 33-grade OPC. The cement products are
marketed and sold under the brand names of J.K. Cement and Sarvashaktiman for OPC
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products, J.K. Super for PPC products and J.K. White and Camel for white cement products.
Some other products manufactured by the company consist of:
• J K Wall Putty
• Grey Cement
• J K White Cement
• J K Water Proof
J K Cement's manufacturing unit at Nimbahera was chosen by the World Bank and the
Danish International Development Agency as one of the four training centers in India to
serve as the Regional Training Center in North India. The operation of the training center
gives the company access to state of art training aids, live working models, and technical
expertise developed by well known national and international cement producers.
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ULTRATECH CEMENT LIMITED
UltraTech Cement Limited, a Grasim subsidiary was incorporated in 24th August 2000 as
L&T Cement Limited, has an annual capacity of 17 million tonnes. It manufactures and
markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland
Pozzolana Cement. As part of the eighth biggest cement manufacturer in the world,
UltraTech Cement has five integrated plants, five grinding units as well as three terminals of
its own (one overseas, in Colombo, Sri Lanka). All the plants have ISO 9001 certification,
and all but one have ISO 14001 certification, while two of the plants have already received
OSHAS 18001 certification. The export market comprises of countries around the Indian
Ocean, Africa, Europe and the Middle East. Export is a thrust area in the company's strategy
for growth.
The Grasim acquired 10 per cent stake in L&T in the year of 2001. During the same year the
Durgapur grinding unit was came to existence. The Company bagged Indo-German
Greentech Environment Excellence Award from the Greentech Foundation, New Delhi
during the period of 2000-2001. The value of stake increased to 15.3 per cent by October
2002. The Grasim Board approved an open offer for purchase of up to 20 per cent of the
equity shares of Larsen & Toubro Ltd (L&T) during the year 2002, in accordance with the
provisions and guidelines issued by the Securities & Exchange Board of India (SEBI)
Regulations, 1997. Again the Grasim increased its stake in L&T to 14.15 per cent in 2002
and the Arakkonam grinding unit was started.
During the year 2003, the board of Larsen & Toubro Ltd (L&T) decided to demerger of its
cement business into a separate cement company (CemCo). Grasim decided to acquire an 8.5
per cent equity stake from L&T and then made an open offer for 30 per cent of the equity of
CemCo, to acquire management control of the company. The Company received State andZonal level I prize for overall performance in Mines safety 2003-2004 Energy efficient unit
award from CII. In 2004, L&T completed the implementation process to demerger of the
cement business and the Grasim also completed open offer, with the latter acquiring
controlling stake in the newly formed company UltraTech.
Grasim acquired management control in July 2004 and the name of the company was
changed to UltraTech Cement Limited with in 14th October 2004. The Company enhanced
its capacity utilisation across its plants. Cement is an energy intensive industry with coal and
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In 2007, the debt equity ratio was 0.16 and by 2008 it was 0.08 and by 2009 it is 0.10. So the
debt equity ratio shows a decrease in the financial year 2008. This shows that the company’s
debt is decreasing, thereby making the company unfavourable in the view of the lenders i.e.
the amount of debt used effectively by the company is declining from 2007 to 2008. But in
the FY 2009, we can see that this ratio has increased to 0.10.
INTEREST COVERAGE RATIO:
In 2007, the interest coverage ratio is 24.28 which increased to 39.20 in 2008. This means
that the company’s debt burden got decreased to a great extent. But in 2009 it got decreased
to 22.93. In the FY 2009, the company’s performance declined considerably and the
company is not generating enough profit to pay the interest to the debts. Consequently, the
financial position of the company is growing weak.
DEBTORS TURNOVER RATIO:
The debtor’s turnover ratio was 31.19 in 2007 and it decreased to 27.47 by the financial year
2008 and then it again increased to 33.96 in the FY 2009. As we know that the debtors
turnover ratio explains the number of times the debtors turned over a period of a financial
year. Thus, by looking at the ratio in the FY 2009 we can say that the efficiency of
management of debtors of the firm is growing high in comparison to the previous years.
INVENTORY TURNOVER RATIO:
The inventory turnover ratio was 11.58 in 2007, 10.80 in 2008 and then a slight increase to
11.10 in 2009. The inventory turnover ratio measures the velocity of conversion of stock into
sales. In the FY 2007, the firm was managing its inventories efficiently which was then
reduced in the FY 2008. But again in FY 2009 the company is able to control its inventories.
FIXED ASSETS TURNOVER:
This ratio indicates the company’s ability to generate net sales revenue from fixed assets of
the company, such as property, building and other equipments. The higher the ratio, the better
it is for the company.
The above table indicates that the fixed assets turnover ratio of 1.53 in 2007 declined to 1.46
in the FY 2008 and consequently declined to 1.38 in the FY 2009 which shows the
company’s inability to generate revenue from fixed assets in the consequent years of its
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The current ratio of company, though declining from the year 2008, but it is still able to
sustain the ratio above 1, which shows company is able to pay its liabilities. If the ratio slips
down below 1, then company may face problems to pay its liabilities. The liabilities of the
company are increasing every year, so company should take measures to reduce liabilities.
DEBT-EQUITY RATIO
The debt equity ratio shows a positive trend for FY’07, FY’08 & FY’09. The ratio also
below 1 for all the three years, which reflects company’s dependence on the debt finance, is
very low. The main reason behind decrease in ratio is, increase in total shareholders’ funds.
The majority of financing of the company is done by equity, and at the same time risk factor
is also reducing because they don’t have to pay interest to the debenture holders.
INTEREST COVERAGE RATIO
Interest coverage ratio shows how much revenue is being earned in relation to its finance
cost. Ambuja Cements were unable to decrease the coverage period but on the contrary
coverage period increased every year, which is not a healthy sign for company’s growth.
DEBTORS TURNOVER RATIO
The debtors’ turnover ratio indicates the efficiency of the company to collect debts. The
efficiency of the company decreased in FY’08 & it increased in FY’09. This shows the
company’s efficiency was increasing but due to economic downturn in FY’08, company’s
efficiency declined.
AVERAGE COLLECTION PERIOD
In 2009, the ratio has gone down which shows that the collection period has become more
powerful and company is able to collect its money from debtors more efficiently when
compared to the previous year where it was 9 days.
INVENTORY TURNOVER RATIO
The ratio shows how many times a company's stock is sold and replaced over a period of
time. There is a difference in the percentage of ratio for FY’08 as compared to FY’07, but the
ratio increased in FY’09. A low turnover implies poor sales and, therefore, excess inventory.
The net sales of the company increased considerably in the year 2009. So, accordingly therewas an increase in the inventory turnover.
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RATIOS Year
2009
Year 2008 Year 2007
ROE 0.16 0.34 0.34
CURRENT RATIO 1.79 1.66 1.87
DEBT-EQUITY RATIO 0.64 0.84 1.31
INTEREST COVERAGE RATIO 5.28 7.77 6.15
DEBTORS TURNOVER RATIO 34.02 30.36 28.25
AVERAGE COLLECTION PERIOD 11 11 10
INVENTORY TURNOVER RATIO 14.97 16.15 15.77
FIXED ASSETS TURNOVER
RATIO
1.77 2.15 2.24
P/E RATIO 2.01 4.40 5.80
TABLE 6.3
ANALYSIS
RETURN ON EQUITY RATIO
The ROE of the company was same for the year 2007 and 2008 and it was at 0.34. But it has
declined in the year 2009 and came to 0.16. The decline may be due to the economic
slowdown which has affected almost all the companies.
CURRENT RATIO
Net working capital should always be positive. In short, the higher the net working capital,
the greater is the degree of overall short-term liquidity. Means current ratio indicates the
liquidity of the enterprise. Min. Expected even for a new unit in India is 1.33:1 therefore we
can see that the ratios in all the years are well over 1.33 which ensures us that the company is
in a good condition and has ample liquidity.
INTEREST COVERAGE RATIO:
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The interest coverage ratio was 15.77 in 2007 which rose to 16.15 in 2008 so this proves that
the company’s debt burden got decreased to some extent. But in 2009 it decreased to 14.97.
The performance of the company got declined in 2009 and the company’s debt burden was
increasing.
DEBT EQUITY RATIO
Debt equity ratio should not exceed 3:1 and it has not in the case of JK Cements. This means
that the company has fewer debts which is good for the company. There is a sharp
deterioration in this ratio so; we have to be on guard, as the financial risk for the company
increases to that extent.
DEBTORS TURNOVER RATIO:
The debtor’s turnover ratio is increasing in from the past three years as it can be seen from
the table. It was at 28.25 in 2007 and it increased to 30.36 in 2008 and then it gradually
increased to 34.02 in 2009. The debtor’s turnover ratio is growing higher which implies that
the efficiency of the company is increasing.
AVERAGE COLLECTION PERIOD:
In 2007 the debtor’s velocity was only 10 days, but there was an increase of 1 day i.e. it
became 11 days in the year 2008 and remained the same in 2009, which is good for the
company.
INVENTORY TURNOVER RATIO
This should not be less than 9:1 and should if possible be higher and we can see that the
ratios are well above 9 which clearly state that the company is doing good and is in a good
condition and has converted its inventory into sales in a very efficient manner.
FIXED ASSETS TURNOVER:
In 2007, the fixed assets turnover was 2.24, but it decreased to 2.15 in 2008. It again declined
to 1.77 in 2009. As the company’s fixed asset was increasing year on year hence its turnover
was decreasing and also sales were not increasing in the same proportion.
P/E RATIO
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The P/E ratio is gradually declining for all the 3 years i.e. from 5.80 in 2007 to 4.40 in 2008
and then to 2.01 in 2009. This shows that the performance of the company is declining and
the management should look into the causes that have resulted into the fall of this ratio.
ULTRATECH CEMENT LIMITED
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In 2008, the assets and the profit of the company increased showing a consistent return of
0.23 as in 2007. But by 2009 it got declined to 0.17. Since there is a tremendous increase in
total assets, the return on assets got declined.
CURRENT RATIO
The current ratio in 2007 is 0.7 and it gradually decreased to 0.65 in 2008 and 0.61 in 2009.
Since the ideal ratio is 2:1 so it signifies that the company is in comfort to pay the current
debts with a margin of safety for possible in current assets.
DEBT-EQUITY RATIO:
In 2007, the debt equity ratio was 1.08 and by 2008 it was 0.74 and by 2009 it is 0.62. So the
debt equity ratio is decreasing constantly and it shows that the company’s debt is decreasing,
and so the company is not in a favourable position in the view point of the lenders i.e. the
amount of debt used effectively by the company is declining from 2007 to 2009.
INTEREST COVERAGE RATIO:
In 2007, the interest coverage ratio is 14.43 which raised to 19.31 in 2008 so this proves that
the company’s debt burden got decreased to some extent and by 2009 it got decreased to
11.84. So the company’s performance got declined by 2009 and the company’s debt burden
is increasing i.e the company is not generating enough profit to pay the interest to the debts
and the financial position of the company is growing weak.
DEBTORS TURNOVER RATIO:
The debtor’s turnover ratio was 30.8 in 2007 and it slightly increased to 31.42 by 2008 and
then it gradually increased to 35.55 by 2009. Generally debtors turnover ratio explains the
number of times the debtors turned over a period of a financial year. The debtors turnover
ratio is growing higher which implies that the efficiency of management of debtors of the
firm is growing high when compared to the previous years.
AVERAGE COLLECTION PERIOD:
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In 2007 and 2009 the debtors velocity was only 9 days and it was favourable to the company
and the bargaining power of the company was high when compared to 2009 were the debtors
velocity was 10 days.
INVENTORY TURNOVER RATIO:
The inventory turnover ratio was 14.43 in 2007 and it got gradually increased to 19.31 in
2008 and then a steep decrease to 11.84 in 2009. Generally the inventory turnover ratio
measures the velocity of conversion of stock into sales. Here from 2007 to 2008 the firm was
managing efficiently the inventories and by 2009 the company is overstocking the finished
goods intended for sale.
FIXED ASSETS TURNOVER:
The fixed assets turnover was 1.17 in 2007 and it is increased to 1.29 by 2008 and by 2009 it
got declined to 1.16. In 2008 there is a decrease in fixed assets and so the turnover gradually
increased because the company effectively utilised the fixed assets while 1n 2009 the
company had increased the fixed assets to 50% than the previous year but the sales revenue
was not in tandem with the increase in fixed assets so the fixed assets turnover got declined
to 1.54.
PRICE/EARNINGS RATIO:
The P/E ratio is gradually declining for all the 3 years i.e. from 12.37 in 2009 to 9.74 in 2008
and then to 7.1 in 2007. This shows that the performance of the company is declining and the
management should look into the causes that have resulted into the fall of this ratio.
INDIA CEMENTS LIMITED
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RATIOS Year 2009 Year 2008 Year 2007
ROE 0.14 0.20 0.21
ROA 0.135 0.185 0.15
CURRENT RATIO 1.42 1.88 2.20
DEBT EQUITY RATIO 0.68 0.96 1.55
INTEREST COVERAGE RATIO 7.49 8.69 4.28
DEBTORS TURNOVER RATIO 11.55 12.44 10.43
AVERAGE COLLECTION PERIOD (days) 34 32 36
INVENTORY TURNOVER RATIO 10.35 11.87 11.29
FIXED ASSETS TURNOVER RATIO 0.89 1.01 1
TAX BURDEN RATIO 0.67 0.75 0
P/E RATIO 8.34 10.51 9.66
TABLE 6.5
ANALYSIS
RETURN ON EQUITY RATIO
Return on equity is net profits to equity share capital. The ratio is decreasing each year which
shows the company is unable to increase profits in accordance to the increase in
shareholders’ funds.
RETURN ON ASSETS RATIO
Though in FY’08 there is an increase in net income of the company but in FY’09 there is a
decline on the net income so that also affects the ROA, because lesser the income there will
be lesser rate of return on assets and also shows company inefficiency in utilization of assets.
CURRENT RATIO
The current assets of the company increased by 25% in the FY’08 but still there was decline
the current ratio because of increase in its liabilities by 127%. In FY’09 the assets decreased
by 1% but the liabilities increased by 17%, so there is a decline in current ratio. The current
ratio of company, though declining every year from the year 2007, but it is still able to
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reserves and surplus less accumulated losses. ROE indicates how well the firm has used the
resources of owners. Industry Aggr. = 0.24
COMPANY ROE
ACC ltd 0.267
Ambuja Cements ltd 0.188
J K Cements ltd 0.157
Ultratech Cement ltd 0.27
India Cements ltd 0.14
TABLE 7.1
GRAPH 7.1
It is always said that higher the ROE is better for the company and when looked at the
investors point of view. When compared with the industry average only ACC ltd and
Ultratech Cement ltd is performing well. But in case of Ambuja Cements ltd this decrease is
because of the decrease in profit after tax in the year 2009 when compared with the year
2008, though there was increase in sales in 2009. Similar is the case with both the other
companies. This was because to keep up with the competition in the market the three
companies had to reduce their prices by increasig the sales.
RETURN ON ASSETS
It shows how profitable a company’s assets are in generating revenue. It gives an indication
of the capital intensity of the company. Industry Aggr. = 0.178
COMPANY ROA
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J K Cements ltd 1.79
UltraTech Cement ltd 0.61
India Cements ltd 1.42TABLE 7.3
GRAPH 7.3
The current ratio of companies ACC ltd and UltraTech Cement ltd is below the industry
average that is because the current assets of the companies has gone down when compared to
previous year, i.e., 2008. But for the other companies it is above the industry average. Evenhaving higher current ratio is not good for the company.
DEBT-EQUITY RATIO
Debt – Equity ratio indicates the component of debt to the component of equity of a
company. Higher the ratio, higher is the debt for the company and vice versa. It is merely an
index. Industry Aggr. = 1.60
COMPANY D/E RATIO
ACC LTD 0.1
Ambuja Cements ltd 0.04
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J K Cements ltd 0.64
UltraTech Cement ltd 0.62
India Cements ltd 0.68TABLE 7.4
GRAPH 7.4
Here we can see that the debt – equity ratio is less than the industry average which is good
for the company as the percentage of debt component with respect to increase in percentage
of equity component is decreasing for all the companies when compared with the previousyear. But one point what needs to be taken into consieration is tax component as we know
that debt acts as a tax shield to the company.
INTEREST COVERAGE RATIO
Interest Coverage ratio indicates the number of times interest is covered by the profits
available to pay interest charges. It is an index of the financial strength of an enterprise. It is
merely an index. Industry Aggr. = 6.29
COMPANY INTEREST COVERAGE RATIO
ACC LTD 22.93
Ambuja Cements ltd 67.16J K Cements ltd 5.28
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GRAPH 7.8
This shows how efficiently the company could turnover the inventory into sales. Ambuja and
India Cements are having inventory turnover ratio less than the industry average which is
10.94. While other three companies ACC, J K cements, and UltraTech Cement ltd are having
ratios greater than the industry average which shows that these three companies are able to
efficiently manage their inventories.
FIXED ASSET TURNOVER RATIO
Fixed Asset Turnover ratio indicates how well a company utilizes its fixed assets in
generating the revenue. It is merely an index. Industry Aggr. = 1.06
COMPANY FIXED ASSET TURNOVER RATIOACC LTD 1.38
Ambuja Cements ltd 1.29
J K Cements ltd 1.77
UltraTech Cement ltd 1.16
India Cements ltd 0.89TABLE 7.9
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GRAPH 7.9
All the four cement companies except India Cements ltd fixed turnover ratio is higher
comopared to the industry average. In case of India cements ltd fixed turnover ratio is 0.89,
i.e., 16% decrease when compared with the industry average. This shows that India Cements
is not able to utilize their fixed assets efficiently. Whle comparing beetween the other four
companies J K Cements ltd is having higher ratio of 1.77 which shows how efficiently the
company is utilizing their fixed assets.
PRICE – EARNING RATIO
This indicates investor’s judgement or expectations about the firm’s performance. This shows
the relationship between market value of the share and the EPS. The higher the PE the
stronger is the recommendation to sell the share and the lower the PE, the stronger is the
recommendation to buy the share.
COMPANY P/E RATIO
ACC LTD 10.68
Ambuja Cements ltd 13.66
J K Cements ltd 2.01
UltraTech Cement ltd 7.1
India Cements ltd 8.34
TABLE 7.10
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GRAPH 7.10
For the investors to get a higher return on the shares they have actually invested, is better to
sell when the P/E ratio is high and buy when it is less. We can see that ACC, Ambuja and
India Cementsltd are having a higher P/E ratio when compared with other two, i.e., J K
Cements and UltraTech Cement ltd. It is now the best time to buy the shares of J K Cements
and UltraTech Cement ltd as their performance when compared to last year is increasing.
And hence the P/E ratio will increase in the near future.
7.2 TREND ANALYSIS
PROFITABILITY TREND
Profitability gives us the earnings available to the investors and owners of the company after
taking into account all the expenses incurred during the business operations. Profitability iscalculated as:
Profitability (%) = Profit after Tax (PAT) / Net Sales
The trend in terms of percentage in profit of the companies are considered and analyzed over
the period of study.
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GRAPH 7.12
J K CEMENTS LTD:
2009 2008 2007
Net Sales 1664.42 1595.56 1343.64
PAT 142.34 265.17 178.62
Profitability Trend (%) 8.551928 16.61924 13.29374TABLE 7.13
GRAPH 7.13
ULTRATECH CEMENT LTD:
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R & D Expenses 3.25 3.29 3.05
Net Sales 7942.66 7165.79 6880.66
R & D Focus (%) 0.040918 0.045913 0.044327TABLE 7.16
GRAPH 7.16
Ambuja Cement Ltd:
2009 2007 2008
R & D Expenses 1.29 0.25 0.24
Net Sales 7040.7 6167.71 5597.91
R & D Focus (%) 0.018322 0.004053 0.004287TABLE 7.17
GRAPH 7.17
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If we look at the above two graphs we can see that both ACC and Ambuja cements gives
importance to R&D. For the last three years Ambuja cements has been constantly spending
more money on R&D of the company whereas ACC reduced their R&D expenses in 2009
compared to the last year ,i.e., 2008.
When we look at other companies, i.e., UltraTech cement ltd., India cements ltd, J K cements
ltd they doesn’t focus towards the R&D of their company and hence their R&D Expense is
zero.
GROWTH ANALYSIS
The growth of the companies in a particular industry is calculated and analyzed on the basis
of the industries sales growth rate, i.e., compounded annual growth rate (CAGR).
Sn = S0 (1 + r) n
Where,
Sn = Net Sales during Year n or the last year considered for analysis.
S0 = Net Sales during Year 0 or the starting year considered for analysis.
r = Compounded Annual Growth Rate.
n = Number of years the company is analyzed
ACC Ltd:
For the year, 2009 – 20.11%
2008 – 25.74%
2007 – 29.37%
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GRAPH 7.18
Ambuja Cements Ltd:
For the year, 2009 – 22.06%
2008 – 24.13%
2007 – 29.16%
GRAPH 7.19
J K Cements Ltd:
For the year, 2009 – 36.21%
2008 – 45.61%
2007 – 55.85%
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GRAPH 7.20
UltraTech Cement ltd:
For the year, 2009 – 19.65%
2008 – 20.61%
2007 – 23.53%
GRAPH 7.21
India Cements ltd:
For the year, 2009 – 23.64%
2008 – 27.22%
2007 – 24.73%
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apace. However what is of concern to the industry are staggering rise in input costs and
pressures to cap selling prices at the same time. Unless the industry is able to recover cost
increases, through suitable adjustments in selling prices through rational economic
considerations, the cement industry will be under pressure.
Buoyed by the strong demand from realty and infrastructure companies in India, cement
companies have embarked on massive expansion plans for the coming years. India’s cement
industry is expanding capacity to meet increasing demand. The industry plans to invest
around Rs 50,000 crore in order to increase production from 198 MTPA to about 275 MTPA
over next two to three years.
These capacities, according to such announcements, are expected to be commissioned over
three-year period and may create an imbalance in demand and supply, resulting in impact on
realization.
A large number of foreign players are also expected to enter the cement sector in the next 10
years, owing to the profit margins, constant demand, and right valuation. Consolidation of the
cement sector too will take place and cement plants producing less than 1 million tonnes will
find it difficult to survive in this market. Cement companies will go for global listings either
through the FCCB route or the GDR routes.
The industry experts project the sector to grow by 9 to 10% for the current financial year
provided India's GDP grows at 7%. With help from the government in terms of friendlier
laws, lower taxation, and more infrastructure spending, the sector will grow and will take
India’s economy forward along with it.
8.3 CONCLUSION
In the present scenario of hectic competition it has been seen that the biggest player in the
market remains big and does not allow other companies to rise. The cement industry is
expected to grow steadily in 2009-2010 and increase capacity by another 50 million tons in
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spite of the recession and decrease in demand from the housing sector. In the analysis it has
been seen that the ACC LTD is over shadowing all other companies in terms of performance.
During Financial year 2007 inflationary conditions enabled all to perform well and generate
profits resulting in boom in share prices. In 2008 all companies underperformed
comparatively due to economic downturn. During this period investors have an opportunity
to gain by paying lower prices for shares and receiving high dividends in future. The effect of
recession in 2008 could be seen in the year 2009 where the growth of the company has been
decreased. But now slowly all the companies are picking up. So recommendations to other
companies will include increasing their customer base and decrease their cost of productions
and improve their performance with respect to credit sales, financial prudence and capacity
utilization.
REFERENCES
http://www.indiainbusiness.nic.in/industry-infrastructure/industrial-sectors/Cement.htm
http://www.ibef.org/industry/cement.aspx
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http://business.mapsofindia.com/cement/
http://www.icra.in/Files/PDF/SpecialComments/2010-January-Cement-Industry.pdf
http://india.mapsofindia.com/indian-economy/major-economic-sectors.html
http://capitaline.com/
http://www.jkcement.com/
http://www.indiacements.co.in/
http://www.ultratechcement.com/
http://www.gujaratambuja.com/
http://www.acclimited.com/
http://www.thaindian.com/newsportal/business/manufacturing-sector-is-indias-largest-
employer-census_10054253.html
http://www.rrfinance.com/Research/Fundamental%20Research/Cement%20Industry.html
http://www.emt-india.net/cement_code/2007/Chapter_2.html
http://www.equitymaster.com/research-it/sector-info/cement/
http://www.tradechakra.com/indian-economy/industries/cement-industry.html